Edited by Amanda Kostek and Kristen Hansen
Last week’s Court Rulings from the Alberta Court of King’s Bench, Court of Appeal and SCC.
CNOOC Petroleum North America ULC v ITP SA, 2024 ABCA 139
Expert Reports | Waiver of Privilege
Droog v Hamilton, 2024 ABKB 24
Application to Dismiss for Long Delay
Baker Law Firm v Colors Unlimited Inc, 2024 ABKB 241
Enhanced Costs | Calderbank Offers
CNOOC Petroleum North America ULC v ITP SA, 2024 ABCA 139
2 days after a pipeline failure one of the parties retained an engineer, who prepared a report in February, 2016. Further, an internal investigation report was also prepared July, 2016. The Plaintiff’s inhouse counsel deposed that at the time litigation was a “real and distinct possibility”, and directed that reports be completed on a “privileged and confidential basis”. The lower court ordered disclosure as the reports were not obtained for the “dominant purpose” of litigation. On appeal, the Court of Appeal confirmed that the test for litigation privilege is that the dominant purpose of the investigation must be for litigation either underway or reasonably anticipated:
[24] The “dominant purpose” test for litigation privilege in Alberta was settled in Nova and confirmed in Blank at para. 59. It can arise when litigation is underway or reasonably anticipated. The test was summarized in Moseley v Spray Lakes Sawmills (1980) Ltd., 1996 ABCA 141 at para. 24, 39 Alta LR (3d) 141, 184 AR 101:
The Court of Appeal considered sending the decision back down to the case management Justice to assess the purpose of the reports as opposed to the use of the information from the investigation, but ultimately resolved the matter on the basis of waiver.
In this case, it was argued that privilege was unintentionally waived by:
a. using the Reports to decide whether to repair or rebuild the pipeline,
b. giving copies to the Alberta Energy Regulator,
c. giving copies to APEGA, and
d. mentioning the conclusions of the Reports at a press conference.
The Court of Appeal determined that use of a redacted report to repair or rebuild did not amount to a waiver of privilege. However, disclosure of the report to the regulator was inconsistent with maintaining privilege, because the regulator would be required to disclose the records to anyone charged. Similarly, disclosing the reports to the regulatory body was also inconsistent with litigation privileged, and therefore privilege was lost. Finally, the press release disclosure made no mention of the reports, and therefore was not inconsistent with the privilege claim.
Ultimately, privilege was lost as a result of disclosure to the regulator and governing body.
Droog v Hamilton, 2024 ABKB 24
At issue was whether the provisions of the Interpretation Act extend the deadline for service of an Affidavit of Records.
[9] The Applications Judge was asked to determine whether section 22(2) of the Interpretation Act, RSA 2000, c I-8, (“Interpretation Act”) applied to extend that date to Tuesday, May 25, 2021. That section provides that:
[10] Also of relevance is section 22(1), which provides that:
[11] Paragraph 28(1)(x) of the Interpretation Act defines “holiday” to include every Sunday, as well as statutory holidays such as Victoria Day, which fell on Monday, May 24, 2021.
The appellant argued that since the the 3 year drop dead period expired on a holiday long weekend, the drop dead period moved to the following business day, which was a Tuesday. In this case, the Affidavit of Records was served on that Tuesday.
The Court disagreed and concluded that since a fax number was included as part of the address for service, service could have been effected by fax even if the law office was not open. The Court advised that the 3 year period contemplated by the Rules passed without a significant advance in the action, and therefore, the action was struck. Had the Affidavit of Records been served in time, it would have advanced the action notwithstanding defects in the remote commissioning. Further, had the Affidavit of Records been emailed, the Court would have validated service even though counsel had not expressly agreed to email service of documents.
Baker Law Firm v Colors Unlimited Inc, 2024 ABKB 241
The court awarded higher costs as a result of alleging a fraudulent preference that was not proven. The Court noted that using allegations in order to gain a tactical advantage was blameworthy conduct warranting enhanced costs:
[31] Advancing serious allegations without evidence is inappropriate and warrants significant costs consequences. Using those allegations to pressure an opposing party in the hopes of gaining a tactical advantage for settlement is even more blameworthy.
Further, a meritless appeal also warranted increased costs:
[35] I find that Baker Law Firm’s appeal was completely unnecessary. AJ Prowse’s decision was clearly correct on the merits. On appeal, Baker Law Firm did not add significantly to the evidence that was before AJ Prowse and did not identify any genuine error in the original Order. I agree with the Respondents that the appeal was largely an attempt to relitigate a decided issue, rather than to address an identified error.
[36] This appeal being unnecessary and meritless also compounds the impropriety of Baker Law Firm’s choice to advance unevidenced claims of fraud against the Respondents. Given the nature of the allegations advanced by Baker Law Firm, the Respondents were required to expend substantial additional resources defending themselves and their reputations.
In this case a low Calderbank offer was advanced early in the litigation. The Court noted that information offers do not automatically attract costs consequences. In this case an offer of $200 offset against any costs award was not an offer of genuine compromise. The Court concluded that it was not appropriate to impose additional costs consequences for a nominal sum with no costs waiver:
[44] Offers that include only a nominal payment and offers that amount to a request that the opposing party rethink its position have been found to lack the requisite element of compromise: Bruen at paras 8-11. It is possible for a nominal settlement offer to be genuine if the offer includes a waiver of costs incurred to the date of service, so long as the offer adequately reflects the relative strength of the parties’ positions at the time the offer was made: see Union Square Apartments Ltd v Academy Contractors Inc (Abalon Construction), 2017 ABQB 151 at para 18 and authorities therein.
[45] In this case, I find that the Holts’ offer was not genuine. In my view, the amount of the offer—a $200 offset against any costs award—was below the threshold of a genuine compromise. The Holts were eventually awarded $6,850 in costs by AJ Prowse; a $200 setoff would represent less than a 4% discount to Baker Law Firm for accepting the offer. While AJ Prowse’s costs award would certainly have been lower had Baker Law Firm accepted the offer, I do not see any scenario in which the $200 setoff would have represented more than 10-20% of the costs award. It would not be proper to impose additional costs consequences on Baker Law Firm for refusing an offer for a nominal sum with no waiver of costs.
The Court ultimately directed costs to be assessed by an Assessment officer and following an assessment, either assessed solicitor client costs or Schedule C Column 3 costs with a 5 times multiplier, whichever is lower. No costs were awarded for an application before AJ Prowse previously.