Precision Drilling Canada Limited Partnership v. Yangarra Resources Ltd., 2013 ABQB 2

Court of Queen ’ s Bench of Alberta Citation: Precision Drilling Canada Limited Partnership v. Yangarra Resources Ltd. , 2013 ABQB 2 Date: 20130103 Docket: 1201 03487 Registry: Calgary Between: Precision Drilling Canada Limited Partnership Plaintiff - and - Yangarra Resources Ltd. and Devon NEC Corporation Defendants _______________________________________________________ Reasons for Judgment of J.T. Prowse, Q.C. Master in Chambers ______________________________________________________ [ 1 ] A procedural question has arisen in the context of this

summary judgment application brought by Precision against Yangarra. [ 2 ] Precision is applying for

summary judgment requiring Yangarra to pay for the drilling of two wells; an original well and a replacement well. Yangarra says it is not obligated to pay for both wells since the original well was lost due to Precision’s negligence. Precision responds that, under the contract between the two, Precision it is entitled to payment for both wells, even if Precision’s negligence caused the loss of the original well. [ 3 ] One area of enquiry by Yangarra is whether the field personnel of Precision communicated their drilling mistakes to off-site personnel of Precision prior to the original well being lost.

Precision’s deponent was asked about this during his cross-examination and replied, by way of undertaking, that there was no such communication. Yangarra wishes to pursue this enquiry further by issuing notices of appointment for questioning (subpoenas) to four Precision off site personnel, pursuant to Rule 6.8. The transcript of the examinations

of those four witnesses will then be put in evidence in the

summary judgment application. [4] Yangarra is entitled to question these four witnesses under Rule 6.8. The only issue is whether Yangarra’s examination is anexamination in chief or a cross-examination. [5] The law under the old Rule 266 was settled. The examination of the party issuing the subpoena was an examination in chief.See: Wawanesa Mutual Insurance Co. v. Schneider, 1995 ABCA 419 , 1995 CarswellAlta 414, 34 Alta. L.R.(3d)1, [1996] 1W.W.R. 651, 174 A.R. 304 (Alta.C.A.); Richardson v. Honeywell Ltd., (AB CA), 1996 CarswellAlta 230, 47 C.P.C.(3d) 49, 181 A.R. 247 (Alta.C.A.); Dykun v.

Odishaw, 2001 ABCA 61, 2001 CarswellAlta 258, 277 A.R. 194. [6] Rule 266 has been replaced by new Rule 6.8. The committee considering the new rules recommended that a party issuing aRule 266 type subpoena should be entitled to cross-examine the witness that they subpoenaed, as has been the practice in Ontario for anumber of years. See: Consultation Memorandum No.12.10, Issue # 36, Alberta Law Reform Institute, July 2004. [7] In my view, the committee’s recommendation was not followed. A party calling a witness under Rule 6.8 must conduct theexamination as an examination in chief, as previously under Rule 266.

The reasons for my conclusion follow. [8] First let me set out the wording of Rule 6.8, followed by the wording of Rule 6.20 (emphasis added), which is incorporatedby reference into Rule 6.8: 6.8 - A person may be questioned under oath as a witness for the purpose of obtaining a transcript of that person’s evidence for use at thehearing of the application, and (

a) rules 6.16 to 6.20 apply for the purpose of this rule, and (

b) the transcript of the questioning must be filed by the questioning party 6.20(1) A person questioned on an affidavit under this Part or a person questioned as a witness for the purpose of obtaining a transcriptunder this Part for use at a hearing may also be questioned by any other party, and the person questioned may then be questioned againby the questioning party on that person’s answers to the questions of the other parties. 6.20(2) Questioning and questioning again under this rule by parties adverse in interest may take the form of cross-examination. [9] The topic of cross-examination is dealt with expressly in the words underlined.

And so the question becomes this: if Yangarraissues subpoenas to four Precision employees or ex-employees, is Yangarra a party “adverse in interest” entitled to cross-examine thosefour witnesses? How do you determine whether a party issuing a notice to question under Rule 6.8 is ‘adverse in interest’ to the witness named inthat notice? [10] Is seems to me that there are two alternative ways to decide who is a party adverse in interest to the witness subpoenaed underRule 6.8: #1.

