Alberta's Rules of Court (the "Rules") ensure that only parties to a litigation are allowed to be subjected to pre-trial questioning. A narrow exception for this general principle lies in Rule 5.18, which allows parties to question non-parties who provided services to a corporation that is party to the action. This case, cited as CNOOC Petroleum North America ULC v. 801 Seventh Inc., 2023 ABCA 97, involved the application by CNOOC Petroleum North America ULC ("CNOOC") to question two service providers of 801 Seventh Inc. (the "Landlord").

The underlying dispute of this appeal relates to the Nexen office building in the core of downtown Calgary which CNOOC vacated in May 2019. CNOOC, the primary tenant of the Nexen tower, terminated their lease, arguing the presence of asbestos made the building unsafe and unfit for their occupancy. In response, the Landlord counterclaimed for breach of the lease and claimed $550 million in damages for lost rental revenue and other losses of value. At the same time, the Landlord attempted to further mitigate their losses by selling the Nexen building. In this process, the Landlord hired two consultants, Colliers and Altus Group (the "Consultants"). Colliers was hired to help facilitate the sale of the building, while Altus Group was hired to help the Landlord negotiate a reduction in property taxes with the City of Calgary. The Landlord gave the Consultants freedom to do their tasks as they needed with little instruction or oversight. CNOOC applied to the court to question the Consultants under Rule 5.18.

The Procedural History

The case management judge granted the Rule 5.18 order because she found the Landlord's corporate representative could not answer the questions for the service providers and CNOOC would be prejudiced if they were not allowed to question the Consultants. The Court of Appeal in CNOOC Petroleum North America ULC v 801 Seventh Inc, 2023 ABCA 97 disagreed with the case management judge's broad use of 5.18 and set aside the order. In the decision, the Court of Appeal reiterated the narrow use of the rule and found that CNOOC could obtain all the information they needed from the Landlord's corporate representative, even if it was less efficient than directly questioning third party service providers.

Rule 5.18

Rule 5.18 is a relatively new rule that was enacted in 2010, along with Rule 5.17, following recommendations by the Alberta Law Reform Institute. Rule 5.17 outlines who can be questioned in litigation where corporations are involved and effectively limits this to parties involved directly in the action (current or former officers, current or former employees, and the corporate representative). Rule 5.18 was enacted at the same time and added a narrow exception to 5.17 where a party is seeking to question an individual who has provided services to a corporation that is party to the action. In order to question a non-party that has provided services to a corporation under Rule 5.18, the applicant must show:

  • The party wishing to question the non-party must be unable to obtain relevant and material information from a current or former officer or employee of the corporation under Rule 5.17;
  • It would be unfair to require the party to proceed to trial without the chance to question on that information; and
  • The questioning would not cause undue hardship, expense, delay or unfairness to the person being questioned.

Furthermore, subsection (2) of Rule 5.18 states that questioning under this rule can only occur by way of a Court Order or if there is a written agreement between the parties to the action. If the non-party is an expert who is involved in the action, this rule cannot be used. Like the questioning of a corporate representative, any evidence obtained under this rule is treated as if it were evidence from an employee of the corporation and hence forms some of the information of the corporation.

Conclusion

Although this is a relatively new rule, case law has already given a strong indication of how it should be used and applied by Alberta Courts. In 1218388 Alberta Ltd v Reifel Cooke Group Limited, 2019 ABQB 76, Justice Grosse gave a thorough interpretation of Rule 5.18. Justice Grosse reiterated that Alberta does not have a third-party discovery rule nor is there pretrial discovery of mere witnesses. Instead, parties are limited to questioning other parties to the action prior to trial with certain exceptions, such as Rule 5.18. Even in circumstances where a party relies heavily on a third party for services, this does not necessarily mean the Rule 5.18 test will be satisfied. This is significant, as it sets a high bar for parties seeking to question a third-party service provider. An order to allow for questioning of persons providing services to a corporation will not be granted out of expediency or efficiency, where a party can request such information from the corporate representative, even if such information is not known directly and must be obtained through undertakings.

The authors would like to acknowledge the support and assistance of Barrett Schultz, articling student at law.

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