Executive Summary: Key Legal and Evidentiary Issues

• 953342 Alberta Ltd., as successor mineral owner, sought partial termination of five Gross Royalty Trusts (GRTs) established in 1953 and redirection of funds accumulated for Lost Contact Unitholders

• Clause 22 of the GRT Agreements was central to the dispute, with the Applicant claiming it created a reversionary interest making it a contingent beneficiary entitled to trust property upon partial termination

• Computershare Trust Company of Canada argued that clause 22 confers no beneficial interest on the Mineral Owner and that the royalty was irrevocably conveyed to the Trustee "forever"

• The Court determined two threshold questions: whether the Applicant had standing as a beneficiary under s. 67(2) of the Trustee Act, and whether Unitholders' interests were indefeasibly vested under s. 67(6)

• Additional submissions were received from the Attorney General of Alberta (arguing Royalty Trust Certificates are securities under unclaimed property legislation), the Public Trustee (declining to act), and a Unitholder (opposing reversion to the Mineral Owner)

• Application was dismissed as the Applicant lacked beneficiary status and the Unitholders' interests were found to be fixed indefeasible interests that vested absolutely, barring court-approved variation

The origins of the Auten Gross Royalty Trusts

In 1953, Leonidis J. Auten ("LJA"), a freehold mineral owner in Alberta, entered into five Gross Royalty Trust Agreements as part of a widespread practice in the province's oil and gas industry dating back to the late 1940s. These GRTs were designed to allow mineral owners to monetize their interests by leasing mines and minerals, then conveying the royalty payable under those leases to a trustee in exchange for gross royalty units that could be sold, traded, or gifted. LJA entered into petroleum and natural gas leases with McColl-Frontenac Oil Company Limited and Imperial Oil, reserving a 12½% gross royalty on production, which he then assigned to a trustee "forever" under the GRT Agreements. The trustee issued Royalty Trust Certificates representing Gross Royalty Units, which LJA subsequently distributed to various holders through sale or other means.

The structure of the GRT Agreements and Supplemental Agreements

The GRT Agreements contained several key provisions. Clause 3 provided for the issuance of Royalty Trust Certificates, while clause 10 required the Trustee to distribute royalty moneys to certificate holders. Clause 8 entitled each full Gross Royalty Unit holder to 1% of production proceeds net of deductions. Critically, clause 22 addressed termination, permitting the Agreement to be terminated on three months' written notice to the Trustee by the Owner with the consent in writing of all holders of Royalty Trust Certificates. Partial termination was also contemplated, provided it did not prejudicially affect other Gross Royalty Unit holders. Supplemental (or "Patch") Agreements were later executed in 1991, explicitly reaffirming the parties' intention that the Royalty Rights were settled upon the Trustee "forever" and that the GRT Agreements were meant to create an unimpeachable interest in land in favour of the Trustee. The successor mineral owners acknowledged they were bound by the original GRT Agreements as if they were original parties.

The application by 953342 Alberta Ltd.

953342 Alberta Ltd. (the "Applicant"), successor to LJA and current owner of the underlying mines and minerals, brought an application before the Court of King's Bench of Alberta seeking an order declaring the five Auten GRTs partially terminated with respect to certain "Lost Contact Unitholders" — individuals who could not be located by the Trustee and for whom a share of revenue paid to the GRTs had been accumulated. The Applicant claimed a reversionary interest in these unitholders' shares, seeking both redirection of accumulated non-deliverable funds and an order that future payments attributable to those units be paid to the Applicant. The Applicant relied on section 67 of Alberta's Trustee Act, SA 2022, c T-8.1, which permits a trustee or beneficiary to apply for court-approved variation of a trust.

