Brookdale International Partners, LP by its general partner BIP GP LLC v. Brookdale, 2017 ABQB 131

Court of Queen’s Bench of Alberta Citation: Brookdale International Partners, LP v Legacy Oil & Gas Inc, 2017 ABQB 131 Date: 20170224 Docket: 1501 07942 Registry: Calgary Between: Brookdale International Partners, LP by its general partner BIP GP LLC and Brookdale Global Opportunity Fund Applicants - and - Legacy Oil & Gas Inc and Crescent Point Energy Corp Respondents _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice D.B. Nixon _______________________________________________________ I. Introduction [ 1 ] This action concerns a claim by dissenting shareholders to obtain an interim payment under

Part 14 of the Alberta Business Corporations Act , RSA 2000, c. B-9 (“ ABCA ”). The statutory provision under which the dissenting shareholders are claiming an interim payment is unique to the ABCA. Its application is subject to the discretion of the Court. [ 2 ] Brookdale International Partners, L.P. and Brookdale Global Opportunity Fund (collectively, the “ Brookdale Entities ”) were shareholders of Legacy Oil & Gas Inc. (“ Legacy ”). In May 2015, Legacy was involved in a Plan of Arrangement under the provisions of the ABCA .

The Brookdale Entities exercised their rights to dissent to that Plan of Arrangement. [ 3 ] The Brookdale Entities commenced an action to be paid "fair value" for the shares held in Legacy. Since it may be sometime

before the Court determines the “fair value” question, the Brookdale Entities sought an interim payment of $2.415 for each of the Legacy shares that they held. II. Issue [ 4 ] Should the Court order Crescent Point Energy Inc. (“ Crescent Point ”) to make an interim payment to the Brookdale Entities in the amount of $2.415 for each Legacy share held by them immediately before the Plan of Arrangement was implemented? III. Facts [ 5 ] The Brookdale Entities purchased common shares of Legacy during April and May, 2015. [ 6 ] In May 2015, Crescent Point and Legacy entered into a Plan of Arrangement.

Under that arrangement, Crescent Point acquired all of the shares of Legacy. While the nature of the arrangement did not require that a right to dissent be offered, it was granted by Legacy. Those dissent rights were then confirmed in an Interim Order. [ 7 ] The Plan of Arrangement was structured so that 0.095 of a Crescent Point share was exchanged for each Legacy share. [ 8 ] As was previously mentioned, the shareholders of Legacy were granted a right to dissent under the Plan of Arrangement.

The Brookdale Entities exercised their respective rights of dissent. [ 9 ] The Brookdale Entities sued for a determination of the fair value of the shares of Legacy under section 191(6) of the ABCA . The valuation date was June 29, 2015 (the “ Valuation Date ”). [ 10 ] On July 28, 2015, Legacy sent the Brookdale Entities a without prejudice “offer to pay … an amount considered by the directors to be the fair value of the shares”.

This offer to pay was made by Legacy in order to comply with its statutory obligation under section 191(7) of the ABCA (the “ Statutory Offer ”). [ 11 ] The amount that Legacy offered under the Statutory Offer was $2.415 for each of its shares held by the Brookdale Entities.

That amount was calculated by a formula which took into consideration the closing price of the Legacy shares on the TSX on the Valuation Date, and the implied value of the shares of Legacy based on the closing price of the Crescent Point shares on the TSX and New York Stock Exchange on that same date. [ 12 ] The Brookdale Entities rejected the Statutory Offer. They chose to seek a determination of the “fair value” of the Legacy shares. [ 13 ] On August 6, 2015, the Brookdale Entities requested an interim payment in an amount equal to the Statutory Offer.

The Brookdale Entities offered to provide an undertaking to repay any overpayment. [ 14 ] On August 7, 2015, Crescent Point advised the Brookdale Entities that it would not make an advance payment before trial. [ 15 ] On September 9, 2015, the Brookdale Entities filed an Application seeking an Order that Crescent Point make an interim payment pursuant to section 191(12) (

c) of the ABCA . The amount of the interim payment being sought by the Brookdale Entities was $2.415 per Legacy share (again, equivalent to the Statutory Offer amount). [ 16 ] As at the date of this Application, Crescent Point had not advanced any funds to the Brookdale Entities in respect of the Legacy shares. [ 17 ] The Brookdale Entities have no presence in Canada. Neither of the Brookdale Entities gave evidence in this Application.

