Romanow v Nexen Energy ULC, 2016 ABQB 339

Court of Queen ’ s Bench of Alberta Citation: Romanow v Nexen Energy ULC, 2016 ABQB 339 Date: 20160620 Docket: 1401 08650 Registry: Calgary Between: Marvin Frank Romanow Plaintiff - and - Nexen Energy ULC Defendant _______________________________________________________ Memorandum of Decision of A. R. Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] This application is brought to compel answers to certain questions asked at questioning.

It raises issues of solicitor and client privilege, state of mind, legal opinion and relevance. [ 2 ] The plaintiff was the chief executive officer of the defendant when he was suddenly dismissed, apparently despite having been recently given a positive review as to his performance. [ 3 ] Although he then had extensive settlement discussions with the defendant, he says that he found that he was treated differently than other executives who had been dismissed without cause.

In particular, he believes that he was entitled to be treated as being a beneficiary under a previous pension trust which was then merged into a new pension trust without his knowledge or agreement with, he believes, consequential adverse effects on his entitlements.

[ 4 ] In light of his view of how management at his former employer has behaved, he wants to be provided with control of his pension. He does not trust them to manage his pension properly. The state of mind of the employer and its instructions to the trust company are therefore relevant and material to the claim. [ 5 ] Accordingly, his suit is based largely on allegations of bad faith.

He asserts that the former employer was taking steps to deceive him, or at least generally mislead him, as to his entitlements, it failed to disclose certain important information and, in particular, failed to disclose the change in the pension trust. Once the changes to the trust were disclosed, the explanation for why changes were made was not revealed or, he believes, misstated.

He asserts that CIBC Mellon Trust, who is the pension trustee, was instructed not to cooperate with him. [ 6 ] The lawsuit is based largely on the premise that the defendant was doing some things that it knew it was not entitled to do, or at least that it did not carefully look at its obligations. Mr. Romanow argues that one measure of bad faith is how he was treated differently than previously dismissed executives who were clearly entitled to rights under the previous pension trust.

Accordingly, he wants to know how previous executives in similar situations were treated. [ 7 ] Although some of the questions touch on matters that might, as part of a response, give rise to an objection based on solicitor client privilege, relevance or other grounds, given the nature of the claim and the nature of the questions generally it is my conclusion that almost all of the questions asked must be answered. Facts [ 8 ] Ian MacLeod was produced as the defendant’s corporate representative in the proceedings.

At the time of questioning he had held the position of VP Human Resources Programs and Corporate Administration of Nexen Energy ULC (“Nexen”) for six years, and he had worked in Nexen’s Human Resources Department for nearly 16 years. In this capacity, he was responsible for assessing and administering pension arrangements, stock options, and other forms of compensation, and he was consulted by senior management in respect of the processes and agreements that impacted Mr. Romanow’s entitlements. His position required him to read, understand and administer the policies and agreements impacting Mr.

Romanow’s employment entitlements, and among other things he was responsible for administering or negotiating various benefit documents and the change of control process that became applicable shortly before Mr. Romanow’s termination. [ 9 ] In short, Mr.

MacLeod is not only the corporate representative for the litigation, he is the individual whose state of mind was largely being questioned, although no doubt some of the questions involved discussions with others and an explanation of corporate practices or policies over a period of time which, in turn, may well have involved information to be obtained from others. [ 10 ] Many of the communications relating to the settlement discussions involve communications between Mr. Romanow’s lawyer and a lawyer representing the defendant. The defendant’s lawyer would then make inquiries and respond.

In various cases, privilege has been asserted as the reason why the background information communicated to the lawyer cannot be disclosed. One of the questions involves asking if certain information from Mr. Romanow’s lawyer was communicated to management and what the internal discussion was about the response. Analysis General Comments [ 11 ] There are many questions that have been objected to here. Rather than explaining each decision separately, it will be more helpful to set out in general terms what I understand to be the law, and then give my decision on individual questions and objections by way of a

Schedule to these reasons. [ 12 ] As Master Farrington recently stated, a party conducting a questioning is entitled to have a useful transcript. Frequent and intrusive objections may interfere with the flow of questions and answers: see NEP Canada ULC v MEC OP LLC , 2016 ABQB 186 at paragraphs 42 and 51 .

I do not mean to suggest that the objections here had that effect, but they went to the core of the plaintiff’s claim and a general discussion of the law may allow an efficient completion of the questioning. [ 13 ] Some general comments summarized by McIntyre J in Encana Corporation v Devon Canada Corp., 2009 ABQB 429 , 2009 CarswellAlta 1084 can easily be taken out of context. There, the Court said this at paragraph 4: All questions are subject to overriding concerns about relevance.

General principles applicable to the forms of questions posed in examinations for discovery (and trial) include: 1. documents speak for themselves, and it is for the Court to interpret them. Witnesses cannot speak to the legal

interpretation of documents. 2. witnesses may not be asked for conclusions 3. examiners may not argue with witnesses or put argument in the guise of questions to the witness 4. examiners may not seek an answer that would offend the rules of privilege 5 witnesses are not to be asked questions of law. [ 14 ] All of this is sage advice and a good starting point to avoid wasting time arguing with witnesses about their “position”, or

what words of a document, or policy, or statute actually mean. That is for argument and the court to decide. [ 15 ] But the guiding principle was set out at the beginning: “All questions are subject to overriding concerns about relevance.” The principles he set forth are expressly stated to be “general principles.” [ 16 ] Relevance is determined by the pleadings. Materiality is determined by whether the answer will or might help the determination of the issues raised in the pleadings. Where a party’s state of mind is expressly pled, questions that relate to it are relevant.

