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AUC Reaffirms Option M and the Policy of Paying Generators the Transmission Savings from Distributed GenerationAUC Reaffirms Option M and the Policy of Paying Generators the Transmission Savings from Distributed Generation344BLG Blog PostKent D. Howie;Alan L. Rosskhowie@blg.com | Kent D. Howie | 693A30232E777C626C6763616E6164615C6B686F776965 i:0#.w|blgcanada\khowie;aross@blg.com | Alan L. Ross | 693A30232E777C626C6763616E6164615C61726F7373 i:0#.w|blgcanada\aross ​Distributed Generation (DG) refers to smaller-sized generation projects (generally less than 20MW) that are directly connected to the lower voltage local electricity distribution systems that service consumers. DG is distinguishable from much larger-sized generation projects that are directly connected to higher voltage transmission lines that first transmit the power longer distances, and deliver it to the local distribution systems which, in turn, deliver that power to consumers. [Read more...]<p>​<img class="ms-rtePosition-1" alt="OrangeSky" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS-GRE-54-iStock-75.jpg" style="margin:5px;" />Distributed Generation (<strong>DG</strong>) refers to smaller-sized generation projects (generally less than 20MW) that are directly connected to the lower voltage local electricity distribution systems that service consumers. DG is distinguishable from much larger-sized generation projects that are directly connected to higher voltage transmission lines that first transmit the power longer distances, and deliver it to the local distribution systems which, in turn, deliver that power to consumers.</p><p>[<a href="/energy/Pages/Post.aspx?PID=344"><em>Read more</em></a>...]</p> ​Distributed Generation (DG) refers to smaller-sized generation projects (generally less than 20MW) that are directly connected to the lower voltage local electricity distribution systems that service consumers. DG is distinguishable from much larger-sized generation projects that are directly connected to higher voltage transmission lines that first transmit the power longer distances, and deliver it to the local distribution systems which, in turn, deliver that power to consumers.>> Read the full post on Alberta Power Market About the authors | Kent Howie and Alan Ross both practice in the Electricity Markets Group at the Calgary, Alberta office of Borden Ladner Gervais LLP.<p><img class="ms-rtePosition-1" alt="OrangeSKy" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS-GRE-54-iStock-375.jpg" style="margin:5px;" />​Distributed Generation (<strong>DG</strong>) refers to smaller-sized generation projects (generally less than 20MW) that are directly connected to the lower voltage local electricity distribution systems that service consumers. DG is distinguishable from much larger-sized generation projects that are directly connected to higher voltage transmission lines that first transmit the power longer distances, and deliver it to the local distribution systems which, in turn, deliver that power to consumers.</p><p style="text-align:justify;"><strong>>> </strong><a href="https://albertapowermarket.com/2017/11/06/auc-reaffirms-option-m-and-the-policy-of-paying-generators-the-transmission-savings-from-distributed-generation/" target="_blank"><strong>Read the full post on Alberta Power Market </strong></a></p><p style="text-align:justify;"><strong>About the authors |</strong> <a href="https://albertapowermarket.com/kenthowie/" target="_blank">Kent Howie</a> and <a href="http://blg.com/en/Our-People/Ross-Alan" target="_blank">Alan Ross </a>both practice in the Electricity Markets Group at the Calgary, Alberta office of Borden Ladner Gervais LLP.</p>11/15/2017 5:00:00 AM2017-11-15T05:00:00ZTrue1float;#11.0000000000000float;#2017.00000000000string;#Novemberfloat;#201711.000000000GP0|#03fc5c71-a1cf-4529-a790-3febb462b5dc;L0|#003fc5c71-a1cf-4529-a790-3febb462b5dc|Electricity;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#23e50663-be85-467e-acf9-7150e42ed669;L0|#023e50663-be85-467e-acf9-7150e42ed669|EnergyElectricity;Energy
Alberta Court of Appeal Clarifies Scope of Privilege over Internal InvestigationsAlberta Court of Appeal Clarifies Scope of Privilege over Internal Investigations342BLG Blog PostGraham Splawskigsplawski@blg.com | Graham Splawski | 693A30232E777C626C6763616E6164615C6773706C6177736B69 i:0#.w|blgcanada\gsplawski ​In Alberta v. Suncor, the Alberta Court of Appeal held the application judge erred in holding that litigation privilege applied to the entire content of an internal investigation file. The case involved a workplace accident at a Suncor facility in Fort McMurray and the subsequent investigation by the Alberta Occupational Health and Safety agency ("OHS"). In the course of its investigation, OHS sought production, pursuant to its statutory mandate, of Suncor's internal investigation file. Suncor refused production on the basis of privilege, and the application judge upheld this refusal. [Read more...]<p><img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_30_75.jpg" alt="" style="margin:5px;" />​In <a href="http://canlii.ca/t/h4mcs" target="_blank"><em>Alberta v. Suncor</em></a>, the Alberta Court of Appeal held the application judge erred in holding that litigation privilege applied to the entire content of an internal investigation file. The case involved a workplace accident at a Suncor facility in Fort McMurray and the subsequent investigation by the Alberta Occupational Health and Safety agency ("OHS"). In the course of its investigation, OHS sought production, pursuant to its statutory mandate, of Suncor's internal investigation file. Suncor refused production on the basis of privilege, and the application judge upheld this refusal. </p><p>[<a href="/energy/Pages/Post.aspx?PID=342"><em>Read more</em></a>...]</p> ​In Alberta v. Suncor, the Alberta Court of Appeal held the application judge erred in holding that litigation privilege applied to the entire content of an internal investigation file. The case involved a workplace accident at a Suncor facility in Fort McMurray and the subsequent investigation by the Alberta Occupational Health and Safety agency ("OHS"). In the course of its investigation, OHS sought production, pursuant to its statutory mandate, of Suncor's internal investigation file. Suncor refused production on the basis of privilege, and the application judge upheld this refusal. The Court of Appeal reversed the application judge in part, finding that privilege could only be asserted over a particular document, or bundle of like documents, and not over the whole file. Only those documents that were created for the dominant purpose of litigation were privileged. Documents that were merely collected in the course of the investigation, that either were created prior to the accident, or in the normal course of business and not for the dominant purpose of litigation, were not privileged, and did not become privileged merely by their inclusion in the internal investigation file. The Court also noted that the purpose behind the creation of a document or record does not change simply because it is forwarded to, or through, in-house counsel, or because in-house counsel directs that all further investigation should come to him or her. This decision is of particular interest to any organization with statutory compliance obligations, or any organization required to conduct an internal investigation where the file may become producible in civil or regulatory litigation. Suncor has applied for leave to appeal to the Supreme Court of Canada. >> For more updates on this topic, visit BLG's Financial Institutions Litigation Blog, The EXCHANGE. <p>​<img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_30_400.jpg" alt="" style="margin:5px;" />In <a href="http://canlii.ca/t/h4mcs" target="_blank"><em>Alberta v. Suncor</em></a>, the Alberta Court of Appeal held the application judge erred in holding that litigation privilege applied to the entire content of an internal investigation file. The case involved a workplace accident at a Suncor facility in Fort McMurray and the subsequent investigation by the Alberta Occupational Health and Safety agency ("OHS"). In the course of its investigation, OHS sought production, pursuant to its statutory mandate, of Suncor's internal investigation file. Suncor refused production on the basis of privilege, and the application judge upheld this refusal. </p><p>The Court of Appeal reversed the application judge in part, finding that privilege could only be asserted over a particular document, or bundle of like documents, and not over the whole file. Only those documents that were created for the dominant purpose of litigation were privileged. Documents that were merely collected in the course of the investigation, that either were created prior to the accident, or in the normal course of business and not for the dominant purpose of litigation, were not privileged, and did not become privileged merely by their inclusion in the internal investigation file. The Court also noted that the purpose behind the creation of a document or record does not change simply because it is forwarded to, or through, in-house counsel, or because in-house counsel directs that all further investigation should come to him or her. </p><p>This decision is of particular interest to any organization with statutory compliance obligations, or any organization required to conduct an internal investigation where the file may become producible in civil or regulatory litigation. Suncor has applied for leave to appeal to the Supreme Court of Canada. </p><p><strong>>> </strong><a href="/TheExchange" target="_blank"><strong><span style="text-decoration:underline;"><font color="#0066cc">For more updates on this topic, visit BLG's Financial Institutions Litigation Blog, <em>The EXCHANGE</em></font><font color="#0066cc">. </font></span></strong></a></p>10/31/2017 4:00:00 AM2017-10-31T04:00:00ZTrue1float;#10.0000000000000float;#2017.00000000000string;#Octoberfloat;#201710.000000000GP0|#1eb0aeef-3188-486c-8353-ba825b2cedc8;L0|#01eb0aeef-3188-486c-8353-ba825b2cedc8|Occupational Health & Safety;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caOccupational Health & Safety
Court of Appeal for Ontario Orders Security for Costs in Chevron Action for Recognition and Enforcement of a Foreign Judgment Court of Appeal for Ontario Orders Security for Costs in Chevron Action for Recognition and Enforcement of a Foreign Judgment 341BLG Blog PostAlannah Fotheringhamafotheringham@blg.com | Alannah Fotheringham | 693A30232E777C626C6763616E6164615C61666F74686572696E6768616D i:0#.w|blgcanada\afotheringham In Yaiguaje v. Chevron Corporation, the Court of Appeal for Ontario confirmed that the conventional approach to security for costs applies in cases where the action is in pursuit of recognition and enforcement of a foreign judgment. [Read more...] <p><img class="ms-rtePosition-1" alt="jpeg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS-BUSI%20122-shutterstock_89189647-75x75.jpg" style="margin:5px;" />In <a href="http://canlii.ca/t/h68k9" target="_blank">Yaiguaje v. Chevron Corporation</a>, the Court of Appeal for Ontario confirmed that the conventional approach to security for costs applies in cases where the action is in pursuit of recognition and enforcement of a foreign judgment. </p><p>[<a href="/energy/Pages/Post.aspx?PID=341"><em>Read more</em></a>...] </p> ​In Yaiguaje v. Chevron Corporation, the Court of Appeal for Ontario confirmed that the conventional approach to security for costs applies in cases where the action is in pursuit of recognition and enforcement of a foreign judgment. This decision is of significance for all financial institutions engaged in litigation where security for costs arises, as it confirms the applicability of the test for security for costs to both class proceedings and actions for recognition and enforcement of foreign judgments. Moreover, to the extent that the Court's order for security for costs in this case makes it cost-prohibitive for the plaintiffs' continued pursuit of their action, it also demonstrates how a motion security for costs can prove an effective bar to protracted litigation. >> Read the full post on BLG's Financial Institutions Litigation Blog, The EXCHANGE. UPDATE Since this post, the plaintiffs brought a motion to vary the decision ordering security for costs to a panel of the Court of Appeal. The Court of Appeal varied the decision of the motion's judge. Read the updated post on BLG's Financial Institutions Litigation Blog, The EXCHANGE. <p>​<img class="ms-rtePosition-1" alt="jpeg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/IMG%20Hands%20Smaller%20Size.JPG" style="margin:5px;" />In <a href="http://canlii.ca/t/h68k9">Yaiguaje v. Chevron Corporation</a>, the Court of Appeal for Ontario confirmed that the conventional approach to security for costs applies in cases where the action is in pursuit of recognition and enforcement of a foreign judgment. </p><p>This decision is of significance for all financial institutions engaged in litigation where security for costs arises, as it confirms the applicability of the test for security for costs to both class proceedings and actions for recognition and enforcement of foreign judgments. Moreover, to the extent that the Court's order for security for costs in this case makes it cost-prohibitive for the plaintiffs' continued pursuit of their action, it also demonstrates how a motion security for costs can prove an effective bar to protracted litigation. </p><p><strong>>> </strong><a href="/theexchange/Pages/Post.aspx?PID=287" target="_blank"><strong>Read the full post on BLG's Financial Institutions Litigation Blog, <em>The EXCHANGE</em>. </strong></a></p><p><strong>UPDATE:</strong> Since this post, the plaintiffs brought a motion to vary the decision ordering security for costs to a panel of the Court of Appeal. The Court of Appeal varied the decision of the motion's judge. <a href="/theexchange/Pages/Post.aspx?PID=297" target="_blank"><em>Read the updated post on BLG's Financial Institutions Litigation Blog, The EXCHANGE. </em></a></p>10/23/2017 4:00:00 AM2017-10-23T04:00:00ZTrue1float;#10.0000000000000float;#2017.00000000000string;#Octoberfloat;#201710.000000000GP0|#5f2600c5-ac2f-4731-ab91-eb396c7c4c54;L0|#05f2600c5-ac2f-4731-ab91-eb396c7c4c54|Bankruptcy and Insolvency;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caBankruptcy and Insolvency
