Canada: American Creek Resources Ltd. v. Teuton Resources Corp., 2015 BCCA 170

American Creek Resources Ltd. v. Teuton Resources Corp., 2015 BCCA 170

This British Columbia Court of Appeal decision involves the contractual interpretation of the phrase "exploration expenditures" within an option agreement.

Teuton and American Creek had an option agreement related to property in north-western B.C. Under the agreement, American Creek would earn a controlling interest in the property upon completion of certain conditions, including spending at least $5 million on "exploration expenditures". While American Creek said it spent over $6 million on exploration expenditures, Teuton challenged certain expenditures as not being reasonable, and refused to complete the transfer.

The trial judge rejected Teuton's argument, construing "exploration expenditures" (which was undefined in the agreement) as expenses that were actually incurred, in good faith, in connection with the property and in relation to exploration and development work within the Mineral Tenure Act regime. He granted an order for specific performance requiring Teuton to transfer title to the property.¹

In upholding the order, the Court of Appeal applied the recent decision of the Supreme Court of Canada in Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53,² holding that contractual interpretation is a question of mixed fact and law, and as such, a judge's findings are entitled to deference. Particular deference was paid to the trial judge's appreciation of the factual matrix and his finding that there was no prior custom or usage as to the phrase "exploration expenditure". The trial judge's finding of reprehensible conduct sufficient to order special costs was a discretionary decision and was also upheld.

Footnotes

1. The underlying decision, indexed as 2014 BCSC 636, is discussed in Mining in the Courts, Vol. V.

2. Creston Moly Corp. v. Sattva Capital Corp. is discussed in Mining in the Courts, Vol. V.

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