Alberta October 2012 Take Five

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October 2012

ALBERTA EDITION

Inside this Issue:

Administrative Law; Professions and Occupations; Registered Nurses; Human Rights Legislation

Bankruptcy and Insolvency; Civil Procedure: Service of Claims: Disallowance Claims

Conflict of Laws; Abuse of Process; Legal Representation

Civil Procedure; Costs; Bullock Order; Calderbank Order

Oil and Gas; Mines and Minerals; Leaseholds

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Appellants Genevieve Wright (“Wright”)

and Mona Helmer (“Helmer”) were registered nurses. In 2008, Helmer, who had an opioid dependency, stole narcotics for her own use from the hospital where she worked. In order to cover up the thefts, she created false records, and made false entries about the administration of narcotics. Over a period of approximately twelve months, Wright, who was also opioid dependent, took narcotics (Percocet) from her employer for personal use and falsified narcotic records to cover up her thefts. The respondent College and Association of Registered Nurses of Alberta (“College”) laid five charges of

unprofessional conduct against Helmer relating to the thefts and forgeries, and laid three charges of unprofessional conduct against Wright. At their hearings, Wright and Helmer raised the defence that their conduct was motivated by their addictions, that these addictions were disabilities, and that the disciplinary hearings were discriminatory acts in contravention of the Alberta Human Rights Act, RSA 2000, c. A-25.5 (“HRA”). In both hearings, the respective disciplinary panels found that there was an insufficient nexus between Helmer’s and Wright’s addictions and their impugned conduct; while driven by their addictions, Helmer and Wright willingly made decisions to commit theft and fraud. Helmer and Wright appealed to the

Wright v College and Association of Registered Nurses of Alberta (Appeals Committee), 2012 ABCA 267Areas of Law: Administrative Law; Professions and Occupations; Registered Nurses; Human Rights Legislation

~Professional misconduct hearings for addicted nurses not discriminatory~

BACKGROUNDCLICK HERE TO ACCESS

THE JUDGMENT

Appeals Committee of the College, which affirmed the decision of the disciplinary panel. Helmer and Wright further appealed to the Court of Appeal, contending that their drug dependency-based disabilities barred the College from making a finding of professional misconduct. Helmer and Wright also argued that the HRA required the College to accommodate their disabilities by foregoing disciplinary hearings in favour of the College’s Alternative Complaints Resolution procedure, or the College’s procedure in dealing with incapacity under s. 118 of the Health Professions Act, RSA 2000, c. H-7 (“HPA”).

http://www.canlii.org/en/ab/abca/doc/2012/2012abca267/2012abca267.pdf


October 2012


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APPELLATE DECISION

Wright v College and Association of Registered , (cont.)

The appeals were dismissed, It was

not unreasonable for the College’s complaints director to decline to use the Alternative Complaints Resolution process when the process specifically excluded criminal complaints. The director reasonably concluded that Helmer and Wright were not incapacitated pursuant to s. 118 of the HPA, since they were able to discharge their duties. Furthermore, neither of the alternative processes precluded the holding of disciplinary hearings. The focus of the human rights analysis is on the conduct of the College, not the conduct of Helmer and Wright. It can be accepted that the latter’s conduct was to some degree caused or motivated by their disability, that is, their addiction. The question, however, is whether the College’s conduct in laying professional misconduct charges was legally connected to the their disability, so as to raise the College’s conduct to the level of discrimination

in law. Invoking the disciplinary proceedings was not prima facie discriminatory. The criminal conduct, which formed the basis for the disciplinary charges –theft and fraud -, was distinct from any personal characteristic of Helmer and Wright. The College’s motivation in laying the charges did not, even in part, arise from Helmer’s and Wright’s addictions. While Helmer’s and Wright’s addictions distinguish them from other members of the College who are subject to disciplinary proceedings, the distinction does not amount to discrimination. There are a great many addicts who do not commit criminal acts, and it is not discriminatory to hold those who do accountable for their actions. While the tribunals below did not find discrimination, they nevertheless were prepared to recognize that Helmer’s and Wright’s disabilities were relevant to the sanction to be imposed. The actual sanctions, consisting of bare reprimands with rehabilitative conditions, were clearly sensitive to Helmer’s and Wright’s circumstances, and have not been appealed. That the reprimands were founded on conduct, which was motivated by addiction, was clear from the reasons of the tribunals. To the extent that accommodation was called for, it was adequately represented in these sanctions.

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A group of companies known as the Concrete Equities Group became insolvent. One member of the group was “LP V”. Upon insolvency, Ernst & Young was appointed as the Monitor under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”). Two of the principals of the Concrete Equities Group were Aurora and Humeniuk. They were also bankrupt, and their trustee in bankruptcy was Hardie

& Kelly Inc. In June 2010, a plan was formed in the CCAA proceedings respecting LP V. A new corporation called MEG Place Limited Partnership Investment Corp. (“MEG Place”) was created to become the new general partner of LP V, and to take over from the Monitor, Ernst & Young. In July 2010, Ernst & Young filed claims on behalf of LP V against the estates of Aurora and Humeniuk. Ernst & Young gave as its address for service in the proofs of claim the address of its counsel, McCarthy Tetrault. Subsequently, MEG Place

BACKGROUND

Sandhu v MEG Place LP Investment Corporation, 2012 ABCA 266Areas of Law: Bankruptcy and Insolvency; Civil Procedure: Service of Claims: Disallowance Claims

~Service of Notice of Disallowance of Claims in bankruptcy proceedings valid~CLICK HERE TO ACCESS

THE JUDGMENT

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took over as the general partner of LP V, and Ernst & Young’srole as Monitor ended. Hardie & Kelly Inc., as trustee of the estates of Aurora and Humeniuk,shortly thereafter disallowed the claims filed by LP V against those estates, and served the disallowanceson McCarthy Tetrault, Ernst & Young’s counsel, in accordance with the address given in the proofsof claim. McCarthy Tetrault forwarded the disallowances to Bennett Jones, which was the



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October 2012


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Sandhu v MEG Place LP Investment Corporation, (cont.)

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registered office of MEG Place. Bennett Jones in turn sent the disallowances to Mr. Butt, the principal of MEG Place. The appellant Sandhu group subsequently came to control the claims of Aurora and Humeniuk against LP V. The Sandhu group commenced an action against LP V, now controlled by MEG Place, to enforce those claims, as well as their personal claims. MEG Place applied for a declaration that

the disallowance of LP V’s claims had not been properly served. While MEG Place acknowledged that the disallowances had been served on the address for service in the prescribed Form 31 proof of claim, it alleged that Hardie & Kelly Inc., as trustee in bankruptcy for Aurora and Humeniuk, knew or ought to have known that Ernst & Young was no longer the Monitor of LP V, and that the disallowances

should have been served directly on MEG Place. The chambers judge declared that service of the notice of disallowances was insufficient for the purposes of s. 135(3) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”) and Rule 113 of the Bankruptcy and Insolvency General Rules, C.R.C., c. 368 (“General Rules”). The Sandhu group appealed.

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Sandhu v MEG Place LP Investment Corporation, (cont.)

APPELLATE DECISION

The appeal was allowed. At issue was whether

the disallowances of MEG Place’s claims were properly served under the BIA and the General Rules. The disallowances were sent to the address given in Form 31, which was the address of McCarthy Tetrault, solicitors for Ernst & Young, who forwarded them on to Bennett Jones, who drew them to the attention of the principal of MEG Place. In order to demonstrate proper service of the disallowances of the claims, it must be shown that the MEG Place group received notice of the disallowances of

their claims, in a context that made it clear that their rights were being engaged. Service is a quintessentially practical consideration. The only point of service is that the defendant must get notice of the claim against it. The chambers judge erred in focusing on the fact that there was no direct service of the disallowances from Hardie & Kelly Inc. to MEG Place.

Any differences between the concepts of direct service and indirect service have no legal significance. Personal service of a corporation like MEG Place can be effected at its registered office, which was at the offices of Bennett Jones: Business Corporations Act, RSA 2000, c. B-9, s. 256. A rule that a trustee who has constructive knowledge of a de facto change of address must either serve twice or verify the proper location, would be impractical in smaller cases and virtually impossible to manage in major cases. In the present case, Hardie & Kelly Inc. had been given the address of McCarthy Tetrault, and it was allowed to rely on that address for service. When McCarthy Tetrault sent the documents to Bennett Jones, Hardie & Kelly Inc. and McCarthy Tetrault were entitled to assume that Bennett Jones had sufficient authority to accept them.