Alberta Court of Appeal Confirms That Evidence of a General Problem With Substance Abuse in the Workplace May Justify Random Testing Alberta Court of Appeal Confirms That Evidence of a General Problem With Substance Abuse in the Workplace May Justify Random Testing 340BLG Blog PostLaurie M. Robson;Andrew Pozzobonlrobson@blg.com | Laurie M. Robson | 693A30232E777C626C6763616E6164615C6C6D72 i:0#.w|blgcanada\lmr;apozzobon@blg.com | Andrew Pozzobon | 693A30232E777C626C6763616E6164615C61706F7A7A6F626F6E i:0#.w|blgcanada\apozzobonRecently the Alberta Court of Appeal released its decision in Suncor Energy Inc. v Unifor Local 707A, 2017 ABCA 313, in which it dismissed an appeal by Unifor and rejected a decision from an arbitration tribunal that had found that Suncor had not demonstrated sufficient safety concerns to justify random drug and alcohol testing at its oil sands operations outside of Fort McMurray, Alta. The Court of Appeal found that Suncor could rely on evidence of substance abuse in the workplace generally, not just within the ranks of its unionized employees, to justify random testing. [Read more...]<p style="text-align:justify;"><img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_GRE-131-Thumbnail.jpg" alt="" style="margin:5px;" />Recently the Alberta Court of Appeal released its decision in <a href="https://www.canlii.org/en/ab/abca/doc/2017/2017abca313/2017abca313.pdf" target="_blank"><em>Suncor Energy Inc. v Unifor Local 707A</em>, 2017 ABCA 313</a>, in which it dismissed an appeal by Unifor and rejected a decision from an arbitration tribunal that had found that Suncor had not demonstrated sufficient safety concerns to justify random drug and alcohol testing at its oil sands operations outside of Fort McMurray, Alta.  The Court of Appeal found that Suncor could rely on evidence of substance abuse in the workplace generally, not just within the ranks of its unionized employees, to justify random testing. </p><p>[<a href="/energy/Pages/Post.aspx?PID=340"><em>Read more</em></a>...]</p>Recently the Alberta Court of Appeal released its decision in Suncor Energy Inc. v Unifor Local 707A, 2017 ABCA 313, in which it dismissed an appeal by Unifor and rejected a decision from an arbitration tribunal that had found that Suncor had not demonstrated sufficient safety concerns to justify random drug and alcohol testing at its oil sands operations outside of Fort McMurray, Alta. The Court of Appeal found that Suncor could rely on evidence of substance abuse in the workplace generally, not just within the ranks of its unionized employees, to justify random testing. Decision of the TribunalThe initial grievance concerned the random drug and alcohol testing of Suncor's employees engaged in safety-sensitive positions at its oil sands operations. The arbitration hearing lasted 23 days, at which Suncor led extensive evidence about employee substance abuse at its Fort McMurray operations. Suncor introduced evidence about positive drug and alcohol tests that took place after safety incidents or "near misses", with the records indicating that over 95% of the positive tests had involved unionized employees. However, most of Suncor's evidence related to the workplace as a whole and it did not distinguish between unionized employees, non-unionized employees and contractors. Unifor was fighting for privacy rights to prevail in terms of rejecting random testing, while Suncor argued that safety concerns supported the need for testing.On March 18, 2014, the board released its decision Unifor, Local 707A v Suncor Energy Inc. Oil Sands, 242 LAC (4th) 1, [2014] AGAA No 6. The majority ruled in favour of Unifor, holding that Suncor had not demonstrated sufficient safety concerns within the unionized employee population to justify random drug and alcohol testing. The majority of the tribunal held that because the tribunal lacked jurisdiction to impose or endorse the drug and alcohol testing of non-unionized employees, the board could only take account of evidence tied directly to that bargaining unit (the unionized employees) and it was foreclosed from even considering Suncor's experience with substance abuse problems of non-unionized employees.One panel member dissented, taking issue with the majority on its analysis and interpretation of Suncor's alcohol and drug testing data and expert testimony. The dissent criticized the majority's findings on this evidence, holding that it was wrongly or incorrectly interpreted. It challenged the majority findings on its statements regarding oral fluid testing as neither the Union nor Suncor provided any evidence on oral fluid testing at the hearing, nor did either party address oral fluid testing in argument. Therefore, the dissenting member held that the majority improperly considered evidence not before the panel or improperly or wrongly considered the evidence as presented.Decision of the Court of Queen's BenchSuncor applied to the Court of Queen's Bench of Alberta for judicial review of the arbitration decision. On May 18, 2016, the Court of Queen's Bench of Alberta released its decision in Suncor Energy Inc. v Unifor Local 707A, 2016 ABQB 269. Justice Blair Nixon for the Court of Queen's Bench quashed the decision and ordered the matter be sent back for a fresh hearing by a new panel. Justice Nixon found that that the majority's decision was unreasonable as the arbitration tribunal had misapplied the Supreme Court of Canada's (SCC) decision in the case of Communications, Energy and Paperworkers Union, Canada, Local 30 v Irving Pulp & Paper Ltd., 2013 SCC 34, 2 SCR 458 ("Irving"), when the tribunal concluded that there must be evidence of a "significant" or "serious" problem before random testing might be justifiable. Further, Justice Nixon concluded that the majority of the arbitration tribunal had erred by only considering the evidence of substance abuse of union employees and it had ignored the evidence of substance abuse in the broader workplace. Finally, Justice Nixon found that the majority had failed to consider all of the relevant evidence. Decision from the Alberta Court of AppealOn appeal, the Alberta Court of Appeal considered the dispute resolution process used in labour law and at what point the reviewing court (in this case, the Alberta Court of Queen's Bench) should interfere with the decision of a panel of professional arbitrators with particular experience and training in labour law. The Alberta Court of Appeal considered the deference to be given to such an experienced panel and the difference between "'submission' to the underlying decision and 'respectful attention'"1 finding that the power to intervene properly exercised allows the reviewing court to address errors even an expert tribunal may make.In addressing the appeal, the Alberta Court of Appeal stated that it was only necessary to address one of the issues identified by Justice Nixon, being the majority panel's "suggestion" that only evidence of drug and alcohol problems within the bargaining unit should be considered. Review the Irving case, the Alberta Court of Appeal noted that while a dangerous worksite is not, in itself, enough to justify imposing random drug or alcohol testing on unionized employees, evidence of a general problem with substance abuse in the workplace as a whole may justify the testing. While the arbitration panel had found that it lacked jurisdiction to impose or endorse drug and alcohol testing on non-unionized employees and therefore could not consider the evidence related to the non-unionized employees, the Alberta Court of Appeal found that this had no bearing on the question before the tribunal. The Court of Appeal found that the tribunal majority's insistence upon evidence particular to Suncor's unionized employees was unreasonable and set the evidentiary bar too high.The Court of Appeal held "[t]he key question in this arbitration was whether there was sufficient evidence of a substance abuse problem in Suncor's Fort McMurray operations to justify random drug and alcohol testing, given the privacy concerns inherent in such random testing. Rather than considering whether there was evidence of a problem in the workplace, the majority asked only whether there was evidence of such a problem specific to bargaining unit employees. By unreasonably narrowing the evidence that it considered when deciding this issue, the tribunal majority effectively asked the wrong question, and therefore applied the wrong legal test."2Unifor's appeal was dismissed. The decision of Mr. Justice Nixon referring the matter back for a new arbitration to be heard by a fresh panel as affirmed. ImplicationsThis case clarifies the legal test and the evidence that is to be considered in determining whether an employer is justified in imposing a program of random drug and alcohol testing on its employees. While it should not be assumed that evidence of substance abuse problems throughout the workplace as a whole will always be accepted to justify a program of random drug and alcohol testing on distinct groups of employees (union and non-union) and contractors, where the workplace functions as an integrated whole, the broader evidence pertaining to the integrated workplace can be relied upon by the employer in support of such a testing program. 1 Suncor Energy Inc. v Unifor Local 707A, 2017 ABCA 313, at para 37 ("Suncor ABCA")2 Suncor ABCA, para 49<p style="text-align:justify;"><img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_GRE-131-shutterstock_big.jpg" alt="" style="margin:5px;width:365px;" />Recently the Alberta Court of Appeal released its decision in <a href="https://www.canlii.org/en/ab/abca/doc/2017/2017abca313/2017abca313.pdf" target="_blank"><em>Suncor Energy Inc. v Unifor Local 707A</em>, 2017 ABCA 313</a>, in which it dismissed an appeal by Unifor and rejected a decision from an arbitration tribunal that had found that Suncor had not demonstrated sufficient safety concerns to justify random drug and alcohol testing at its oil sands operations outside of Fort McMurray, Alta.  The Court of Appeal found that Suncor could rely on evidence of substance abuse in the workplace generally, not just within the ranks of its unionized employees, to justify random testing. </p><p style="text-align:justify;"><strong>Decision of the Tribunal</strong></p><p style="text-align:justify;">The initial grievance concerned the random drug and alcohol testing of Suncor's employees engaged in safety-sensitive positions at its oil sands operations.  The arbitration hearing lasted 23 days, at which Suncor led extensive evidence about employee substance abuse at its Fort McMurray operations.  Suncor introduced evidence about positive drug and alcohol tests that took place after safety incidents or "near misses", with the records indicating that over 95% of the positive tests had involved unionized employees.  However, most of Suncor's evidence related to the workplace as a whole and it did not distinguish between unionized employees, non-unionized employees and contractors.  Unifor was fighting for privacy rights to prevail in terms of rejecting random testing, while Suncor argued that safety concerns supported the need for testing.</p><p style="text-align:justify;">On March 18, 2014, the board released its decision:  <em>Unifor, Local 707A v Suncor Energy Inc. Oil Sands, </em>242 LAC (4th) 1, [2014] AGAA No 6.  The majority ruled in favour of Unifor, holding that Suncor had not demonstrated sufficient safety concerns within the unionized employee population to justify random drug and alcohol testing.  The majority of the tribunal held that because the tribunal lacked jurisdiction to impose or endorse the drug and alcohol testing of non-unionized employees, the board could only take account of evidence tied directly to that bargaining unit (the unionized employees) and it was foreclosed from even considering Suncor's experience with substance abuse problems of non-unionized employees.</p><p style="text-align:justify;">One panel member dissented, taking issue with the majority on its analysis and interpretation of Suncor's alcohol and drug testing data and expert testimony.  The dissent criticized the majority's findings on this evidence, holding that it was wrongly or incorrectly interpreted. It challenged the majority findings on its statements regarding oral fluid testing as neither the Union nor Suncor provided any evidence on oral fluid testing at the hearing, nor did either party address oral fluid testing in argument. Therefore, the dissenting member held that the majority improperly considered evidence not before the panel or improperly or wrongly considered the evidence as presented.</p><p style="text-align:justify;"><strong>Decision of the Court of Queen's Bench</strong></p><p style="text-align:justify;">Suncor applied to the Court of Queen's Bench of Alberta for judicial review of the arbitration decision.  On May 18, 2016, the Court of Queen's Bench of Alberta released its decision in <em>Suncor Energy Inc. v Unifor Local 707A</em>, 2016 ABQB 269.  Justice Blair Nixon for the Court of Queen's Bench quashed the decision and ordered the matter be sent back for a fresh hearing by a new panel.  Justice Nixon found that that the majority's decision was unreasonable as the arbitration tribunal had misapplied the Supreme Court of Canada's (SCC) decision in the case of <em>Communications, Energy and Paperworkers Union, Canada, Local 30 v Irving Pulp & Paper Ltd.</em>, 2013 SCC 34, 2 SCR 458 ("Irving"), when the tribunal concluded that there must be evidence of a "significant" or "serious" problem before random testing might be justifiable.  Further, Justice Nixon concluded that the majority of the arbitration tribunal had erred by only considering the evidence of substance abuse of union employees and it had ignored the evidence of substance abuse in the broader workplace.  Finally, Justice Nixon found that the majority had failed to consider all of the relevant evidence. </p><p style="text-align:justify;"><strong>Decision from the Alberta Court of Appeal</strong></p><p style="text-align:justify;">On appeal, the Alberta Court of Appeal considered the dispute resolution process used in labour law and at what point the reviewing court (in this case, the Alberta Court of Queen's Bench) should interfere with the decision of a panel of professional arbitrators with particular experience and training in labour law.  The Alberta Court of Appeal considered the deference to be given to such an experienced panel and the difference between "'submission' to the underlying decision and 'respectful attention'"<sup>1</sup> finding that the power to intervene properly exercised allows the reviewing court to address errors even an expert tribunal may make.</p><p style="text-align:justify;">In addressing the appeal, the Alberta Court of Appeal stated that it was only necessary to address one of the issues identified by Justice Nixon, being the majority panel's "suggestion" that only evidence of drug and alcohol problems within the bargaining unit should be considered.  Review the Irving case, the Alberta Court of Appeal noted that while a dangerous worksite is not, in itself, enough to justify imposing random drug or alcohol testing on unionized employees, evidence of a general problem with substance abuse in the workplace as a whole may justify the testing. </p><p style="text-align:justify;">While the arbitration panel had found that it lacked jurisdiction to impose or endorse drug and alcohol testing on non-unionized employees and therefore could not consider the evidence related to the non-unionized employees, the Alberta Court of Appeal found that this had no bearing on the question before the tribunal.  The Court of Appeal found that the tribunal majority's insistence upon evidence particular to Suncor's unionized employees was unreasonable and set the evidentiary bar too high.</p><p style="text-align:justify;">The Court of Appeal held "[t]he key question in this arbitration was whether there was sufficient evidence of a substance abuse problem in Suncor's Fort McMurray operations to justify random drug and alcohol testing, given the privacy concerns inherent in such random testing. Rather than considering whether there was evidence of a problem in the workplace, the majority asked only whether there was evidence of such a problem specific to bargaining unit employees.  By unreasonably narrowing the evidence that it considered when deciding this issue, the tribunal majority effectively asked the wrong question, and therefore applied the wrong legal test."<sup>2</sup></p><p style="text-align:justify;">Unifor's appeal was dismissed.  The decision of Mr. Justice Nixon referring the matter back for a new arbitration to be heard by a fresh panel as affirmed. </p><p style="text-align:justify;"><strong>Implications</strong></p><p style="text-align:justify;">This case clarifies the legal test and the evidence that is to be considered in determining whether an employer is justified in imposing a program of random drug and alcohol testing on its employees.  While it should not be assumed that evidence of substance abuse problems throughout the workplace as a whole will always be accepted to justify a program of random drug and alcohol testing on distinct groups of employees (union and non-union) and contractors, where the workplace functions as an integrated whole, the broader evidence pertaining to the integrated workplace can be relied upon by the employer in support of such a testing program. </p><p style="text-align:justify;"><a href="https://www.canlii.org/en/ab/abca/doc/2017/2017abca313/2017abca313.pdf" target="_blank"><span style="font-size:7pt;"><sup>1</sup></span></a><span style="font-size:7pt;"> </span><span style="font-size:7pt;">Suncor Energy Inc. v Unifor Local 707A, </span><span style="font-size:7pt;">2017 ABCA 313, at para 37 ("Suncor ABCA")</span></p><p style="text-align:justify;"><a href="https://www.canlii.org/en/ab/abca/doc/2017/2017abca313/2017abca313.pdf" target="_blank"><span style="font-size:7pt;"><sup>2</sup></span></a><span style="font-size:7pt;"> Suncor ABCA, para 49</span></p>10/18/2017 4:00:00 AM2017-10-18T04:00:00ZTrue1float;#10.0000000000000float;#2017.00000000000string;#Octoberfloat;#201710.000000000GP0|#05db54b2-7a5f-4abd-b4d3-fe0dc1304321;L0|#005db54b2-7a5f-4abd-b4d3-fe0dc1304321|Labour and Employment;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & GasLabour and Employment;Oil & Gas
Environmental Law Newsletter - Fall EditionEnvironmental Law Newsletter - Fall Edition339BLG Blog PostRick Williams;Erika Lambert-Shirzad;Luke Dineley;Jacob Gehlen;Matti Lemmensrwilliams@blg.com | Rick Williams | 693A30232E777C626C6763616E6164615C726C77 i:0#.w|blgcanada\rlw;elambertshirzad@blg.com | Erika Lambert-Shirzad | 693A30232E777C626C6763616E6164615C656C616D62657274736869727A6164 i:0#.w|blgcanada\elambertshirzad;ldineley@blg.com | Luke Dineley | 693A30232E777C626C6763616E6164615C6C64696E656C6579 i:0#.w|blgcanada\ldineley;jgehlen@blg.com | Jacob Gehlen | 693A30232E777C626C6763616E6164615C6A6765686C656E i:0#.w|blgcanada\jgehlen;mlemmens@blg.com | Matti Lemmens | 693A30232E777C626C6763616E6164615C6D6C656D6D656E73 i:0#.w|blgcanada\mlemmens​This Newsletter is authored by members of BLG's Environmental Law Focus Group. We follow new and interesting legal issues and cases which have an environmental impact or element as they emerge. The breadth and depth of experience held by our contributors lends itself to a diverse and insightful examination of current legal trends, topics and case summaries. Our experience not only provides a source of valuable information, but also assists in finding solutions to legal issues that arise in this constantly evolving area. [Read more...]<p style="text-align:justify;">​<img class="ms-rtePosition-1" alt="Environment.jpeg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/GEN_NATU-250-Thumbnail.jpg" style="margin:5px;" />This Newsletter is authored by members of BLG's <a href="http://blg.com/en/Expertise/EnvironmentalLaw" target="_blank"><strong>Environmental Law Focus Group</strong></a>. We follow new and interesting legal issues and cases which have an environmental impact or element as they emerge. The breadth and depth of experience held by our contributors lends itself to a diverse and insightful examination of current legal trends, topics and case summaries. Our experience not only provides a source of valuable information, but also assists in finding solutions to legal issues that arise in this constantly evolving area.</p><p>[<a href="/energy/Pages/Post.aspx?PID=339"><em>Read more</em></a>...]</p>This Newsletter is authored by members of BLG's Environmental Law Focus Group. We follow new and interesting legal issues and cases which have an environmental impact or element as they emerge. The breadth and depth of experience held by our contributors lends itself to a diverse and insightful examination of current legal trends, topics and case summaries. Our experience not only provides a source of valuable information, but also assists in finding solutions to legal issues that arise in this constantly evolving area.Time Keeps Ticking Implications of the New Undue Delay Framework on Regulatory ProsecutionsAuthored by Rick Williams, Erika Lambert-Shirzad and Ingrid Braul (Summer Student) In its 2016 decision in R. v. Jordan, 2016 SCC 27 ("Jordan"), the Supreme Court of Canada directed Canadian courts to apply a new analytical framework when determining whether a delay warrants a stay of proceedings under section 24(1) of the Charter. Although Jordan involved a criminal prosecution, the applicability of the new analytical framework to "quasi-criminal" or regulatory prosecutions may be of interest to persons operating in the regulatory environment. >> READ MOREBC Court of Appeal Rules that Contaminated Property Must Be Assessed Using Highest and Best Use Authored by Luke Dineley and Jacob Gehlen In a highly anticipated decision for the valuation of contaminated property in British Columbia, the BC Court of Appeal overturned a decision of the BC Supreme Court and set out how contaminated property should be assessed for tax purposes. >> READ MORE Due Diligence Defence for Vehicle Emissions Standards in CanadaAuthored by Matti Lemmens and Brett Nguyen (Summer Student) In a recent case in Ontario, R. v. Daymak Inc., 2017 ONCJ 251, the Ontario Court of Justice considered the requirements of the due diligence defence in the context of emissions standards charges. >> READ MORE<p style="text-align:justify;"><img class="ms-rtePosition-1" alt="Environment.jpeg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/GEN_NATU-250-500pxWide.jpg" style="margin:5px;width:400px;height:266px;" />This Newsletter is authored by members of BLG's <a href="http://blg.com/en/Expertise/EnvironmentalLaw" target="_blank"><strong>Environmental Law Focus Group</strong></a>. We follow new and interesting legal issues and cases which have an environmental impact or element as they emerge. The breadth and depth of experience held by our contributors lends itself to a diverse and insightful examination of current legal trends, topics and case summaries. Our experience not only provides a source of valuable information, but also assists in finding solutions to legal issues that arise in this constantly evolving area.</p><p style="text-align:justify;"><strong>Time Keeps Ticking: </strong><strong>Implications of the New Undue Delay Framework on Regulatory Prosecutions</strong></p><p style="text-align:justify;">Authored by <a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62J8h/PzVGJ8JPmQH8qME1/84/hDNiyA0SFynbkgJbGGe&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>Rick Williams</strong></a>, <a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62J8h/PzVGJ8JFx6ATHwj1dkImNIUJcupoV6cSwYW0PlLpbDAoGX2ON8=&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>Erika Lambert-Shirzad</strong></a> and <strong>Ingrid Braul </strong>(Summer Student)</p><p style="text-align:justify;"><br>In its 2016 decision in <em>R. v. Jordan</em>, 2016 SCC 27 ("<strong><em>Jordan</em></strong>"), the Supreme Court of Canada directed Canadian courts to apply a new analytical framework when determining whether a delay warrants a stay of proceedings under section 24(1) of the <em>Charter. </em>Although <em>Jordan</em> involved a criminal prosecution, the applicability of the new analytical framework to "quasi-criminal" or regulatory prosecutions may be of interest to persons operating in the regulatory environment. </p><p style="text-align:justify;"><br><a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62EFPqhjAdra6OymCtE5L/j++Aat3iUICbnT+9GEMeSUhSFK5wLYD6LcPvQFslcLKGg==&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>>> READ MORE</strong></a><strong></strong></p><p style="text-align:justify;"><strong>BC Court of Appeal Rules that Contaminated Property </strong><strong>Must Be Assessed Using Highest and Best Use</strong><strong><em> </em></strong><strong> </strong></p><p style="text-align:justify;">Authored by <a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=/G1GTPto3VWxPB5HpRfeWkYTsr7+HwrI/LnOBCpzvvJg+5deDwYOUhUlqY5dbej/&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>Luke Dineley</strong></a> and <a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwYmLvynrlLI2fHWSQaeY8YPLDWHuIzl5eeEPn049unYNMA1ZSCCDMW8uvDFjBDBhf8=&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>Jacob Gehlen</strong></a></p><p style="text-align:justify;"><br>In a highly anticipated decision for the valuation of contaminated property in British Columbia, the BC Court of Appeal overturned a decision of the BC Supreme Court and set out how contaminated property should be assessed for tax purposes. </p><p style="text-align:justify;"><br><a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62EFPqhjAdra6OymCtE5L/j++Aat3iUICbnT+9GEMeSUhEQXWAa6fTOZvGpheNmrrkQ==&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>>> READ MORE</strong></a> </p><p style="text-align:justify;"><strong>Due Diligence Defence for </strong><strong>Vehicle Emissions Standards in Canada</strong></p><p style="text-align:justify;">Authored by <a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62J8h/PzVGJ8JTRWomDSYB1llOdXvMBn1w3s2UYMk0Avx&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>Matti Lemmens</strong></a> and <strong>Brett Nguyen </strong>(Summer Student) </p><p style="text-align:justify;"><br>In a recent case in Ontario, <em>R. v. Daymak Inc.,</em> 2017 ONCJ 251, the Ontario Court of Justice considered the requirements of the due diligence defence in the context of emissions standards charges.</p><p style="text-align:justify;"><br><a href="http://bordenladnergervaisllp.com/collect/click.aspx?u=s54SYG4dfwZOGCBVzIw62EFPqhjAdra6OymCtE5L/j++Aat3iUICbnT+9GEMeSUhoHub0ERWFrc/zluHPqTB4w==&rh=ff00340486e838532f56146198478a6f5c9e43ea" target="_blank"><strong>>> READ MORE</strong></a></p>10/10/2017 4:00:00 AM2017-10-10T04:00:00ZTrue1float;#10.0000000000000float;#2017.00000000000string;#Octoberfloat;#201710.000000000GP0|#98850b8e-4cdc-41cf-9cf7-f309880c7c29;L0|#098850b8e-4cdc-41cf-9cf7-f309880c7c29|BLG Energy News and Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#80272199-c96f-4e96-a610-ee5c8caae603;L0|#080272199-c96f-4e96-a610-ee5c8caae603|EnvironmentBLG Energy News and Events;Environment
Federal Court of Appeal Requires Minister to Discharge Fiduciary Duty in Consent to Assignment of First Nations Pipeline EasementFederal Court of Appeal Requires Minister to Discharge Fiduciary Duty in Consent to Assignment of First Nations Pipeline Easement338BLG Blog PostMiles Pittman;Ramsey Glassmpittman@blg.com | Miles Pittman | 693A30232E777C626C6763616E6164615C6D706974746D616E i:0#.w|blgcanada\mpittman;rglass@blg.com | Ramsey Glass | 693A30232E777C626C6763616E6164615C72676C617373 i:0#.w|blgcanada\rglass​This decision concerns the 2014 consent by the federal Minister of Aboriginal Affairs and Northern Development (the "Minister") to the assignment of a pipeline easement as part of a corporate reorganization undertaken by Kinder Morgan. The easement forms part of the Trans Mountain pipeline, and crosses the Coldwater Indian Reserve (the "Reserve"), and accordingly ministerial consent to the assignment between Kinder Morgan subsidiaries was required.The Crown owed the Coldwater Indian Band ("Coldwater") a fiduciary duty when considering whether or not to consent to the assignment. The Federal Court of Appeal found that, while the Minister considered the ability of the proposed assignee to discharge the obligations under the easement, he was also required to consider whether a consent to the assignment of the easement on its original terms would be in Coldwater's best interest, while also being mindful of the public interest in the pipeline's ongoing operation. The Minister did not undertake this consideration, and the consent was returned to the Minister for reconsideration having regard to its obligations. [Read more...]<p style="text-align:justify;">​<img class="ms-rtePosition-1" alt="Thumbnail.jpg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/PipelineLarge.jpg" style="margin:5px;width:100px;height:67px;" />This decision concerns the 2014 consent by the federal Minister of Aboriginal Affairs and Northern Development (the "Minister") to the assignment of a pipeline easement as part of a corporate reorganization undertaken by Kinder Morgan.  The easement forms part of the Trans Mountain pipeline, and crosses the Coldwater Indian Reserve (the "Reserve"), and accordingly ministerial consent to the assignment between Kinder Morgan subsidiaries was required.