Instead, the Brookdale Entities tendered an affidavit sworn by a junior employee of a non-party, Weiss Asset Management LLP (“ WAM ”). [ 18 ] The junior employee of WAM who swore the affidavit was Mr. William Garrity. He was 28 years old, and a graduate of a German university with a degree in comparative literature and German studies. [ 19 ] WAM is a U.S. limited partnership, based in Boston, Massachusetts. It is registered as an investment advisor with the Securities and Exchange Commission of the United States. WAM is an investment advisor to the Brookdale Entities. IV.

Analysis [ 20 ] The Court considers the Application for an interim payment in two steps. First, the Court reviews the law. Second, the Court applies the law to the facts of this case. A. The Law [ 21 ] The Court outlines the relevant legislation and jurisprudence. The Court also reviews the legislative evolution of the relevant statutory provision. [ 22 ] The Court reviews the legislative evolution of section 191(12) (

c) of the ABCA because the provision is unique. This review is

also warranted by the fact that there is very little jurisprudence on the provision. [23] The review of the legal framework touches on four components. First, as mentioned above, a review of the legislativeevolution of section 191(12)(

c) of the ABCA. Second, a review of the Statutory Offer, which must be made when dissent rights areexercised by a shareholder. The Statutory Offer is embedded in section 191(7) of the ABCA. While this corporate obligation isperipheral to the central issue in this case, it is part of the legislative framework that surrounds the exercise of dissent rights. Third, areview of the interim payment clause, which is the central issue in this case. That clause is section 191(12)(

c) of the ABCA. Fourth, areview of the relevant jurisprudence. 1. Legislative Evolution – Dissent Rights [24] One of the most important innovations included in the Business Corporations Act that the Government of Alberta proposed in1980 was the appraisal right, and its components.

Details of that history can be found in Institute of Law Research and Reform,Proposals for a New Alberta Business Corporations Act, Report No 36, vol 1 and 2 (Edmonton: Institute of Law Research and Reform,1980). [25] The appraisal right proposed in 1980 included the ability of a shareholder to dissent if the corporation decided to pursue abusiness path that was fundamentally different than the one initially contemplated.

In conjunction with the exercise of the dissent right,former shareholders could require the corporation to buy them out at a price representing the fair value of their shares. [26] In the course of considering appraisal rights in the context of the proposed ABCA, the Institute of Law Research and Reform(the “Law Reform Institute”) recognized that there were benefits and burdens to such rights.

While the underlying concept wasintended to provide minority shareholders with a mechanism that could be used against an unfair majority, the Law Reform Instituterecognized that appraisal rights also might give an unprincipled minority an opportunity to extort benefits from the majority: Proposalsfor a New Alberta Business Corporations Act, vol 1, at 129.

One of the examples given by the Law Reform Institute was that buying outthe minority could drain the company of cash needed for its ordinary affairs or for the execution of the proposal that triggered theappraisal right. [27] The particular legislative evolution that is of interest in this case is the inclusion of section 191(12)(

c) of the ABCA (formerlysection 184(12)(c)). That statutory provision provides the Court with the authority to make an interim payment to a dissentingshareholder. That particular power is unique. No similar provision exists in, for example, the

Canada Business Corporations Act, RSC1985, c. C-44 or the Ontario Business Corporations Act, RSO 1990, c. B-16. [28] This commentary from the Law Reform Institute recognized the benefits and burdens associated with the subject rightsconcerning different groups of shareholders. It is noteworthy that there is no suggestion in that commentary which would indicate thatsection 191(12)(

c) was intended to be analogous to a demand clause. It is a discretionary provision, and its application depends on thefacts of the particular case. 2. Statutory Offer – A Prerequisite [29] After dissent rights are exercised by a shareholder, certain procedural steps are mandated. One of these steps includes acorporate obligation to make an offer to buy out the dissenting shareholders. [30] The statutory obligation to make an offer to buy out a dissenting shareholder is in section 191(7) of the ABCA. That statutoryprovision reads as follows.

