In a recent decision of the Alberta Court of Queen's Bench,
Canadian Natural Resources Limited v ShawCor Ltd, 2016 ABQB 21, the
Court confirmed that the Alberta Rules of Court could be used in to
"read-in" evidence of a consultant's employee against
an oil and gas company. This case is an important reminder to
industry to ensure that consultants are chosen with care and their
activities monitored closely, because their evidence could become
"some of the information" of the company in later court
Canadian Natural Resources Limited ("CNRL") brought an
action against ShawCor Ltd., and Shaw Pipe Protection Ltd.
("ShawCor"), IMV Projects Inc. ("IMV"), Flint
Field Services Ltd. and Transline Ltd. ("Flint") alleging
that the defendants negligently provided a pipe coating and
insulation system related to a 32 km underground pipeline owned by
CNRL. ShawCor third partied Dunn Hiebert & Associates
("Dunn Hiebert") and Ram River Pipeline Outfitters Ltd.
("Ram River"). In addition, ShawCor claimed against its
co-defendant Flint and Flint claimed against its co-defendants
ShawCor and IMV. The allegations include that coating failure
resulted in defects in the pipeline, requiring the removal and
replacement of the pipeline, including a new insulation system, the
cost of which is estimated at $65 million.
Dunn Hiebert was engaged by CNRL to provide inspection services
in relation to the pipeline and Dunn Hiebert was to inspect and
examine the coating and approved it on several occasions.
Rule 5.18 of the Alberta Rules of Court ("ARC")
provides a mechanism by which the evidence of persons who has
provided services to a corporation can be questioned and their
evidence is treated as if that person was an employee of the
corporation. The importance of this is that the evidence of
employees of the corporation must be adopted as "some of the
information" of the corporation, and therefore could bind the
corporation, for the purposes of litigation proceedings.
This is a case of first instance on the application of rule 5.18
of the ARC where the evidence in question is given by another party
to the litigation (Dunn Hiebert) that is adverse to the corporation
(CNRL) at least on some issues.
In short, the Court found that there was no unfairness to CNRL
by allowing the application of ARC 5.18 to occur, even where the
person providing the services or the entity providing the services,
within the meaning of ARC 5.18, is a party to the action.
The overwhelming evidence was that Dunn Hiebert's witnesses
were the eyes and ears of CNRL and that there was no other party at
CNRL that could offer this first hand evidence.
CNRL argued that Flint was adverse in interest to Dunn Hiebert
and raised concerns relating to sweetheart cross-examination. The
Court acknowledged that in complex litigation parties may be
adverse on some issues and not on others and that fair practice
requires it to be vigilant of sweetheart cross-examination in these
circumstances. However, sweetheart cross-examination concerns could
be handled at trial where the Court must identify when and on what
issue a party is adverse in interest to determine what kind of
questioning is allowed in any event.
CNRL further alleged that Dunn Hiebert was adverse in interest
to CNRL because Dunn Hiebert had alleged that CNRL permitted high
temperature emulsion to pass through the pipeline causing the
failure of the coating system. The Court agreed that Dunn Hiebert
and CNRL were adverse in interest.
Although the Court acknowledged that The Alberta Law Reform
Institute's Consultation Memorandum 12.2, did not contemplate
the issue before it, and agreed with CNRL that what was
contemplated in the Consultation Memorandum is that it would apply
to persons or entities not a party in an action, the Court
disagreed with CNRL's argument that ARC 5.18 was intended to
apply only to "a stranger to the action". The Court held
that ARC 5.18 encompasses all situations where a service provider
has the only available evidence, stranger or not.
Accordingly, in Alberta evidence of one party to complex
litigation may be treated as though it is the evidence of another
party to the same action, even where the parties are adverse in
interest on some issues. However, this case does not appear to be a
blanket statement that such will be the case in every instance. The
facts will be important. Here the employees whose evidence was at
issue were the only ones that could provide that evidence and were
contracted by CNRL. Further, the employees in question had not
given any evidence on issues in which they and CNRL were determined
to be adverse in interest.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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