</p><p style="text-align:justify;">The Crown owed the Coldwater Indian Band ("Coldwater") a fiduciary duty when considering whether or not to consent to the assignment. The Federal Court of Appeal found that, while the Minister considered the ability of the proposed assignee to discharge the obligations under the easement, he was also required to consider whether a consent to the assignment of the easement on its original terms would be in Coldwater's best interest, while also being mindful of the public interest in the pipeline's ongoing operation. The Minister did not undertake this consideration, and the consent was returned to the Minister for reconsideration having regard to its obligations.</p><p>[<a href="/energy/Pages/Post.aspx?PID=338"><em>Read more</em></a>...]</p>​OverviewThis decision concerns the 2014 consent by the federal Minister of Aboriginal Affairs and Northern Development (the "Minister") to the assignment of a pipeline easement as part of a corporate reorganization undertaken by Kinder Morgan. The easement forms part of the Trans Mountain pipeline, and crosses the Coldwater Indian Reserve (the "Reserve"), and accordingly ministerial consent to the assignment between Kinder Morgan subsidiaries was required.The Crown owed the Coldwater Indian Band ("Coldwater") a fiduciary duty when considering whether or not to consent to the assignment. The Federal Court of Appeal found that, while the Minister considered the ability of the proposed assignee to discharge the obligations under the easement, he was also required to consider whether a consent to the assignment of the easement on its original terms would be in Coldwater's best interest, while also being mindful of the public interest in the pipeline's ongoing operation. The Minister did not undertake this consideration, and the consent was returned to the Minister for reconsideration having regard to its obligations.To read the full summary, click here. FactsTrans Mountain Pipeline was incorporated in 1951. Trans Mountain required multiple easements to be built, including one from Coldwater. The easement ("Easement") was agreed to by Coldwater Band Council in 1955, and was granted over approximately 6.5 km of the Reserve. Coldwater received $1,292.00 for the Easement, calculated at the standard rate of the time, and has since that time also been charging Kinder Morgan property tax for the easement.The Easement contained a restriction on assignment, in that it could not be assigned without consent of the responsible minister. Between 2002 and 2007, Trans Mountain underwent a series of corporate mergers, with the result that Trans Mountain was ultimately owned by Kinder Morgan, but was owned by a different subsidiary of Kinder Morgan. Therefore, in order to assign the Easement successfully to the subsidiary that owned the pipeline, ministerial consent was required. In July 2012, Kinder Morgan sought the consent of the Minister for the assignment of the Easement. Shortly thereafter, Coldwater was given notice of the request, and began communicating with the Minister about the terms of the consent. In 2013, Kinder Morgan applied to the National Energy Board for a certificate of public convenience and necessity in order to enlarge the pipeline so as to approximately triple its capacity. Coldwater expressed its concern about the expansion, and also expressed its desire to the Minister to modernize the Easement, including terms such as environmental practices and enhanced rights for the Band. Coldwater subsequently advised the Minister that it was not in the interest of Coldwater to consent to the assignment of the Easement and that the Minister should refuse consent to the assignment. Shortly thereafter, the Minister and the Tk'emlúps te Secwépemc First Nation initiated an optional process for the purposes of modernizing pipeline easements over multiple reserves. Coldwater was invited to partake in the process, with a focus on updating the Easement, and did so for a time, but later removed itself from the modernization process because many of the provisions it had proposed were not included in in the modernized easement. The Minister provided his consent to the assignment on December 19, 2014. In a letter informing Coldwater of the decision, the Minister said he considered "the grantee credit record, grantee environmental record, grantee contract record, grantee eligibility, valid grantor, adequate description, appropriate circumstances and proper documentation for the assignment of the Trans Mountain Pipeline." However, the decision did not include consideration of whether the assignment would minimally impair Coldwater's interest in the use and enjoyment of the land, and also did not include consideration of the impact of the continuation of the terms of the Easement on Coldwater's right to use and enjoy the reserve lands. DecisionIn a majority decision of the court, the Minister's decision to consent to the assignment was set aside and returned to the Minister for redetermination, taking into account the Crown's fiduciary duty to Coldwater in consenting to the assignment, not just assessing the ability of the assignee to perform the obligations under the Easement. In short, the Court did not tell the Minister what to decide, only the matters to be considered in arriving at the decision. The fiduciary duty requires the Minister "to exercise his discretion in a manner consistent with his obligations of loyalty and good faith and to act in what he reasonably and with diligence regards as Coldwater's best interest while, at the same time, being mindful of the public interest in the pipeline's continued operation" (para. 60). The Court could find no evidence on the record that the duty was discharged. Further, as a result of the modernization process initiated by the Minister, he ought to have known that the terms of the Easement were no longer responsive to current concerns. The Minister was "therefore required to consider whether the protection available to Coldwater under the modernized template was adequate in order to protect the land, and thus minimally impair Coldwater's interest in the land" (para. 93).The Court also noted that the Minister was not required to consider the expansion of the Trans Mountain pipeline in discharging its duty – Kinder Morgan has advised Coldwater that the proposed expansion will not take place without Coldwater's consent. The dissenting judgement from Webb JA focused on the fact that the assignment was from one subsidiary of Kinder Morgan to another subsidiary, and therefore it was impossible to see how Coldwater's use or enjoyment of the land would be any different as a result of the assignment. Further, it would be possible that the interest of the proposed assignee would be held in trust, regardless of the minister's consent. Therefore, irrespective of whether the fiduciary duty had been discharged, the result of consent or non-consent would be the same. <p style="text-align:justify;">​<span lang="EN-CA"><strong><img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/PipelineLarge.jpg" alt="" style="margin:5px;width:350px;height:234px;" />Overview</strong></span></p><p style="text-align:justify;">This decision concerns the 2014 consent by the federal Minister of Aboriginal Affairs and Northern Development (the "Minister") to the assignment of a pipeline easement as part of a corporate reorganization undertaken by Kinder Morgan.  The easement forms part of the Trans Mountain pipeline, and crosses the Coldwater Indian Reserve (the "Reserve"), and accordingly ministerial consent to the assignment between Kinder Morgan subsidiaries was required.</p><p style="text-align:justify;">The Crown owed the Coldwater Indian Band ("Coldwater") a fiduciary duty when considering whether or not to consent to the assignment. The Federal Court of Appeal found that, while the Minister considered the ability of the proposed assignee to discharge the obligations under the easement, he was also required to consider whether a consent to the assignment of the easement on its original terms would be in Coldwater's best interest, while also being mindful of the public interest in the pipeline's ongoing operation. The Minister did not undertake this consideration, and the consent was returned to the Minister for reconsideration having regard to its obligations.</p><p style="text-align:justify;">To read the full summary, <a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/235242/index.do" target="_blank">click here</a>. </p><p style="text-align:justify;"><span lang="EN-CA"><strong>Facts</strong></span></p><p style="text-align:justify;">Trans Mountain Pipeline was incorporated in 1951. Trans Mountain required multiple easements to be built, including one from Coldwater. The easement ("Easement") was agreed to by Coldwater Band Council in 1955, and was granted over approximately 6.5 km of the Reserve. Coldwater received $1,292.00 for the Easement, calculated at the standard rate of the time, and has since that time also been charging Kinder Morgan property tax for the easement.</p><p style="text-align:justify;">The Easement contained a restriction on assignment, in that it could not be assigned without consent of the responsible minister. Between 2002 and 2007, Trans Mountain underwent a series of corporate mergers, with the result that Trans Mountain was ultimately owned by Kinder Morgan, but was owned by a different subsidiary of Kinder Morgan.  Therefore, in order to assign the Easement successfully to the subsidiary that owned the pipeline, ministerial consent was required.  </p><p style="text-align:justify;">In July 2012, Kinder Morgan sought the consent of the Minister for the assignment of the Easement. Shortly thereafter, Coldwater was given notice of the request, and began communicating with the Minister about the terms of the consent. In 2013, Kinder Morgan applied to the National Energy Board for a certificate of public convenience and necessity in order to enlarge the pipeline so as to approximately triple its capacity.  Coldwater expressed its concern about the expansion, and also expressed its desire to the Minister to modernize the Easement, including terms such as environmental practices and enhanced rights for the Band. </p><p style="text-align:justify;">Coldwater subsequently advised the Minister that it was not in the interest of Coldwater to consent to the assignment of the Easement and that the Minister should refuse consent to the assignment. Shortly thereafter, the Minister and the Tk'emlúps te Secwépemc First Nation initiated an optional process for the purposes of modernizing pipeline easements over multiple reserves. Coldwater was invited to partake in the process, with a focus on updating the Easement, and did so for a time, but later removed itself from the modernization process because many of the provisions it had proposed were not included in in the modernized easement.  </p><p style="text-align:justify;">The Minister provided his consent to the assignment on December 19, 2014. In a letter informing Coldwater of the decision, the Minister said he considered "the grantee credit record, grantee environmental record, grantee contract record, grantee eligibility, valid grantor, adequate description, appropriate circumstances and proper documentation for the assignment of the Trans Mountain Pipeline." However, the decision did not include consideration of whether the assignment would minimally impair Coldwater's interest in the use and enjoyment of the land, and also did not include consideration of the impact of the continuation of the terms of the Easement on Coldwater's right to use and enjoy the reserve lands.  </p><p style="text-align:justify;"><span lang="EN-CA"><strong>Decision</strong></span></p><p style="text-align:justify;">In a majority decision of the court, the Minister's decision to consent to the assignment was set aside and returned to the Minister for redetermination, taking into account the Crown's fiduciary duty to Coldwater in consenting to the assignment, not just assessing the ability of the assignee to perform the obligations under the Easement. In short, the Court did not tell the Minister what to decide, only the matters to be considered in arriving at the decision. </p><p style="text-align:justify;">The fiduciary duty requires the Minister "to exercise his discretion in a manner consistent with his obligations of loyalty and good faith and to act in what he reasonably and with diligence regards as Coldwater's best interest while, at the same time, being mindful of the public interest in the pipeline's continued operation" (para. 60). The Court could find no evidence on the record that the duty was discharged. Further, as a result of the modernization process initiated by the Minister, he ought to have known that the terms of the Easement were no longer responsive to current concerns. The Minister was "therefore required to consider whether the protection available to Coldwater under the modernized template was adequate in order to protect the land, and thus minimally impair Coldwater's interest in the land" (para. 93).</p><p style="text-align:justify;">The Court also noted that the Minister was not required to consider the expansion of the Trans Mountain pipeline in discharging its duty – Kinder Morgan has advised Coldwater that the proposed expansion will not take place without Coldwater's consent. </p><p style="text-align:justify;">The dissenting judgement from Webb JA focused on the fact that the assignment was from one subsidiary of Kinder Morgan to another subsidiary, and therefore it was impossible to see how Coldwater's use or enjoyment of the land would be any different as a result of the assignment. Further, it would be possible that the interest of the proposed assignee would be held in trust, regardless of the minister's consent. Therefore, irrespective of whether the fiduciary duty had been discharged, the result of consent or non-consent would be the same. </p>10/3/2017 4:00:00 AM2017-10-03T04:00:00ZTrue1float;#10.0000000000000float;#2017.00000000000string;#Octoberfloat;#201710.000000000GP0|#2cad29ca-54e6-43bb-a056-02b01b063aaa;L0|#02cad29ca-54e6-43bb-a056-02b01b063aaa|Aboriginal;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#348dd05a-6925-465e-9cfd-96049207044d;L0|#0348dd05a-6925-465e-9cfd-96049207044d|Federal;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GP0|#7ea7e480-c8e7-48db-baae-396516e81926;L0|#07ea7e480-c8e7-48db-baae-396516e81926|PipelinesAboriginal;Federal;Oil & Gas;Pipelines
