Executive Summary: Key Legal and Evidentiary Issues

• The Canadian LP's initial term expired on February 20, 2020, without extension by the Canadian GP or by extraordinary resolution of the limited partners.

• Whether the Cooperation Agreement could mandate an extension of the Canadian LP Agreement — after its expiry — to match the extended US LP Agreement was a central contractual interpretation issue.

• Metalmark's minority shareholder protections under the Unanimous Shareholder Agreement (USA) restrict the transfer of PTW shares without prior written approval from both the Pyramid Group and Metalmark.

• The chambers judge committed a fundamental legal error by failing to recognize that the Pyramid Group owns units in the Canadian LP, not the PTW shares directly.

• Dissolution and distribution provisions under Article 14 and Article 9 of the Canadian LP Agreement were not adequately considered by the chambers judge before ordering the return of shares in kind.

• On appeal, the order directing the Canadian GP to transfer PTW shares to the Pyramid Group was set aside, with the Court finding triable issues remain regarding the appropriate remedy.

The origins of the dispute

The case of 1880499 Alberta Ltd v Warwick & Kent (Canada) GP Ltd arose from a transaction that combined three energy services businesses built or acquired by the respondents, collectively known as the "Pyramid Group." The Pyramid Group set out to create a larger company that would be attractive to an investor. The anticipated "liquidity event" would allow the principals of the Pyramid Group to realize their investments. The transaction was structured so that the Pyramid Group received 46.13% of the common and preferred shares of the larger company, PTW Energy Services Ltd ("PTW"). The Pyramid Group members were also limited partners in a Canadian limited partnership, Warwick & Kent (Canada) II LP (the "Canadian LP"), formed in accordance with the Partnership Act, RSA 2000, c P-3. After the PTW transaction closed, the Canadian LP held 7.18% of the PTW common and preferred shares through its general partner, Warwick & Kent (Canada) GP Ltd (the "Canadian GP"). The Canadian GP is the recorded owner of those shares. In addition, a group of entities collectively referred to as "Metalmark" invested $125 million cash in the PTW transaction in exchange for a 38.02% preferred share interest in PTW.

The contractual framework

Several agreements governed the transaction. The Canadian LP limited partnership agreement (the "Canadian LP Agreement"), made effective February 24, 2014, was executed by the Canadian GP as general partner and members of the Pyramid Group as limited partners. PTW and Metalmark are not parties to the Canadian LP Agreement. A parallel US limited partnership, Warwick & Kent (US) LP (the "US LP"), operated under the US LP amended and restated limited partnership agreement (the "US LP Agreement"), dated April 16, 2014, entered by the general partner NCA Warwick LLC (the "US GP"), a limited liability company established under the laws of the state of Washington, and several limited partners resident outside Canada. A Cooperation Agreement, dated February 28, 2014, was made between the Canadian LP, the Canadian GP, the US LP, and the US GP. The partnerships agreed that all discretionary decisions made by their general partners would be the same in all material respects for each partnership and that any amendments made to the limited partnership agreements would match in all material respects. The PTW Energy Services Ltd Amended & Restated Unanimous Shareholder Agreement (the "USA") was executed by all PTW shareholders in April 2014. Among other things, it placed certain restrictions on share transfers without Metalmark approval. Under the USA, Article 7 dealt specifically with the "Transfer" of PTW shares. Section 7.1(b) required the prior written approval of both the Pyramid Group and Metalmark for all transfers of shares until the Return of Capital had been realized by the holders of Class A Preferred Shares. Section 7.1(c) expressly restricted the Canadian GP, as the shareholder on behalf of the Canadian LP, from making any distributions in kind or otherwise transferring any shares to any limited partner or other equity holder without the prior written approval of the Pyramid Group and Metalmark, which was not to be unreasonably withheld.

