Case: AlphaBow Energy Ltd (Re), 2026 ABCA 35 (CanLII)
Keywords: orphan wells; Companies’ Creditors Arrangement Act, RSC 1985, c C-36, s. 13
Synopsis:
The Alberta Energy Regulator (“AER”) issues a “reasonable care and measures order”, requiring the Applicant, AlphaBow Energy Ltd., to post $15M in security. The Applicant does not comply with the order; its licences and sites are subsequently suspended. (See para. 2).
The Applicant then enters a court-ordered claims process under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (“CCAA”). The initial CCAA order imposes a stay against creditors and some regulatory actions, including the AER’s “reasonable care and measures order”. (See para. 3). Throughout the CCAA process, a series of transactions are approved by the Court of King’s Bench. (See para. 4). A business called Cascade Capture Ltd. (“Cascade”) files a “licence transfer application”, which is conditionally approved by AER. However, AER makes a further security request: $20M from the Applicant, $5M from Cascade. (See para. 5).
The Applicant is unable to satisfy the request; Cascade pulls its application. (See para. 6). The Applicant later files an application with the Court of King’s Bench seeking a declaration that:
- any future request for security from the Applicant by the AER be stayed for so long as the CCAA proceedings are ongoing; and
- the failure to pay the $20M not be “relied upon by the AER in considering whether to approve licence transfer applications related to [the Applicant’s] assets”.
The Chambers Judge (Bourque, J.) dismisses the application, finding AER’s request for the Applicant to pay $20M was an action taken in its capacity as a regulator, not a creditor. Accordingly, the Chambers Judge finds this is not subject to the initial CCAA order. The Chambers Judge declines to exercise discretion to stay AER’s request (or any future request). (See paras. 7-8).
The Applicant seeks leave to appeal the Chambers Judge’s decision. The Court of Appeal per Ho J.A., dismisses the application. (See paras. 1, 23).
Importance:
Section 13 of the CCAA provides that, “[e]xcept in Yukon, any person dissatisfied with an order or a decision made under this Act may appeal from the order or decision on obtaining leave of the judge appealed from or of the court or a judge of the court to which the appeal lies and on such terms as to security and in other respects as the judge or court directs.” (Emphasis added).
How does one go about “obtaining leave” in these circumstances?
Citing Re Liberty Oil & Gas Ltd, 2003 ABCA 158 at para. 15 and BMO Nesbitt Inc v. Bellatrix Exploration Ltd., 2020 ABCA 264 at para. 7, the Court of Appeal affirmed the need to establish “serious and arguable grounds that are of real and significant interest to the parties”. (See para. 9).
As outlined by the Court of Appeal, this requires consideration of 4 factors:
- whether the point on appeal is of significance to the practice;
- whether the point raised is of significance to the action itself;
- whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous; and
- whether the appeal will unduly hinder the progress of the action. (See para. 10).
The Court of Appeal observed that, “in most cases”, the last two factors are to be “ascribed more weight”. (See para. 11; Resurgence Asset Management LLC v. Canadian Airlines Corp., 2000 ABCA 149 at para. 46). Of further interest, the Court noted that consideration of these factors involves an assessment of the standard of review which would apply if leave were granted: “[a]ssessment of these factors requires consideration of the standard of review that would govern the appeal, if leave were granted. That standard would require the appellant to point to an error on a question of law, a palpable and overriding error in the findings of fact, or an error in the supervising chambers judge’s exercise of discretion”. (See para. 11; Resurgence at para. 42).
In this case, the Court of Appeal found that the Applicant failed to establish its appeal was “prima facie meritorious in considering whether the chambers judge arguably made an error of law or a palpable and overriding error in the findings of fact or exercises of discretion.” (See paras. 15-16). In other words, the relative ‘difficulty’ or ‘challenge’ posed by the standard of review corresponding to the Applicant’s grounds was a factor here. Regarding grounds of appeal that related to the Chambers Judge’s discretionary decisions and fact finding, the Court found no “palpable and overriding errors in principle or application. Nor were his factual findings unsubstantiated by the record”. (See para. 17). The Court of Appeal also found that an appeal in this matter would “hinder the progress of this action”. (See para. 20).
In closing, however, the Court suggested that AER may wish to take a different approach in future: “I understand [the Applicant’s] position that the Second Security Request in effect undercut the Reverse Vesting Order and the approved transactions, and it would have been preferable for the AER to clarify its intended use of security enforcement to all parties involved at an earlier stage of the CCAA proceeding”. (See para. 22).
Counsel for the Applicant: Keely Cameron, Michael Selnes, Sophie Fiddes (Bennett Jones, Calgary)
Counsel for the Respondent, Alberta Energy Regulator: James Reid and Dakota Bailey (Miller Thomson, Calgary)
Counsel the Respondent, Orphan Well Association: Ryan Zahara and Erinn Wilson (MLT Aikens, Calgary)