AESO Issues its Long-Term Outlook for Electricity in AlbertaAESO Issues its Long-Term Outlook for Electricity in Alberta337BLG Blog PostKent D. Howiekhowie@blg.com | Kent D. Howie | 693A30232E777C626C6763616E6164615C6B686F776965 i:0#.w|blgcanada\khowieAt least every two years the Alberta Electric System Operator (AESO) shares with the market its long-term (20 year) forecast of Alberta's electricity demand and the generation capacity needed to meet that demand. The forecast is called the Long-term Outlook ("LTO"), and the AESO uses it to help guide transmission planning in Alberta. This is because it is the AESO, and not transmission companies, that determines and implements transmission system expansions and enhancements. [Read more...]<p style="text-align:justify;">At least every two y<img class="ms-rtePosition-1" alt="Energy.png" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/Energy.png" style="margin:5px;width:150px;height:50px;" />ears the Alberta Electric System Operator (<strong>AESO</strong>) shares with the market its long-term (20 year) forecast of Alberta's electricity demand and the generation capacity needed to meet that demand.  The forecast is called the Long-term Outlook ("<strong>LTO</strong>"), and the AESO uses it to help guide transmission planning in Alberta.  This is because it is the AESO, and not transmission companies, that determines and implements transmission system expansions and enhancements.</p><p><span style="color:black;font-family:"arial",sans-serif;font-size:10pt;"></span>[<a href="/energy/Pages/Post.aspx?PID=337"><em>Read more</em></a>...]</p>​What is the Long-term Outlook?At least every two years the Alberta Electric System Operator (AESO) shares with the market its long-term (20 year) forecast of Alberta's electricity demand and the generation capacity needed to meet that demand. The forecast is called the Long-term Outlook ("LTO"), and the AESO uses it to help guide transmission planning in Alberta. This is because it is the AESO, and not transmission companies, that determines and implements transmission system expansions and enhancements.>> Read the full post on Alberta Power Market About the author | Kent Howie is a partner in the Calgary, Alberta office of Borden Ladner Gervais LLP. He heads the Electricity Markets Group in the Calgary Office and is the editor of and contributor to AlbertaPowerMarket.com.<p style="text-align:justify;">​<img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/Energy.png" alt="" style="margin:5px;width:475px;height:139px;" /><strong>What is the Long-term Outlook?</strong></p><p style="text-align:justify;">At least every two years the Alberta Electric System Operator (<strong>AESO</strong>) shares with the market its long-term (20 year) forecast of Alberta's electricity demand and the generation capacity needed to meet that demand.  The forecast is called the Long-term Outlook ("<strong>LTO</strong>"), and the AESO uses it to help guide transmission planning in Alberta.  This is because it is the AESO, and not transmission companies, that determines and implements transmission system expansions and enhancements.</p><p style="text-align:justify;"><strong>>> </strong><a href="https://albertapowermarket.com/2017/09/05/aeso-issues-its-long-term-outlook-for-electricity-in-alberta/" target="_blank"><strong>Read the full post on Alberta Power Market </strong></a></p><p style="text-align:justify;"><strong>About the author |</strong> <a href="https://albertapowermarket.com/kenthowie/" target="_blank">Kent Howie</a> is a partner in the Calgary, Alberta office of Borden Ladner Gervais LLP. He heads the Electricity Markets Group in the Calgary Office and is the editor of and contributor to <a href="https://albertapowermarket.com/" target="_blank">AlbertaPowerMarket.com</a>.</p>9/19/2017 4:00:00 AM2017-09-19T04:00:00ZTrue1float;#9.00000000000000float;#2017.00000000000string;#Septemberfloat;#201709.000000000GP0|#23e50663-be85-467e-acf9-7150e42ed669;L0|#023e50663-be85-467e-acf9-7150e42ed669|Energy;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#03fc5c71-a1cf-4529-a790-3febb462b5dc;L0|#003fc5c71-a1cf-4529-a790-3febb462b5dc|Electricity;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GP0|#68a53fee-4a86-4326-9cee-6b963cc47e1c;L0|#068a53fee-4a86-4326-9cee-6b963cc47e1c|Natural ResourcesEnergy;Electricity;Oil & Gas;Natural Resources
BLG’s Second Annual FSG Symposium BLG’s Second Annual FSG Symposium 336BLG Blog Post ​Join us for a up-close look at the major trends within Calgary's financial services market including the current state of the Alberta economy, the uncertainty of commodity prices and the impact thereof on the credit market and related credit documentation. [Read more...]<p>​Join u<img class="ms-rtePosition-1" alt="Financial Services Symposium.jpg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/Financial%20Services%20Symposium.jpg" style="margin:5px;width:100px;height:67px;" />s for a up-close look at the major trends within Calgary's financial services market including the current state of the Alberta economy, the uncertainty of commodity prices and the impact thereof on the credit market and related credit documentation.<span style="color:black;font-family:"arial",sans-serif;font-size:10pt;"><br></span> <span style="color:black;font-family:"arial",sans-serif;font-size:10pt;">[<a href="/energy/Pages/Post.aspx?PID=336"><em>Read more</em></a>...]</span></p> BLG's SECOND ANNUAL FINANCIAL SERVICES SYMPOSIUM Current Legal Trends and Issues in Financing in Alberta Join us for a up-close look at the major trends within Calgary's financial services market including the current state of the Alberta economy, the uncertainty of commodity prices and the impact thereof on the credit market and related credit documentation. In anticipation of the Calgary municipal election four days after the symposium, we are pleased to have His Worship Mayor Naheed Nenshi as our special keynote speaker to discuss his campaign and municipal issues in the Calgary business community. A full program of the symposium will follow. If you have any questions, please contact Ruxandra Andreiasi at rsvpcalgary@blg.com. Event Details Thursday, October 12, 2017 Registration and Breakfast 730 am - 800 am Symposium and Lunch 800 am - 100 pm Centennial Place West Tower 3rd Floor, 250 5 St SW Calgary, AB View Map >> RSVP Now<h1><strong><img class="ms-rtePosition-3" alt="PICTURE.jpg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/PICTURE.jpg" style="margin:5px;" /></strong></h1><p><span class="ms-rteFontSize-4"><strong>BLG's SECOND ANNUAL FINANCIAL SERVICES SYMPOSIUM:<br></strong></span><span style="font-size:16pt;">Current Legal Trends and Issues in Financing in Alberta</span></p><p>Join us for a up-close look at the major trends within Calgary's financial services market including the current state of the Alberta economy, the uncertainty of commodity prices and the impact thereof on the credit market and related credit documentation.<br>  <br> In anticipation of the Calgary municipal election four days after the symposium, we are pleased to have His Worship Mayor Naheed Nenshi as our special keynote speaker to discuss his campaign and municipal issues in the Calgary business community.<br>  <br> A full program of the symposium will follow. If you have any questions, please contact Ruxandra Andreiasi at <a href="mailto:rsvpcalgary@blg.com?subject=BLG%E2%80%99s%20Second%20Annual%20Financial%20Services%20Symposium">rsvpcalgary@blg.com</a>.  </p><p><strong>Event Details:</strong></p><p>Thursday, October 12, 2017</p><p>Registration and Breakfast: 7:30 am - 8:00 am</p><p>Symposium and Lunch: 8:00 am - 1:00 pm</p><p>Centennial Place West Tower<br>3rd Floor, 250 5 St SW<br>Calgary, AB<br><a href="https://www.google.com/maps/place/250+5+St+SW%2c+Calgary%2c+AB+T2P+0R4%2c+Canada/%4051.0511355%2c-114.0751821%2c17z/data=%213m1%214b1%214m5%213m4%211s0x53716ffae8954d45:0xef86d53cab31992e%218m2%213d51.0511321%214d-114.0729881?hl=en&shorturl=1" target="_blank">View Map</a></p><p><strong>>> </strong><a href="http://bordenladnergervaisllp.com/s/1749840720ef65e41da0dacd1e62a0f90f87b57a" target="_blank"><strong>RSVP Now</strong></a></p>9/14/2017 4:00:00 AM2017-09-14T04:00:00ZTrue1float;#9.00000000000000float;#2017.00000000000string;#Septemberfloat;#201709.000000000GP0|#b01107da-49ba-46f5-940e-aca68ced7b53;L0|#0b01107da-49ba-46f5-940e-aca68ced7b53|BLG Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caBLG Events
Pay First, Dispute Later (or Trial Now, Pay Later)? Pay First, Dispute Later (or Trial Now, Pay Later)? 335BLG Blog PostMiles Pittman;Leanne Desbaratsmpittman@blg.com | Miles Pittman | 693A30232E777C626C6763616E6164615C6D706974746D616E i:0#.w|blgcanada\mpittman;ldesbarats@blg.com | Leanne Desbarats | 693A30232E777C626C6763616E6164615C6C646573626172617473 i:0#.w|blgcanada\ldesbaratsIn Talisman Energy Inc. v Questerre Energy Corporation, 2017 ABCA 218 the Alberta Court of Appeal considered the pay first, dispute later provisions common in oil and gas joint operating agreements. These provisions generally provide that invoices issued under an operating agreement are a liquidated demand and a party receiving an invoice has no right to set-off or counterclaim. In another recent case, SemCAMS ULC v Blaze Energy, 2016 ABCA 113 ("SemCAMS") (discussed by BLG here, here and here), the Court of Appeal enforced one of these provisions, upholding an award of summary judgment against a non-operator for unpaid invoices notwithstanding that the non-operator disputed the operator's accounting methods. However, in this case the Court of Appeal distinguished SemCAMS and denied summary judgment to recover amounts pursuant to unpaid invoices in favour of Talisman Energy Inc. ("Talisman") on the basis that the issues were complex and warranted a trial. In particular, the Court of Appeal found that the facts were unclear as to which agreement the parties were operating under. This case is significant as it demonstrates that the pay first, dispute later provisions are not always appropriate for determination through the summary judgment process and can warrant a trial in certain circumstances. The case also highlights the limits on the utility of summary judgment in resolving issues expeditiously and in a cost-effective manner. <p style="text-align:justify;"><img class="ms-rtePosition-1" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS-BUSI%209-75x75.jpg" alt="" style="margin:5px;" />In <em>Talisman Energy Inc. v Questerre Energy Corporation, </em>2017 ABCA 218 the Alberta Court of Appeal considered the pay first, dispute later provisions common in oil and gas joint operating agreements. These provisions generally provide that invoices issued under an operating agreement are a liquidated demand and a party receiving an invoice has no right to set-off or counterclaim. In another recent case, <em>SemCAMS ULC v Blaze Energy, </em>2016 ABCA 113<em> </em>("<em>SemCAMS</em>") (discussed by BLG <a href="/energy/Pages/Post.aspx?PID=198" target="_blank">here</a>, <a href="/energy/Pages/Post.aspx?PID=163" target="_blank">here </a>and <a href="/energy/Pages/Post.aspx?PID=273" target="_blank">here</a>), the Court of Appeal enforced one of these provisions, upholding an award of summary judgment against a non-operator for unpaid invoices notwithstanding that the non-operator disputed the operator's accounting methods. However, in this case the Court of Appeal distinguished <em>SemCAMS </em>and denied summary judgment to recover amounts pursuant to unpaid invoices in favour of Talisman Energy Inc. ("Talisman") on the basis that the issues were complex and warranted a trial. In particular, the Court of Appeal found that the facts were unclear as to which agreement the parties were operating under. </p><p style="text-align:justify;">This case is significant as it demonstrates that the pay first, dispute later provisions are not always appropriate for determination through the summary judgment process and can warrant a trial in certain circumstances. The case also highlights the limits on the utility of summary judgment in resolving issues expeditiously and in a cost-effective manner. </p>In Talisman Energy Inc. v Questerre Energy Corporation, 2017 ABCA 218 the Alberta Court of Appeal considered the pay first, dispute later provisions common in oil and gas joint operating agreements. These provisions generally provide that invoices issued under an operating agreement are a liquidated demand and a party receiving an invoice has no right to set-off or counterclaim. In another recent case, SemCAMS ULC v Blaze Energy, 2016 ABCA 113 ("SemCAMS") (discussed by BLG here, here and here), the Court of Appeal enforced one of these provisions, upholding an award of summary judgment against a non-operator for unpaid invoices notwithstanding that the non-operator disputed the operator's accounting methods. However, in this case the Court of Appeal distinguished SemCAMS and denied summary judgment to recover amounts pursuant to unpaid invoices in favour of Talisman Energy Inc. ("Talisman") on the basis that the issues were complex and warranted a trial. In particular, the Court of Appeal found that the facts were unclear as to which agreement the parties were operating under. This case is significant as it demonstrates that the pay first, dispute later provisions are not always appropriate for determination through the summary judgment process and can warrant a trial in certain circumstances. The case also highlights the limits on the utility of summary judgment in resolving issues expeditiously and in a cost-effective manner. Background Talisman and Questerre Energy Corporation ("Questerre") were parties to a farmout agreement (the "Farmout Agreement") with respect to two properties in Quebec. The Farmout Agreement incorporated the 1990 CAPL Operating Procedure by reference and included a clause which allowed Talisman to… maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable, but not paid by such defaulting Joint-Operator, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant dates such amounts were due to be paid, without resort of such Joint-Operator to set-off or counterclaim. In early 2010, Talisman proposed to drill the Fortierville well and issued an Independent Operations Notice (an "ION") to Questerre for the well, enclosing an Authorization for Expenditure ("AFE"). If Questerre elected to participate it would be required to pay 25% of the well costs and failure to participate would result in Questerre being in penalty for the well. The ION did not include completion costs. Talisman and Questerre traded several apparently ambiguous communications about the AFE. Questerre advised Talisman that it would not participate in the Fortierville well unless Talisman agreed to complete, test and evaluate the well as part of a comprehensive program