Expiration of the Canadian LP and the ensuing conflict

Under section 3.3 of the Canadian LP Agreement, the partnership was to continue until February 20, 2020 (the "Initial Term"). The Canadian GP was entitled, by delivering notice in writing to the limited partners not less than 30 days prior to the end of the Initial Term, to extend the term for an additional one-year period. A further extension of the term could be approved by an Extraordinary Resolution. Neither of these things occurred. On March 6, 2020, the Pyramid Group wrote to the Canadian GP requesting the return of the PTW shares held by the Canadian LP through the Canadian GP, noting that since the Canadian LP Agreement had terminated, the Canadian GP had to take steps to dissolve the partnership and wind up its affairs. The Canadian GP responded on March 24, 2020, advising that the Pyramid Group had "no present entitlement to demand either dissolution of the Canadian [LP] or transfer of [the PTW] shares," pointing to steps being taken to extend the initial term of the US LP Agreement and obligations under the Cooperation Agreement. The Canadian GP also reminded the Pyramid Group about the provisions in the USA that "expressly restrict any transfer of shares (including by way of a dissolution/distribution in kind of the Canadian and US Partnerships) without the approval of Metalmark." On April 7, 2020, the Pyramid Group responded that it understood the initial term of the US LP Agreement had expired without extension, which meant the Cooperation Agreement had also terminated, and it reiterated the demand for the return of the PTW shares. The Canadian GP responded on April 30, 2020, confirming that the US LP Agreement had been extended and asking the Pyramid Group to extend the Canadian LP Agreement. The Pyramid Group refused and on July 23, 2020 filed a statement of claim against the Canadian GP.

The lower court decisions

The applications were first heard by an applications judge (2022 ABQB 385). He concluded that the Canadian LP Agreement could not be amended and extended retroactively based on the Cooperation Agreement, finding it "would be abusive and inconsistent with the applicable principles of contractual interpretation to read them as enabling a unilateral amendment after the fact to override the clear and unambiguous terms of an agreement that was specifically negotiated between the parties." In terms of remedy, the applications judge found that the Canadian LP Agreement provided for "dissolution" but the return of the PTW shares was "not indisputably automatic." He was not satisfied, based on the record before him, that he could summarily determine the appropriate remedy because there was no evidence as to the current economic climate and likelihood of a liquidity event, nor was there evidence about the tax consequences of dissolution. He was also concerned about how the potential methods of dissolution could affect control of PTW and the expectations of the parties, including minority shareholder protections negotiated in favour of Metalmark. In the result, the applications judge granted the Pyramid Group's summary judgment application in part — he concluded that the term of the Canadian LP Agreement had not been, and could not be, extended — but dismissed the Pyramid Group's request for the return of the PTW shares and directed that the issue of remedy go to trial. The chambers judge (2024 ABKB 197) affirmed the applications judge's decision that the initial term of the Canadian LP Agreement had passed without an extension under section 3.3 and agreed the Canadian LP limited partners could not be forced to extend the initial term. She disagreed, however, on the remedy question. She determined that because the "Canadian LP must be dissolved," there was no remedy issue to be tried, and she ordered the Canadian GP to return what she called the "Pyramid Shares" to the Pyramid Group, reasoning that the "control that Metalmark negotiated under ... the [USA] over the transfer of shares by the Canadian GP to the Pyramid Group could only be exercised prior to the termination of the Canadian LP."

The Court of Appeal's analysis of the Cooperation Agreement

The Alberta Court of Appeal upheld the finding that the Cooperation Agreement did not mandate an extension of the Canadian LP after the initial term had already expired. While section 5.2 of the Cooperation Agreement required each partnership to undertake amendments to its respective limited partnership agreement to match in all material respects amendments undertaken in respect of the other's, the Court found that this provision "does not go so far as to mandate the limited partners of the Canadian LP to pass an extraordinary resolution - after the expiry of the initial term - to extend the Canadian LP, nor does it prevent the dissolution of the Canadian LP when the term has expired based on the clear and unambiguous provisions of the Canadian LP Agreement." The Court held that the chambers judge made no reviewable error in summarily concluding that the agreements allow for the Canadian LP limited partners to opt for the dissolution of the Canadian LP in the circumstances. There were, however, triable issues about what must happen next.