The party who issues the subpoena is calling the witness as his/her witness - therefore it is the other party who is ‘adverse in interest’and may cross-examine, or,

#2. You evaluate, in advance, which party the witness is expected to favour, and the other party, even if it is the party who issued the subpoena, is “adverse in interest” to the witness and entitled to cross-examine. [ 11 ] In my view, alternative # 1 is correct. If Yangarra chooses to subpoena a witness under Rule 6.8, then that is their witness. Yangarra cannot be considered ‘adverse in interest’ to their own witness. The difficulties inherent in alternative # 2, anticipating the loyalty of subpoenaed witnesses [ 12 ] Firstly, what do you do with witnesses expected to be neutral?

Who gets to cross-examine them? Or are both parties restricted to examination in chief? Suppose Party A and Party B were once business partners. They are now litigating, each asserting that the other wrongfully siphoned off funds of their business venture. Party A chooses to issue a Rule 6.8 subpoena to a neutral bank employee, hoping to prove the movement of funds out of the business account into the possession of Party B. Is the examination of the banker by Party A an examination in chief or a cross-examination? [ 13 ] Secondly, what do you do with ex-employees?

At least one of the witnesses being subpoenaed is an ex-employee of Precision. Do you presume him to remain loyal to Precision and thus be subject to cross-examination? [ 14 ] Thirdly, what happens if your presumption as to loyalty turns out to be wrong? What if Yangarra’s first question to the subpoenaed Precision off site employee is “were the drilling mistakes made on site communicated to you by the on site personnel prior to the well failure?” and his answer is “yes”? Does Yangarra’s examination carry on as a cross-examination or is to be immediately converted to an examination in chief?

When Precision re-examines this witness (as contemplated by Rule 6.20(1) quoted above) would Precision be restricted to re-examination in chief, or would this witness now be classified as adverse to Precision and subject to cross- examination by Precision? [ 15 ] Classifying witnesses subpoenaed under Rule 6.8 as “adverse in interest” based on some idea of presumed loyalty devolves quickly into a complicated quagmire. Conclusion [ 16 ] Rule 6.20 speaks of parties adverse in interest, not witnesses adverse in interest. Yangarra is a party to this litigation, as is Precision.

They are adverse in interest. [ 17 ] If Yangarra brings forward a witness, either by obtaining an affidavit from them, or by issuing a Rule 6.8 subpoena to them, then it is Yangarra’s witness. I do not think Rule 6.8 was intended to allow Yangarra to cross-examine their own witnesses. If the Rules Committee had intended this change to the practice under former Rule 266 it would have been easy to state, as do the current Ontario Rules, that the witness “may be cross-examined by the examining party”. [ 18 ] A respondent to a

summary judgment application might argue that this analysis could lead to applicants for

summary judgment choosing lesser informed representatives as their deponents, in order to thwart the respondent from effectively seeking, through cross- examination, evidence raising triable issues. However, the onus is on the applicant in a

summary judgment application to establish that there are no triable issues. Putting forward ill-informed deponents will not meet that burden. Such mischievous tactics are also thwarted by Rule 13.18 which only allows deponents in

summary judgment applications to swear to matters based on their personal knowledge. [ 19 ] In the case at hand, Yangarra wishes to go behind the answer to undertaking provided to it, by examining under oath four witnesses who were off-site employees of Precision at the relevant time. I granted an adjournment of the hearing to allow this to happen. However, the questioning of these four witnesses subpoenaed by Yangarra under Rule 6.8, shall be in chief, and not by way of cross- examination.

[ 20 ] Costs of this procedural issue can be dealt with at the time the decision is made on the merits of the

summary judgment application. That decision will not be made until the examinations are complete, the transcripts are placed before the court, and further submissions are received as to the import of the evidence contained in the transcripts. Heard on the 21 st day of December, 2012. Dated at the City of Calgary, Alberta this 31 st day of December, 2012. J.T. Prowse, Q.C. M.C.C.Q.B.A. Appearances: Brian P. Reid Bennett Jones LLP for the Plaintiff (Applicant) Precision Drilling Canada Limited Partnership Trevor R. McDonald Burnet, Duckworth & Palmer LLP for the Defendants (Respondents) Yangarra Resources Ltd.