Canada-Cities Service Petroleum Corporation v. Kininmonth et al.

Canada-Cities Service Petroleum Corporation v. Kininmonth et al.

Because no production occurred during the 10‑year primary term, the habendum clause operated to terminate the lease at the end of that term; commencement of drilling within the term did not extend the lease and the drilling covenant did not modify the habendum clause, therefore the lease expired on May 10, 1961.

Citation
[1964] SCR 439
Parties
Plaintiff Appellant: Canada-Cities Service Petroleum Corporation; Defendant Respondent: Orvilla Gertrude Kininmonth; Defendant Respondent: Leonard Wickson Kininmonth; Defendant Respondent: Prudential Trust Company Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 April 1964
Procedural Posture
Appeal / On Appeal From the Appellate Division of the Supreme Court of Alberta to the Supreme Court of Canada
Outcome
Appeal dismissed
Legal Topics
Lease Interpretation, Habendum Clause, Production Requirement to Extend Lease, Drilling Obligations, Termination of Oil and Gas Leases
Source Language
English
Mines and Minerals Petroleum and Natural Gas Property/real Estate Lease Interpretation Habendum Clause Production Requirement to Extend Lease Drilling Obligations Termination of Oil and Gas Leases

Case Brief

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Parties

Canada-Cities Service Petroleum Corporation

Plaintiff Appellant

Orvilla Gertrude Kininmonth

Defendant Respondent

Leonard Wickson Kininmonth

Defendant Respondent

Prudential Trust Company Limited

Defendant Respondent

Procedural Posture

Appeal / On Appeal From the Appellate Division of the Supreme Court of Alberta to the Supreme Court of Canada

Legal Issues

  1. 1 Whether the lease continued in force after the 10‑year primary term when production was obtained only after expiry
  2. 2 Whether commencement of drilling within the primary term but completion and production after expiry extends the lease
  3. 3 Whether the drilling covenant or payment of delay rentals modifies the habendum clause to permit completion after the primary term

Ratio Decidendi

Because no production occurred during the 10‑year primary term, the habendum clause operated to terminate the lease at the end of that term; commencement of drilling within the term did not extend the lease and the drilling covenant did not modify the habendum clause, therefore the lease expired on May 10, 1961.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs