During the first week of December, 2014, the Quebec Court of
Appeal rendered two consecutive industry-significant decisions in
favour of our client Athena Energy Marketing Inc.
("Athena")1 involving the interpretation and
application of contracts for the supply of natural gas.
1. The Victoria Decision – The natural gas
supply agreement with the private supplier was a contract of
In the matter of 9080-9211 Québec Inc. (hereinafter
"Victoria") versus Athena,2 the Court of
Appeal confirmed that the natural gas supply agreement between the
parties was one of sale rather than services.3 Athena
was found not to be acting as a natural gas dealer or intermediary,
but as a seller of natural gas. Victoria was therefore not legally
entitled to terminate the natural gas supply agreement at any time,
which it could have done with respect to a services contract under
certain conditions. It remained bound to honour its contractual
obligations despite the marked drop in its natural gas consumption
after having sold four of its buildings.
2. The Peyrow Decision – The supplier rightfully
applied the contractual clause providing for the resale of
unconsumed gas at market price
In the matter of Mehrzad Peyrow ("Peyrow") versus
Athena,4 Peyrow had contractually committed to take
delivery of and purchase a fixed quantity of natural gas per year
for a five-year term and at a fixed price. Peyrow's annual gas
consumption proved to be significantly less than the fixed quantity
he agreed to take delivery of by way of contract.
The Court of Appeal set aside the trial judgment and concluded
that, absent any other agreement with its client, Athena was bound
to apply the contractual mechanism obliging it to resell
Peyrow's unconsumed natural gas on a monthly basis and at the
The Court of Appeal also concluded that the trial judge had
erred in finding that Athena had made no effort to reach Peyrow in
order to allow him to liquidate his unconsumed natural gas in a
manner other than that called for in the contract.6
Athena acted in good faith and was bound to apply the contractual
resale clause,7 after having offered other possible
solutions to Peyrow for the resale of his unconsumed gas.
1. Athena now does business under the name "RBC
Natural Gas Services Inc.".
2. 9080-9211 Québec Inc. (Les
Propriétés Victoria) v. Athena Energy
Marketing Inc. (Services de gaz naturel RBC inc.), 2014 QCCA
2255 (Decision dated December 2, 2014). On January 27, 2015,
Victoria filed a motion for leave to appeal the Court of
Appeal's decision to the Supreme Court of Canada. To date the
Supreme Court has not ruled on the motion.
3. Ibid., paragraph 4.
4. Athena Energy Marketing Inc. (Services de gaz
naturel RBC Inc.) v. Peyrow, 2014 QCCA 2230 (Decision
dated December 4, 2014).
5. Ibid., paragraphs 16 to 20. The trial judge
had decided that Athena could not apply the contractual resale
clause in the circumstances of this file.
6. Ibid., paragraphs 21 to 31.
7. Ibid., paragraph 31.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).