and would run microseismic monitoring as part of the completion program on the well. After the expiry of the ION, Talisman sent a letter stating that it would drill and complete the well but it did not issue an ION or an AFE with respect to both drilling and completion. Questerre subsequently executed the original AFE. In May 2016, Questerre sent an email to Talisman stating that it was interested in joint operations with respect to the Ste. Gertrude well on the same basis as the Fortierville well. Talisman issued an ION and AFE for the Ste. Gertrude well and this AFE also included the drilling of the well, but not its completion. Talisman proceeded to take steps to complete both wells and then sought to recover 25% of the costs of that work from Questerre. Questerre refused to pay the amounts outstanding, stating that completion required a supplemental AFE. In its action against Questerre, Talisman sought to recover liquidated damages for Questerre's proportionate share of the costs of the drilling and completion of both wells and the drilling costs for four other wells that it had drilled with Questerre's participation. Questerre defended Talisman's claim, and counterclaimed for breach of Talisman's promise to complete both wells. Questerre's position was that the correspondence between the parties was a collateral contract whereby the parties agreed that Questerre would only pay for costs if Talisman agreed to both drill and complete the wells. Queen's Bench DecisionsMaster Prowse granted summary judgment to Talisman for the drilling costs claimed by Talisman but declined to award summary judgment for the completion costs on the basis that a trial would be required to determine whether the correspondence between the parties regarding the completion costs evidenced the existence of a collateral contract. On appeal, Justice Hawco found a trial was required with respect to the entirety of Talisman's claim given that a finding that there was a collateral agreement might have impacted Talisman's claim with respect to the drilling costs. Court of Appeal Decision The Court of Appeal upheld Justice Hawco's decision, finding that a trial was necessary to determine the nature, scope and effect of the alleged collateral agreement. The Court of Appeal held that ordinarily Talisman would be entitled to summary judgment for the drilling costs claimed by Talisman with respect to the other four wells, but it found that because Talisman continued to exercise its operator's lien over those wells until the litigation concerning the other two wells was resolved it "brings the fate of the four other wells into the ambit of the litigation, where a trial is necessary to resolve the outstanding issues". Implications The case is significant as it demonstrates a limit on the immediate recourse an operator has under the pay first, dispute later provisions of the CAPL operating procedures. A joint-operator can take the position that the provision does not apply to the operation in question in order to resist a summary judgment application. The scenario where the scope of an agreement is unclear is not that uncommon in the oil and gas industry where there are often a multitude of different agreements that govern jointly owned lands and an abundance of correspondence between the parties, including AFEs, that could arguably amend existing agreements or constitute separate collateral agreements. This can make it difficult to determine what, if any, agreements apply in specific circumstances.As BLG commented here, while summary judgment is an appealing alternative to the trial process, due to the fact that a summary judgment or dismissal action is heard first before a Master, is subject to a right of appeal, and then there is the possibility of a further appeal to the Court of Appeal, its usefulness in speeding up the trial process and providing for a less costly avenue to resolve disputes is somewhat compromised. In this case, Master Prowse initially issued his decision in December 2015. The Court of Appeal's decision was issued in June 2017 and now, if the parties proceed to trial, they will be looking at scheduling likely at some point later in 2018 at the earliest. That is a significant delay and presumably proceeding directly to a trial from the outset would have been led to a faster and more final resolution of the matters in dispute. While an accounting dispute under a CAPL operating procedure may seem like an appropriate dispute for summary determination, this case demonstrates that a summary judgment application could in fact cause more cost and delay than proceeding with the regular trial procedure. <p style="text-align:justify;"><img class="ms-rtePosition-1" alt="Full-Size.jpg" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/Full-Size.jpg" style="margin:5px;width:300px;height:200px;" />In <em>Talisman Energy Inc. v Questerre Energy Corporation, </em>2017 ABCA 218 the Alberta Court of Appeal considered the pay first, dispute later provisions common in oil and gas joint operating agreements. These provisions generally provide that invoices issued under an operating agreement are a liquidated demand and a party receiving an invoice has no right to set-off or counterclaim. In another recent case, <em>SemCAMS ULC v Blaze Energy, </em>2016 ABCA 113<em> </em>("<em>SemCAMS</em>") (discussed by BLG <a href="/energy/Pages/Post.aspx?PID=198" target="_blank">here</a>, <a href="/energy/Pages/Post.aspx?PID=163" target="_blank">here </a>and <a href="/energy/Pages/Post.aspx?PID=273" target="_blank">here</a>), the Court of Appeal enforced one of these provisions, upholding an award of summary judgment against a non-operator for unpaid invoices notwithstanding that the non-operator disputed the operator's accounting methods. However, in this case the Court of Appeal distinguished <em>SemCAMS </em>and denied summary judgment to recover amounts pursuant to unpaid invoices in favour of Talisman Energy Inc. ("Talisman") on the basis that the issues were complex and warranted a trial. In particular, the Court of Appeal found that the facts were unclear as to which agreement the parties were operating under. </p><p style="text-align:justify;">This case is significant as it demonstrates that the pay first, dispute later provisions are not always appropriate for determination through the summary judgment process and can warrant a trial in certain circumstances. The case also highlights the limits on the utility of summary judgment in resolving issues expeditiously and in a cost-effective manner. </p><p style="text-align:justify;"><strong>Background </strong></p><p style="text-align:justify;">Talisman and Questerre Energy Corporation ("Questerre") were parties to a farmout agreement (the "Farmout Agreement") with respect to two properties in Quebec. The Farmout Agreement incorporated the 1990 CAPL Operating Procedure by reference and included a clause which allowed Talisman to:</p><blockquote dir="ltr" style="margin-right:0px;"><p dir="ltr" style="text-align:justify;margin-right:0px;">… maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable, but not paid by such defaulting Joint-Operator, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant dates such amounts were due to be paid, <span style="text-decoration:underline;">without resort of such Joint-Operator to set-off or counterclaim</span>. </p></blockquote><p style="text-align:justify;">In early 2010, Talisman proposed to drill the Fortierville well and issued an Independent Operations Notice (an "ION") to Questerre for the well, enclosing an Authorization for Expenditure ("AFE"). If Questerre elected to participate it would be required to pay 25% of the well costs and failure to participate would result in Questerre being in penalty for the well. The ION did not include completion costs. </p><p style="text-align:justify;">Talisman and Questerre traded several apparently ambiguous communications about the AFE. Questerre advised Talisman that it would not participate in the Fortierville well unless Talisman agreed to complete, test and evaluate the well as part of a comprehensive program and would run microseismic monitoring as part of the completion program on the well. After the expiry of the ION, Talisman sent a letter stating that it would drill and complete the well but it did not issue an ION or an AFE with respect to both drilling and completion. Questerre subsequently executed the original AFE. </p><p style="text-align:justify;">In May 2016, Questerre sent an email to Talisman stating that it was interested in joint operations with respect to the Ste. Gertrude well on the same basis as the Fortierville well. Talisman issued an ION and AFE for the Ste. Gertrude well and this AFE also included the drilling of the well, but not its completion. </p><p style="text-align:justify;">Talisman proceeded to take steps to complete both wells and then sought to recover 25% of the costs of that work from Questerre. Questerre refused to pay the amounts outstanding, stating that completion required a supplemental AFE. </p><p style="text-align:justify;">In its action against Questerre, Talisman sought to recover liquidated damages for Questerre's proportionate share of the costs of the drilling and completion of both wells and the drilling costs for four other wells that it had drilled with Questerre's participation. Questerre defended Talisman's claim, and counterclaimed for breach of Talisman's promise to complete both wells. Questerre's position was that the correspondence between the parties was a collateral contract whereby the parties agreed that Questerre would only pay for costs if Talisman agreed to both drill and complete the wells. </p><p style="text-align:justify;"><strong>Queen's Bench Decisions</strong></p><p style="text-align:justify;">Master Prowse granted summary judgment to Talisman for the drilling costs claimed by Talisman but declined to award summary judgment for the completion costs on the basis that a trial would be required to determine whether the correspondence between the parties regarding the completion costs evidenced the existence of a collateral contract.  On appeal, Justice Hawco found a trial was required with respect to the entirety of Talisman's claim given that a finding that there was a collateral agreement might have impacted Talisman's claim with respect to the drilling costs. </p><p style="text-align:justify;"><strong>Court of Appeal Decision </strong></p><p style="text-align:justify;">The Court of Appeal upheld Justice Hawco's decision, finding that a trial was necessary to determine the nature, scope and effect of the alleged collateral agreement. The Court of Appeal held that ordinarily Talisman would be entitled to summary judgment for the drilling costs claimed by Talisman with respect to the other four wells, but it found that because Talisman continued to exercise its operator's lien over those wells until the litigation concerning the other two wells was resolved it "brings the fate of the four other wells into the ambit of the litigation, where a trial is necessary to resolve the outstanding issues".  </p><p style="text-align:justify;"><strong>Implications </strong></p><p style="text-align:justify;">The case is significant as it demonstrates a limit on the immediate recourse an operator has under the pay first, dispute later provisions of the CAPL operating procedures. A joint-operator can take the position that the provision does not apply to the operation in question in order to resist a summary judgment application. The scenario where the scope of an agreement is unclear is not that uncommon in the oil and gas industry where there are often a multitude of different agreements that govern jointly owned lands and an abundance of correspondence between the parties, including AFEs, that could arguably amend existing agreements or constitute separate collateral agreements. This can make it difficult to determine what, if any, agreements apply in specific circumstances.</p><p style="text-align:justify;">As BLG commented <a href="/energy/Pages/Post.aspx?PID=273" target="_blank">here</a>, while summary judgment is an appealing alternative to the trial process, due to the fact that a summary judgment or dismissal action is heard first before a Master, is subject to a right of appeal, and then there is the possibility of a further appeal to the Court of Appeal, its usefulness in speeding up the trial process and providing for a less costly avenue to resolve disputes is somewhat compromised. In this case, Master Prowse initially issued his decision in December 2015. The Court of Appeal's decision was issued in June 2017 and now, if the parties proceed to trial, they will be looking at scheduling likely at some point later in 2018 at the earliest. That is a significant delay and presumably proceeding directly to a trial from the outset would have been led to a faster and more final resolution of the matters in dispute. While an accounting dispute under a CAPL operating procedure may seem like an appropriate dispute for summary determination, this case demonstrates that a summary judgment application could in fact cause more cost and delay than proceeding with the regular trial procedure. </p>9/7/2017 4:00:00 AM2017-09-07T04:00:00ZTrue1float;#9.00000000000000float;#2017.00000000000string;#Septemberfloat;#201709.000000000GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#6ed29997-7c09-433d-9f4f-e4bb2ce1b29b;L0|#06ed29997-7c09-433d-9f4f-e4bb2ce1b29b|Litigation;GP0|#a8d93e98-a569-4c7f-ac81-5c92b85685cd;L0|#0a8d93e98-a569-4c7f-ac81-5c92b85685cd|AppealsOil & Gas;Litigation;Appeals
