Grant Of Summary Judgment To Gas Facility Operator Based On "Pay First, Dispute Later" Clause Upheld

There was no error in granting partial summary judgment on more than $5 million dollars in gas facility invoices, the Alberta Court of Appeal held in SemCAMS ULC v Blaze Energy Ltd, 2016 ABCA 113, despite the gas producer's objections that a trial was needed to determine the amounts owing. While the producer is free to pursue an audit of the disputed amounts and a counterclaim for any adjustments, it faces a current liability for the amounts invoiced.

The Court held that the lower court's decision was founded on a reasonable interpretation of the relevant agreements that was supported by considerations of business efficacy. The relevant agreements used the "pay first, dispute later" structure common in the oil and gas industry. As we noted in our post discussing the summary judgment decision (see: Operator Granted Summary Judgment Against Producer for Disputed Invoice Amounts), the lower court accepted that in light of the operator's need to ensure a steady cash