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Beacon Hill Service (2000) Limited v Esso Petroleum Canada, 2012 ABCA 269 Areas of Law: Conflict of Laws; Abuse of Process; Legal Representation

~Conflict of law ruling with respect to legal representation affirmed~

BACKGROUND

Appellant E.F. Anthony Merchant

(“Merchant”), was a lawyer, and appellant Beacon Hill Service (2000) Limited (“Beacon Hill”), was a company of which Merchant was the “leading actor”. Merchant was the principal shareholder of Beacon Hill. Beacon Hill brought an action against the respondent

Esso Petroleum Canada, A Division of Imperial Oil Limited and McColl-Frontenac Petroleum Inc. Respondent Imperial Oil, a Partnership of Imperial Oil Limited and McColl-Frontenac Petroleum Inc., counterclaimed, pleading that Merchant was guarantor of Beacon Hill’s debt. Merchant was likely to testify at trial, and his credibility was at issue. Chambers judge Macleod J. permitted Merchant to

The appeal was dismissed. The decision of Macleod

J. was an exercise of discretion within the innate jurisdiction of the Court of Queen’s Bench to control its processes, to uphold the integrity of the administration of justice and to prevent abuse and potential abuse of those processes. Discretionary rulings that affect the procedural course of legal proceedings should generally be disturbed on appeal only if clearly unreasonable or legally erroneous, which in practical terms means only if the trial judge misdirects himself or if his decision is so clearly wrong

as to amount to an injustice. Macleod J. did not err in law in his assessment of the specific context of the present proceedings and the events, which had occurred therein as disclosed to him. It was not an error of law or palpable error of fact for him to have regard to the indications that Merchant would inevitably be called as a witness in the trial. Nor was it unreasonable for Macleod J. to conclude that Merchant’s personal credibility would be disputed by opposing parties on important and material matters directly in issue between the parties and not merely as to incidental topics. Macleod J.’s further conclusion that Merchant’s law firm would be unable to approach the litigation with any greater detachment than Merchant was also not unreasonable under the circumstances. The firm, like Merchant, would arguably have a reputational if not also a financial stake in the outcome.

APPELLATE DECISION

CLICK HERE TO ACCESS THE JUDGMENT

represent himself in the proceedings, but prevented him from also representing Beacon Hill. Macleod J. also ruled that Merchant’s law firm, Merchant Law Group, could not represent Beacon Hill in the proceedings. Merchant and Beacon Hill appealed.





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Condominium Corporation No. 9813678 v. Statesman Corporation, 2012 ABCA 265Areas of Law: Civil Procedure; Costs; Bullock Order; Calderbank Order

~Bullock and Calderbank orders affirmed~

On May 30, 2002, a fire

occurred in the Erlton District of Calgary. The fire originated in a condominium building that was under construction. The building was the fourth and final phase of a four structure residential complex that had been developed and built by the appellant Statesman Corporation (“Statesman”). Respondent Condominium Corporation No. 9813678 and condominium owners (“plaintiffs”) sued Statesman and others associated with the development and construction of the building. The trial judge found that a workman named Karl Swan, who was applying torch-on waterproofing to the roof of the building,

caused the fire. Swan was held liable for starting the fire. Swan’s employer, Dean Sziva, carrying on business as Cactus Waterproofing & Roofing “(Cactus”), was found vicariously liable for Swan’s negligence. The Advanced Group (as waterproofing sub-contractor) and Statesman (as owner, developer, and general contractor) were also held liable for the fire on the basis that they owed the plaintiffs a non-delegable duty of care for an inherently dangerous activity. In addition to the fire negligence claim, the plaintiffs brought an action against the City of Calgary, alleging that the City had approved a deficient design for the structures in question and that the fire would not have occurred had the deficient design not been approved (“building regulation claim”). The plaintiffs’ building regulation claim was dismissed at trial. In July 2010, after the

BACKGROUND

CLICK HERE TO ACCESS THE JUDGMENT

trial decision had been issued, the trial judge conducted a hearing on the matter of costs. The hearing dealt with the costs related to both aspects of the trial: the fire negligence claim (where the plaintiffs were successful) and the building regulation claim (which had been successfully defended by the City). With respect to the building regulation claim, the City was awarded double costs pursuant to rules 169 and 174 of the Alberta Rules of Court, Alta. Reg. 390/1968, by virtue of an Offer of Judgment made by the City on December 18, 2008. With respect to the fire negligence claim, the plaintiffs were awarded their costs to prosecute that portion of the action against the unsuccessful defendants, including Statesman. The trial judge then went



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Condominium Corporation No. 9813678 v. Statesman, (cont.)

on to consider how the plaintiffs’ costs should be apportioned among the unsuccessful defendants. At the costs hearing, the Advanced Group, Cactus and Swan referred to their pre-trial attempts to resolve the fire negligence claim, including informal Calderbank offers sent to the plaintiffs. They argued that their liability for the costs of the plaintiffs and Statesman should be restricted to the date of their

respective informal offers. After considering the effect of various pre-trial offers, the trial judge concluded that Statesman could recover those costs, and its own costs, from the other unsuccessful defendants up to the commencement of trial, but not thereafter. Statesman was solely responsible for paying the costs of the plaintiffs after the commencement of the trial on January 12, 2009. Statesman appealed, arguing

that it was improper for the Bullock order to include the double costs payable to the City as a result of their rejected formal offer of settlement; and that it was inappropriate to deny Statesman its costs for the period subsequent to January 12, 2009, having regard to the Calderbank settlement proposals that were considered and rejected.