The Applicant's argument on clause 22 and beneficiary status

The Applicant's central argument was that clause 22 of the GRT Agreements gave it, as successor Mineral Owner, a "power" to effect partial termination and, consequently, a reversionary or contingent beneficial interest in the trust property. It contended that LJA never intended to give up all interest in the Royalty and that the disappearance of unitholders was an event expressly contemplated by the Settlor, triggering a reversion of their share of royalties to the Mineral Owner. The Applicant argued this reversionary mechanism constituted it a "contingent beneficiary" with standing to bring the application under s. 67(2) of the Trustee Act. It further submitted arguments under ss. 28 and 1(i) of the Trustee Act, claiming status as a "qualified beneficiary" and asserting that partial termination was one of the "purposes" of the trusts.

The Respondent and other parties' positions

Computershare Trust Company of Canada (the "Respondent"), as Trustee, opposed the application. It argued that the Applicant was not a unitholder and therefore not a beneficiary; that clause 22 contained no conveyance of any legal or beneficial interest to the Mineral Owner; and that any implied right of reversion was antithetical to the express, irrevocable conveyance of the Royalty "forever." The Respondent highlighted clause 4.1.1 of the Supplemental Agreements, which made clear that all Royalty Rights had been transferred to the Trustee, and pointed to a logical inconsistency in the Applicant's argument — the Applicant claimed entitlement based on unitholder consent while simultaneously asking the Court to dispense with that consent. The Attorney General of Alberta submitted that Royalty Trust Certificates may be securities under the Securities Transfer Act and therefore subject to Alberta's unclaimed property legislation, potentially requiring the Trustee to deliver the property to the Minister of Finance. The Public Trustee declined to consent to act as trustee on behalf of the Lost Contact Unitholders. Unitholder Karen MacPherson wrote to the Court opposing the Applicant's claim and advocating instead for pro rata distribution to remaining unitholders.

The Court's analysis on standing and clause 22

Justice C.M. Jones identified two threshold questions: whether the Applicant had standing as a beneficiary, and whether the Unitholders' interests were indefeasibly vested. On the first question, the Court found that clause 22 did not create a reversionary interest for the Mineral Owner. The Court determined that clause 22 conferred upon the Mineral Owner only a limited role — to give notice to the Trustee of termination accompanied by the consent of all affected unitholders. The true power of termination lay with the unitholders, not the Mineral Owner, as their consent was a condition precedent. Further, clause 22 was silent on what would happen to terminated interests — it did not provide that the Mineral Owner would become entitled to any units or royalty in the event of partial termination. The Court also rejected arguments based on the resulting trust doctrine, noting that LJA had received valuable consideration for the conveyance and there had been no gratuitous transfer. The express purpose of the trusts was to alienate the royalty interest in perpetuity.

The Court's determination on vested indefeasible interests

On the second threshold question, the Court concluded that the Unitholders held fixed indefeasible interests that vested absolutely, drawing on case law including Scurry-Rainbow Oil Ltd v Galloway Estate, Boger Estate v Canada, Hillis v R, and Bethel Estate (Re). The Court found that the unitholders were clearly ascertainable through the Trustee's registry; they had been in possession of Royalty Trust Certificates since the initial grant with no condition precedent; and there were no conditions subsequent that would divest them of their interests. The fact that Lost Contact Unitholders could not be physically located did not render them unascertainable — it merely raised succession law issues. Consequently, under s. 67(6) of the Trustee Act, the Court was prohibited from approving any variation that would reduce or remove these indefeasibly vested interests.

The ruling and outcome

The Honourable Justice C.M. Jones of the Court of King's Bench of Alberta dismissed the application in its entirety on April 1, 2026. The Applicant, 953342 Alberta Ltd., failed on both threshold questions: it lacked standing as a beneficiary under s. 67(2) of the Trustee Act, and the Court was without jurisdiction to approve the requested variation due to the protection of indefeasibly vested interests under s. 67(6). No monetary award was made in favour of either party on the substantive issues; however, the parties were directed to submit written cost arguments within thirty days of the date of the Decision, such submissions not to exceed ten pages in length. The exact amount of costs, if any, was not determined in this decision.