Cull v. Canadian Superior Oil Ltd.

Cull v. Canadian Superior Oil Ltd.

Clause 12 granted a right to drill to completion with reasonable diligence and dispatch and provided for continuance if oil or gas in paying quantities was found; production need not begin at the precise moment of completion so long as the lessee proceeds with reasonable diligence and dispatch to obtain production, therefore the lease did not terminate and remained subsisting.

Citation
[1972] SCR 89
Parties
Appellant (lessor): Ida Armilda Cull; Respondent (lessee): Canadian Superior Oil Ltd.
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
27 April 1971
Procedural Posture
Civil Appeal Lease Dispute (mines and Minerals) / Appeal to the Supreme Court of Canada From the Supreme Court of Alberta, Appellate Division
Outcome
Appeal dismissed; lease declared good, valid and subsisting.
Legal Topics
Lease Continuation, Production Requirement, Drilling to Completion, Contract Interpretation, Estoppel, Pooling Clause
Source Language
English
Mines and Minerals Petroleum and Natural Gas Law Property Law Contract Law Lease Continuation Production Requirement Drilling to Completion Contract Interpretation +2 more

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Parties

Ida Armilda Cull

Appellant (lessor)

Canadian Superior Oil Ltd.

Respondent (lessee)

Procedural Posture

Civil Appeal Lease Dispute (mines and Minerals) / Appeal to the Supreme Court of Canada From the Supreme Court of Alberta, Appellate Division

Legal Issues

  1. 1 Whether a lessee who commenced drilling before the primary term expired and completed the well after expiry can rely on clause 12 to continue the lease
  2. 2 Whether production must commence immediately upon completion of drilling to extend the lease
  3. 3 Construction and interaction of clauses 2, 7 and 12 of the lease

Ratio Decidendi

Clause 12 granted a right to drill to completion with reasonable diligence and dispatch and provided for continuance if oil or gas in paying quantities was found; production need not begin at the precise moment of completion so long as the lessee proceeds with reasonable diligence and dispatch to obtain production, therefore the lease did not terminate and remained subsisting.

Court Disposition

Appeal dismissed; lease declared good, valid and subsisting.

Orders

  • Appeal dismissed with costs
  • Declaration that the petroleum and natural gas lease is good, valid and subsisting