Executive Summary: Key Legal and Evidentiary Issues

• Polaris sought summary dismissal under Rule 9-6(4) arguing it could not perform the Option Agreement after selling its equity interest in the Cedar LNG Project to Pembina

• The central dispute concerns whether the FID triggered Spire's option rights and whether the structuring of the FID was done intentionally to circumvent Spire's rights under the Option Agreement

• Self-induced impossibility or frustration is not recognized as a valid defense to breach of contract under established law

• Both parties presented deficient evidence—Polaris offered only bald assertions without demonstrating efforts to fulfill obligations, while Spire failed to provide evidence of actual loss or damage

• Summary judgment requires the applicant to establish "beyond a reasonable doubt" that no genuine issue for trial exists, a threshold Polaris failed to meet

• The indemnification clause in the Option Agreement potentially makes Polaris severally liable for losses arising from breaches by KPLP or Polaris

Background of the dispute

In November 2020, Spire Option Holder LLC entered into an Equity Participation Rights and Option Agreement with Polaris LNG LP, Kwaxdlau Project Limited Partnership, and several other defendants connected to the Cedar LNG Project, a major LNG development located on Haisla Nation lands near Kitimat, BC. The Option Agreement granted Spire the right to subscribe for up to an aggregate of 10% of all equity securities offered to investors in each Cedar LNG FID Offering, in consideration for Spire making a Cedar LNG Feed payment. Spire pleads that they made the Feed payment.

Sale of Polaris's interest and the Option Agreement's fate

In June 2021, Polaris sold its entire equity interest in the Cedar LNG Project to Pembina Pipeline Corporation through a Sale Agreement. Polaris assigned all its rights, titles and interests in and to, and all benefits under the Project Development Agreement to Pembina through an Assignment and Assumption Agreement. However, Polaris did not assign the Option Agreement to Pembina, nor did it seek to renegotiate the Option Agreement with Spire. Polaris therefore remained a party to the Option Agreement it signed with Spire, even after signing the Sale Agreement and the Assignment Agreement.

The final investment decision and Spire's claims

In June 2024, the Cedar LNG Project announced the FID. The Project will be funded through debt and capital contributions. Spire alleges the defendants have wrongfully repudiated the option rights of Spire and that Spire suffered loss and damage as a consequence. Spire further alleges that the defendants breached their duty of contractual good faith by designing the FID structure to circumvent or prevent Spire from exercising its options under the Option Agreement. Spire filed its notice of civil claim on October 30, 2024, and an amended notice of civil claim on April 9, 2025.

Polaris's summary judgment application

Polaris applied for summary dismissal of Spire's claim, arguing that after assigning its interest in the Cedar LNG Project to Pembina, Polaris had no ability to perform the Option Agreement. Mr. Steele, former President of Polaris, affirmed an affidavit stating that after the close of the Sale Agreement, Polaris no longer had the ability to perform under the Option Agreement, was not involved in, consulted with, or otherwise made aware of any decision whether or not to perform the Option Agreement, and had no ability to make any decision or take any step to effect any funding structure.

The court's analysis of the evidentiary record

Justice Fowler found the state of the evidence at this application perplexing. The evidence on behalf of Polaris was described as "troublingly deficient"—apart from bald assertions that Polaris no longer had the ability to perform under the Option Agreement, there was no evidence of what steps it took, if any, to attempt to fulfill its obligations. The evidence on behalf of the plaintiff was equally deficient—Spire provided evidence that it "was not permitted to exercise its rights" but presented no evidence of what it would have done had it been permitted to exercise its rights, leaving no evidence that Spire has suffered any loss or damage.

Legal standard for summary judgment

The court emphasized that for a claim to be dismissed on a summary judgment application, it must be manifestly clear that there is no matter to be tried. The meaning of "manifestly clear" was explained as equivalent to "beyond a reasonable doubt." The defendant who seeks summary dismissal bears the evidentiary burden of showing that there is "no genuine issue of material fact requiring trial." The defendant must prove this; it cannot rely on mere allegations or the pleadings.

Ruling and outcome

The court dismissed Polaris's application for summary judgment. Justice Fowler held that the evidence presented by Polaris was insufficient to meet the high threshold required—it is insufficient to simply assert in evidence an inability to perform obligations under a contract and provide no evidence of why not, particularly when the circumstances allegedly rendering performance impossible were self-induced. While the court expressed sympathy for Polaris because the material facts in the pleadings causally connecting them to any loss or damage suffered by the Plaintiff seem woefully inadequate, Polaris did not respond to the Amended NOCC by pleading that Spire had suffered no loss or damage, and did not bring the application on that basis. The court determined it would be unfair to Spire to grant summary judgment to Polaris on grounds not raised. Costs will be in the cause. No specific monetary amount was awarded or ordered at this procedural stage. No specific monetary amount was awarded or ordered.