Where the temporal knowledge, or perhaps erroneous belief, of the party’s actual obligation - as compared to what the party did - is relevant, the answers too many questions are material. [ 17 ] This distinction was touched on in Wesley First Nation (Stoney Nakoda First Nation) v Alberta , 2013 ABQB 344 , aff’d 2015 ABCA 76 , at paragraph 73 , quoting from Montana Indian Band v Canada , 172 FTR 46 (FCTD) 2000): The rule against requiring a deponent to interpret documents is most properly applied where the document in question is a contract and the witness is asked what he or she thinks it means.

Documents, however, can and do serve as the basis of a great deal of factual information and a deponent who is asked to give such information is not being asked to interpret the document or to give an opinion but rather to state on behalf of the party he or she represents, that party’s understanding of the facts represented therein.

Even in a wholly modern context, records are often expressed in some form of code, overt or covert; a corporate party or even an individual may surely be asked to give the true meaning of such records. [ 18 ] Privilege does not arise automatically simply because a lawyer was involved in a conversation, or is a messenger communicating information. Also, something said by a lawyer to a third party is not privileged.

It is legal advice that is privileged; not every communication that a lawyer has had with anyone involved is privileged. [ 19 ] Here, many of the objections are made on the grounds of solicitor client privilege apparently based on the fact that the communications coming from the defendant were communicated to plaintiff’s counsel by the company’s lawyer.

However, if there was a reason why Nexen did something, or did not do something, and the discussion internally as to why it was going to do that thing did not at least involve a discussion with a lawyer for legal advice, where does the privilege arise? [ 20 ] For example, a discussion between the corporate litigation representative Mr. MacLeod and Nexen’s CEO would not be subject to privilege simply because the content of the discussion was communicated to counsel for Mr. Romanow through Nexen’s lawyer.

Otherwise, no undertaking would be answered as they are now commonly answered in practice: the answer to the undertaking is routinely provided by the party’s lawyer. There is no privilege involved. Sometimes a lawyer is just a messenger, and a litigant cannot prevent proper questioning by inserting a lawyer into the information pipeline. [ 21 ] As well, sometimes a decision by an employer or contracting party is made without regard to legal obligations, and sometimes a decision is made in spite of legal obligations that the party is aware of.

Where the party is consciously making a decision to act, or not act, in spite of its known legal obligations, the party’s state of mind may be relevant. Its relevance may relate only to punitive damages (where they are sought), but where bad faith has been pled as here, its relevance is clear. Nexen has not argued that the plea of bad faith is inappropriate in this case. Mr. Romanow wants to manage his own pension because he does not trust Nexen and the pension trustee, CIBC Mellon Trust.

He asserts that Nexen has tried to mislead him and done other things against his interest. [ 22 ] When the actions taken by a party are said to have been taken knowing that they were illegal, or contrary to the terms of the agreement, questions about who made the decision, exactly what the decision was, when that decision was taken, and why the decision was taken are all not only relevant to the claim, they are facts that lie at the core of the dispute.

There may be aspects of the responses that involve privileged communications, but the mere possibility that a lawyer might have been consulted, or the mere presence of a lawyer, or the lawyer’s involvement as a messenger, does not introduce a privilege. The fact that the person did or did not understand his actual legal obligation does not involve the witness giving a legal opinion. [ 23 ] There are many legal obligations that are not very complicated.

For example, in the context of a debt claim where the defendant denies ever owing the debt, the question might be asked, “Did you understand that after you signed this promissory note and received the loan you would have to pay back the money?” Such a question cannot be objected to on the basis that the existence of the debt involves forming a legal opinion as to the party’s obligation to pay, or that he might have spoken to a lawyer at some point to determine whether or not he had to pay and therefore his answer is privileged. [ 24 ] Similarly, in a motor vehicle accident case, a pedestrian who is the plaintiff might be asked, “Did you think you had the right of way?” When the witness answers “Yes”, it is appropriate to ask the witness why he or she thought so.

The witness might say, for example, “Because the ‘Walk’ sign was lit.” It is not appropriate for the witness’ counsel to object to the question on the basis that the answer involves a legal opinion and an

interpretation of the relevant traffic safety statute and regulations. [ 25 ] Business people are generally expected to understand the legal framework under which they work. [ 26 ] Human resource managers are expected to have some understanding as to the policies and the documents that they administer.

Asking such a witness if he understood the relevant legal obligations is especially relevant where the witness’ state of mind has been put directly in issue in the pleadings, as here. [ 27 ] Where the claim of bad faith involves an assertion that the plaintiff was treated differently from others in the same position (as here), questions as to how others were treated, and why he was treated differently, also touch on the core of the dispute.

One of the possible measures of bad faith in such a claim is the difference between how the plaintiff was treated as compared to others in the same position were treated previously.

[ 28 ] Questioning is about facts, but the state of mind of a witness is a fact. The scope of questioning in this circumstances was discussed by Slatter, J. (as he then was) in Weatherill (Estate of) v Weatherill , 2003 ABQB 69 at paragraph 16 : There are some facts that can only be proven by essentially eliminating all the competing scenarios, thereby leaving the fact in issue as the sole logical inference. When a state of mind is in issue, it can generally only be proven by demonstrating a pattern of conduct of the person whose state of mind it is.

In deciding whether a particular document is material, one must take a very pragmatic view, viewing the situation from the perspective of the party who must prove the fact in question. At an interlocutory stage of proceedings, the Court should not measure counsels’ proposed line of argument too finely; if counsel can disclose a rational strategy in which the disputed document plays a material part, that should be sufficient.

