Canada: Battle Over Gravel Results In Clarification In Test For Pre-Judgement Relief

The Alberta Court of Queen's Bench released its decision in Athabasca Minerals Inc. v Syncrude Canada Ltd., 2017 ABQB 47 in January, denying an application brought by Syncrude Canada Ltd. (Syncrude) for various forms of pre-judgment relief that would have the effect of partially suspending operations of the Susan Lake gravel pit. The Susan Lake gravel pit is one of the largest in Canada, and supplies the majority of gravel to energy companies operating and developing oil sands resources in the Athabasca Oil Sands region.


Athabasca Minerals Inc. (AMI) manages the removal of materials from the Susan Lake pit pursuant to a management contract with the Province. As part of its responsibilities, AMI ensures that a royalty is paid to the Province for materials removed from the pit and is responsible for the reclamation and re-forestation of the pit in accordance with applicable legislation and standards. For these services, AMI receives a management fee for the materials removed from the pit for the duration of the contract.

Syncrude produces oil sands bitumen from lands encompassed by a Mineral Surface Lease (the Mineral Lease) with the Province of Alberta. Pursuant to the Mineral Lease, Syncrude has certain reclamation obligations, both ongoing and at the end of operations. A portion of the Mineral Lease overlaps with the area under management by AMI (the Overlapping Area).

In 2012, AMI commenced an action against Syncrude, alleging that Syncrude removed surface materials from the pit and failed to pay for those materials and the full amount of management fees payable to AMI. In response, Syncrude filed a counterclaim alleging that AMI wrongfully permitted excavation, removal and use of reclamation material from the Overlapping Area. In essence, Syncrude asserted that the Mineral Lease gives it exclusive use and possession of sand and gravel in the Overlapping Area for reclamation purposes and that AMI's operation of the pit has interfered with that right.


Syncrude filed an application with the Court seeking various pre-judgment relief against AMI pending trial and judgment, including:

  1. a preservation order, preserving any material currently in situ in the Overlapping Area, prohibiting AMI from dealing with stockpiled cover soil, sand and gravel within the Overlapping Area and a direction that management fees otherwise payable to AMI under the management contract be paid into Court;
  2. an attachment order, attaching all of AMI's legal or beneficial interests in all real and property pursuant to the Civil Enforcement Act, RSA 2000, c-15 (CEA); and
  3. alternatively, a mareva injunction, enjoining AMI from dealing with, conveying, selling, encumbering or otherwise disposing of any interests in personal or real property or assets in its possession or control.


Preservation Order

The Court agreed with Syncrude's argument that the test for a preservation order is the well-known tripartite test established in RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 SCR 311 as follows:

  1. there is a serious issue to be tried;
  2. the applicant will suffer irreparable harm in the absence of relief; and
  3. the balance of convenience favours granting relief.

In particular, the Court held that an applicant for a preservation order is not required to also meet the provisions of Section 17 of the CEA respecting attachment orders, as was argued by AMI.

The Court held that there was a serious issue to be tried respecting the rights conferred to Syncrude and AMI under the various agreements with, and approvals issued by, the Province of Alberta. However, the Court found that Syncrude failed to meet the other two elements of the test. The Court's decision that Syncrude would not suffer irreparable harm was influenced by the fact that Syncrude had revised the relief it sought to permit a select group of companies to continue to purchase and remove sand and gravel in the Overlapping Area. The Court found that this diluted Syncrude's argument that it required a preservation order to secure the stockpiled or in situ sand and gravel in the Overlapping Area. The Court also held that the balance of convenience tipped in favour of AMI, as a preservation order would adversely impact AMI's ability to perform its duties under its contracts with the Province and may frustrate the Province's intention that sand and gravel be made available for public use.

Attachment Order

The Court accepted Syncrude's position that the test for an attachment order is contained entirely in section 17(2) of the CEA, and there is no additional requirement that an applicant meet the tripartite test established in RJR-MacDonald. Accordingly, the test for an attachment order set out in the CEA requires the applicant to show:

(a) there is a reasonable likelihood that the claimant's claim against the defendant will be established, and

(b) there are reasonable grounds for believing that the defendant is dealing with the defendant's exigible property, or is likely to deal with that property,

(i) otherwise than for the purpose of meeting the defendant's reasonable and ordinary business or living expenses, and

(ii) in a manner that would be likely to seriously hinder the claimant in the enforcement of a judgment against the defendant.

The Court declined to grant the attachment order, finding that there was no evidence to support Syncrude's assertion that the Mineral Lease provided it exclusive right to use and possess sand and gravel. Regarding the second criterion, the Court held that even if Syncrude was moderately successful in its Counterclaim, it would put AMI out of business and accordingly, an attachment order would not significantly enhance Syncrude's chance of recovery.

Mareva Injunction

The Court found that an applicant for a mareva injunction must establish (a) a strong prima facie case for potential success at trial, and (b) a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid a judgment. Further, the applicant must meet procedural requirements: (a) full and frank disclosure, (b) particulars of the claim, (c) assets within the jurisdiction, and (d) an undertaking as to damages. Finally, the applicant must satisfy two branches from the tripartite test: irreparable harm and balance of convenience.

For the same reasons as above, the Court was not convinced that there was a real risk that AMI would dissipate assets. Accordingly, the Court rejected Syncrude's application for a mareva injunction.

This case confirms the usual tests for preservation orders, attachment orders and mareva injunctions in Alberta. The important lesson of the case for industry is, when seeking pre-judgment relief, the applicant must focus on garnering enough evidence to support the draconian remedy they seek – courts will not grant pre-judgment relief lightly.

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