Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 229

Court of Queen ’ s Bench of Alberta Citation: Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 229 Date: 20160421 Docket: 0701 04061, 0901 08210, 1201 05556, 1201 12278, 1201 15228, 1201 16166, 1301 02933, 1301 07573, 1301 07809, 1301 09664, 1301 09665, 1301 14139, 1401 00646, 1401 00777, 1401 03449, 1401 05316 Registry: Calgary Between: Action No. 0701 04061 Geophysical Service Incorporated Plaintiff - and - Encana Corporation Defendant And Between Action No. 0901 08210 Geophysical Service Incorporated Plaintiff - and - Lynx Canada Information Systems Ltd., Lynx Canada Information Systems Ltd., operating as Lynx Information Systems Ltd., and the said Lynx Information Systems Ltd., Her Majesty the Queen in the Right of Canada as represented by Public Works and Government Services Canada, the Department of Natural Resources Canada and the National Energy Board Defendants

And Between Action No. 1201 05556 Geophysical Service Incorporated Plaintiff - and - West Canadian Digital Imaging Inc., West Canadian Industries Group Ltd., Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the National Energy Board, and ABC Corporation Ltd. Defendants And Between Action No. 1201 12278 Geophysical Service Incorporated Plaintiff - and – Canadian Discovery Ltd. and ABC Corporation Ltd.

Defendants And Between Action No. 1201 15228 Geophysical Service Incorporated Plaintiff - and – Anadarko Petroleum Corporation, Anadarko US Offshore Corporation (formerly Kerr McGee Oil & Gas Corporation), Canadian Natural Resources Ltd., Companies A-Z Defendants

And Between Action No. 1201 16166 Geophysical Service Incorporated Plaintiff - and – Olympic Seismic Ltd., Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the National Energy Board and Companies A-Z Defendants And Between Action No. 1301 02933 Geophysical Service Incorporated Plaintiff - and – Arcis Seismic Solutions Corp., Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the National Energy Board, Canada – Newfoundland and Labrador Offshore Petroleum Board, and Companies A-Z Defendants And Between Action No. 1301 07573 Geophysical Service Incorporated Plaintiff - and - ConocoPhillips Canada Resources Corp., Canadian Natural Resources Limited, MGM Energy Corp., Kogas Canada Ltd., and Companies A-Z Defendants

And Between Action No. 1301 07809 Geophysical Service Incorporated Plaintiff - and – Statoil Canada Ltd. Defendant And Between Action No. 1301 09664 Geophysical Service Incorporated Plaintiff - and – Edison S.P.A. and Edison International S.P.A . Defendants And Between Action No. 1301 09665 Geophysical Service Incorporated Plaintiff - and – Nalcor Energy – Oil and Gas Inc. Defendant

And Between Action No. 1301 14139 Geophysical Service Incorporated Plaintiff - and – Exxonmobil Canada Ltd. and Imperial Oil Limited Defendants And Between Action No. 1401 00646 Geophysical Service Incorporated Plaintiff - and – Plains Midstream Canada ULC, BP Canada Energy Group ULC, and Companies A-Z Defendants And Between Action No. 1401 00777 Geophysical Service Incorporated Plaintiff - and – Exploration Geosciences Ltd., Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the Department of Natural Resources Canada and the National Energy Board and ABC Corporation Defendants

And Between Action No. 1401 03449 Geophysical Service Incorporated Plaintiff - and – Total S.A., Total E&P Canada Ltd., and the Canada – Newfoundland and Labrador Offshore Petroleum Board Defendants And Between Action No. 1401 05316 Geophysical Service Incorporated Plaintiff - and – Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the Department of Natural Resources Canada, and the National Energy Board Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.

Strekaf _______________________________________________________ [ 1 ] This decision addresses costs arising out of my written decision delivered on January 22, 2016 ( 2016 ABQB 49 ). Geophysical Service Inc (“GSI”) appealed 26 orders for security for costs granted to various Defendants by a M a ster on March 19, 2015 in 17 actions that had been commenced by GSI . The combined amount of security ordered to be posted by the Master was $1,910,550.24, which was reduced on appeal by $431,655.75 to $1,434,164.50.

This lower amount also takes into account the settlement on one of the actions in respect of which security had been posted. [ 2 ] In my decision, I noted that success on the appeals had been divided and invited counsel to provide written submissions on costs, if they were unable to agree on how they should be addressed. I have received and reviewed those submissions. [ 3 ] GSI submits that this Court should determine the costs of the applications before the Master and on these appeals, as the costs before the Master have not yet been set.