Again it must be remembered that the purpose of the Rule was to avoid abusive, excessive, and unnecessarily expensive discovery, not to cut off legitimate lines of inquiry. [ 29 ] Where relevant and material, witnesses may be asked to give evidence about what they did, why they did it, or why they did not do it, and whether at the time they believed they were right in what they did or did not do. Whether they were actually legally entitled to do what they did, or not, may be for the Court to decide.

But the evidence may demonstrate that the party knew what its obligations were and deliberately acted contrary to them. That is the nature of the claim asserted here. [ 30 ] The basic question, “Did you have an understanding at the time what your legal obligations were?” is a fair question, at least where the witness’ state of mind is relevant and material.

Where the claim against the party employing the witness is based on bad faith and deception, it is difficult to imagine a circumstance when it is not. [ 31 ] (The answer might be, “I did not” and that might be the end of the enquiry, although where the witness is the business person responsible for administering corporate policies and formal legal agreements, the answer “I did not” might lead to other inquiries.) [ 32 ] The follow-up question, “What did you understand your legal obligations to be?” is similarly proper. [ 33 ] The further follow-up question, “Before making your decision to act, did you seek legal advice?” is also appropriate.

So is the follow-up question, “After you obtained legal advice, what did you do?” [ 34 ] What is not an appropriate question is, “What was the legal advice?” [ 35 ] Similarly, when questioning on a particular contract, it is appropriate to ask a witness, particularly a sophisticated witness who regularly must refer to the contract in the course of his or her employment, or perhaps a witness who participated in drafting it, “Did you have an understanding what paragraph X of the agreement meant?” If the witness acknowledges that he did, it is appropriate to ask the follow-up question, “What did you think paragraph X meant?” This is simply a question as to the witness’ state of mind given the circumstances of the case. [ 36 ] When the party is a corporation or partnership, the collective state of mind of management might be in issue.

That collective state of mind might have been expressed in either a written policy or an established practice. [ 37 ] What is not an appropriate question of the witness is, “What did paragraph X of the agreement mean?” That question asks for a legal opinion. That is a question for the trial court. [ 38 ] A question that might not be appropriate is, “What is your current position on the meaning of paragraph X of the agreement?” That may ask for argument. However, the facts of the case may justify asking that question.

For example it may be necessary to determine whether the party has now realized the errors of its ways in its

interpretation, and is now treating other persons subject to the same form of agreement differently than the plaintiff. That may colour how the trial court views the party’s

interpretation at the relevant time. [ 39 ] This was touched upon in Dumais v Hobbs , 2015 ONSC 5643 , 2015 CarswellOnt 13797 at paragraph 36 , where Master MacLeod said, “It is also proper to ask him what his current position is concerning the meaning of the documents.” That seems to conflict with a comment of Master Funduk in Van Cleef Manufacturing Co. v Pafco Insurance Co , 1988 CarswellAlta 917 where he was dealing with a case where the issue was whether the plaintiff’s view of the meaning of an insurance endorsement or the defendant’s view was correct.

He said the party’s “understanding” of the meaning was irrelevant. Therefore it was not proper to question on it. [ 40 ] In my view, both Master Funduk and Master MacLeod were correct. As is often stated, the analysis starts with the pleadings. If the issue is simply that paragraph X means one thing or another, the arguments that one party has is for the lawyers to state before the court. It is not relevant as evidence.

But in many cases the understanding that a party had when it did the things in question is germane to the issue pled because the party’s state of mind is in issue, and the party’s current understanding may be relevant as well. [ 41 ] If the question is asked simply to determine the opposing party’s position on the meaning of a contractual provision (or statutory provision), it is not relevant: Wesley First Nation v Alberta , (Alberta QB), supra, at para. 73.

Questions designed to elicit an opinion of law are also improper, because they are directed at argument: Wesley First Nation at para. 78 – 80 . [ 42 ] Finally, sometimes objections are made because a possible proper basis for an objection is thought to be on the horizon. But if the objection is made too soon, before there is any factual basis for the objection, it is an inappropriate objection. The party seeking to establish a privilege has the burden of demonstrating it: NEP Canada ULC v MEC OP LLC , supra , at paragraph 49 . [ 43 ] It is with that general approach that I address, in

Schedule “A” to this memorandum of decision, the specific questions that have been posed in these proceedings, to which objections have been made. In doing so, I will on the

summary of “Impugned Questions” prepared by counsel for Nexen. The questions were grouped, so much as possible, according to the reason or reasons for objection,

although some objections overlap with others. Conclusion [ 44 ] In the result, the plaintiff was very substantially successful on the application. In the ordinary course, costs would be awarded to the plaintiff under

Schedule “C” of the Alberta Rules of Court under the appropriate column. If there is some reason why costs would not follow the event in this manner, the parties may contact the masters’ chambers clerk to

schedule an appointment to address them. Heard on the 30 th day of March and the 19 th day of April, 2016. Dated at the City of Calgary, Alberta this 20 th day of June, 2016. A. R. Robertson, Q.C. M.C.C.Q.B.A. Apparences: Grant N. Stapon, Q.C. Bennett Jones LLP for the Applicant David V. Tupper and John May Blake, Cassels & Graydon LLP for the Respondent

Schedule “A” Specific Questions [1] Page 15, line 4: So you were aware that pursuant to this trust arrangement [a 1991 Securitization Procedure], for an executive benefit plan associated with pension entitlements, that if an executive was terminated, the executive could, in fact, cause the company to fund the obligation by making the payment into the trust? [2] This question must be answered.

The question is essentially about his “awareness” or understanding of the workings of the trust arrangement. [3] Page 21, line 20: Number 4 [of the recitals to amending agreement dated May 30, 2003] says, “The executive is a member of the executive benefit plan and is covered by the securitization procedure.” Do you see that? A. Yes Q. so that would have been the 1991 procedure? [4] This question must be answered. The witness is being asked to explain the basis for a reference in an agreement and it

appears to be something the witness likely understands. The question is not focused on the meaning, but rather his understanding of it at the relevant time. [5] Page 21, line 27: as a matter of fact, Mr. MacLeod, what securitization procedure were you using before May 30, 2003 when this was amended? The 1991 procedure? [6] This question must be answered.

The witness is being asked what procedures were being followed by the defendant. [7] Page 24, lines 7 and 17: What about these words [in the May 30, 2003 agreement], did you have any difficulty understanding these, and that is, to this end, (as read) Effective on the amending agreement effective date, the executive shall cease to be covered by the securitization procedure and of the securitization and funding of the executive benefit plan obligations shall be governed by the terms of this amending agreement. Did you have any difficulty? Do you understand those words, Mr. MacLeod?

What is Nexen’s understanding of those words, Mr. MacLeod?... Correct me if I am wrong, Mr. MacLeod, but as the administrator of these agreements, you would have been required to read them, understand them, and administer them, right? A: Yes. Q: Thank you. What was your understanding in connection with clause 6 and 7 of the amending agreement in these proceedings? [8] The first two questions must be answered, although materiality may be nebulous.

The question, “What is Nexen’s understanding of those words?” need not be answered because it is asking for a legal opinion. [9] The question, “What was your understanding in connection with clause 6 and 7…” must be answered because it is asking for his understanding at the relevant time. [10] Page 26, line 17 and page 27, line 15: You will agree that paragraph 6 [of the May 30, 2003 agreement] indicates that, (as read) The Corporation and the executives have agreed in the amending agreement to provide for the securitization and funding of the corporation’s outstanding obligations under the executive benefit plan to the executive, the executive benefit plan obligations and the change of control obligations through the same arrangement.

You understood the plain meaning of those words; is that fair? ... Okay. And paragraph 7, to this end, (as read) Effective on the amending agreement effective date, the executive ceased to be covered by the securitization procedure and the securitization and funding of the executive benefit plan obligations commenced to be covered by the amending agreements. Correct me if I am wrong, but that’s production 10 in Mr. Romanow’s production? MR. TUPPER: Sorry, are you just asking him to identify what production it is? MR. STAPON: No.

I am asking him to identify the document which is being referenced in paragraph 7 of the trust agreement. [11] The question must be answered. No legal opinion is sought here, but rather the question is about the witness’ understanding of the documents that he administered. [12] Page 39, line 16, page 40, line 5 and page 40, line 9 : Okay. You will recall, Mr. MacLeod, that the 1991 agreement provided that in the event the executive was terminated, the executive could call upon Nexen to fund the retirement obligation by cash, correct?... Mr.

STAPON: I am asking you to look at page 6 of the document you just produced again [the 1991 securitization procedure], once again paragraph 3.2. Is there any doubt in your mind, after a plain reading of that as the administrator of the plan, Mr. MacLeod, that Nexen, upon an employee being terminated, could be called upon by that employee to securitize the pension amounts of Nexen?

Q: Did you understand that to be the case, whether or not the agreement says that? [13] These questions, which are effectively one question, must be answered because they probe the witness’s understanding, as the administrator of the documents, of the documents he administered. [14] Page 42, lines 10 and 18: Right.

I want to understand where or how, when it says [in an amending agreement dated December 9, 2008]: (as read) If an executive’s employment is terminated by any party for any reason prior to a change of control… And then it continues on to say: (as read) … any remaining entitlements of the executive under the executive benefit plan which remain following the termination of restated agreement pursuant to

section 2.4 shall then commence to be covered under the securitization procedure.

Explain to me how Nexen could understand, as reflected in Blakes’ letter that upon Mr. Romanow’s termination before a change of control there was nothing further applicable in this agreement?... Q: Tell me, Mr. MacLeod, who, within Nexen, decided that that position was going to be taken? [15] This question requires some more clarity. Without access to the letter from Blakes (the law firm representing Nexen) it is difficult to know with certainty what question was being asked.

If the question related to Nexen’s understanding at the relevant time, the answer may be required although counsel may have properly objected on the basis of privilege - the answer may involve disclosing solicitor client communications and advice. [16] Page 43, line 20: Were you, as the administrator of this plan, of the view that if an executive was terminated, there was no longer any right to securitization after the execution of this agreement [a September 17, 2008 change of control agreement]? [17] This question must be answered.

It probes the witness’s understanding of how the agreements that he administered functioned. [18] Page 64, line 18: Did you have an understanding as to whether or not there were any securitization rights available to Mr. Romanow at this time? [19] This question must be answered for the same reason as the previous question. [20] Page 114, line 17: There is a statement [in a trust merger agreement dated December 10, 2013]: “…and whereas such amendments do not adversely affect the securitization of the obligations accrued to date.” Do you see that? A: Yes.

Q: Is there any reason why the reference is to date rather than in the future, given the loss of your letter of credit? [21] This answer must be given, although it is close to the line. Unless Mr. MacLeod participated in drafting the agreement, he may well not know the answer, but he may have a sufficient understanding of the document to explain it.

This is a very specific question that may relate primarily to draftsmanship. [22] Page 116, line 27 and page 117, line 14: And in connection with item 5 [of an officer’s certificate in connection with the trust merger], the advice was: “No funding was required under any agreement with the beneficiaries under the agreements.” That would include Mr. Romanow, despite his demands for securitization, correct? Does

part 5 of this certificate, Nexen document NEE206732, also apply to Mr. Romanow? [23] These questions must be answered because they probe the understanding of the witness as administrator of the documents as to Nexen’s obligations. [24] Page 125, line 9: And

section 12 [of an amended trust agreement dated December 23, 2013], there is a specific notation that, (as read) No person claiming any right or benefit from the trust fund shall have any ability to seek a remedy from the trustee unless identified by the corporation as a person entitled to participate in the benefits funds from the trust fund. Nothing like that clause existed before; is that correct? [25] This question must be answered.

It probes the history of the trust agreement administered by Nexen and the witness’ understanding of their contents, which, in these circumstances is relevant and material to the claim advanced. [26] Page 131, lines 15 and 19: And it indicates that the corporation may amend, modify or waive

article 11 of the [September 17, 2008] restated agreement and then it continues on. It says: (as read) Provided that such amendment, modification or waiver, as the case may be, does not adversely affect the securitization in accordance with the terms hereof of those obligations which have accrued up to the date of such amendment. Do you see that? A: Yes. Q: And did you understand that to mean that you can only make changes if they don’t impact rights which have accrued up to the dates the agreement was signed?...

Q: What was the corporation’s understanding of that provision? [27] These questions must be answered because they probe the witness’ understanding (in the circumstances that would appear to be the corporation’s understanding, although the witness might clarify) of how the documents that he administered function. [28] Page 137, line 9: And at the time of Mr. Romanow’s termination, he was, in fact, a member of that [September 17, 2008] change of control agreement and of that 2003 trust agreement, correct? A. Yes. Q: Then there was a second trust which was for everyone else, correct? A: Yes. Q: How did Mr.

Romanow get from A to B in clause 16? MR. TUPPER: That’s been the subject of all of the legal dialogue already between you and Mr. Thiessen. MR. STAPON: I agree, but I’m asking for Nexen’s advice under oath as to what and how it happened. [29] This question must be answered to the extent that the witness is being asked to explain the witness’ understanding at the relevant time period. [30] Undertaking 48, page 142: All right. So I’m going to ask you then specifically for this one. That is, what securitization

procedure, as it’s defined in the change of control in the executive benefit plan is being referred to by Nexen in

article 2.4 [of the September 17, 2008 agreement]? I would like this specific document, please. [31] This undertaking must be answered. The witness is being asked to explain his understanding of the agreements that he administered. [32] Page 146, line 17: That would have resulted effective September 7, 2012 in a scramble to try and figure out what Mr. Romanow’s rights were and what agreement they would be secured pursuant to, correct? [33] This question must be answered.

The question probes into the witness’ understanding of the documents he administered and on the res gestae pled by the plaintiff. [34] Page 234, line 20: Okay. I take it by this point in August 2012, Nexen and you, being in charge of the benefit program, recognized that if the change of control went through, the executives who were subject to the change of control agreement would all be subject to entitlement to a lump sum payout, correct? [35] This question must be answered.

It addresses his understanding of Nexen’s obligations under the documents that he administered. [36] Page 252, line 18: And that agreement [an arrangement agreement with CNOOCC Canada Limited] in the event that it concluded would have resulted in a change of control of the corporation, correct? [37] This question must be answered for the same reason as the previous question. [38] Page 62, line 13: You will agree with me at this point in time you had not provided Mr. Romanow with what you say is the applicable securitization procedure made back in 1991? MR. TUPPER: No, we don’t say that at all.

This witness has never said that, so that is also objected to. [39] This question must be answered. It is another way of saying, “Did you provide Mr. Romanow with what you say is the applicable securitization procedure?” but asked in a fashion as it might be asked in cross-examination. [40] Page 176, line 22: Why would Mr. Romanow’s change of control agreement be passed along if Nexen was going to take the position it wasn’t applicable? MR. TUPPER: I’m not sure there is a foundation for that.

I am not sure that there had been an articulation or ever an understanding or a formation of Nexen’s position at that point, so the question has no foundation. [41] This question must be answered, subject to a caveat. The question appears to be directed at Nexen’s understanding of the relevance of a document, provided in negotiations, which it later said was not applicable.

However, if it had not been established that the document was provided at that time, or that Nexen did not later take the position that it was not applicable, the question need not be answered. [42] Page 60, line 171: [Note: This reference to page and line is in error. I could not locate the excerpt in the partial transcripts provided. I have accepted the excerpt as quoted by the defendant.] Did Nexen consider the securitization process when it requested that Mr. Romanow signed this release of any and all claims, but for what is stipulated in that offer of settlement? A: I don’t know.

Q: Is there anyone you can check with to find out? A: I can, yeah. Q: Who would you check with? A: I would check with counsel, actually. Q: I’m going to ask you to do that. MR. TUPPER: I’m going to refuse that. That’s clearly solicitor/client legal advice. [43] This question must be answered, unless the answer involves revealing solicitor client communications. The mere fact that this witness would consider it appropriate to inquire of counsel as to whether something was considered does not necessarily mean that legal advice was involved in the decision.

His portal to the decision-making process may simply be through legal counsel. [44] Page 79 lines 4 and 12: Well, do you know if Nexen instructed Mr. Maxwell not to give the 2003 trust agreement? A: Actually, I don’t. MR. TUPPER: And that’s privileged. MR. STAPON: Actually, it is not privileged at all. This is a solicitor-and-agent communication. If it gave those instructions, that is that Maxwell was to say no, you don’t get it, I need to know who made the decision and why. [ 45 ] This question must be answered.

There is no indication that solicitor client privilege is involved. [ 46 ] Page 80 line 21: The objection on this page was conceded by the defendant in oral argument so the question must be answered [ 47 ] Undertaking 20, page 83: This was also conceded by the defendant. [ 48 ] Undertaking 33, page 100: This was also conceded by the defendant. [ 49 ] Undertaking 82 page 227: This was also conceded by the defendant. [ 50 ] Undertaking 86, page 234: With respect to document 73 in the Romanow production, to advise if Nexen is saying that the change of control agreement is now applicable with respect to its securitization procedure. [ 51 ] This undertaking must be complied with.