Set-Off – A Powerful Remedy Made Even More Powerful by Alberta CourtSet-Off – A Powerful Remedy Made Even More Powerful by Alberta Court334BLG Blog PostMiles Pittman;Jessica Cameron;Robin Jawandampittman@blg.com | Miles Pittman | 693A30232E777C626C6763616E6164615C6D706974746D616E i:0#.w|blgcanada\mpittman;jcameron@blg.com | Jessica Cameron | 693A30232E777C626C6763616E6164615C6A63616D65726F6E i:0#.w|blgcanada\jcameron;rjawanda@blg.com | Robin Jawanda | 693A30232E777C626C6763616E6164615C726A6177616E6461 i:0#.w|blgcanada\rjawanda​Set-off is one of the most effective and powerful remedies available to a creditor, and operators under oil and gas operating agreements find it especially useful, in that the operator can set off revenues or other funds or credits it receives as operator against amounts owed. Further, the operator's set-off rights are usually honoured in an insolvency. In Spyglass Resources Corp v. Bonavista Energy Corporation, 2017 ABQB 504, the Alberta Court of Queen's Bench opened the door to expanding the scope of set-off, as it approved the operator's setting-off of joint royalty credits it received against the non-operator's share of abandonment and decommissioning costs. Even though the credits arose under one contract and the costs under another – the Court did so in the name of business efficacy. Further, the Court found that set-off was effective against the non-operator's receiver and also awarded costs against the receiver for the application challenging the set-off. These developments in the law of set-off are sure to influence the actions of creditors and debtors alike, both in the oil and gas industry and elsewhere. [Read more...] <p style="text-align:justify;">​<img class="ms-rtePosition-1" alt="Pipline Thumbnail" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_GRE-22-iStock_6021237Large-Thumbnail.jpg" style="margin:5px;" />Set-off is one of the most effective and powerful remedies available to a creditor, and operators under oil and gas operating agreements find it especially useful, in that the operator can set off revenues or other funds or credits it receives as operator against amounts owed. Further, the operator's set-off rights are usually honoured in an insolvency. </p><p style="text-align:justify;">In <a href="https://www.canlii.org/en/ab/abqb/doc/2017/2017abqb504/2017abqb504.html?resultIndex=1" target="_blank"><em>Spyglass Resources Corp v. Bonavista Energy Corporation</em>, 2017 ABQB 504</a>, the Alberta Court of Queen's Bench opened the door to expanding the scope of set-off, as it approved the operator's setting-off of joint royalty credits it received against the non-operator's  share of abandonment and decommissioning costs. Even though the credits arose under one contract and the costs under another – the Court did so in the name of business efficacy.  Further, the Court found that set-off was effective against the non-operator's receiver and also awarded costs against the receiver for the application challenging the set-off.  These developments in the law of set-off are sure to influence the actions of creditors and debtors alike, both in the oil and gas industry and elsewhere. </p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=334"><em>Read more</em></a>...] </p>​Set-off is one of the most effective and powerful remedies available to a creditor, and operators under oil and gas operating agreements find it especially useful, in that the operator can set off revenues or other funds or credits it receives as operator against amounts owed. Further, the operator's set-off rights are usually honoured in an insolvency. In Spyglass Resources Corp v. Bonavista Energy Corporation, 2017 ABQB 504, the Alberta Court of Queen's Bench opened the door to expanding the scope of set-off, as it approved the operator's setting-off of joint royalty credits it received against the non-operator's1 share of abandonment and decommissioning costs. Even though the credits arose under one contract and the costs under another – the Court did so in the name of business efficacy. Further, the Court found that set-off was effective against the non-operator's receiver and also awarded costs against the receiver for the application challenging the set-off. These developments in the law of set-off are sure to influence the actions of creditors and debtors alike, both in the oil and gas industry and elsewhere. To read the full case summary please click here. Factual BackgroundBonavista Energy Corporation ("Bonavista") operated a series of wells, compressors, pipelines and a sour gas plant in the West Liege region of Alberta, for itself and Spyglass Resources Corp. ("Spyglass"). In accordance with its practice, Bonavista used one joint account to administer all the revenues and costs for the project, notwithstanding that the lands and facilities were each governed by different operating procedures and accounting procedures. The main project agreements were a Construction, Ownership and Operating Agreement for the plant (the "CO&O") and a Joint Operating Agreement (the "JOA") for the wells that incorporated a 1990 CAPL Operating Procedure (the "1990 CAPL"). As part of its original regulatory approval for the project from the Alberta Energy Regulator (the "AER"), Bonavista was required to prepare a Decommissioning and Land Reclamation Plan in case the plant stopped operating. The wells produced gas that overlaid bitumen deposits and continued production of the gas wells could have reduced the pressure in the bitumen reservoir such that the reservoir's viability could have been compromised. In late 2011, the AER issued a permanent shut-in order of the wells, and as a result Bonavista and Spyglass were entitled to gas-over-bitumen royalty credits (the "GOB Credits"). Due to the wells being shut-in, the plant also ceased production and Bonavista began decommissioning the plant and abandoning the pipelines, in accordance with the Decommissioning Plan. The CO&O required that where there were two facility owners, all Operating Committee votes were required to be unanimous, and also required the Operator to clean up and restore the site for the joint account, even without Operating Committee approval. Beginning in late 2013, Bonavista began issuing mail ballots and accompanying AFE's for plant decommissioning and pipeline abandonment, including one set of 35 AFE's, each with a face amount of less than $25,000.00.2 Each month, Bonavista issued Spyglass one joint interest bill (a "JIB") for the joint account detailing each cost borne by the project and GOB Credit (again, irrespective of the agreement pursuant to which the cost arose), and netted the GOB Credit against Spyglass's share of costs. Spyglass disputed the costs and did not pay the balance owing. During this time, Bonavista also ignored Spyglass's ongoing requests for a meeting to discuss the expenditures, and did not hold Operating Committee meetings to discuss the matter. Spyglass entered receivership in November 2015. Spyglass's receiver, Ernst & Young (the "Receiver") demanded the return of Spyglass's interest in the GOB Credits that had been netted against Spyglass's share of costs – prior to the receivership, Spyglass had not made this demand. Bonavista refused to pay, arguing it was entitled to set the GOB Credits off against Spyglass's unpaid costs.Bonavista also separately applied to the AER to determine the abandonment costs and to allocate to Spyglass its proportionate share. The AER issued an Abandonment Costs Order against Spyglass in June 2016, setting the decommissioning and abandonment costs at approximately $900,000 plus penalties.The Receiver advanced three arguments for return of the GOB Credits. Because Bonavista did not obtain Spyglass's approval for incurring the costs (as required by the CO&O), and because Bonavista was not required by law to incur the costs and also refused to meet with Spyglass as required by the governing agreements, the costs were improperly charged and Bonavista was responsible for the whole amount. Because it obtained the Abandonment Costs Order, Bonavista's remedy was limited to pursuit of the Order's enforcement and not other remedies. Bonavista was not entitled to exercise set-off rights against Spyglass, because the costs arose under one agreement and the credits another agreement; the costs were required to be ascertainable in order for set-off to be available; and the GOB Credits were not "intimately connected" to the costs. Each of the above arguments was rejected by the Court, and Bonavista's set-off was approved. The DecisionFirst, the Court concluded that the requirement to comply with the Decommissioning Plan trumped the requirement for unanimous Operating Committee approval of the operations, and while Bonavista may have been in breach of contract for not seeking Operating Committee approval, that did not mean that Spyglass was off the hook for its portion of the costs, because the costs were legally required to be borne by Bonavista. Second, the Court found that obtaining the Abandonment Costs Order did not preclude Bonavista from enforcing its other remedies, including exercising set-off rights. The Court found that the Abandonment Costs Order merely validated and allocated the abandonment costs and did not require Bonavista to give up its other remedies.Third, the Court assessed Bonavista's set-off right. There are three types of set-off under Alberta law Contractual set-off, where the contract itself provides set-off rights; Legal set-off, where there are offsetting debts and they are ascertainable; and Equitable set-off, where a court awards set-off, effectively because it would be manifestly unjust to allow one party to succeed on its claim while the other party is left to pay. In equitable set-off, the party claiming the remedy must arrive "with clean hands", having behaved appropriately. The Court held that the facts supported each of the types of set-off – a clean sweep for Bonavista. Contractual Set-off The set-off provisions in the CO&O and JOA created different set-off rights the CO&O only allowed set-off of costs against amounts due "pursuant to this Agreement", while the 1990 CAPL allows set-off of amounts arising "under this Operating procedure or under any other Agreement" between the parties. The GOB Credits arose under the JOA, while the decommissioning and abandonment costs were borne under the CO&O, and hence the Receiver argued that contractual set-off was not permitted because the CO&O only allowed Bonavista to set off revenues that arose pursuant to the CO&O. The Court found that, while the project was governed by a number of agreements each having its unique characteristics, the agreements in the aggregate should be interpreted as permitting netting of costs against credits to promote business efficacy, and therefore it awarded contractual set-off. The Court held that "it would be inimical to the interests of the parties whose activities are governed by a number of agreements, but for whom a single joint account is maintained, to deny the operator the ability to net amounts coming into the joint account under some of those agreements against amounts payable from the joint account under other agreements. In my view, such netting should be permissible when various revenues and expenses, accounted for through the use of the joint account, reflected integrated operations".3Legal Set-off Legal set-off requires that obligations existing between the two parties must be debts, the amounts of which can be ascertained with certainty; and they must be cross-claims between the same parties and in the same right. The Receiver argued that the costs did not crystallize until the AER issued the Abandonment Costs Order, which was after the date of receivership, and hence Bonavista was not entitled to exercise legal set-off. The Court disagreed with the Receiver's position, finding that the amounts owing by Spyglass were ascertainable through the delivery of the monthly JIBs by Bonavista and that such amounts crystallized when the time period for them to be paid expired –the Court therefore also awarded legal set-off.Equitable set-off In order to be awarded equitable set-off, Bonavista was required to show that the claims were "so clearly connected" that it would be manifestly unjust to enforce payment without considering the cross-claim. Bonavista argued that the costs were a direct result of the shut-in order, and the shut-in order led directly to the GOB Credits. Thus, the same order gave rise to the requirements to incur the costs, and the GOB Credits; and further that it would aksi require the costs to be paid without the corresponding credit. The Court agreed and awarded equitable set-off. ImplicationsThis case is significant for a number of reasons. First, the Court's characterization of the CO&O and the JOA in the "aggregate" to allow for contractual set-off is an expansive one. It looked at the entire business relationship of the parties rather than parsing the specific terms of the underlying contracts, and as the parties had operated with one joint account, found that their business relationship allowed for the set-off terms of the contracts to be read together. Operators that have resisted setting off costs because the governing agreements do not allow it should be rejoicing because the Court indicated it is prepared to look at the whole business relationship, including whether one joint account was maintained for the project, to determine whether contractual set-off is available. A less generous court might have found that because the CO&O only permitted set-off of costs against those revenues arising "under this Agreement", and not "under this Agreement and any other agreement between the parties", it would not grant contractual set-off, as the GOB Credits arose under the JOA and not the CO&O. Drafting parties should ensure that their agreements contain this broader set-off language, but this case may provide some protection if the agreements do not. Second, the Court's award of equitable set-off is a bit of a surprise. A party coming to a court looking for an equitable remedy is required to come with "clean hands". The Court could easily have viewed Bonavista's issuance of 35 AFE's of less than $25,000.00, and its refusal to hold Operating Committee meetings, as conduct which would preclude the award of an equitable remedy. Third, the Court allowed the exercise of set-off rights against the Receiver. While set-off against a Receiver is permissible where the constituent elements can be established, courts examine set-off more closely in insolvency situations. This is because the effect of a set-off is to give one creditor a priority claim in the insolvency, as the whole set-off claim is paid in advance of other creditors. Finally, the Court also found that the Receiver acted as a "real litigator" in this application as Spyglass had not commenced a claim prior to the receivership and did not challenge Bonavista's netting of the costs in the JIBs. As a result, the Court awarded costs against the Receiver, a relatively rare occurrence. This costs award may act as a deterrent against receivers aggressively pursuing future claims on behalf of a debtor if the debtor itself elected not to bring the claim prior to the receivership. 1Though the CAPL Operating Procedure uses the term "joint-operator", we have for ease used "non-operator" instead. 2Bonavista may have done so to avoid the requirement of AFE approval set out in the JOA. The Operator could spend up to $25,000 without issuing an AFE to the Joint-Operator. 3 Decision, para. 80.