Montreal Trust Co. v. Gulf Securities Corp. Ltd. et al.

Montreal Trust Co. v. Gulf Securities Corp. Ltd. et al.

The Supreme Court held that Imperial was an assignee of Tidewater within the scope of clause 10 and royalties payable by Imperial to Gulf were within the royalty trust assignment to Montreal, so Gulf was liable to account to Montreal; however Montreal was not an assignee of the Tidewater agreement itself and Tidewater owed no contractual duty to Montreal beyond paying royalties that might have been payable by Tidewater itself, so Montreal could not recover damages from Tidewater.

Citation
[1978] 1 SCR 708
Parties
Plaintiff Appellant: Montreal Trust Company; Defendant Respondent: Gulf Securities Corporation Ltd.; Defendant Respondent: Tidewater Oil Company; Defendant Respondent: Triad Petroleum Development Ltd.; Defendant Respondent: Marathon Oil Company; Defendant Respondent: Canada Cities Services Petroleum Corporation; Defendant Respondent: Atlantic Richfield Company
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
25 January 1977
Procedural Posture
Civil Appeal (royalty/contract) / On Appeal to the Supreme Court of Canada; Judgment Delivered
Outcome
Appeal allowed in part: appeal against Gulf allowed; appeal against Tidewater and other respondents dismissed
Legal Topics
Royalties, Assignment of Choses in Action, Notice of Assignment, Lease Surrender and Reassignment, Assignee Liability
Source Language
English
Mines and Minerals Property Contract Trusts and Equity Royalties Assignment of Choses in Action Notice of Assignment Lease Surrender and Reassignment +1 more

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Parties

Montreal Trust Company

Plaintiff Appellant

Gulf Securities Corporation Ltd.

Defendant Respondent

Tidewater Oil Company

Defendant Respondent

Triad Petroleum Development Ltd.

Defendant Respondent

Marathon Oil Company

Defendant Respondent

Canada Cities Services Petroleum Corporation

Defendant Respondent

Atlantic Richfield Company

Defendant Respondent

Procedural Posture

Civil Appeal (royalty/contract) / On Appeal to the Supreme Court of Canada; Judgment Delivered

Legal Issues

  1. 1 Whether an assignee of an assignor's lease (Imperial) became liable to pay royalties to the royalty trust (Montreal) under clause 2 of the royalty trust agreement by virtue of clause 10 of the Tidewater agreement
  2. 2 Whether Montreal, as assignee of Gulf's royalty, could enforce against Tidewater obligations owed by Tidewater to Gulf arising from clause 10
  3. 3 Whether Tidewater breached any duty to Montreal by failing to require Imperial to pay royalties to Montreal and instead allowing payment to Gulf

Ratio Decidendi

The Supreme Court held that Imperial was an assignee of Tidewater within the scope of clause 10 and royalties payable by Imperial to Gulf were within the royalty trust assignment to Montreal, so Gulf was liable to account to Montreal; however Montreal was not an assignee of the Tidewater agreement itself and Tidewater owed no contractual duty to Montreal beyond paying royalties that might have been payable by Tidewater itself, so Montreal could not recover damages from Tidewater.

Court Disposition

Appeal allowed in part: appeal against Gulf allowed; appeal against Tidewater and other respondents dismissed

Orders

  • Restore trial judgment against Gulf and allow Montreal's claim against Gulf for royalties from Imperial; dismiss Montreal's claims against Tidewater and the other respondents; costs to Montreal in this Court and in the Court of Appeal
  • Set aside the Court of Appeal judgment in respect of Gulf