The objection was “privilege”, but there is no indication that solicitor client privilege is involved. It might be an example of a party perhaps changing its own understanding of its obligations. The plaintiff is attempting to understand a communication that was unclear. [ 52 ] Page 235, lines 7 and 14: Did Nexen not come up with a plan which basically said look, if the change of control agreement goes through, we’ll pay everybody out pursuant to the change of control agreement and for future pension entitlements, we’ll put them

into the 2011 trust? ... I’m trying to find out why Mr. Thiessen, after we put in notice of securitization, provided a copy of the 2011 trust agreement. Who instructed him to do that? [ 53 ] The first question in this discussion must be answered, but the second question (who instructed legal counsel on an issue of strategy) involves information likely protected by solicitor client privilege. [ 54 ] Page 236, line 8: This was conceded by the defendant. [ 55 ] Page 239, line 1: I would like you to look at document 85 in the Romanow production. This is September 11, 2012. This is again to the attention of Mr.

Thiessen and it says “Mr. Romanow demands his TOPs and he also demands his securitization.” Can you tell me if that information was communicated to Nexen, and if so, what the internal Nexen analysis of that position was. MR. TUPPER: I think communication with Nexen is going to involve solicitor/client privilege. MR. STAPON: Not necessarily, Mr. Tupper. That is, a message can be passed on and it can be debated internally within Nexen. I would want to see that debate, if there was internal debate. MR. TUPPER: No.

Given the nature of the issues at this time, I’m going to refuse that. [ 56 ] This question must be answered. In this case Mr. Thiessen was functioning as messenger. Solicitor client privilege is not invoked. [ 57 ] Undertaking 91, page 258: To provide any documents in connection with advice received in connection with the

interpretation of the stock option plan. [ 58 ] This repeats the undertaking as it was summarized by the court reporter, but it does not appear to reflect the question that was asked, which was whether Mr. Macleod sought a legal opinion on whether the stock option agreement had been complied with, and if so was the communication in writing? [ 59 ] Undertaking 1, page 12: To determine what emails were exchanged in connection with documents that were applicable to Mr. Romanow’s case, and to

A) locate those documents,

B) indicate the date and “to and from” in connection with each one, and

C) indicate whether or not there is a privilege claim being advanced in connection with same. [ 60 ] The emails in question were with Mr. Reinhart and board members. The objection was based on privilege and the fact that all relevant documents have been produced. The possibility of privilege is recognized in the question, but that is not a complete answer until there is some foundation for the objection. As to the assertion that all documents have been produced, it is not at all uncommon for the questioning process to identify further areas where relevant and material documents should be produced.

This undertaking must be complied with. [ 61 ] Page 14, lines 1, 7 and 14 : And it says there [in the 1991 Securitization Procedure] that, “the Company shall establish a trust on the effective date.” Do you see that? A: Yes. Q: Can you tell me if the trust was, in fact, established on the effective date? MR. TUPPER: Mr. Stapon, I am struggling with the relevance of this line of questions. Neither Mr. Romanow nor Nexen has pled or relied on this agreement. [ 62 ] The objection here was relevance.

In light of the focus on the applicability of different trust agreements, the alleged bad faith and the absence of information (due to objections) as to Mr. MacLeod’s understanding of the relevant documents, this question must be answered. According to assertions made by plaintiff’s counsel in the transcript (not quoted here) it was produced late in the day, and Nexen claims it was the basis for the securitization procedure. Plaintiff’s counsel’s question were stated to be directed at demonstrating that that was not true.

It is a legitimate inquiry relating to the plaintiff’s claim. [ 63 ] Page 35, line 25: As at the time of Mr. Romanow’s termination in early January 2012, did Nexen take the position that any aspects of this agreement [a 2003 trust agreement] continued to pertain to his entitlements or not? [ 64 ] This question must be answered. It relates to Nexen’s state of mind at the relevant time. [ 65 ] Page 44, line 9 and page 45, line 14: Okay. Who were parties to the amending agreement that was made on or about 17 September 2008? You will see Mr. Romanow is a specific party.

Who else had similar agreements? [ 66 ] This question must be answered. It relates to the comparative treatment of Mr. Romanow with other executives in a similar position. [ 67 ] Page 66, lines 17 and 22: I would like you to look at Romanow production number 85, which is a September 11, 2012 letter from me to the attention of Mr. Thiessen, and at page 2 there is a very detailed discussion in connection with securitization. Did this letter come to your attention? Did this letter come to your attention at the time it was sent? A: I have seen it, yes.

Q: Were you asked for your views in connection with the accuracy of its position? [ 68 ] This question must be answered. It relates to Mr. MacLeod’s state of mind at the relevant time. [ 69 ] Page 66, line 27: Who, within Nexen, made the decision in connection with whether this was an accurate position or otherwise? [ 70 ] This question must be answered.

It relates to the state of mind of the decision-maker, the first step in that analysis being a determination of who the decision-maker was. [ 71 ] Undertaking 15, page 72: Further to Romanow production 90, to confirm that at the time this process was being negotiated, Nexen, before providing the agreement and before receiving the notice of securitization, was asking Mr. Romanow to give up the right of securitization.