<p style="text-align:justify;">​<img class="ms-rtePosition-1" alt="Pipeline-original" src="/energy/PublishingImages/Lists/Blog%20Posts/AllItems/INDUS_GRE%2022-iStock_000006021237Large.jpg" style="margin:5px;width:250px;" />Set-off is one of the most effective and powerful remedies available to a creditor, and operators under oil and gas operating agreements find it especially useful, in that the operator can set off revenues or other funds or credits it receives as operator against amounts owed. Further, the operator's set-off rights are usually honoured in an insolvency. </p><p style="text-align:justify;">In <a href="https://www.canlii.org/en/ab/abqb/doc/2017/2017abqb504/2017abqb504.html?resultIndex=1"><em>Spyglass Resources Corp v. Bonavista Energy Corporation, </em>2017 ABQB 504</a>, the Alberta Court of Queen's Bench opened the door to expanding the scope of set-off, as it approved the operator's setting-off of joint royalty credits it received against the non-operator's<sup>1</sup> share of abandonment and decommissioning costs. Even though the credits arose under one contract and the costs under another – the Court did so in the name of business efficacy.  Further, the Court found that set-off was effective against the non-operator's receiver and also awarded costs against the receiver for the application challenging the set-off.  These developments in the law of set-off are sure to influence the actions of creditors and debtors alike, both in the oil and gas industry and elsewhere. </p><p style="text-align:justify;">To read the full case summary please <a href="https://www.canlii.org/en/ab/abqb/doc/2017/2017abqb504/2017abqb504.html?resultIndex=1" target="_blank">click here. </a></p><p style="text-align:justify;"><strong>Factual Background</strong></p><p style="text-align:justify;">Bonavista Energy Corporation ("<strong>Bonavista</strong>") operated a series of wells, compressors, pipelines and a sour gas plant in the West Liege region of Alberta, for itself and Spyglass Resources Corp. ("<strong>Spyglass</strong>"). In accordance with its practice, Bonavista used one joint account to administer all the revenues and costs for the project, notwithstanding that the lands and facilities were each governed by different operating procedures and accounting procedures. The main project agreements were a Construction, Ownership and Operating Agreement for the plant (the "<strong>CO&O</strong>") and a Joint Operating Agreement (the "<strong>JOA</strong>") for the wells that incorporated a 1990 CAPL Operating Procedure (the "<strong>1990 CAPL</strong>").   As part of its original regulatory approval for the project from the Alberta Energy Regulator (the "<strong>AER</strong>"), Bonavista was required to prepare a Decommissioning and Land Reclamation Plan in case the plant stopped operating.  </p><p style="text-align:justify;">The wells produced gas that overlaid bitumen deposits and continued production of the gas wells could have reduced the pressure in the bitumen reservoir such that the reservoir's viability could have been compromised. In late 2011, the AER issued a permanent shut-in order of the wells, and as a result Bonavista and Spyglass were entitled to gas-over-bitumen royalty credits (the "<strong>GOB Credits</strong>"). Due to the wells being shut-in, the plant also ceased production and Bonavista began decommissioning the plant and abandoning the pipelines, in accordance with the Decommissioning Plan. </p><p style="text-align:justify;">The CO&O required that where there were two facility owners, all Operating Committee votes were required to be unanimous, and also required the Operator to clean up and restore the site for the joint account, even without Operating Committee approval. Beginning in late 2013, Bonavista began issuing mail ballots and accompanying AFE's for plant decommissioning and pipeline abandonment, including one set of 35 AFE's, each with a face amount of less than $25,000.00.<sup>2</sup> Each month, Bonavista issued Spyglass one joint interest bill (a "<strong>JIB</strong>") for the joint account detailing each cost borne by the project and GOB Credit (again, irrespective of the agreement pursuant to which the cost arose), and netted the GOB Credit against Spyglass's share of costs. Spyglass disputed the costs and did not pay the balance owing. During this time, Bonavista also ignored Spyglass's ongoing requests for a meeting to discuss the expenditures, and did not hold Operating Committee meetings to discuss the matter. </p><p style="text-align:justify;">Spyglass entered receivership in November 2015. Spyglass's receiver, Ernst & Young (the "<strong>Receiver</strong>") demanded the return of Spyglass's interest in the GOB Credits that had been netted against Spyglass's share of costs – prior to the receivership, Spyglass had not made this demand. Bonavista refused to pay, arguing it was entitled to set the GOB Credits off against Spyglass's unpaid costs.</p><p style="text-align:justify;">Bonavista also separately applied to the AER to determine the abandonment costs and to allocate to Spyglass its proportionate share. The AER issued an Abandonment Costs Order against Spyglass in June 2016, setting the decommissioning and abandonment costs at approximately $900,000 plus penalties.</p><p style="text-align:justify;">The Receiver advanced three arguments for return of the GOB Credits. </p><ol style="text-align:justify;"><li>Because Bonavista did not obtain Spyglass's approval for incurring the costs (as required by the CO&O), and because Bonavista was not required by law to incur the costs and also refused to meet with Spyglass as required by the governing agreements, the costs were improperly charged and Bonavista was responsible for the whole amount.</li><li>Because it obtained the Abandonment Costs Order, Bonavista's remedy was limited to pursuit of the Order's enforcement and not other remedies. </li><li>Bonavista was not entitled to exercise set-off rights against Spyglass, because:</li><ol><li>the costs arose under one agreement and the credits another agreement; </li><li>the costs were required to be ascertainable in order for set-off to be available; and</li><li>the GOB Credits were not "intimately connected" to the costs. </li></ol></ol><p style="text-align:justify;">Each of the above arguments was rejected by the Court, and Bonavista's set-off was approved. </p><p style="text-align:justify;"><strong>The Decision</strong></p><p style="text-align:justify;">First, the Court concluded that the requirement to comply with the Decommissioning Plan trumped the requirement for unanimous Operating Committee approval of the operations, and while Bonavista may have been in breach of contract for not seeking Operating Committee approval, that did not mean that Spyglass was off the hook for its portion of the costs, because the costs were legally required to be borne by Bonavista. </p><p style="text-align:justify;">Second, the Court found that obtaining the Abandonment Costs Order did not preclude Bonavista from enforcing its other remedies, including exercising set-off rights. The Court found that the Abandonment Costs Order merely validated and allocated the abandonment costs and did not require Bonavista to give up its other remedies.</p><p style="text-align:justify;">Third, the Court assessed Bonavista's set-off right. There are three types of set-off under Alberta law:</p><ol style="text-align:justify;"><li> Contractual set-off, where the contract itself provides set-off rights;</li><li>Legal set-off, where there are offsetting debts and they are ascertainable; and </li><li>Equitable set-off, where a court awards set-off, effectively because it would be manifestly unjust to allow one party to succeed on its claim while the other party is left to pay. In equitable set-off, the party claiming the remedy must arrive "with clean hands", having behaved appropriately. </li></ol><p style="text-align:justify;">The Court held that the facts supported each of the types of set-off – a clean sweep for Bonavista. </p><p style="text-align:justify;"><strong>Contractual Set-off: </strong>The set-off provisions in the CO&O and JOA created different set-off rights: the CO&O only allowed set-off of costs against amounts due "pursuant to this Agreement", while the 1990 CAPL  allows set-off of amounts arising "under this Operating procedure or under any other Agreement" between the parties. The GOB Credits arose under the JOA, while the decommissioning and abandonment costs were borne under the CO&O, and hence the Receiver argued that contractual set-off was not permitted because the CO&O only allowed Bonavista to set off revenues that arose pursuant to the CO&O. </p><p style="text-align:justify;">The Court found that, while the project was governed by a number of agreements each having its unique characteristics, the agreements in the aggregate should be interpreted as permitting netting of costs against credits to promote business efficacy, and therefore it awarded contractual set-off. The Court held that "it would be inimical to the interests of the parties whose activities are governed by a number of agreements, but for whom a single joint account is maintained, to deny the operator the ability to net amounts coming into the joint account under some of those agreements against amounts payable from the joint account under other agreements. In my view, such netting should be permissible when various revenues and expenses, accounted for through the use of the joint account, reflected integrated operations".<sup>3</sup></p><p style="text-align:justify;"><strong>Legal Set-off: </strong>Legal set-off requires that obligations existing between the two parties must be debts, the amounts of which can be ascertained with certainty; and they must be cross-claims between the same parties and in the same right. The Receiver argued that the costs did not crystallize until the AER issued the Abandonment Costs Order, which was after the date of receivership, and hence Bonavista was not entitled to exercise legal set-off. The Court disagreed with the Receiver's position, finding that the amounts owing by Spyglass were ascertainable through the delivery of the monthly JIBs by Bonavista and that such amounts crystallized when the time period for them to be paid expired –the Court therefore also awarded legal set-off.</p><p style="text-align:justify;"><strong>Equitable set-off</strong>: In order to be awarded equitable set-off, Bonavista was required to show that the claims were "so clearly connected" that it would be manifestly unjust to enforce payment without considering the cross-claim. Bonavista argued that the costs were a direct result of the shut-in order, and the shut-in order led directly to the GOB Credits. Thus, the same order gave rise to the requirements to incur the costs, and the GOB Credits; and further that it would aksi require the costs to be paid without the corresponding credit. The Court agreed and awarded equitable set-off.   </p><p style="text-align:justify;"><strong>Implications</strong></p><p style="text-align:justify;">This case is significant for a number of reasons. </p><p style="text-align:justify;">First, the Court's characterization of the CO&O and the JOA in the "aggregate" to allow for contractual set-off is an expansive one. It looked at the entire business relationship of the parties rather than parsing the specific terms of the underlying contracts, and as the parties had operated with one joint account, found that their business relationship allowed for the set-off terms of the contracts to be read together. Operators that have resisted setting off costs because the governing agreements do not allow it should be rejoicing because the Court indicated it is prepared to look at the whole business relationship, including whether one joint account was maintained for the project, to determine whether contractual set-off is available. A less generous court might have found that because the CO&O only permitted set-off of costs against those revenues arising "under this Agreement", and not "under this Agreement and any other agreement between the parties", it would not grant contractual set-off, as the GOB Credits arose under the JOA and not the CO&O. Drafting parties should ensure that their agreements contain this broader set-off language, but this case may provide some protection if the agreements do not. </p><p style="text-align:justify;">Second, the Court's award of equitable set-off is a bit of a surprise. A party coming to a court looking for an equitable remedy is required to come with "clean hands". The Court could easily have viewed Bonavista's issuance of 35 AFE's of less than $25,000.00, and its refusal to hold Operating Committee meetings, as conduct which would preclude the award of an equitable remedy. </p><p style="text-align:justify;">Third, the Court allowed the exercise of set-off rights against the Receiver. While set-off against a Receiver is permissible where the constituent elements can be established, courts examine set-off more closely in insolvency situations. This is because the effect of a set-off is to give one creditor a priority claim in the insolvency, as the whole set-off claim is paid in advance of other creditors. </p><p style="text-align:justify;">Finally, the Court also found that the Receiver acted as a "real litigator" in this application as Spyglass had not commenced a claim prior to the receivership and did not challenge Bonavista's netting of the costs in the JIBs. As a result, the Court awarded costs against the Receiver, a relatively rare occurrence. This costs award may act as a deterrent against receivers aggressively pursuing future claims on behalf of a debtor if the debtor itself elected not to bring the claim prior to the receivership. </p><p style="text-align:justify;"><span style="font-size:0.6em;"><sup>1</sup><em><sub><font size="2">Though the CAPL Operating Procedure uses the term "joint-operator", we have for ease used "non-operator" instead. </font></sub></em><br></span><span style="font-size:0.6em;"><sup>2</sup><em><sub><font size="2">Bonavista may have done so to avoid the requirement of AFE approval set out in the JOA. The Operator could spend up to $25,000 without issuing an AFE to the Joint-Operator. </font></sub></em><br></span><span style="font-size:0.6em;"><sup><em>3 </em></sup><sub><font size="2"><em>Decision, para. 80.</em></font></sub></span></p>9/5/2017 4:00:00 AM2017-09-05T04:00:00ZTrue1float;#9.00000000000000float;#2017.00000000000string;#Septemberfloat;#201709.000000000GP0|#6ed29997-7c09-433d-9f4f-e4bb2ce1b29b;L0|#06ed29997-7c09-433d-9f4f-e4bb2ce1b29b|Litigation;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#ce7f0211-1ba9-4936-92ec-7c7af811db0f;L0|#0ce7f0211-1ba9-4936-92ec-7c7af811db0f|Insolvency;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & GasLitigation;Insolvency;Oil & Gas