As the appeals were heard collectively, GSI seeks one set of costs in the amount of $10,220.21, calculated for the two day hearing on column 5 on the amounts that would be awarded to argue before the Court of Appeal,

plus disbursements. In the alternative, GSI proposes that each of the parties bear their own costs of the applications before the Master and of the appeals or that the costs of the applications and appeals be costs in the cause in each of the actions. [ 4 ] The Respondents have filed a single brief in which they collectively seek costs totaling $234,049.31 for the appeals only, as set out in the

schedule below. The Respondents submit that the costs of the applications below should be determined by the Master. Each of the Respondents (with the exceptions noted below) seek costs payable individually on each appeal on double column 5 on the amount that would be awarded to argue before the Court of Appeal for two days plus a 25% inflationary adjustment and disbursements. MGM Energy Corp (“MGM”), ConocoPhillips Canada Resources Corp (“ConocoPhillips”), Canadian Natural Resources Ltd (“CNRL”) and Olympic Seismic Ltd (“Olympic”) did not submit Bills of Costs and presumably are not seeking any costs.

Edison SPA and Edison International SPA (“Edison”) and Total SA, Total E&P Canada Ltd (“Total”) seek lesser amounts due to efficiencies that they recognize were realized in the process. Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada on behalf of the Department of Natural Resources Canada (“HMTQ”) is only seeking one set of costs in the amount of $3500 despite its participation in three actions and the National Energy Board (“NEB”) is only seeking one set of costs despite its participation in six actions.

In the alternative, the Respondents submit that the costs awarded to them could be discounted by the percentage amount by which their security was reduced.

Action Number Security Awarded by Master Security Awarded on Appeal Reduction Percentage Respondents’ Proposed Costs Nalcor 1301 09665 $100,010.00 $99,000.00 $1,010.00 0.0100990 $20,832.23 Statoil 1301 07809 91,770.00 85,000.00 6,770.00 0.0737714 20,832.23 Anadarko 1201 15228 106,102.50 89,000.00 17,103.00 0.1611885 20,832.23 MGM 1301 07573 90,195.00 44,500.00 45,695.00 0.5066245 0.00 Conoco Phillips 1301 07573 90,195.00 44,500.00 45,695.00 0.5066245 0.00 CNRL 1201 15228 106,102.50 57,540.00 48,563.00 0.4576942 0.00 CNRL 1301 07573 106,102.50 57,540.00 48,563.00 0.4576942 0.00 HMTQ 0901 08210 25,460.50 21,000.00 4,461.00 0.1751929 3,500.00 HMTQ 1401 00777 25,460.50 21,000.00 4,461.00 0.1751929 0.00 HMTQ 1401 05316 9,975.00 7,850.00 2,125.00 0.2130326 0.00 NEB 0901 08210 73,836.00 62,000.00 11,836.00 0.1603012 19,500.00 NEB 1201 05556 76,511.00 55,000.00 21,511.00 0.2811491 0.00 NEB 1201 16166 73,836.00 56,000.00 17,836.00 0.2415624 0.00 NEB 1301 02933 73,836.00 55,000.00 18,836.00 0.2551059 0.00 NEB 1401 00777 76,511.00 57,000.00 19,511.00 0.2550091 0.00 NEB 1401 05316 51,720.00 43,000.00 8,720.00 0.1686002 0.00 Canadian Discovery 1201 12278 57,540.00 57,540.00 0.00 0 21,451.57 Arcis 1301 02933 49,350.00 36,000.00 13,500.00 0.2705167 20,475.00 Edison 1201 09664 53,077.50 53,077.50 0.00 0 11,520.70 Exxon 1301 14139 135,466.25 121,000.00 14,466.00 0.1067886 20,475.00 BP 1401 00646 131,250.00 120,000.00 11,250.00 0.0857143 20,475.00 Plains 1401 00646 63,525.00 52,000.00 11,525.00 0.1814246 21,097.80 Total 1401 03449 63,210.00 59,000.00 4,210.00 0.0666034 11,518.90 Encana 0701 04061 64,617.00 64,617.00 0.00 0 21,538.65 Olympic 1201 16166 70,161.00 16,000.00 54,161.00 0.7719531 0.00 Total n/a $1,865,820.25 $1,434,164.50 $431,658.00 n/a $234,049.31 [ 5 ] I will deal only with the costs of the appeals.

I leave the costs on the applications before the Master to be determined by him as I consider that to be most efficient and appropriate. [ 6 ] Costs are a matter for the Court’s discretion as outlined in Rules 10.29 and 10.31, having regard to the matters set out in Rule 10.33, which include:

a) The result and degree of success of each party;

b) The amount claimed;

c) The importance of the issues;

d) The complexity of the action;

e) The conduct of a party that shortened or lengthened a proceeding;

f) A party’s denial or refusal to admit anything that could have been admitted;

g) Whether any application, proceeding or step in an action was unnecessary;

h) Irregularities in any documents or other failure to comply with the rules or an order of the Court;

i) Whether a party engaged in misconduct; and

j) Other matters the Court considers appropriate. [ 7 ] Counsel have referred to numerous authorities which outline how costs were addressed in other cases. I have based my determination of how costs of these appeals should be handled on the following considerations:

a) This was a somewhat unusual case given the number of parties participating on the appeals in 17 actions, which were conducted on a combined basis heard over two days.

