Crew Energy Inc. v. Cenovus Energy Inc., 2012 ABQB 462

Court of Queen ’ s Bench of Alberta Citation: Crew Energy Inc. v. Cenovus Energy Inc., 2012 ABQB 462 Date: 20120716 Docket: 1101 07197 Registry: Calgary Between: Crew Energy Inc. Plaintiff - and - Cenovus Energy Inc. Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice G.C. Hawco _______________________________________________________ [ 1 ] The parties come before me with respect an application to strike the Statement of Claim filed by the Plaintiff Crew Energy Inc. ( “ Crew ” ) on October 7, 2011.

Cenovus Energy Inc. ( “ Cenovus ” ) claims that the Statement of Claim is frivolous, irrelevant and improper. This matter had previously been initiated by way of an originating application on May 20, 2011. The Statement of Claim was subsequently filed in October and an application brought in December to strike it. [ 2 ] A number of applications have been made concerning the pleadings. Counsel have appeared before me and made representations, briefs have been filed. An attempt was made to “ tone down ” the original Statement of Claim. The Defendant still takes issue with the draft proposed by the Plaintiff.

It will be that draft to which my comments are directed, as opposed to the original

Statement of Claim. [ 3 ] I would, of course, prefer not to be involved in drafting of pleadings. It is clear, however, that even the proposed draft prepared by the Plaintiff contains evidence and argument, and, occasionally, colourful language. What I therefore propose is to go through what I shall refer to the Crew draft. I will also refer to the Cenovus draft. The result will be an amalgam of both drafts and will become the amended Statement of Claim in these proceedings. Introduction: An Overview of Claim [ 4 ] Paragraphs 1 and 2 of the Crew Statement of Claim will remain.

I would simply begin paragraph 1 by stating “ Over the period April 25, 2011 to May 18, 2011, the Defendant Cenovus ... ” . [ 5 ] Paragraph 3 is struck as being argumentative. [ 6 ] Paragraph 4 of the Crew draft Statement of Claim will remain other than sub-paragraph 3(iii) is to be struck. There should also be a new paragraph 5 which will take the form of paragraph 4 in the Cenovus draft. The Parties [ 7 ] Paragraph 5 and 6 of the Cenovus draft will be used. Cenovus ’ and Crew ’ s Contractual Relationship [ 8 ] Paragraphs 8 through to 16 of the Crew draft will be used. Paragraphs 17 and 18 will be struck.

The Leases on the Earned Lands [ 9 ] Paragraphs 19, 20 and 21 of the Crew draft are acceptable, other than that the phrase “ fundamental ” shall be changed to “ legal terms ” in paragraph 21. Cenovus Serves Crew with the Default Notices [ 10 ] Paragraph 22 of Crew ’ s draft is accepted, other than “ invalid and improper ” in line 2 will be struck, and “ in bad faith ” in line 4 will be struck. Paragraph 23 is acceptable other than “ which was Easter Monday ” which will be struck. [ 11 ] Paragraph 24 and 25 are acceptable. Paragraphs 26 through to and including 29 are struck.

My concern with those paragraphs is that it refers to a settlement and are therefore without prejudice. In place of paragraphs 27, 28 and 29, the parties may wish to put in a clause which would be to the effect that as a result of negotiations between the parties (or as a result of a court order), Cenovus will not treat the leases as terminated until further order of this Court. The Offset Wells Clause [ 12 ] Paragraph 30 of the Crew draft will remain. Paragraphs 31 and 32 are argumentative and will be struck. Default under the Offset Wells Clause [ 13 ] Paragraph 33 will remain.

Paragraphs 34 to 37 are argumentative and evidence and will come out. Paragraph 38 and the attending chart will remain. Paragraph 41 and the attending chart will remain. Paragraphs 42 through to 52 of the Crew draft will be removed as it consists primarily of argument or evidence. Paragraph 53 is acceptable. Paragraph 54 is acceptable. Paragraph 55 is evidence and should be removed.

[ 14 ] Paragraphs 56 through to 60 of the Crew draft are appropriate. [ 15 ] Paragraph 61 of the Crew draft is appropriate. [ 16 ] With respect to allegations of bad faith conduct and punitive damages, I would prefer to see paragraphs 28 through to 31 of the Cenovus draft, together with paragraph 35 and 36 of the Cenovus draft. My concern with the Crew draft is that paragraphs 63 to 67 appear to me to be more argument than anything else and that the language is, quite frankly, inappropriate in a Statement of Claim.

I believe that a more bare bones approach as set forth in the Cenovus draft are more than adequate to enable Crew to address its concerns in the areas of bad faith and punitive damages. [ 17 ] Paragraph 68 of the Crew draft and the remedy sought are appropriate. [ 18 ] If the parties have any difficulties with respect to the pleadings, or if I have missed something that both counsel believe should be included, I will deal with the matter on the next scheduled Case Management meeting, which is, I believe, Monday August 13 at 10:00 a.m. Heard on the 14 th day of February and the 16 th day of May, 2012.

Dated at the City of Calgary, Alberta this 16 th day of July, 2012. G.C. Hawco J.C.Q.B.A. Appearances: Maureen Killoran Thomas Gelbman Osler, Hoskin & Harcourt LLP for the Plaintiff James Murphy David de Groot Burnet, Duckworth & Palmer LLP

for the Defendant