The Paris-based oil major and New York hedge fund Paulson&Co. were before the Court of Appeal of Alberta last week over Total's acquisition of Deer Creek Energy Ltd., whose major holding is the Joslyn lease in Northern Alberta, currently Total's flagship oil sands project.

In a drawn-out, high-profile trial three years ago, Paulson unsuccessfully argued that Total didn't pay a fair price for its 16% of the company's stock.

"We have asked the appeals court for a new trial, where the method of valuation will be discounted cash flow," Michael Waldorf, senior vicepresident at New York-based Paulson, said in an interview. "Our view is the trial court was wrong on the facts and wrong on the law." The court is considering the request.

Paulson was squeezed out by Total after shareholders with 82% of the shares accepted its offer, which Total increased twice, from $20.50 to $25.50, and then to $31 to defeat a competing bid from Royal Dutch Shell PLC.

Paulson said in documents filed before the appeals court that the market valuation method used by the trial judge, Barbara Romaine of the Alberta Court of Queen's Bench, was flawed in the case of its Deer Creek interest, which Paulson continued to hold for months after others sold out.

In a 133-page decision last June, Judge Romaine said Total paid a fair price for Deer Creek, contrary to Paulson's claim that the company was worth between $110 and $200 a share based on its own disclosures to the investment community, but was outmanoeuvred by the French company's negotiators.

Total wants the appeals court to dismiss the case.

"There is no basis for a new trial ... as the evidence in any event overwhelmingly supports a fair value award of no higher than $31," the company said in court documents.

The case is being watched by UTS shareholders unimpressed with Total's offer for UTS.

Total sweetened on Monday its bid for UTS, a partner in the proposed Fort Hills project, to $1.75 a share, or $830-million, up from $1.30, or $616.2-million, in late January.

On Tuesday, the president of its Canadian subsidiary, Michael Borrell, said he didn't see a scenario in which Total would further increase its offer. He also said that UTS fits well, but is not essential to Total's long-term oil-sands strategy.

Shareholders said they don't believe Total's latest ultimatum, nor that Total doesn't need UTS, considering the slow progress of its other oil sands projects, including Joslyn.

ccattaneo@nationalpost.com