If an application is made under subsection (6), the corporation shall, unless the Court otherwise orders, send to each dissentingshareholder a written offer to pay the shareholder an amount considered by the directors to be the fair value of the shares. 3. Interim Payment – The Operational Clause [31] The authority of the Court to order an interim payment is provided for in section 191(12)(

c) of the ABCA. That provisionreads as follows. In connection with an application under subsection (6), the Court may give directions for ... (

c) the payment to the shareholder of all or part of the sum offered by the corporation for the shares. 4. The Relevant Jurisprudence [32] Section 191(12)(

c) of the ABCA was considered by the Court in Orman v Canadian Mountain Minerals Ltd (2000), (AB KB), 268 AR 338, 86 Alta LR (3d) 307 (QB). [33] Certain shareholders in Orman exercised dissent rights and applied for an interim payment before a final determination of thefair value of their shares. The application in Orman succeeded, resulting in an interim payment for the full amount of the statutoryamount that was offered. [34] In Orman, the dissent rights were a statutory requirement because they arose from an amalgamation of Canadian MountainMinerals Ltd and Goldtex Resources Ltd: see ABCA, section 191(1)(c).

B. Application of the Law [ 35 ] The Court now turns to apply the law to the facts. This examination involves two steps. First, a review of the Statutory Offer. Second, an analysis of the request by the Brookdale Entities for an interim payment. This second step reviews the justification advanced by the Brookdale Entities concerning the interim payment. 1. Statutory Offer – Rejected [ 36 ] When the Brookdale Entities exercised their dissent rights, a statutory obligation was imposed on Legacy to offer to buy the shares held by the dissenting shareholders.

That statutory obligation is embedded in section 191(7) of the ABCA . [ 37 ] Legacy complied with that statutory obligation. It sent the Brookdale Entities an offer to pay $2.415 for each of its shares held by the Brookdale Entities. [ 38 ] This offer was made by Legacy on July 28, 2015. The Brookdale Entities rejected the Statutory Offer. [ 39 ] The Brookdale Entities are not challenging any aspect of this Statutory Offer. 2.

Interim Payment – The Request [ 40 ] According to the Plan of Arrangement and the Interim Order, after the Brookdale Entities exercised their dissents rights, they cease to have any rights in respect of their Legacy shares: see also ABCA, section 191(14) . The residual right the dissenting shareholders retained was to be paid “fair value” for those shares as at the Valuation Date. [ 41 ] The Brookdale Entities are sophisticated investors.

Undoubtedly, they knew the implications when they exercised their rights of dissent, including the loss of their ability to achieve immediate liquidity in respect of their Legacy shareholdings. [ 42 ] The only other relief that the Brookdale Entities could pursue while they were waiting for a “fair value” determination was an interim payment. The legal basis for making an interim payment request is section 191(12) (

c) of the ABCA . [ 43 ] The Brookdale Entities took steps to request an interim payment. More specifically, they requested an interim payment in an amount equal to the Statutory Offer.

The day following that request, Crescent Point advised the Brookdale Entities that it would not make an advance payment before trial. [ 44 ] The Brookdale Entities then brought this Application, requesting an Order for an interim payment in the amount of $2.415 per share. [ 45 ] Notwithstanding this Application, it is understood that the Brookdale Entities will continue with their action for a determination of the “fair value” of the Legacy shares. However, there is no evidence that any steps have been taken to

schedule a trial date for that determination. [ 46 ] Based on a review of all of the materials filed and the submissions made, the rationale being advanced by the Brookdale Entities for the interim payment can be segregated into four categories. First, the Brookdale Entities argue that the interim payment would provide a minimum fairness to them. Second, the Brookdale Entities argue that the Statutory Offer is below “value”. Third, the Brookdale Entities argue that the financial condition of Crescent Point has deteriorated significantly since June 29, 2015.

Fourth, the Brookdale Entities argue that they have suffered losses. The Court will consider each of these four points in the sequence noted above. a. Minimum Fairness [ 47 ] The Brookdale Entities argue that an interim payment to them would provide minimum fairness. They also argue that a payment of $2.415 per share would not prejudice Crescent Point or Legacy because the interim payment requested approximates “fair value”. [ 48 ] The Brookdale Entities submit that this fair value approximation is supported by the Statutory Offer of $2.415 per share, which was based on analysis carried out by Legacy.