The appeal was dismissed. The trial judge found that it was

appropriate to issue a Bullock order in the circumstances. Statesman had issued a third party notice to the City alleging the same claims as those made by the plaintiffs, and at no time did Statesman ever resile from that position. The trial judge concluded that Statesman took an active role in maintaining the City in the action. The City was a successful defendant, Statesman was an unsuccessful defendant, Statesman maintained its lis against the City throughout the litigation, and, as a consequence, the Bullock order was properly

made. At the costs hearing, the Advanced Group, Cactus and Swan referred to their pre-trial attempts to resolve the fire negligence claim, including informal Calderbank offers sent to the plaintiffs. They argued that their liability for the costs of the plaintiffs and Statesman should be restricted to the date of their respective informal offers. The trial judge noted that the plaintiffs obtained a judgment that exceeded those informal offers and that it was reasonable for the plaintiffs to reject them. He also concluded that the Advanced Group, Cactus and Swan were required to participate in the trial with counsel as a result of Statesman’s failure to consent to the proposals. He therefore limited the liability of Advanced Group, Cactus and Swan to cost incurred by the plaintiffs and Statesman only up to the commencement of trial, and not thereafter. This was a reasonable exercise of the trial judge’s discretion.

APPELLATE DECISION



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Encana Corporation v. Devon Canada Corporation, 2012 ABCA 271Areas of Law: Oil and Gas; Mines and Minerals; Leaseholds

~Natural gas leases included coalbed methane~

BACKGROUNDCLICK HERE TO ACCESS

THE JUDGMENT

Appellants Carbon Development

Partnership, Carbon Development Corporation and Encana Corporation (“Coal Owners”) owned the coal underlying the subject lands. In respect of some of those lands, one of the appellants, Encana Corporation, owned all the underlying mines and minerals, including petroleum and natural gas. Respondents Direct Energy Marketing Limited and others (“Natural Gas Lessees”) were lessees of the natural gas underlying the same lands. The parties were involved in seven lawsuits. In five of them, the Coal Owner sued the Natural

Gas Lessee in trespass and conversion, alleging the latter perforated well bores in its coal strata without consent and extracted coalbed methane, a substance the Coal Owner alleged belonged to it by virtue of its coal ownership. In two of the lawsuits, the Natural Gas Lessee counterclaimed for a declaration that its natural gas leases granted to it the right to natural gas and therefore to coalbed methane. Several years following the commencement of the lawsuits, but before trial, s. 10.1 of the Mines and Minerals Act, RSA 2000, c M-17, was amended to provide that coalbed methane was a natural gas unless the right to coal bed methane was specifically reserved or excepted. The

amendment came into effect December 2, 2010. Section 10.1(1) as amended states: “Coalbed methane is hereby declared to be and at all times to have been natural gas.” Subsequent to the amendment, the chambers judge granted the Natural Gas Lessees leave to bring a motion seeking summary judgment in respect of some leases. The result of the summary judgment applications was that the chambers judge declared that coalbed methane was a substance leased to the Natural Gas Lessees pursuant to their leases of petroleum and natural gas. The Coal Owners appealed.



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The appeal was dismissed. The Coal Owners

contended that the legislation did not apply to freehold mines and minerals. Alternatively, they argued that, if the legislation applied to freehold mines and minerals, the chambers judge’s declaration could not be made without ascertaining the intention of the parties when the rights

were conveyed. The chambers judge correctly rejected this argument, ruling that, in light of the Legislature’s declaration that coalbed methane is and always was natural gas, it no longer mattered what the parties intended to lease or reserve when the lease was entered into. With respect to the Coal Owners’ argument that the Mines and Minerals Act and the contested amendments do not apply to freehold or private minerals, section 2 of the Act specifically states that the Act applies to all mines and minerals where the context permits.

APPELLATE DECISION

Encana Corporation v. Devon Canada Corporation , (cont.)


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