Mercury Oils Ltd. v. Vulcan-Brown Petroleums Ltd.

In the light of the necessity for delegation and what took place during the last war, and the decision of the HuisoN J.-This is an appeal from the judgment of the Appellate Division of the Supreme Court of Alberta which, by a majority of four to one, dismissed an appeal from a judgment of Mr. Justice Shepherd awarding the plaintiff a declaration as claimed in its statement of claim.

(1) [1942] 1 W.W.R. 138;

[1942] 1 D.L.R. 209.

(2) [19411

3 W.W.R. 384; [19421

1 D.L.R. 210. The material facts in the case are not in dispute. They are fully set forth in the judgments below.

Briefly, the defendant appellant holds under a lease from . the owner

The plaintiff holds under a prior sublease the petroleum and natural gas rights in the said parcel of land. The lease to the plaintiff provides that the plaintiff as lessee shall pay as a rental or royalty for the premises: (1) twenty per cent of all merchantable products received from the demised premises; (2) a rental of forty dollars per annum payable half yearly; (3) that the lessee should drill a well of a defined character and capacity upon the land; and (4) that within twelve months after completion of the first well it would drill a second well and that, in default of so doing, it should be deemed to have abandoned the property, except the first well and the five acres surrounding it. The plaintiff has fulfilled the first three obligations as above mentioned but did not drill the second well because meanwhile new regulations under The Oil and Gas Wells Act, 1931, chapter 46, Alberta, were passed. These regulations made by order in council dated January 11th, 1939, provided that the Board constituted under the Act may prescribe the points at which wells may be drilled, and provided that no person shall commence to drill a well without a licence and that no licence shall be issued for any well at any point which was within 440 yards of any producing well. These regulations ordinarily made it impossible to drill a second well on a forty-acre plot such as was covered by the lease here. The plaintiff respondent applied to the Board for a licence under the regulations to drill a second well on the leased premises but such application was refused.

The defendant appellant (to whom the plaintiff had attorned) took the position that the agreement to drill the second well was absolute, that the plaintiff's failure to drill amounted to a default under the terms of the lease and that it must thereby be deemed to have abandoned its interest in all, except the first well and the five acres surrounding same. The plaintiff respondent thereupon commenced this action claiming a declaration that there was MicuRy no default or abandonment and that its rights in the OnALTD premises still continued.

The trial judge held that the plaintiff was entitled to the PErBOLEums declaration as claimed and the court of appeal by a Lw.

majority affirmed his decision.

Hudson J.

The clause in the sublease providing for the second well is as follows:

There are several other clauses in the sublease which have a bearing on this question. Clause 9 provides: 9. The lessee shall in respect to the premises hereby demised, faithfully and punctually do and perform all covenants and conditions, acts, matters and things as are required in the original lease from The Calgary and Edmonton Corporation Limited, or which may be contained in any regulations from time to time in force or promulgated by any proper authority.

The original lease referred to in this clause 9 contained a provision as follows:

The lessee shall and will carry on all drilling dperations in strict compliance with the statute and regulations and all other provisions of law applicable thereto.

This provision, therefore, must be taken to be incorporated in the sublease. Then, it should be stated that the original lease referred to above was surrendered and a new lease to the defendant appellant substituted therefor. This new lease contained a provision as follows:

That the lessee shall and will carry on all drilling operations in strict compliance with the statute and regulations and all other provisions of law applicable thereto, also in accordance with the regulations of the Government of the province of Alberta applicable to Crown leases. Subsequently, by agreement between the lessor, the plaintiff respondent and the defendant appellant, the respondent attorned to and became tenant of the appellant and oL acknowledged itself to be bound by the covenants and conditions of the said sublease and all amendments thereto and of such assignment.

The position then is that the defendant claims that the plaintiff has made default in not doing something which if done would be contrary to another covenant in the lease and at the same time contrary to a covenant made by the plaintiff appellant in its own lease, and which act if done might jeopardize the defendant's own title.

In view of this paradoxical situation let us next look at two other provisions of the sublease:

Reading all of these provisions together as we must, can it be said that the plaintiff is in default within the contemplation of clause 28?

I do not think so.

The present is not a case of frustration or of unjust enrichment.

There is no total failure of consideration. The plaintiff has paid the money rental in the past and is under an obligation to pay it in the future. The plaintiff is, so far as we know, operating the first well and paying the defendant the royalty on production provided for by the sublease.

Nor is it shown that there is any special hardship imposed upon the defendant. It does not appear that the defendant could get a licence to drill where the plaintiff has failed.

If the regulations are altered to permit the drilling of another well, then both parties will profit. The defendant will get the royalty and the plaintiff the remaining share of the products.

S.C.R.]

Apart from the construction of the contract itself, it was argued that the Oil and Gas Wells Act was ultra vires of the provincial legislature, and that the order in council establishing the regulations was beyond the power of the Lieutenant-Governor in Council. All of the judges in the courts below have held this argument to be unfounded. With this conclusion I agree.

The title in fee simple passed from the Crown in the right of the Dominion in 1906 and thereafter the provincial legislature had power to legislate in respect of same. The statement of the Chief Justice in the Spooner case (1) is quite in accord with this conclusion.

I would, therefore, dismiss the appeal with costs to the respondent, but there shall be no costs in respect of the intervention of the Attorney-General.

J. (ad hoc)-I am of the opinion that the appeal should be dismissed with costs.

Solicitor for the Attorney-General for Alberta: W. S. Gray. FINE FOODS OF CANADA, LIMITED

METCALFE FOODS, LIMITED

J dent of the Exchequer Court of Canada (1), dismissing the present appellant's petition for a direction that a certain trade mark of the respondent be expunged from the Register of Trade Marks. The material facts sufficiently appear in the judgment now reported.

J.-This is an appeal by Fine Foods of Canada Ltd. from a judgment of the late President of the Exchequer Court dismissing a petition under section 52 of The Unfair Competition Act, 1982, to expunge the trade mark " Garden Pride ", registered by the respondent, Metcalfe Foods Ltd., under No. NS14074 on October 17th, 1940, as applied to canned fruits, vegetables, jams, jellies and pork and beans.

The respondent, whose principal place of business is at Whitby, in the province of Ontario, commenced to make use of. that trade mark in or about the month of June, 1940. Before 1929, the predecessor in title of the appellant, whose principal place of business is at Tecumseh in Ontario, commenced to use a trade mark " Garden Patch " for the purpose of distinguishing its products, which products are similar to those of the respondent, and caused the said trade mark to be registered on October 2nd, 1929, as number 219/47728.

In the year 1935, the appellant commenced to use the trade mark " Summer Pride " also for the purpose of distinguishing its products, and shortly thereafter instructed agents in Ottawa to cause the said mark to be registered but, by oversight, no registration was made.

The appellant and respondent have continued to use their respective trade marks with reference to their products, and the ground for the application to the Exchequer Court is stated in the appellant's petition as being that the registration of the respondent's trade mark " Garden Pride"

Clause (k) of section 2 of The Unfair Competition Act, 1932, reads as follows:- The learned President decided that the two trade marks "Garden Patch " and " Garden Pride " are not similar within the meaning of this clause and I agree with him. In coming to a conclusion as between the appellant's unregistered mark " Summer Pride " and respondent's registered mark " Garden Pride ", the President considered that he was not entitled to take into consideration the use of the former because it was not registered. I express no opinion on this point, for, even assuming that the Court may take into consideration the unregistered mark, the two marks are not " similar " within the meaning of that expression as used in the Act.

The appeal should be dismissed with costs.

Appeal dismissed with costs.