[ 72 ] This question must be answered. It relates directly to Nexen’s state of mind during the negotiation discussions. [ 73 ] Undertaking 19, page 83: To advise who made the decision to deny Mr. Romanow his request to be taken out of the 2011 trust and put back into the 2003 trust. [ 74 ] This undertaking must be complied with. It touches on the state of mind of the decision-maker at Nexen, and the first step is to determine who that was. [ 75 ] Undertaking 21, page 84: To advise who, within Nexen, considered document tab 180 in Mr. Romanow’s production, and the April 15, 2013 letter from Mr.

Stapon to the attention of Mr. Tupper, demanding that Mr. Romanow’s securitization occur pursuant to the 2003 trust agreement and setting out an analysis as to why that ought to occur. [ 76 ] This question must be answered the same reason as the previous question. [ 77 ] Undertaking 30, page 95: To produce the description of the beneficiaries in the same fashion as they are contained in Nexen document NEE206928. [ 78 ] This question must be answered. It relates to the comparative treatment of Mr.

Romanow with other executives in a similar position. [ 79 ] Undertaking 32, page 96: To provide the description of the beneficiaries to the trust that were applicable in the 2011 year when Mr.

Romanow was still an employee of Nexen and before the making of the settlement agreement. [ 80 ] This question must be answered for the same reason. [ 81 ] Page 97, line 26: I’m going to ask you to advise for the record when those two individuals were moved into this particular trust [the 2011 trust]? [ 82 ] This question must be answered for the same reason. [ 83 ] Page 99, line 7: I anticipated that that was going to be your answer. So that by the 10 th day of December 2013, there were no longer any beneficiaries in the 2003 trust, correct? A: That’s correct.

Q: And that’s because they all received lump-sum payments following the change of control, correct? [ 84 ] This question must be answered for the same reason. [ 85 ] Page 104, line 26: Were you there when the bank requested this clause [in the trust merger agreement dated December 10, 2013], sir? A: I was not. Q: Okay. That would have been Ms. Schonberner? A: I don’t know that. I don’t remember for sure. Q: I’m going to ask you to determine whether or not it was the bank that, in fact, made that request. [ 86 ] The reference to the “bank” is a reference to CIBC Mellon Trust, the trustee.

This question must be answered because the creation of the trust merger agreement was part of the res gestae asserted by the plaintiff. CIBC was released and discharged from all of its obligations under the 2003 trust agreement. The plaintiff asserts that he is a beneficiary of the trust that released CIBC. [ 87 ] Page 107, line 4: In fact, that’s my understanding.

That is, that following the CN 00C transaction, correct me if I am wrong on this, everybody who was a party to the 2008 September 17, 2008 change of control agreement and would have had their EBP benefits funded, correct? [ 88 ] This question must be answered. It relates directly to the comparative treatment of Mr.

Romanow with other executives in a similar position. [ 89 ] Page 107, line 26: With respect, all those individuals in the September 17, 2008 trust agreement or EBP and the change of control agreement, they had all been paid out, correct? [ 90 ] This question must be answered for the same reason as the previous question. [ 91 ] Page 108, line 16: Did Nexen seek the consent of anyone before amalgamating these two particular trusts [the 2003 and 2011 trusts], no matter which beneficiary was affected? [ 92 ] This question must be answered for the same reason as the previous question and because it touches on Mr.

MacLeod’s understanding of the documents he was administering. [ 93 ] Undertaking 37, page 111: To produce the valuation document which demonstrates the nature of the funding at the time of the 2011 trust. [ 94 ] This undertaking must be complied with.

It relates directly to the res gestae asserted by the plaintiff. [ 95 ] Undertaking 38, page 113: To advise of the obligations of everyone pursuant to the EBP plan and the change of control plan were assessed and by December 23, 2013, they were fully paid out and the Government of Canada had received the reciprocal tax credit process. [ 96 ] This undertaking must be complied with. It relates directly to the comparative treatment of Mr. Romanow with other executives in a similar position. [ 97 ] Page 122, line 25, page 123, lines 11 and 27, and page 124, line 4: MR.

STAPON: I am looking at clause 6 of the amendment

made to that clause 2.2 on December 23, 2013. MR. TUPPER: I see. That’s what it says. MR. STAPON: You would have understood that to be a significant amendment with respect to the duties of a trustee to an individual like Mr. Romanow, correct?.... I am putting it to your client that this direction that the CIBC no longer owes any duty to the individual beneficiaries but only acts as a directed trustee would be a significant amendment. You will recall, Mr. MacLeod, that in correspondence which I previously referred you to this afternoon, we indicated to Mr.

Roger Booth that CIBC Mellon owed specific fiduciary duties to my client. I read that clause and you saw that clause. Do you recall that? A: Yes. Q: you will agree with me that this is an effort to take away any such duties? [ 98 ] This question must be answered. The arguments made by plaintiff’s counsel in the transcript (not quoted here) make it clear that he is attempting to show that actions were done in bad faith. [ 99 ] Page 146, line 27 and page 147, line 8: Was there any discussion to which you were a party, Mr. MacLeod, that Mr.

Romanow’s demands in connection with his securitization process and a settlement would have to be publicly disclosed to Nexen shareholders contemporaneous with the demand being made? [ 100 ] This question must be answered. It addresses the comparative treatment of Mr. Romanow with other executives in a similar position and also it was directed at demonstrating that steps were taken with Mr.

Romanow that were driven by shareholder relations concerns (as opposed to legal obligations) as indicated in plaintiff’s counsel’s explanation in the transcript (not quoted here).. [ 101 ] Page 154 lines 10, 17 and 24, page 155 lines 6, 13 and 21, page 156 line 2, page 170, line 5, and page 175, line 20: I take it you were aware that the board had retained consultants to determine whether or not the plan of action which Nexen was embarking upon in connection with long-term creation of shareholder value was the appropriate program; is that correct?… I take it that you are aware that the board gave Mr.

Romanow support that “Look, you are on the right track, consultants are saying that you are doing the right thing. We are going to stand behind you” is that fair?… I take it that you are aware that in February 2011, the Jerislowski Fraser firm indicated that it wanted to replace various members of the Nexen board with its own nominees with a view to potentially breaking up the company, selling its assets or putting the company up for sale because they lost confidence in both the board and management team?… Are you aware in these proceedings that after Mr.

Saville met with representatives from Jerislowski Fraser, that a plan was put together to try and satisfy what was being described as dissident shareholders?… Are you aware that as late as November 2011, Mr. Romanow was advised by Mr. Jenkins, of the Board, the Board was of the view that he was doing an excellent job and that he might, in fact, be described as CEO of the year if he stuck with this plan and hung around for four or five more years?… Are you aware of the fact that the board almost immediately thereafter held private meetings without notification to the attention of Mr.

Romanow whereby decisions were undertaken to terminate his employment as a result of the fact that the dissident shareholders needed to see some action?… That Mr. Jenkins [chair of the Compensation Committee] told Mr. Romanow that he was doing very well, the board was fully supportive of his position and his work and that he could be expected to be around for a long time and that’s how the corporation was going to compensate him. Did you have any discussion with Mr. Jenkins in connection with these allegations before he left her at the time of the CNOOC transaction?… Can you confirm, Mr.

MacLeod, that prior to Mr. Romanow’s termination, there had never been any suggestion by the Board of Directors or otherwise that Mr. Romanow’s performance was deficient in any way, shape or form? [ 102 ] These questions were all objected to on the basis of relevance, because the focus was on Mr. Romanow’s performance and his termination. Nexen has conceded that he was not terminated for cause. However, the questions probe at the circumstances behind the allegations of bad faith. That is, if the evidence is as I understand it to have been conceded – that shortly before Mr.

Romanow’s termination he was praised about his work – then questions relating to the “behind the scenes” activity is not of tertiary relevance, which would not be sufficiently relevant for questioning, but rather of secondary relevance (see NAC Constructors Ltd. v Alberta Capital Region Wastewater Commission , 2006 ABCA 246 , at para. 12 and 13 for a discussion on the topic). It may help explain steps that were taken, either to demonstrate bad faith or perhaps disclose its absence.

They must be answered. [ 103 ] Page 186, line 24: And in your preparation for this examination, did you, in fact, the confirm with any of Messrs. Jackson or Frances or Jenkins that it was, in fact, the shareholder activism which was causing them to terminate Mr. Romanow? [ 104 ] This question must be answered for the same reason as the previous line of questions. [ 105 ] Page 187, line 8: You will agree with me that the basis of and the reasons for Mr.

Romanow’s termination were never disclosed to him over the course of the settlement negotiation; is that fair? [ 106 ] This question must be answered for the same reason as the previous line of questions. [ 107 ] Page 201, line 21: Are you aware that Mr. Thiessen had published a paper which indicated that production pension documents were, in fact, relevant for the purpose of determining whether or not severance would be applicable? [ 108 ] This question need not be answered. It is a transparent attempt at either discrediting a legal opinion presumably given by Mr.

Thiessen or demonstrating that he was not following his own published opinion. It would not be relevant even if the attempt was successful. [ 109 ] Undertaking 67, page 204: To check with Mr. Quinn and advise what the source of the information was in Nexen document NEE013345, who it was that wrote the board resolution in that fashion and whether or not those parties were even in attendance at the board meeting. [ 110 ] This question must be answered. It relates to who was or were the actual decision maker(s). [ 111 ] Undertaking 70, page 210: To produce the answer to the questions that Mr. Quinn Wilson asked Mr.

MacLeod in connection with what Nexen’s historical practice had been (reference document NEE 002897). [ 112 ] This question must be answered. It touches on the comparative treatment of Mr. Romanow with other executives in a similar position.

[ 113 ] Undertaking 76, page 219: To determine if any directors had suggested that Mr. Romanow’s termination be with cause. [ 114 ] This question need not be answered. It is not relevant. [ 115 ] Page 230, line 16: Do you know if any employees of Nexen who were beneficiaries of the TOPs plan, other than Mr. Romanow, asked to exercise their options after July 23, 2012? [ 116 ] This question must be answered because it touches on the comparative treatment of Mr.

Romanow with other executives in a similar position. [ 117 ] Page 234, line 26 and page 234, line 7: That would have involved every single beneficiary of the 2003 trust, with the exception of Mr.

Romanow, if he is entitled to be there, correct?… Did Nexen not come up with a plan which basically said look, if the change of control agreement goes through, we’ll pay everybody out pursuant to the change of control agreement and for future pension entitlements, will put them into the 2011 trust? [ 118 ] This question was dealt with above, referencing page 234 lines 7 and 14. [ 119 ] Page 255, line 21: Will you agree with me to this point, Mr. MacLeod, that Mr.

Romanow, even to today’s date, has not been given an explanation as to why clause 8 [of Nexen’s tandem option plan] shouldn’t apply to get him his options, and that is clause 8 of the option agreement? [ 120 ] This question must be answered because it touches on the comparative treatment of Mr. Romanow with other executives in a similar position. [ 121 ] Page 265, line 17: What was the ordinary withholding applied by Nexen to STARS when they were exercised? A: It’s regular income. Q: So why wouldn’t Nexen do that here for Mr.

Romanow, having regard to the nature of the agreement that was struck on 13 September of 2012 [the settlement agreement between Romanow and Nexen]? [ 122 ] This question must be answered. It touches on the allegations of bad faith. [ 123 ] There are three remaining undertakings to produce documents, but the response provided is, “no such documents found” which, if correct, is an acceptable response.