The Pyramid Group's ownership and the role of the USA

The Court of Appeal identified a "fundamental legal error" in the chambers judge's reasoning: the Pyramid Group subscribed for, and owns, units in the Canadian LP — not the PTW shares directly. The evidence confirms that the Canadian GP, not any of the limited partners, is the registered holder of the PTW shares. This is consistent with the nature of limited partnerships, where the general partner has "sole control over the property and business of the limited partnership," with "all the rights and powers and ... all the restrictions and liabilities of a partner in a partnership," subject to certain statutory and contractual limitations. Furthermore, the chambers judge failed to meaningfully address the legal nature of the USA. As a unanimous shareholder agreement, the USA has been described as having a constitutional status equivalent to the corporation's constating documents — a "corporate law hybrid, part contractual and part constitutional in nature," as explained in Duha Printers (Western) Ltd v Canada. In directing the return of the PTW shares, the chambers judge overlooked the significance of the USA and the restrictions it places on the transfer of PTW shares. Under section 7.8(a) of the USA, no shares could be transferred on the books of PTW, nor would any transfer be effective, unless and until the terms of the USA were first complied with, and any transfer in violation would be "invalid and of no effect." None of the enumerated circumstances for a "Permitted Transfer" under section 1.1 of the USA applied in this case.

Dissolution provisions and the Partnership Act

The Court also found that the chambers judge failed to grapple with the dissolution and distribution provisions of the Canadian LP Agreement. Section 14.2 requires the Canadian GP, not less than 15 days prior to dissolution, to sell or otherwise dispose of all or such part of the partnership's assets as may be sold or otherwise disposed of on commercially reasonable terms, as determined by the Canadian GP in its sole discretion, and thereafter: pay or provide for the payment of debts, liabilities, and liquidation expenses; distribute the net proceeds to the partners according to the distribution provisions of Article 9; and satisfy all applicable formalities prescribed by applicable law. Section 14.3 provides that no limited partner is entitled to any reimbursement of its contribution to the capital of the Canadian LP except as funds or other property are available for distribution pursuant to Article 9. Article 9 sets out a priority scheme, with the first priority being 100% to the Class A Limited Partners and the General Partner pro rata in relation to their Capital Contributions until the Class A Limited Partners have received cumulative distributions equal to the amount of their Capital Contributions. In the case of the Pyramid Group, its Capital Contribution is defined as "the cash amount originally invested… being an aggregate of $10,575,000." Under section 9.3, upon termination and dissolution, distributions may also include restricted securities or other assets of the partnership; however, this requires the Canadian GP to obtain a valuation from an independent investment banking firm or other appropriate independent expert, which had not yet been done. The chambers judge's reliance on section 62 of the Partnership Act was also found to be "misguided." While she correctly noted that section 62(2) entitles a limited partner to demand the return of its contribution on dissolution, she failed to consider section 62(3), which provides that a limited partner has, irrespective of the nature of the contribution, only the right to demand and receive cash in return for the contribution, unless there is a statement to the contrary in the partnership agreement or all the partners consent to some other manner of returning the contribution.

The ruling and outcome

The Court of Appeal allowed the appeal in part. The order requiring the Canadian GP to transfer the PTW shares to the Pyramid Group was set aside, with the Court concluding that "whether the return of the PTW shares, in kind, to the Pyramid Group is appropriate in the circumstances cannot be determined on this record." The appellants — Warwick & Kent (Canada) GP Ltd, the Metalmark entities, and PTW Energy Services Ltd — succeeded in overturning the share transfer order. However, the Court affirmed that the Canadian LP's initial term had indeed expired and could not be extended, and that the chambers judge made no reviewable error in summarily concluding on that point. No specific monetary amount was awarded to any party, as the matter of the appropriate remedy remains unresolved and will require further proceedings, including compliance with the dissolution and distribution provisions of the Canadian LP Agreement and the transfer restrictions of the USA. The appeal was heard on November 14, 2025, and the Memorandum of Judgment was filed at Calgary, Alberta on April 16, 2026, by Justices Crighton, Kirker, and Hawkes.