ATCO Electric Ltd. v. Manning Rural Electrification Association Limited, 2011 ABQB 333

Court of Queen ’ s Bench of Alberta Citation: ATCO Electric Ltd. v. Manning Rural Electrification Association Limited, 2011 ABQB 333 Date: 20110516 Docket: 0403 24559 Registry: Edmonton Between: ATCO Electric Ltd. Plaintiff - and - Manning Rural Electrification Association Limited Defendant _______________________________________________________ Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This lawsuit is about the

interpretation of a contract. This application is about refused undertakings at the questioning. [ 2 ] The parties have treated this lawsuit as being primarily about a single, narrow issue: whether the words “connected through” in

Article 6 of the agreement in issue had the narrower meaning of “connected to”. If the words in

Article 6 bear this second meaning, it may have a significant effect on the charges the Defendant must pay the Plaintiff. [ 3 ] This action is just over six years old. There has been discovery of records. Examinations (now the questioning) are well advanced.

[ 4 ] Defence counsel changed later in the lawsuit. Present counsel takes the position that the circumstances surrounding the contract are relevant to its

interpretation. The Defendant also now argues that

Article 6 must be interpreted in a manner that promotes ‘commercial efficacy’. Consequently, it is argued that the disputed undertakings, which have mostly to do with ATCO’s actual maintenance costs of the Manning line, are relevant and material. [ 5 ] The disputed undertakings are 29-32 and 35.

Apart from undertaking number 35, which relates to a cost sharing formula and which I find to be properly refused on the grounds of relevancy, all of the disputed undertakings have to do with the plaintiff’s costs of maintaining the line in the Manning Rural Electrification area. [ 6 ] The pleadings ultimately determine the scope of permissible questioning. Rule 5.2, which defines what is ‘relevant and material’, refers us to the issues raised in the pleadings. [ 7 ] Paragraph 5 of the Amended Statement of Claim reads: “5.

Under the terms of the Wire Owners Agreement, ATCO and Manning share the costs for all upgrades, rebuilts, operation and maintenance costs of the “main line”, defined in the Wire Owners Agreement ...” (emphasis added) [ 8 ] Paragraph 5 would seem to put the quantum of maintenance costs into issue and open up the questioning to actual expenditures and the type of questions that comprise the disputed undertakings. [ 9 ] However, the Plaintiff argues that

Article 6 of the agreement provides the mechanism for determining how the cost should be shared. Instead of a literal division of expenses,

Article 6 provides for the collection of a charge ‘payable as an operation and maintenance charge’. The Plaintiff argues that the whole point of

Article 6 was to avoid the type of debate now in issue. In other words, the purpose of

Article 6 is said to avoid the annual assessment of actual costs by reducing cost sharing to a formula. On this basis the lawsuit is really about number of users, not actual costs and the disputed undertakings are not relevant. [ 10 ] The Plaintiff’s position is supported somewhat by the Affidavits of Records and the approach taken by previous defence counsel.

The producible documents as disclosed in the Plaintiff’s and Defendant’s Affidavits of Record and the supplemental Affidavit of Records of ATCO Electric Ltd. all apparently have to do with contractual negotiations and not with actual expenses. [ 11 ] However, the pleadings go on. Paragraph 7 of the Statement of Defence reads: 7. Manning states the use of the words “connected through” and “of the Company” in

Article 6 make it clear that the

interpretation of

Article 6 relied upon in the Statement of Claim filed herein is in error. To the extent that the wording of

Article 6 is ambiguous or is at variance with the intentions of the parties, Manning seeks rectification of the wording of

Article 6 to resolve the ambiguity. (emphasis added ) [ 12 ] Paragraph 4 of the Reply to Statement of Defence and Defence to Counterclaim reads: 4. ATCO states that the intention of the parties in creating

Article 6 of the Wire Owners Agreement, was that Manning should pay for its share of the costs arising from its members’ use and benefit of the distribution system facilities. (emphasis added) [ 13 ] Pleadings should be interpreted liberally and in the context of achieving the purpose set out in Rules 5.1 and 1.2 together with

a determination of what is relevant and material or appropriate for the purposes of Rules 5.2 and 5.25. This part of the process is, after all, still a discovery despite the wording change. [ 14 ] Even though the pleadings might be stretched to accommodate the issues now raised by the Defendant, this lawsuit is really about number of users not actual expenses. [ 15 ] The Defendant’s proposed line of questioning, rather than narrowing the issues pursuant to Rule 5.1(1)(b), will have the opposite effect and turn this lawsuit into something quite different than it has been.

This change in tack really amounts to a defacto amendment of the pleadings in the context of the litigation. It will necessitate revised Affidavits of Records and further questioning while the Defendant/Applicant remains immune from the costs consequences that would ordinarily follow an amendment. [ 16 ] Commercial efficacy can be argued from the difference between ATCO’s and Manning’s positions set out in the pleadings. Manning’s position is that the words ‘connected through’ in

Article 6 are properly interpreted to mean ‘connected to’. The different

interpretations directly corresponds to the number of affected users. The difference in numbers is set out in the pleadings. [ 17 ] The real issue between the parties is not the amount of the charge calculated according to the formula but the number of users for whom the charge is levied. The difference in numbers is clear from the claim and defence. Questioning about “actual expenses”, will not significantly help the court determine the real issues in dispute as identified by the parties in their pleadings and in their conduct of this litigation. On this basis the proposed line of questioning is not material pursuant to Rule 5.2(1)(

a) and is therefore disallowed. [ 18 ] I am indebted to counsel for their clear and thoughtful argument. Heard on the 23rd day of March, 2011. Dated at the City of Edmonton, Alberta this 13 th day of May, 2011. W.S. Schlosser M.C.C.Q.B.A. Appearances: David Hawreluk Bennett Jones LLP for the Plaintiff Sigurd DeBlanc

Bryan & Company LLP for the Defendant