b) The amount at issue on the appeal was $1.9 million.

c) Success was divided as GSI did not succeed in setting aside the orders for security in their entirety as it had sought to do, but was successful in reducing the collective amount of security awarded by $431,655.75, which reflected an overall reduction of 23%.

d) Some of the Respondents had no reduction in the security awarded to them and were fully successful in opposing the appeal. Other Respondents had their costs reduced by amounts that varied from $1,010 (1%) to $54,161(77%).

e) The issue was a matter of considerable importance to all parties. GSI was required to post security of $1.9 million in order to proceed with its actions. The Respondents would likely be unable to recover their costs if the appeals were allowed, the security discharged, the actions proceeded and they were ultimately successful.

f) While the appeal was limited to security for costs, some novel arguments were raised.

g) There was significant cooperation amongst all counsel that enabled the appeal to proceed in an efficient fashion.

h) While the Respondents take issue with some of the allegations made by GSI alleging improper conduct by them which were not accepted by the Court, I do not find the raising of those allegations constitutes misconduct that would justify a costs penalty. [ 8 ] In my view, it would not be appropriate to adopt any of the costs proposals advanced by GSI or the Respondents.

GSI’s approach would either have GSI receive costs, have each party bear their own costs or have costs in the cause when it was required (after the appeal) to post security of over $1.4 million in respect of 25 orders granted to various Defendants in 17 actions. There were three days of hearings before the Master and two days of hearings on the appeal with numerous affidavits, questionings, and briefs involved, throughout which GSI opposed posting any security.

Further, an order for costs in the cause would be contrary to GSI’s submission, which was accepted on appeal, that costs for interlocutory application are generally payable forthwith in any event and should therefore not be included when determining the amount of security to be posted.

None of GSI’s proposals reasonably reflect what would be appropriate in the circumstances. [ 9 ] The Respondents’ approach would have GSI pay costs of the appeals totaling either $234,049.31or $180,217.97, when the result of the appeals was a substantial reduction of $431,655.75 (23%) in the amount of security that GSI was required to post.

That would also be unreasonable. [ 10 ] I am of the view that costs of the appeals should be payable by GSI to each of Canadian Discovery, Edison, and Encana (whose security was not reduced on the appeal) and to Nalcor Energy – Oil and Gas Inc (“Nalcor”) (whose security was reduced on appeal by only $1,010 or 1%). Costs should be payable to GSI by MGM, ConocoPhillips, CNRL (once only), and Olympic as the reduction in security awarded to these Respondents was between $45,695 and $54,161, reflecting a reduction of between 46 – 77%.

The costs payable in each case shall be $5500, which represents two days of a contested application requiring briefs calculated under column 5 plus an estimated $500 for disbursements. No costs shall be payable by, or to, the remaining Respondents, whose security was reduced by between $4,210 (6%) and $21,511 (28%). [ 11 ] As a result, GSI will pay costs totaling $22,000 to certain of the Respondents and will receive costs totaling $22,000 from other Respondents. Dated at Calgary, Alberta this 21st day of April, 2016. J. Strekaf J.C.Q.B.A. Appearances: Mr. Richard J.N. Gilborn

Caron & Partners For the Plaintiff in Action No. 0701 04061 Mr. Daniel Gilborn Caron & Partners For the Plaintiff in all other Actions Mr. Michael O’Brien Blake, Cassels & Graydon LLP For the Defendant Encana Mr. James Elford For the Defendant, HMTQ Mr. Marko Vesely Larson Lundell LLP For the Defendant, NEB Mr. Trevor McDonald Burnet Duckworth & Palmer LLP For the Defendant, Canadian Discovery Ms. Kelly Osaka and Mr. Jacob Young (Student-at-Law) Osler, Hoskin & Harcourt LLP For the Defendant, Anadarko Mr. Todd Kathol Field LLP For the Defendant, Olympic Mr.

Chase Holthe Norton Rose Fulbright Canada LLP For the Defendant, Arcis Ms. Kelly Osaka and Ms. T. Schappert Osler, Hoskin & Harcourt LLP For the Defendant, ConocoPhillips

Ms.K.Osaka and Ms. T. Schappert Osler, Hoskin & Harcourt LLP For the Defendant, Statoil Ms. Rachel Howie Dentons Canada LLP For the Defendant, Edison Ms. K. Osaka and Ms. T. Schappert Osler, Hoskin & Harcourt LLP For the Defendant, Nalcor Ms. Lucy L’Hirondelle Norton Rose Fulbright Canada LLP For the Defendant, Exxon Mr. David McKinnon Bennett Jones LLP For the Defendant, Plains Mr. Thomas P. O’Leary Dentons Canada LLP For the Defendant, Total Ms. Michelle Herron and Mr. Matthew Lindsay Rose LLP For the Defendant, BP Mr. Craig Alcock Burnet, Duckworth & Palmer LLP For the Defendant, CNRL