As outlined above, the $2.415 was calculated by a formula that took into consideration variables which referenced the closing price of the Legacy shares and the Crescent Point shares on the TSX, and also the Crescent Point shares on the New York Stock Exchange as at the Valuation Date. [ 49 ] There is no dispute that the Brookdale Entities are owed “fair value” for their Legacy shares. That is an obligation of Crescent Point because the rights of dissent were included in the Plan of Arrangement, and confirmed in an Interim Order.

However, the Court notes that the dissent rights in this case were volunteered by Legacy because the underlying transaction did not trigger the application of section 191(1) of the ABCA . [ 50 ] While this Court does not have the mandate or the evidence to make a finding on the “fair value” issue, the value of the Legacy shares is undoubtedly greater than zero. That said, the process to be followed is outlined in the ABCA . The process is initiated by a court application: ABCA, section 191(6) .

As in any court application, the applicant must continue to take appropriate steps to advance the process through the judicial system. [ 51 ] The legislative framework in the ABCA to determine “fair value” imposes an obligation on the Court to determine that value for the subject shares. Once the Brookdale Entities rejected the Statutory Offer, the statute imposes a process by which the “fair value” of the shares will be determined. That valuation process imposes an obligation on the Court, which it will fulfil based on the evidence presented.

[ 52 ] The substantive question at this stage is whether the alleged minimum fairness argument advanced by the Brookdale Entities is sufficient to cause the Court to exercise its discretion to order an interim payment. The position of the Court on this substantive question is twofold. [ 53 ] First, if there is sufficient evidence before it, the Court may exercise its discretion and order an interim payment under the authority granted in section 191(12) (

c) of the ABCA . That determination will be made on a case-by-case basis, taking into consideration all relevant facts: Orman , at para 61 . [ 54 ] As noted above, the policy thrust underlying section 191(12) (

c) is to allow an interim payment where appropriate, based on all of the evidence in the particular case. However, it is important to note that the provision does not provide an automatic right to an advance payment. Further, the policy thrust is weaker in this case because the dissent rights were volunteered by Legacy, as opposed to being mandated by the ABCA . [ 55 ] In this case, the evidence suggests that the Statutory Offer amount and the value of the consideration received by the continuing shareholders were reasonably close.

That analysis is detailed below. [ 56 ] If that is the case, Crescent Point has acted fairly in respect of its actions concerning the Brookdale Entities and the other Legacy shareholders. It need not do more at this stage, and the Court should not be obligated to step-in and order further action. In the circumstances, the obligation is now on the Brookdale Entities to take next steps under section 191(6) of the ABCA for a determination of “fair value”. [ 57 ] Second, the Court may choose not to exercise its discretion to order an interim payment under section 191(12) (

c) if the payor, such as Crescent Point, is at risk of not being able to recover any overpayment: Orman , at para 61 . That risk exists in this case because the Brookdale Entities have no presence in Canada. [ 58 ] While the Brookdale Entities gave an undertaking, there is no ability for Crescent Point to take any enforcement action in Canada. In the circumstances, the Court finds that the undertaking provided by the Brookdale Entities is not sufficient. This finding is reinforced by the evasive response of Mr.

Garrity in respect of his authority to offer the proposed undertaking, and his refusal to disclose commercially meaningful information. [ 59 ] The Court acknowledges the narrative from Mr. Daniel Bradford, General Counsel and Secretary of WAM, concerning the undertaking offered by the Brookdale Entities. However, his narrative is not in evidence and, therefore, this Court finds that the comments of Mr. Bradford are not admissible. This finding by the Court is reinforced by the fact that the alleged offers by Mr.

Bradford were not provided under oath, and Crescent Point had no opportunity to cross-examine him. [ 60 ] In this case, the inability of Crescent Point to take enforcement action in Canada to recover any overpayment displaces any residual minimum fairness argument that the Brookdale Entities might have in these circumstances. The issue of fairness includes the need for the Court to consider the ability of a corporation, such as Crescent Point, to recover for any overpayment that might be made under section 191(12) (

c) of the ABCA . Further, the fact that Legacy volunteered the dissent rights in the first instance weakens the argument advanced by the Brookdale Entities to the effect that an interim payment of $2.415 per Legacy share is necessary to achieve minimum fairness. [ 61 ] For the reasons touched on above, the Court dismisses the assertion by the Brookdale Entities that Crescent Point needs to make an interim payment of $2.415 per Legacy share because it would provide minimum fairness. The application of section 191(12) (

c) is not automatic. Its application is discretionary, and will be based on the facts. A critical fact in this case is that Legacy volunteered the dissent rights. In doing so, Legacy was providing more than a minimum fairness to its shareholders, which included the Brookdale Entities. b. Statutory Offer – Below Value [ 62 ] The Brookdale Entities argue that the amount offered by Legacy in the Statutory Offer is below “value” because it is lower than two thresholds. Those two thresholds are as follows. a.

The Brookdale Entities argue that the Statutory Offer was less than the consideration received by shareholders of Legacy who did not exercise their dissent rights. b.

The Brookdale Entities argue that the Statutory Offer was less than the imputed value of $3.02 per Legacy share that was calculated based on the TSX closing price of Crescent Point shares on the day prior to the announcement of the Arrangement, being May 25, 2015; and also less than the imputed value of $2.85 stated in the circular dated June 1, 2015. [ 63 ] Before this Court addresses the two thresholds, it is important to recall that under the terms of the Plan of Arrangement, the dissenting shareholders received 0.095 of a Crescent Point share (the “ CP Exchange Equity ”) for each Legacy share.

This was the sole consideration received by the dissenting shareholders of Legacy. As such, those continuing shareholders swapped Legacy shares for the CP Exchange Equity. i. First Threshold [ 64 ] Turning to the first threshold, the Court disagrees with the implicit suggestion that the Brookdale Entities should be paid an interim amount of $2.415 for every Legacy share they held because the Statutory Offer was below the alleged value of the CP Exchange Equity. The Court takes this view because the alleged material discrepancy in value does not exist.

A calculation of the value of the CP Exchange Equity received by the continuing shareholders as at the Valuation Date proves the point.

[ 65 ] The closing price of the Crescent Point shares on the Valuation Date was $25.45 per share. The deemed dividend entitlement to which the continuing shareholders were entitled was 23 cents per Crescent Point share. [ 66 ] If we accept that the value of the CP Exchange Equity is to be compared to, or contrasted with, the Statutory Offer, the Court finds that the Statutory Offer amount of $2.415 was not significantly below the consideration received by shareholders of Legacy who did not exercise their dissent rights.

In order to give any merit to the “value argument” raised by the Brookdale Entities, the evidence would have to demonstrate that the Statutory Offer amount was lower than the CP Exchange Equity value by an unreasonable margin of error.

Based on the evidence presented, the Court finds that not to be the case. [ 67 ] Applying the exchange ratio of .095 to both of these variables results in a value of $2.4396 ([$25.45 closing price/Crescent Point share X .095] + [$0.23 dividend entitlement/Crescent Point share X .095]) being attributed to the CP Exchange Equity received on the Valuation Date by a continuing shareholder. [ 68 ] This calculation includes the deemed dividend entitlement, which is arguably external to the fair value of the Legacy shares (because that dividend entitlement is derived from Crescent Point, and not Legacy).

Moreover, the Court notes that the Interim Order, at paragraph 22, specifically provides as follows. Dissenting Shareholders who validly exercise their right to dissent, as set out above, and who: (

a) are ultimately entitled to be paid fair value for their Legacy Shares shall:...(iii) not be entitled to any other payment or consideration, including any payment that would be payable under the Arrangement had such registered Legacy Shareholders not exercised their Dissent Rights in respect of such Legacy Shares.... [ 69 ] This paragraph 22 of the Interim Order appears to preclude the Brookdale Entities from claiming any entitlement to the deemed dividend. [ 70 ] In any event, the difference between the Statutory Offer and the CP Exchange Equity is $0.0246 ($2.4396 - $2.415).

Measured against the Statutory Offer amount, that equates to a difference of just slightly over 1%, even when the dividend entitlement is included. [ 71 ] The Court finds that modest difference to be within the reasonable range of values that a competent valuator would have reached in trying to set the Statutory Offer amount.

This position is made even stronger by the fact that in the determination of the “fair value” amount, the Brookfield Entities are likely not entitled to the deemed dividend following the exercise of their dissent rights. [ 72 ] This finding of the Court is reinforced when one takes into account the state of the market and the type of property that underlies both Legacy and Crescent Point. In particular, both of those companies are in the oil and gas business. The markets underlying hydrocarbon commodities are known to be volatile.

That being the case, the approximate difference of 1% between the Statutory Offer amount and the CP Exchange Equity value is well within an acceptable margin of error. ii. Second Threshold [ 73 ] Turning to the second threshold, the Court finds that the imputed values calculated by reference to the Crescent Point share price on May 25, 2015 and June 1, 2015 are not meaningful in the circumstances of this case. In politics, a week is a long time.

Similarly, many evaluation parameters within an oil and gas company can fluctuate significantly over the course of the week. [ 74 ] Volatility in value of an oil and gas company can be even more pronounced over the span of a month. For these reasons, the imputed values advanced by the Brookdale Entities that are calculated by reference to market prices of equity on either May 25, 2015 or June 1, 2015 are not meaningful to this Court for purposes of the determining whether it should exercise its discretion in ordering an interim payment under section 191(12) (

c) of the ABCA . [ 75 ] The most relevant date is the Valuation Date, which is a reference date that is set by statute: ABCA, section 191(3) . Again, the Court notes that the Interim Order, at paragraph 21, specifically speaks to this issue.

The fair value of the Legacy Shares to which a Dissenting Shareholder is entitled to shall be determined as of the close of business on the last business day before the day on which the Arrangement Resolution is approved by the Legacy Shareholders and shall be paid to the Dissenting Shareholders by Crescent Point as contemplated by the Plan of Arrangement and this Order. [ 76 ] As outlined above, differences between the Statutory Offer amount and the CP Exchange Equity value on the Valuation Date was approximately 1%.

For the reasons touched on under both the First Threshold and the Second Threshold, the Court dismisses the assertion by the Brookdale Entities that Crescent Point should make an interim payment of $2.415 per Legacy share because the Statutory Offer was below “value”. c. Risk Factor – Economic Deterioration [ 77 ] The Brookdale Entities argue that the financial condition of Crescent Point has deteriorated significantly between June 29, 2015 and the date that this Application was heard.

The Brookdale Entities further argue that they are subject to a material degree of increased risk that Crescent Point will not be able to pay “fair value” for their shares, as ultimately determined by the Court. [ 78 ] The Brookdale Entities cite Orman as authority for its position. The decision in Orman ultimately turned upon the court's findings on the evidence that was presented in that case. [ 79 ] In the view of this Court, the five important facts in the Orman case were as follows.

a. Canadian Mountain Minerals Ltd. was the entity in Orman that would have been obligated to make the payment to the dissenting shareholders. b. The statutory offer made in the Orman case was likely at the low range of fair value. c. The applicants were required to provide a form of written undertaking that was agreeable to Cantex Mine Development Corp. (“ Cantex ”) . Cantex was the parent corporation of Canadian Mountain Minerals Ltd., and it had assumed the liabilities of its subsidiary. d. The parties giving the undertaking were residents of Alberta. e.

There was a real risk that Cantex would not be able to satisfy a fair value judgment. [ 80 ] The corresponding facts in this Application are in stark contrast to those in Orman . In particular, the three important distinguishing facts in this case are as follows. a. There is no evidence that the Statutory Offer made by Legacy was at the low end of the fair value range. Further, the above analysis indicates that the value of the CP Exchange Equity as at the Valuation Date is within approximately 1% of the Statutory Offer amount. b. The undertaking provided by Brookdale Entities had no substance.

In particular, the foreign hedge funds have no presence in Canada. Further, the undertaking provided by the Brookdale Entities was nothing more than a conditional unsecured promise to pay. No security was offered to give substance to the undertaking, and no meaningful financial information was produced to support the ability of the Brookdale Entities to honour the undertaking. In contrast, the parties that gave the undertaking in Orman were residents in Canada, and that would have allowed enforcement action to be exercised against those payees within this jurisdiction. c.

There is no evidence that Crescent Point will not be able to satisfy a fair value judgment. Concerning this issue, the Court finds that the evidence given by Mr. Garrity had little merit. He did not know critical facts attributable to Crescent Point. For example, he did not know that the Crescent Point credit facility was not tied to its reserve base or that Crescent Point did not issue bonds in the U.S. high yield market. Concerning this last point, the evidence is that Crescent Point was considered by its banks and senior noteholders to be issuing debt that was equivalent to investment-grade.

The evidence of Mr. Garrity also indicated that he had certain fundamental misunderstandings of the underlying legal relationships in this case. For example, he asserted that the monies being sought by the Brookdale Entities did not belong to Crescent Point. He also asserted that the Brookdale Entities “...didn’t believe anything as an entity.” While these comments touch on points of law, the fundamental misunderstandings of the relevant legal framework attributable to Crescent Point are so basic that they adversely impact the credibility of this affiant. As a final comment on Mr.

Garrity, this Court gave no weight to his comments that were in the nature of opinion evidence. He was simply not qualified to give such evidence. [ 81 ] For the reasons outlined above and the distinctions between Orman and this case, the Court dismisses the assertion by the Brookdale Entities that Crescent Point should make an interim payment of $2.415 per Legacy share because of the economic deterioration of Crescent Point. This position is further supported by the evidence that as at November 12, 2015 (

a) the market capitalization of Crescent Point was $8.52 billion; and (

b) the enterprise value was $12.72 billion. d. Losses Suffered – Damages Alleged [ 82 ] The Brookdale Entities argue that they have suffered damages because they lost their ability to reinvest the value of the Legacy shares. In particular, the Brookdale Entities argue that because of the dissenting shareholder mechanism, they lost the ability to sell their Legacy shares on stock exchanges. [ 83 ] The Brookdale Entities go on to argue that if they had received the funds through a liquidation event, they could have invested those funds and achieved returns for investors. They also argue that these damages continue.

The Brookdale Entities further submit that they are now subject to the credit risk of Crescent Point as a result of a transaction for which they did not vote, but properly exercised their statutory rights to dissent. [ 84 ] The Court disagrees with the assertion that the Brookdale Entities suffered a loss. Its reasons are threefold.

[85] First, the Brookdale Entities provided no evidence that they have suffered damages. There are only general allegations of aloss. There is no evidence of any loss. At best, the Brookdale Entities are asserting that they have incurred an opportunity cost. Analleged opportunity cost is not evidence that a loss has been realized or damages incurred. [86] Second, the Brookdale Entities did not claim damages.

The Application filed on September 9, 2015 by the Brookdale Entitiesmakes a reference to losses suffered, but is silent on a claim for damages. [87] Third, section 191(17) of the ABCA contemplates a mechanism that recognizes the time value of money. It states as follows.

The Court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting shareholder, from the date onwhich the shareholder ceases to have any rights as a shareholder by reason of subsection (14) until the date of payment. [88] For the first two of the three reasons given above, the Court dismisses the assertion by the Brookdale Entities that they areentitled to damages for losses suffered.

The Court finds that argument to be without merit. [89] Concerning the argument by the Brookdale Entities that they lost their ability to sell their Legacy shares on the stockexchanges, this Court merely notes that those entities chose to exercise the dissenting shareholder mechanism. They are sophisticatedinvestors. They knew what they were doing. 3. The Jurisprudence [90] The Brookdale Entities submit that section 191(12)(

c) of the ABCA must be construed in reference to the goal of thelegislation, which they argue was to allow dissenting shareholders to walk away fully paid for their shareholdings. The BrookdaleEntities go on to submit that section 191(12)(

c) is available to provide "a special category of interlocutory relief", which allowsdissenting shareholders to realize on at least some of their shareholdings on an accelerated basis. The Applicants cite Orman (at para 60)and Bradley Resources Corp v Kelvin Energy Ltd, 1985 ABCA 65 , 18 DLR (4th) 468, [1985] 5 WWR 763 (ABCA) asauthority for these propositions. [91] The Court considered this argument carefully. It notes that the analysis in Orman did not stop at paragraph 60. Paragraph 61 isalso important. There the Court stated that section 191(12)(

c) does not grant a dissenting shareholder an automatic right to an advancepayment prior to a trial to determine the fair value claim. Section 191(12)(

c) is discretionary, and the Court will only apply its discretionbased on the evidence before it. [92] This does not suggest that the Brookdale Entities do not have a right to be fully paid.

They do, but only because Legacyvolunteered to grant dissent rights as part of the Plan of Arrangement. [93] While there are situations where the Court will exercise its discretion and order an interim payment under section 191(12)(c)of the ABCA, the Court must be careful not to allow that clause to evolve into a provision that automatically permits execution on a debtprior to judgment: Aetna Financial Services Ltd v Feigelman, (SCC), [1985] 1 SCR 2, at 10, 15 DLR (4th) 161; seealso Orman, at para 61. [94] This Court acknowledges that an interim payment was granted in Orman.

That notwithstanding, the Court has pointed outnumerous ways in which the facts in this case are distinguishable from those in Orman. To further bolster its position, this Courtemphasizes that Orman can be further distinguished as follows. a. In Orman, the applicants were individuals resident in Canada who were founding shareholders of the company. As stated above,the Applicants in this case are foreign hedge funds. It is significant that the Brookdale Entities have no presence in Canada and,therefore, no assets against which enforcement can be taken. b.

In Orman, the primary company had breached its obligation to make a statutory offer. That breach was addressed by Cantex, albeitmonths late. In contrast, Legacy made a Statutory Offer on a timely basis, as required by the ABCA. c. In Orman, the statutory offer was premised in part on an assertion of standard industry pricing for escrowed shares. Interestingly, inOrman the statutory offer was stated to be without prejudice to a claim that the applicants had no right to their shares.

In contrast, theStatutory Offer by Legacy was clear, free of any purported discount, and both Legacy and Crescent Point acknowledged right of theBrookdale Entities to dissent. d. In Orman, the matter was set down for trial six months hence. In contrast, the Brookdale Entities has not moved the matter alongexpeditiously. Given its lack of activity, the trial likely will not be held until after 2017. That delay is not the fault of Crescent Point. e.

In Orman, the evidence established that the new owners of the company may effectively destroy the applicants' claim for fair value"precisely because the company proceeds down [a] new road." Indeed, the amount offered under the statutory offer in Orman totalled$1.14 million, whereas the company's working capital was only $1.27 million. Further, the company had plans to spend up to $2 millionon mineral exploration, and had entered into financial commitments with related parties. As such, the fair value claim represented almostall of the company's working capital.

In contrast, the current claim by the Brookdale Entities represents a trifling fraction of the workingcapital of Crescent Point. Further, in this case neither Legacy nor Crescent Point is going down a new road. The business remains the

same. f. In Orman , the dissent rights were mandatory. In contrast, the dissent rights on which the Brookdale Entities are relying are not mandatory. The Brookdale Entities only have dissent rights under the corresponding Plan of Arrangement because Legacy volunteered those rights as part of the corporate restructuring. V. Conclusions [ 95 ] The Court dismisses the Application. In

summary, the reasons for this dismissal are sixfold. First, contrary to the assertions of the Brookdale Entities, the Statutory Offer that was made to the dissenting shareholders was virtually identical to the value of the CP Exchange Equity. Second, the undertaking offered by the Brookdale Entities was not substantive, and was not enforceable in Canada. This enforcement deficiency is a significant factor weighing against the Brookdale Entities when the Court is considering discretionary application of section 191(12) (c). Third, the Brookdale Entities did not provide evidence of any damages. General allegations of damages are evidence of nothing. Fourth, section 191(12)(

c) is a discretionary provision. It is not to be construed as a provision that a dissenting shareholder can activate on demand, particularly when the underlying dissent rights are volunteered (as opposed to being mandatory). Fifth, the Court will only apply its discretion based on the evidence before it. In this case, much of the evidence advanced by the Brookdale Entities was tenuous and unpersuasive. Sixth, the Court has the power to award a reasonable rate of interest when the “fair value” amount is determined. This discretionary power is contained in section 191(17) of the ABCA .

That provision would allow the Court in this case to recognize the time value of money, if that is considered appropriate at the trial. [ 96 ] If necessary, the parties may speak to costs within the next 90 days. Heard on the 18 th day of February, 2016. Dated at the City of Calgary, Alberta this 24 th day of February, 2017. D.B. Nixon J.C.Q.B.A. Appearances: D. Brian Foster, QC for the Applicants Steven H. Leitl and Chase Holthe for the Respondents