Re: SemCanada Crude Company (Orleans Energy Ltd.), 2013 ABQB 102

Court of Queen ’ s Bench of Alberta Citation: Re: SemCanada Crude Company (Orleans Energy Ltd.), 2013 ABQB 102 Date: 20130221 Docket: 0801 08510 Registry: Calgary In the Matter of the Companies ’ Creditors Arrangement Act , R.S.C. 1985, c. C-36, as amended And in the Matter of a Plan of Compromise or Arrangement of SemCanada Crude Company, SemCAMS ULC, SemCanada Energy Company, A.E. Sharp Ltd., CEG Energy Options Inc., and 1380331 Alberta ULC (Re: Orleans Energy Ltd.) Between: RMP Energy Inc., formerly Orleans Energy Ltd.

Applicant/Respondent - and - SemCAMS ULC Respondent/Applicant _______________________________________________________ Memorandum of Decision on Costs of the Honourable Madam Justice B.E. Romaine

_______________________________________________________ [ 1 ] A decision in this application was issued on July 31, 2012: 2012 ABQB 495 . [ 2 ] An application for leave to appeal that decision was dismissed by the Court of Appeal on October 3, 2012.

The parties have been unable to agree on costs of the application and have made written submissions on the issue. [ 3 ] SemCAMs submits that Orleans should pay solicitor-client costs of $112,550.53 because SemCAMs was successful in the application and because, it submits, Orleans’ pursuit of its claim was “in blatant disregard” of the plan of arrangement dated July 23, 2009 in these Companies ’ Creditors Arrangement Act proceedings which was sanctioned by this Court.

SemCAMs submits that an award of costs beyond ordinary costs is warranted for its deterrent effect. [ 4 ] Orleans submits that the Court should follow the usual practice in commercial insolvency applications and require each party to bear its own costs.

Alternatively, it submits that a party-party cost award of $11,693.30 (being basic costs with no multiple applied) would be appropriate. [ 5 ] While there is an established practice in commercial insolvency applications of requiring each party to bear their own costs, recognizing that creditors faced with a debtor that has sought protection under the Companies ’ Creditors Arrangement Act are sometimes forced by the process to have their claims adjudicated, such a practice most often arises with respect to applications that are heard in a

summary manner during the cause of negotiations leading to a plan of arrangement. This claim and application are different. Orleans was involved in negotiations with the debtor companies and the Monitor throughout the process, and was aware before the plan of arrangement was sanctioned by the Court of the position the debtors and Monitor were taking on the nature of the “Thirteenth Month Adjustment” claim, a claim similar in nature to the Price Adjustment Claim that was the subject of the application.

Orleans was served with the plan of arrangement and the plan sanction order, and is a sophisticated litigant represented by counsel. In the face of the sanction order, Orleans filed a statement of claim on November 29, 2011 without seeking leave of the Court, requiring SemCAMs to bring its application for a declaratory order. Given these circumstances, I find that the usual practice with respect to costs in insolvency matters should not apply to this application. [ 6 ] Thus, as SemCAAMs was entirely successful in its application, it is entitled to costs.

However, the litigation proceeded in the normal course after SemCAMs’ motion was filed, and I cannot find any evidence that Orleans was guilty of any misconduct during the course of the litigation that would warrant an award of solicitor-client costs. [ 7 ] Costs in the amount of $11,693.30 as submitted as appropriate by Orleans, however, are not sufficient in the circumstances, representing as they do approximately one-tenth of solicitor-client costs. This litigation was factually and conceptually complicated, as is evident from the contractual arrangement between the parties described in my decision.

I do not find the amount of solicitor-client costs described by SemCAMs to be surprising, given the nature of the application and the steps taken to prosecute it, nor is there any evidence that the amount charged was exorbitant, other than the bare assertion of Orleans. I find that a costs award of $30,000 all inclusive is appropriate, representing less than 1/3 of solicitor-client costs in a complex application that was vigorously contested on both sides. Dated at the City of Calgary, Alberta this 21st day of February, 2013. B.E. Romaine J.C.Q.B.A.

Appearances: Trevor A. Batty of Burnet Duckworth & Palmer LLP for the Applicant/Respondent RMP Energy Inc. formerly Orleans Energy Ltd. A. Robert Anderson, Q.C. and Daniel Yaverbaum of Osler, Hoskin & Harcourt LLP for the Respondent/Applicant SemCAMS ULC