Canada: Court Orders Production Of Native Accounting Records Where Operator Fails To Maintain An Oil Sands Project Carried Account

In a recent decision of the Alberta Court of Queen's Bench, Bard v Canadian Natural Resources, 2016 ABQB 267, the Court considered issues respecting e-discovery in the context of a complex, multi-million dollar accounting action between sophisticated commercial entities.


The Plaintiffs and the Defendants (collectively, "CNRL") are parties to a 1968 Memorandum of Agreement (the "Agreement") "according to which the Plaintiffs hold an undivided 5 percent working interest in Lease 18 for an oil sands project known as Horizon, while CNRL operates the project [the "Horizon Project"] as 95 percent shareholder" (para 2). The Plaintiffs' share of the proceeds and costs were to be recorded in a Carried Account, which tracks the Plaintiffs' financial interest, as the Plaintiffs do not get paid until and unless the proceeds exceed the costs recorded in the Carried Account (para 2).

In 2010, the Plaintiffs commenced an action against CNRL for breach of contract, breach of fiduciary duty and unjust enrichment in relation to CNRL's accounting of credits and debits posted to the Carried Account.

In 2014, CNRL issued new statements for the Carried Account, purporting to replace all previous statements. The new statements were based on a new interpretation of the Agreement and followed a significantly different methodology of accounting.

In 2014, the Plaintiffs applied to obtain (a) permission to amend the Statement of Claim to reflect, among other things, the implications of the new methodology; and (b) an order compelling CNRL to produce seven categories of native and other records.

The Decision Regarding Production of Records

In total, the Plaintiffs sought production of seven categories of records. Three of these categories, and the Court's decision regarding whether they should be produced, are of particular relevance to industry participants. The Plaintiffs sought production of:

  1. Native spreadsheets, including embedded formulas and metadata, to supplement the copies already produced by CNRL in a TIFF format in accordance with the Complex Case Litigation Plan (the "Litigation Plan") agreed to by the parties;
  2. Certain of CNRL's electronic financial database records; and
  3. Miscellaneous records requested by the Plaintiffs' expert.

Native Spreadsheets

CNRL had provided spreadsheets to the Plaintiffs in their TIFF image files in accordance with the Litigation Plan. However, the Plaintiffs argued that the TIFFs were not "usable" and they needed the native versions of the spreadsheets to enable them to manipulate the data and test different analyses more robustly.

CNRL objected to producing the native spreadsheets primarily arguing that (a) the spreadsheets had already been produced in accordance with the Litigation Plan and were usable as produced and (b) compelling CNRL to produce the native spreadsheets would impose an undue burden on CNRL disproportionate to the records' probative value.

In response to CNRL's first argument, the Court held that disclosure must be meaningful and "one's inability to search and manipulate the data from across thousands of TIFF images renders them, at the very least, less usable than their Excel counterparts" (para 112). The Court noted that it could have chosen to strictly enforce the Litigation Plan that the parties agreed to, but here, doing so would not result in meaningful disclosure.

With respect to CNRL's proportionality argument, the Court held that proportionality is an important principle, but "what it requires will differ depending on the circumstance" (para 121). Counsel for CNRL claimed it would cost $1 million to satisfy the Plaintiffs' production requests, in part because CNRL did not maintain a Carried Account separate and distinct from all other financial data for the Horizon Project and thus would have to run a query in CNRL's financial system to generate the relevant data. However, the Court held that "even if it would cost $1 million, proportionality is not a major feature of discovery in a case of this scope, featuring parties of this size and sophistication, and where the magnitude of potential damages is this great" (para 122) and that "any burden on CNRL arises from its own failure to maintain a separate Carried Account" (para 104).

In conclusion, the Court held that the expense, delay, danger or difficulty in producing the records the Plaintiffs requested was not grossly disproportionate to the likely benefit and therefore ordered CNRL to produce the native spreadsheets.

Financial Database Records

CNRL uses a database system in its business to store all of the revenue and expenses and source data related to the Horizon Project (the "E1 System"). The Plaintiffs sought production of the credits and debits entered into CNRL's E1 System with respect to the Horizon Project so the Plaintiffs could re-construct the Carried Account and apply what it believed to be the correct interpretation of the Agreement to the actual financial data. As a result, the Plaintiffs' request sought production of the general ledger, trial balances, chart of accounts, and other records requested by the Plaintiffs' expert.

The Court held that:

  1. whether or not a full reconstruction of the Carried Account was necessary, electronic financial database records on the Horizon Project's revenue and costs were, at a minimum, relevant and material as to whether or not CNRL did, in fact, credit and debit the Carried Account in accordance with the Agreement (para 83);
  2. comparing the financial database records for the Horizon project with the statements provided to the Plaintiffs would either corroborate or contradict CNRL's position that it has at all times acted accurately and in good faith in its accounting of the Plaintiffs' interest (para 83);
  3. producing the source data would "minimize delay if CNRL were to change its methodology again and empower this Court to reach a just outcome if the trial judge were to disagree with the interpretations offered by the parties" (para 84). CNRL unsuccessfully argued that the request was a level of detail that was not needed; and

(d) although the rules of evidence permit the introduction of summaries of voluminous source documents, it is generally still a requirement that the source documents be disclosed to the opposing side, and introduced as part of the trial record (para 84: citing Kon Construction Ltd v Terranova Developments Ltd, 2015 ABCA 249).

Records Requested by Expert

The Plaintiffs relied on an expert retained to assist in its reconstruction of the Carried Account. That expert gave evidence which asserted that certain records the Plaintiffs sought were necessary for him to conduct his analysis. CNRL argued that full reconstruction of the Carried Account was unnecessary and that the expert's evidence should be given little weight.

The Court disagreed with CNRL and ordered CNRL to produce the records requested by the expert. The Court cited Air Canada v WestJet Airlines Ltd., [2006] OJ No 1797 (Ont SCJ) where the Court held, at para 72, that "it does not lie within the purview of Air Canada to decide what information WestJet's experts do or do not need...". The Court noted that Plaintiffs' counsel had disclosed "a rational strategy in which the disputed [records play] a material part" (para 74) and that "no independent witness suggests that [the expert] does need this data to do his analysis" (para 72).


This case has implications to oil and gas industry participants, some procedural, some practical, and some legal:

  1. With respect to e-discovery, this case confirms that a proactive approach to electronic record-keeping and e-discovery is important;
  2. Discovery must be "meaningful" and what constitutes "meaningful" disclosure will vary depending on each individual case. When financial records are at the heart of a case, extensive production from the accounting software where those records are stored may be ordered and any derivative spreadsheets are likely to be ordered to be produced in their native format in order to provide meaningful access to the opposing party; and
  3. Records requested by experts, asserted to be necessary to do their expert work, will generally be required to be produced, particularly where no independent witness testifies that those records are not required.

BLG acted for the successful Plaintiffs in this matter.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions