Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 49

Court of Queen ’ s Bench of Alberta Citation: Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 49 Date: 20160122 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.

Defendants - and - 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 Third Parties 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 02993 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 _______________________________________________________ I. Introduction [ 1 ] Geophysical Service Inc (“GSI”) appealed 26 orders for security for costs granted to various Defendants by Master Laycock on March 19, 2015 in 17 actions commenced by GSI. The combined amount ordered to be paid as security for costs was $1,910,550.24. The appeals were argued before me on October 15 and 16, 2015. II. Background and Relevant Facts [ 2 ] GSI is a federally incorporated company headquartered in Calgary.

It carried on business collecting and licensing seismic data, in the course of which it (and its predecessors) provided seismic data to various government boards pursuant to the existing federal regulatory schemes in place at the time. Some of that seismic data was released by those boards to various oil and gas companies. The boards and oil and gas companies take the position this was done in accordance with the regulatory regime. GSI submits that while the legislation may permit viewing, it does not authorize the release of copies of the seismic data to third parties.

GSI has commenced these 17 actions in Alberta against the federal government, the National Energy Board, the Canada-Newfoundland and Labrador Offshore Petroleum Board and numerous oil and gas companies, advancing various claims including: that the provision of copies of the seismic data by the government boards was not authorized by the legislation; that doing so constituted a breach of copyright; and that obtaining the data and other activities of the corporate Defendants constituted breaches of various license agreements they had with GSI.

GSI has also commenced other actions in this Court, in the Federal Court, in Texas and in other provinces, advancing similar claims. [ 3 ] On April 24, 2014, Master Mason dismissed an application for security for costs of $30,000 brought by Corridor Resources Inc against GSI (Action 1301-11045). [ 4 ] Various other applications seeking security for costs from GSI had been filed and Master Laycock directed that all further security for costs applications respecting GSI be heard by him. [ 5 ] Applications by Statoil Canada Ltd (“Statoil”) (Action 1301-07809) and Nalcor Energy – Oil and Gas Inc (“Nalcor”) (Action 1301-09665) were heard by Master Laycock on October 20, 2014 (the “October Applications”). [ 6 ] Applications by Anadarko Petroleum Corporation and Anadarko US Offshore Corporation (“Anadarko”) and Canadian Natural Resources Ltd (“CNRL”) (Action 1201-15228) and by CNRL, ConocoPhillips Canada Resource Corp (“ConocoPhillips”) and MGM Energy Corp (“MGM”) (Action 1301-17573) were heard by Master Laycock on November 26-27, 2014 (the “November Applications”). [ 7 ] On December 11, 2014, Master Laycock directed that the remaining applications for security for costs would be heard February 18-19, 2015 (the “February Applications”), at which time the parties were given leave under Rule 6.11(1)(

f) to refer to and rely upon evidence filed in the other actions.

The February Applications involved the Defendants in the following actions: Encana Corporation (“Encana”) Action 0701-04061 Her Majesty the Queen in Right of Canada on behalf of Public Works and Government Services Canada and the Department of Natural Resources Canada (“HMTQ”) Actions 0901-08210, 1401-00777, 1401-05316 Husky Oil Limited and Husky Oil Operations Limited (“Husky”) Action 1001-05563 National Energy Board (“NEB”) Actions 0901-08210, 1201-05556, 1201-16166, 1301-02933, 1401-00777, 1401-05316 Canadian Discovery Ltd. (“Canadian Discovery”) Action 1201-12278 Arcis Seismic Solutions Corp. (“Arcis”) Action 1301-14139 Edison S.P.A. and Edison International S.P.A. (“Edison”) Action 1201-09664 Exxonmobil Canada Ltd. and Imperial Oil Limited (“Exxon”) Action 1301-14139 BP Canada Energy Group ULC (“BP”) and Plains Midstream Canada ULC (“Plains”) Action 1401-00646 Antrim Energy Inc. (“Antrium”) Action 1401-00904 Total S.A., Total E & P Canada Ltd. (“Total”) Action 1401-03449 Olympic Seismic Ltd. (“Olympic”) Action 1201-16166

[ 8 ] On March 19, 2015, Master Laycock released his written decision dealing with the October, November and February Applications. He applied the test set out in s. 254 of the Business Corporations Act, RSA 2000, c B-9 (the “ BCA ”), as the sole standard applicable in a security for costs application against a corporate plaintiff, as outlined by Wakeling J (as he then was ) in Amex Electrical Ltd v 726934 Ltd , 2014 ABQB 66 , 582 AR 304.

This requires the applicant defendant to establish that a corporate plaintiff will be unable to pay the costs of a successful defendant, in which case the court has discretion to require security for costs to be posted on terms the court thinks fit. [ 9 ] The Master reviewed the evidence regarding GSI’s financial circumstances. As GSI generated no income from operations in 2014, its assets would decrease over time as they were used to cover ongoing expenses.

He concluded that the only exigible assets that would be available to the Defendants for recovery of their costs would be the cash and securities held by GSI as its office furniture, supplies and fixtures would have little value on a sheriff’s sale and its seismic data would be difficult to sell through execution proceedings. He then considered what costs the Defendants might obtain if they were successful and GSI’s ability to pay those costs.

The Master reviewed the draft bills of costs prepared by the Defendants in each action, made some adjustments to the items claimed and estimated the costs that would be payable to each Defendant if ultimately successful under double column 5 (except in the case of HMTQ where single column 5 was used as double column 5 costs were not sought) to be as follows: Nalcor (1301-09665) $ 188,422.50 Anadarko (1201-15228) $ 201,682.50 Statoil (1301-07809) $ 188,422.50 MGM (1301-07573) $ 172,777.50 ConocoPhillips (1301-07573) $ 174,562.50 CNRL (1201-15228 & 1301-07573) $ 376,245.00 HMTQ (0901-08210, 1401-00777 and 1401-05316) $ 146,000.00 NEB (0901-08210, 1201-05556, 1201-16166, 1301-02933, 1401-00777, and 1401-05316) $1,000,461.00 Canadian Discovery (1201-12278) $ 134,715.00 Arcis (1201-12278) $ 109,725.00 Edison (1201-09664) $ 175,750.00 Exxon (1301-14139) $ 265,676.25 BP (1401-00646) $ 305,275.00 Plains (1401-00646) $ 171,750.00 Antrim (1401-00904) $ 147,222.91 Total (1401-03449) $ 134,417.50 Encana (0701-04061) $ 153,027.00 Olympic (1201-16166) $ 147,525.00 Total $4,193,657.16 (I note that my total is different from the $4,164,827.68 the Master indicated would be the total costs for all Defendants.) [ 10 ] The Master noted that there were at least six additional actions that could result in cost orders against GSI of between $600,000 and $1,000,000. [ 11 ] The Master found that GSI’s investment account balances as of November 28, 2014 and its business account balances as of January 5, 2015 totaled $4,640,120.89.

He concluded that if the Plaintiff expended the same amount in 2015 for general and administrative expenses as it had in 2013 ($2,296,180), its account balance at December 31, 2015 would be approximately $2,400,000. Applying only the average monthly legal expenses of $93,000, the annual total of $1,116,000 would reduce the account balance to $3,500,000 by December 31, 2015. [ 12 ] The Master concluded that while there were many unknown possible developments, there was significant danger that GSI would be unable to pay the costs of the successful Defendants in the actions as a whole.

On an individual basis, GSI likely would be able to pay the costs of early successful Defendants but not of later successful Defendants. He concluded that, on a balance of probabilities, GSI would be unable to pay the costs awards to all Applicants. [ 13 ] He then went on to consider whether any of the discretionary factors identified in Amex would make it unfair to GSI to make

an order for security for costs.

In particular, he noted that it was admitted that the Defendants have arguable defences, that there was no evidence that GSI would be unable to raise funds to continue and complete the actions, that the Defendants were seeking security for past costs, that no counterclaims existed, that most applications were brought at an early stage of the proceedings (although some were delayed because they had not appreciated GSI’s financial position) and that the legal issues raised were important to the community. [ 14 ] The Master granted security for costs to the following Defendants in the actions and in the amounts set out below.

The costs were calculated on double column 5 (except for HMTQ) to the conclusion of questioning. The amounts were to be paid into court within two months and the proceedings stayed, other than the case conference scheduled before the Chief Justice, pending payment. The Defendants were given leave to apply for a further installment of security for costs after questioning was completed.

Nalcor (1301-09665) $ 100,010.00 Statoil (1301-07809) $ 91,770.00 Anadarko (1201-15228) $ 106,102.50 MGM (1301-07573) $ 90,195.00 ConocoPhillips (1301-07573) $ 90,195.00 CNRL (1210-15228) $ 106,102.50 CNRL (1301-07573) $ 106,102.50 HMTQ (0901-08210) $ 25,460.50 HMTQ (1401-00777) $ 25,460.50 HMTQ (1401-05316) $ 9,975.00 NEB (0901-08210) $ 73,836.00 NEB (1201-05556) $ 76,511.00 NEB (1201-16166) $ 73,836.00 NEB (1301-02933) $ 73,836.00 NEB (1401-00777) $ 76,511.00 NEB (1401-05316) $ 51,720.00 Canadian Discovery (1201-12278) $ 57,540.00 Arcis (1301-141139) $ 49,350.00 Edison (1301-09664) $ 53,077.50 Exxon (1301-14139) $ 135,466.25 BP (1401-00646) $ 131,250.00 Plains (1401-00646) $ 63,525.00 Antrim (1401-00904) $ 44,730.00 Total (1401-03449) $ 63,210.00 Encana (0701-04061) $ 64,617.00 Olympic (1201-16166) $ 70,161.00 Total $1,910,550.25 [ 15 ] GSI has posted the total amount of security ordered by the Master by deposit to its solicitor’s trust account. [ 16 ] Chief Justice Wittmann conducted case conferences in April and June 2015 involving counsel in 23 of the actions commenced by GSI in Alberta.

By orders dated June 2, 2015 and June 22, 2015, he directed that two common issues be tried concurrent with the trial in the action commenced by GSI against 612469 Alberta Limited (carrying on business as CalWest Printing and Reproductions) (Action 1101-15306), which was scheduled to commence on November 23, 2015:

a) What is the effect of the Regulatory Regime that includes the legislation and regulations listed in Appendix A on GSI’s claims?

b) Can copyright subsist in seismic data of the kinds that are the subject-matter of GSI’s claims, namely (as described in paragraph 37 of the Defendants’ Brief filed May 29, 2015):

i) raw seismic field data, or raw seismic, magnetic, and gravity data; ii) seismic related navigation data; iii) processed and reprocessed seismic data; iv) selections, arrangement and compilations of raw, process and reprocessed seismic data;

v) productions and reproductions of seismic data in various forms and media including physical, electronic, magnetic and digital works; vi)

interpretations, derivations and translations of the seismic data; and vii) related seismic data materials? [ 17 ] The Chief Justice also directed that the costs of the trial of the common issues would be limited such that GSI would be neither required to pay a full set of costs to each Defendant if it was unsuccessful nor entitled to receive a full set of costs from each Defendant if it was successful. [ 18 ] On July 31, 2015, Master Hanebury dismissed an application brought by Antrim for

summary dismissal of GSI’s claim alleging infringement of its copyright in seismic data. Shortly prior to the hearing of this application, the Antrim action was settled and, as a result, this Court need no longer deal with the appeal of the security awarded to Antrim. III. Standard of Review [ 19 ] All parties agree that the standard of review on an appeal from a Master’s decision is correctness. IV.

Applicable Law [ 20 ] All parties agree that this application is governed by s. 254 of the BCA which states: In any action or other legal proceeding in which the plaintiff is a body corporate, if it appears to the court on the application of a defendant that the body corporate will be unable to pay the costs of a successful defendant, the court may order the body corporate to furnish security for costs on any terms it thinks fit. [ 21 ] They also agree that the initial burden is on the applicant to show on a balance of probabilities that the plaintiff will be unable to pay the costs awarded to a successful defendant after trial.

If that initial onus is satisfied, the evidentiary burden shifts to the plaintiff to show why the Court should not exercise its discretion to award security: Provalcid Inc v Graff , 2014 ABQB 453 , 591 AR 117 at paras. 87- 88 . [ 22 ] The parties differ as to how this

section should be interpreted and applied in the circumstances of this case. V. Issues on Appeal [ 23 ] GSI submits that the Master erred in allowing the applications for security for costs, either as a whole, or in some specific actions, by:

a) utilizing evidence from the February Applications in deciding the October and November Applications;

b) treating the action as consolidated for the purpose of ruling on the security for costs applications and pooling the costs claims across multiple actions, which is not contemplated in s. 254;

c) engaging in inappropriate speculation about GSI’s burn rate from disputed facts;

d) applying the incorrect legal test under s. 254 as it requires an applicant to establish that GSI will be unable to pay the costs of a successful Defendant, not that there is a risk that it might be unable to do so;

e) failing to consider the discretionary factors appropriately;

f) failing to find that the Defendants are attempting to prevent GSI from pursuing its claims by trying to break GSI financially and obtain security for cost orders that will debilitate or frustrate GSI’s ability to proceed; and

g) failing to properly quantify the draft bills of costs by allowing double column 5 costs, by including costs for interlocutory applications which are generally awarded to be paid forthwith in any event of the cause following the completion of the application, by overestimating the items included in the bills of costs and by awarding more than one set of costs to jointly represented parties in the MGM/ConocoPhillips action. VI. Analysis

A. The Evidentiary Record on Appeal [24] GSI submits that the Master wrongfully utilized evidence from the February Applications in deciding the October andNovember Applications. They note that his December 11, 2014 Order gave the parties to the February Applications leave under Rule6.11(1)(

f) to rely on evidence from the other actions but that this did not authorize after the fact consideration of evidence from theFebruary Applications in his determination of the October and November Applications that already had been argued. [25] By delivering an overall decision which dealt collectively with the October, November and February Applications, it isapparent that the Master did utilize some of the evidence on the February Applications when dealing with the October and NovemberApplications.

This was not authorized by the December 11, 2014 Order and no notice was given to GSI that he would be proceeding inthis fashion.

This likely was an oversight but still constitutes a technical error. [26] The next question is whether, for the purpose of this appeal of the security for costs orders granted in the October andNovember Applications, I should consider only the evidence on the record in those applications, or whether those appeals should beconsidered on the entire evidentiary record on this appeal, which includes the evidence before the Court on the February Applications. [27] Rule 6.14(3) provides that an appeal from a master’s order is “an appeal on the record of proceedings before the master andmay also be based on additional evidence that is, in the opinion of the judge hearing the appeal, relevant and material”.

Rule 6.14(6)states that a respondent to an appeal is to file and serve on the applicant “any additional evidence referred to in subrule (3)”. TheDefendants in the October and November Applications did not serve GSI with the evidence from the February Applications. However,GSI already had that material in its possession as part of the overall record on this appeal. Issues arising out of the evidence from theFebruary Applications were fully addressed in the briefs and oral submissions before me.

GSI’s counsel was unable to identify anyprejudice it would suffer if the appeals in respect of the October and November Applications included the evidence from the FebruaryApplications, beyond any arguments they might otherwise have arising from the more limited record. [28] I find that the evidentiary record for the February Applications is relevant and material to the issues raised on the appealsfrom the orders granted in the October and November Applications.

Having regard to the foundational rules, which are directed athaving claims “fairly and justly resolved …in a timely and cost effective fashion”, and to the lack of any substantive prejudice to GSI, Isee no reason to decide the appeals in respect of the October and November Applications on a different evidentiary record than in respectof the February Applications. B. Pooling Costs [29]

Section 254 requires an applicant to establish on a balance of probabilities that a corporate plaintiff will be unable to pay thecosts of a successful defendant. GSI submits that a proper

interpretation of this

section would not permit the Court to pool the estimatedcollective costs of all of the Defendants in multiple actions when considering whether security for costs should be awarded in a particularaction. [30] The Master concluded at paras. 98 – 99 that: ...The plaintiff will be unable to pay the costs of the successful defendants as a whole. On an individual basis, the plaintiff will likely beable to pay the costs of the early defendants who reach trial and are successful in defending the plaintiff’s claims.

If I do not grant an order for security for costs, the plaintiff will have sufficient funds to pay any cost ordered to the early successfuldefendants. Should I not grant [an] order for security for costs, the later successful defendants will be prejudiced because it is quite clearthat the plaintiff would be unable to pay their costs. [31] The approach of considering several actions collectively when determining whether security for costs should be awarded isnot unprecedented in Alberta, though it does not appear that the argument advanced by GSI was addressed in either of those cases.

InBooth Construction Ltd v Estabrook Construction Ltd, (AB KB), [1987] 83 AR 333, the plaintiffs had commencedthree separate actions against various defendants for breach of contract, negligence and defamation. Justice Egbert heard the security forcosts applications brought by the defendants pursuant to the predecessor of s. 254 in all three actions at the same time.

He found at para.16 that “...it is beyond question that, if Booth is not successful in its various actions, the only assets available to Booth to pay the costs ofthe Defendants, which are substantial, will be the machinery and equipment which is already pledged…”. In Mega Cranes Ltd vStatesman Group, 2011 ABQB 249, 508 AR 395, the Master directed that the plaintiff post security in three related actions. [32] While s. 254 typically would be applied in the context of a single action, it need not be read in such a narrow fashion.

GSI’sinterpretation effectively would add the phrase “in this action” after the phrase “of a successful defendant”. The logical result of thisinterpretation is that if a plaintiff commenced multiple actions and it was not clear which action would get to trial first, and the plaintiffonly had sufficient funds to pay a costs award to the first successful defendant, the Court could not order security to any of thedefendants. The plaintiff could continue to use up its otherwise available eligible assets and any subsequent successful defendants wouldbe unable to recover their costs.

In my view, that would be an unfortunate state of affairs inconsistent with the legislative intention ofgiving the Court discretion in appropriate cases to ensure that a corporate plaintiff will not be unable to pay costs awarded against it to asuccessful defendant. [33]

Section 254 is a discretionary remedial provision that should be interpreted in a broad, purposive fashion, consistent with s. 8of the Judicature Act, RSA 2000, c J-2, which states: The Court in the exercise of its jurisdiction in every proceeding pending before it has power to grant and shall grant, either absolutely oron any reasonable terms and condition that seem just to the Court, all remedies whatsoever to which any of the parties to the proceedingmay appear to be entitled in respect of any and every legal or equitable claim properly brought forward by them in the proceeding, sothat as far as possible all matters in controversy between the parties can be completely determined and all multiplicity of legal

proceedings concerning those matters avoided. [34] In my view, s. 254 is broad enough to permit the Court to consider the overall impact of costs awards to successful defendantsin other actions that have been brought by a corporate plaintiff when determining whether security for costs is appropriate in a particularcase. In other words, so long as a defendant in one action can establish that either it, a co-defendant in that action or a defendant inanother action brought by the plaintiff will be unable to recover its costs if successful, the Court has discretion to award security forcosts. C.

Speculation about GSI’s Burn Rate [35] GSI submits that it was not appropriate for the Master to speculate about its burn rate and relies upon the decision of theAlberta Court of Appeal in Walton v Alberta (Securities Commission), 2014 ABCA 273, 580 AR 218, which distinguishes between thepermissible drawing of inferences and impermissible speculation at para. 26: ...The fundamental difference is explained in Alberta Union of Provincial Employees v Alberta, 2010 ABCA 216 at paras. 37-8, 29 AltaLR (5th) 273, 482 AR 292: 37 There is a legal distinction between speculation and drawing inferences from the circumstantial and direct evidence on the record.The trier of fact is permitted to do the latter, but not the former.

The standard of review for the drawing of inferences is deferential.Inferences drawn from the facts are reviewed for reasonableness, or palpable and overriding error.

If the inference drawn is reasonable, areviewing court should not intervene just because other inferences (even arguably better inferences) could also have been drawn: H.L. v.Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401 at para. 74. 38 For these purposes, "speculation" can therefore be described as the drawing of an inference in the absence of any evidence to supportthat inference, or in situations where there is no "air of reality" to the inference: R. v.

Dubois, (SCC), [1980] 2 S.C.R.21, adopting the dissenting reasons in (1979), 1979 ABCA 230 , 17 A.R. 541, 49 C.C.C. (2d) 501 at paras. 15-17 (C.A.); R. v.Morrissey (1995), (ON CA), 22 O.R. (3d) 514, 97 C.C.C. (3d) 193 (C.A.) at p. 530; R. v. Martin, 2010 NBCA 41 atparas. 34-6; Caswell v. Powell Duffryn Associated Collieries Ltd., [1940] A.C. 152 at pp. 169-70; Kerr v. Ayr Steam Shipping Co.,[1915] A.C. 217 at pp. 233-4. Drawing inferences when there is an evidentiary gap, based on an "educated guess", is speculation: U.S.A. v Huyhn (2005), (ON CA), 202 OAC 198 at para. 7, 200 CCC (3d) 305 (CA).

These concepts were applied in a securities context in Re Suman,(2012) 35 OSCB 2809 at paras. 294-300. [36] The Master carefully examined the evidence before him regarding GSI’s financial circumstances. He noted that its corporateofficer swore in his September 2014 affidavit that the company had $3 million in cash, furniture, office supplies and fixtures valued at$200,000 and a library of seismic material with a replacement value of $800 million.

The Master concluded that the furniture, officesupplies and fixtures were listed as having a value of $29,666 in the unaudited May 30, 2014 financial statements and would have littlevalue in a sheriff’s sale. He determined that the seismic data would have little value and would be difficult to sell through executionproceedings as whether it was properly releasable into the public domain was one of the issues in the lawsuit.

He noted that GSIgenerated no income from operations in 2014 and that the only exigible assets left to the Defendants for recovery of their costs would bethe cash and investments, which had a value of about $4.6 million based upon the latest documents showing balances as of November 28,2014 and January 5, 2015. [37] He then looked at GSI’s expenses and noted that its 2013 General and Administrative Expenses were $2.3 million and itsaverage legal fees in 2014 were $93,000 per month.

He noted that if GSI’s General and Administrative expenses in 2014 were the sameas they were in 2013, its account balance at the end of 2015 would be reduced to $2.4 million. Alternatively, if its average monthly legalfees of $93,000 continued they would be $1,116,000 annually and its account balance would be $3.5 million. [38] The Master found no evidence that GSI would transfer funds to prejudice the Defendants. [39] I find all these were inferences that reasonably could be drawn from the evidence before the Master, not speculation.

They areprojections based upon the available financial information. [40] As to the Master’s failure to attribute any value to GSI’s seismic data, it is not listed or valued in GSI’s unaudited financialstatements and there is no evidence from a qualified appraiser as to its value. While the Master’s approach of attributing no value toGSI’s seismic data presumes that GSI will be unsuccessful in its actions, that is the premise underlying any award for security for costs.This is a very unusual case where GSI’s main business at the present time appears to be pursuing multiple actions advancing similararguments.

In these circumstances, it was appropriate for the Master to presume that GSI would experience similar unsuccessful resultsin each of those actions for the purposes of assessing whether the criteria set out in s. 254 were met. D. Establishing that GSI “will be unable” not “might be unable” to pay the costs of asuccessful Defendant [41] GSI submits that s. 254 requires the Defendants to establish that GSI will be unable to pay the costs of a successfulDefendant, not that it might be unable to do so.

As the Master found that it was likely GSI would be able to pay the costs of the earlysuccessful Defendants but not of the later successful Defendants, GSI submits that no Defendant has established that GSI “will beunable” to pay its costs if successful. [42] The first response to this is, as above, that s. 254 is broad enough to permit the Court to consider the implications for otheractions.

The second is that the burden of proof on the Defendants could be satisfied by a Defendant demonstrating that GSI’s burn rate issuch that it likely will be unable to pay its costs of any of the Defendants if successful, after trial.

[43] In my view, it is more than likely that GSI will be unable to pay the costs of any of the Defendants if they are successful attrial, having regard to the evidence before me as to GSI’s exigible assets and my estimate of its burn rate. It is likely that none of theactions before the Court on this application will proceed to trial before September 2017, based upon the current stage of proceedings ineach action, the common issues trial (which may well result in appeals whatever the result, given the nature of the issues and amounts atstake) and the systemic delays in obtaining a trial date at the present time.

The evidence indicates that GSI’s combined assets in itsoperating and investment accounts based on information at November 28, 2014 and January 5, 2015 were $4.6 million.

This amountwould be subject to some variation due to market fluctuations and changes in exchange rates as GSI acknowledged its Brief filed inFebruary 2015 for the application before Master Laycock that the value of its exigible assets had decreased somewhat to over $4 million.GSI’s General and Administrative Expenses for 2012 and 2013, according to its financial statements prepared in May 2014 by KPMG,were $2.153 million and $2.296 million, respectively (including legal fees). GSI indicated in undertaking responses that its legal feeswere $587,326 for 2012, $995,947 for 2013 and $1,225,043 for 2014.

It is reasonable to infer that GSI’s legal fees going forward willcontinue to be at least $100,000/month or $1.2 million per year as GSI has commenced further actions in 2014 and 2015. GSI’s Generaland Administrative Expenses, excluding legal fees, going forward will also be at least $100,000/month based upon its 2012 and 2013information.

On this basis, even if GSI’s exigible assets were to increase due to fluctuating market conditions or changing exchangerates, its expenses through to August 2017 would be over $5 million and it likely would be unable to pay any costs awarded to anysuccessful Defendant after trial. E. Discretionary Factors [44] At paras. 26 and 103 – 114 of his decision, the Master reviewed a number of the discretionary factors enumerated by JusticeWakeling in Amex. The list in Amex is not exhaustive and not all of those factors will be relevant in a particular case.

As I am satisfiedthat the Master correctly concluded that the Defendants met the first part of the test in s. 254 and demonstrated on a balance ofprobabilities that successful Defendants will be unable to recover their costs, I have considered the following discretionary factors:

a) Like the Master, I do not believe it is necessary or helpful at this stage to consider the merits of the actions in detail and merely notethat the Defendants have arguable defences that likely will be vigorously pursued;

b) GSI is a closely held private corporation. There is no evidence that it would be unable to post security for costs and/or to raisefunds to pursue the actions from its shareholders, directors or other third parties who would benefit if the litigation is successful;

c) The only counterclaim is that advanced by Edison premised on the allegation that GSI’s action against it is in furtherance of animproper purpose. It exists only as a result of GSI’s action. In these circumstances, the counterclaim should not preclude awardingsecurity for costs against GSI;

d) Applications for security for costs were brought reasonably promptly once the Defendants came to appreciate that GSI was nolonger carrying on active business and was commencing numerous actions in multiple jurisdictions such that ongoing legal costs wouldbe a drain on its existing asset base. To the extent that claims have been made for past costs, those will be addressed below; and

e) The lawsuits raise important legal issues. [45] On balance, I agree with the Master that it would not be unfair in the circumstances to require GSI to post security for costs. F. Defendants Attempts to Debilitate GSI [46] GSI also submits that the Defendants are engaging in systems-based litigation and are using the Rules of Court and thesecurity for costs applications as a “procedural obstacle course”. [47] GSI has commenced more than 20 lawsuits seeking damages in the billions of dollars. It can expect to face vigorous defences.This litigation is being case managed by the Chief Justice.

Counsel cooperated both before the Master and on the appeals before me tohave the security for costs applications dealt with in an efficient manner. I observed nothing on the part of the Defendants or theircounsel that would indicate any inappropriate behavior in relation to the conduct of the litigation. G.

Defendants’ Conduct [48] Some cases have recognized that a court may decline to order security for costs or reduce the quantum when the actions of theapplying defendant caused or contributed to the plaintiff’s impecuniosity: Centre of Physical Therapy and Athletic Rehabilitation Ltd vFilipenko, 2011 ABQB 340, 523 AR 101.

Other cases indicate that security may be granted even when the impecuniosity allegedlyresults from the defendant’s actions of which the plaintiff complains: Pocklington Foods Inc v Alberta (Provincial Treasurer), (AB KB), [1994] 153 AR 288 at para 12. [49] GSI submitted that the Master failed to take into account that the NEB’s release of GSI’s seismic data into the public domainlessened the value of that data and contributed to GSI’s impecuniosity.

NEB’s position is that it is complying with the legislative regimeand whether or not that is the case will be an issue to be determined at the common issue trial or otherwise in the course of the actions. Inthis context, I do not find NEB’s conduct to have been such that it would be appropriate to take this factor into account. I also am of theview that the alleged conduct of the Department of Natural Resources and various other Defendants in relation to the issues raised in thelitigation should not affect their claims for security for costs at this stage of the proceedings. H.

Quantification Issues [50] Having concluded that the Defendants have established that they are entitled to security for costs, the next issue to be

determined is whether the quantum of security ordered by the Master was correct. (

i) Double Costs [ 51 ] I am satisfied that assuming double costs under column 5 was appropriate for all Defendants except HMTQ, who did not seek same, and Olympic, against whom no monetary amount is sought in the Statement of Claim. In Olympic’s case, column 1 is the appropriate column. However, given the complexity of the actions, security for costs for Olympic should be calculated on the basis of double column 1.

The amount ordered by the Master in respect of Olympic should be reduced accordingly. (ii) Inflated Estimates [ 52 ] GSI submits that the Defendants have overestimated the steps to be taken to get to trial, that the reductions by the Master to those estimates were still not sufficient and that the common issues trial and other procedural steps that may be directed by the Chief Justice at case conferences will further reduce the expected steps and should reduce the required security.

I am generally satisfied that the steps assessed by the Master in each action were appropriate, excluding costs for interlocutory applications which will be addressed below. It is premature to determine at this point whether the common issues trial or other procedural directions by the Chief Justice may materially affect those estimates. If that appears to be the case after questioning is completed, then an application can be brought by any party to adjust accordingly the amount of security required to be posted. (iii) Past Costs [ 53 ] While Justice Wakeling in Amex at paras. 74(

e) and 75(

b) disapproved of awarding security for steps already taken, the Master followed the approach of Justice Poelman in Manson Insulation Products Ltd v Crossroads C & I Distributors , 2014 ABQB 634 , in which he awarded past costs where the defendant applied for security after it discovered that the plaintiff had sold all of its assets and it had no prior reason to believe that the plaintiff’s ability to pay costs was in jeopardy.

The Master adopted this approach and awarded security for past costs as he accepted that the Defendants became aware of the need to apply for security after seeing press releases indicating that GSI was no longer operating and its major asset was a series of lawsuits which were increasing in number and expanding in complexity and after it appeared that GSI had no income in 2014. [ 54 ] Some Defendants have not sought past costs.

However, to the extent that they have been claimed, I am satisfied that it is appropriate to take them into account in this case in determining the amount of security to be awarded for the same reasons accepted by the Master. (iv) Costs for Interlocutory Applications [ 55 ] GSI points out that costs for interlocutory applications generally are payable forthwith in any event of the cause and asserts that such amounts should not be included in calculating an appropriate amount of security. I agree that these amounts should not be included in the amount of security required to be posted by GSI. (

v) Multiple Costs to Jointly Represented Parties [ 56 ] The Master ordered GSI to post security for costs for each of MGM and ConocoPhillips in the amount of $90,195 in Action 1301-07573, in which both entities are represented by the same counsel. MGM and ConocoPhillips note that they are separate legal entities, that additional claims were advanced against ConocoPhillips that were not advanced against MGM, that they have filed separate defenses, produced separate documents and appointed separate corporate representatives and that they meet with and instruct counsel separately.

In my view, there will be overlapping efficiencies when more than one party elects to be defended by the same law firm in a single action. In this case, while there were additional allegations made against ConocoPhillips that were not advanced against MGM, portions of the two Statements of Defence contained identical wording, both list the same counsel and the draft Bills of Costs were identical but for the inclusion of a $1500 document processing charge in the case of ConocoPhillips.

To the extent that additional items could be claimed such as two Statements of Defence, two affidavits of records or time for questioning representatives of both parties, that would be more appropriate than seeking security twice for such matters as reviewing opposing parties’ documents, preparing for questioning, attending at questioning, preparation for trial and other such matters. As a result, separate security will not be allowed for each of MGM and ConocoPhillips but an increased amount will be awarded to reflect some of the items where there would be no duplication. VII.

Conclusion [ 57 ] I allow the appeal to the extent of varying the Master’s order to reduce the amount of security for costs required to be posted by GSI in some respects. To the extent that the amounts I order differ from those ordered by the Master, they reflect my estimate of the approximate costs to the completion of questioning based upon my review of the draft bills of costs submitted and the considerations outlined above: Nalcor (1301-09665) $ 99,000.00 Statoil (1301-07809) $ 85,000.00 Anadarko (1201-15228) $ 89,000.00 MGM/ConocoPhillips (1301-07573) $ 89,000.00

CNRL (1210-15228) $ 57,540.00 CNRL (1301-07573) $ 57,540.00 HMTQ (0901-08210) $ 21,000.00 HMTQ (1401-00777 $ 21,000.00 HMTQ (1401-05316) $ 7,850.00 NEB (0901-08210 $ 62,000.00 NEB (1201-05556) $ 55,000.00 NEB (1201-16166) $ 56,000.00 NEB 1301-02933) $ 55,000.00 NEB (1401-00777) $ 57,000.00 NEB (1401-05316) $ 43,000.00 Canadian Discovery (1201-12278) $ 57,540.00 Arcis (1301 14139) $ 36,000.00 Edison (1301-09664)* $ 53,077.50 Exxon (1301-14139) $121,000.00 BP (1401-00646) $120,000.00 Plains (1401-00646) $ 52,000.00 Total (1401-03449) $ 59,000.00 Encana (0701-04061)* $ 64,617.00 Olympic (1201-16166) $ 16,000.00 * These amounts will remain the same as my estimates were higher but no cross appeal was filed. [ 58 ] Any party is at liberty to apply to vary the amount of security required to be posted upon the completion of questioning. [ 59 ] Success on these appeals has been divided.

If the parties are unable to agree how costs should be addressed, they are at liberty to provide me with their written submissions within 45 days of this decision, which submissions should include a breakdown of the amounts sought. [ 60 ] I thank all counsel for their cooperation in preparing the well-organized materials and in presenting argument in this case in an efficient manner, all of which greatly assisted in my consideration of these appeals. Heard on the 15 th and 16 th days of October, 2015 . Dated at Calgary Alberta this 22 nd day of January, 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