Saying You're Right Isn't Enough: Default Notices and Freehold Leases

Most freehold oil and gas leases in Canada require the lessor to provide the lessee with notice of an alleged default. The lessee then has a certain amount of time to remedy the default or commence proceedings for a judicial determination of whether there was, in fact, a breach. The recent Alberta Court of Queen's Bench decision in 1301905 Alberta Ltd. v. Sword Energy Inc., 2013 ABQB 113 [Sword Energy] confirms that a lessee must challenge a default notice by strictly complying with the provisions of the default clause or be subsequently barred from arguing the substantive merits of the alleged breach. Published on the Bennett Jones Thought Network.