Pacific Investments & Development Ltd v Wood Buffalo (Region), 2017 ABQB 469

Court of Queen’s Bench of Alberta Citation: Pacific Investments & Development Ltd v Wood Buffalo (Region), 2017 ABQB 469 Date: 20170726 Docket: 1713 00116 Registry: Ft. McMurray Between: Pacific Investments & Development Ltd. and Pacific Investments GP Ltd. Plaintiff/Appellant - and - Regional Municipality of Wood Buffalo and Glen Laubenstein Defendants/Respondents _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice K.P. Feehan _______________________________________________________ I.

Overview [ 1 ] Pacific Investments & Development Ltd and Pacific Investments GP Ltd sued the Regional Municipality of Wood Buffalo and Glen Laubenstein for $65,000,000 and other remedies. They sued in Calgary where Pacific Investments’ head office and legal counsel are located. Wood Buffalo says they should have sued in Fort McMurray. On initial application, the Master agreed with Wood Buffalo. The Master was correct. II. Issues

[ 2 ] The issues on this appeal from the Master are: 1. Did the Master apply the correct Rules of Court and case law to determine where the litigation should have been commenced and whether it should now be moved? 2. Did the Master correctly determine that the action should have been commenced in Fort McMurray? 3. Did the Master correctly determine that the action should now be moved to Fort McMurray? The answer to each of these questions is yes. III.

Standard of Review [ 3 ] The parties agree that the standard of review on appeal from the Master is correctness ( Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 ). IV. Background to the Appeal [ 4 ] Pacific Investments appeals a decision of the Master, dated February 16, filed February 24, 2017, on application by Wood Buffalo, directing a transfer of this action from the Judicial Centre of Calgary to the Judicial Centre of Fort McMurray. At issue is the

interpretation of Rules 3.3 and 3.5 of the Alberta Rules of Court , AR 124/2010, as amended, and application of those Rules to the facts in question. [ 5 ] The evidence before the Master consisted of three Affidavits of Ronald Pelletier, corporate representative of Wood Buffalo, filed August 17, 2016, January 3 and 6, 2017; and the transcript of his Questioning on those Affidavits conducted January 15, 2017; the Affidavit of Glen Laubenstein, former Chief Administrative Officer of Wood Buffalo, filed January 3, 2017; two Affidavits of Jeff Petrick, corporate representative of Pacific Investments, both filed January 12, 2017; and the transcript of Questioning on those Affidavits conducted January 13, 2017. [ 6 ] On appeal, two further Affidavits were submitted by Jeff Petrick, filed March 24 and April 6, 2017. [ 7 ] The Master held at p 18 of the transcript of proceedings: …in my view, there’s far more connection of this action to Fort McMurray than there is to Calgary in terms of the facts, in terms of the witnesses, and in my view, the defendants have met their onus that this matter ought to be transferred to Fort McMurray.

V.

Background to the Litigation [ 8 ] Pacific Investments is a real estate development and syndication corporation with head office in Calgary and projects in and around Calgary, Fort McMurray and Panama. [ 9 ] Wood Buffalo is a specialized municipality under the Municipal Government Act , RSA 2000, c M-26, in the area around and including Fort McMurray, and Glen Laubenstein was at material times the Chief Administrative Officer of Wood Buffalo. [ 10 ] On November 30, 2010, the Government of Alberta, on request from Wood Buffalo, issued a Request for Proposal for the sale of approximately 1,000 acres to be developed as industrial lands to support industrial growth in the Fort McMurray area.

Pacific Investments submitted a proposal in response, allegedly based upon representations from Wood Buffalo as to zoning approvals and the application of property tax rates that apply to lands included in the Wood Buffalo Urban Service Area, which proposal was accepted by the Province of Alberta. [ 11 ] Pacific Investments claims that Wood Buffalo did not provide it with continuing support, including necessary zoning approvals and application of expected property tax rates, and it filed a Statement of Claim for $65,000,000 for lost profits, declarations with respect to taxes paid and outstanding, and further damages with respect to alleged tax overpayment. [ 12 ] On January 6, 2017, Wood Buffalo filed an application seeking a declaration that the action had not been commenced in the appropriate judicial centre pursuant to Rule 3.3, and an Order transferring the action from the Judicial Centre of Calgary to the Judicial Centre of Fort McMurray pursuant to Rule 3.5 .

VI. Did the Master apply the correct Rules of Court and case law to determine where the litigation should have been commenced and whether it should now be moved? [ 13 ] There has been significant evolution in the Rules and case law as to where litigation should be commenced and whether it should be moved from one judicial centre (formerly judicial district) to another. The Master correctly applied new Rules 3.3 and 3.5 and the case law following those Rules, rejecting tests set out in previous Rules and interpretive case law.

(

a) Evolution of the Rules [14] Rules 3.3 and 3.5 of the Alberta Rules of Court, effective November 1, 2010, read, in part: Determining the appropriate judicial centre 3.3(1) The appropriate judicial centre for the purpose of these rules is (

a) the closest judicial centre, by road, to the Alberta residences or Alberta places of business of all the parties, or (

b) if a single judicial centre cannot be determined under clause (a), the judicial centre that is, by road, the closest to the Albertaresidence or Alberta place of business of one of the parties, that party being selected by the party starting the action.

(2) If a party carries on business in more than one Alberta location, the place of business in Alberta of that party for the purpose ofthis rule is the place of business that is nearest to the location at which the matters in issue in the action arose or were transacted. … Transfer of action 3.5 The Court may order that an action be transferred from one judicial centre to another (

a) if the Court is satisfied that it would be unreasonable for the action to be carried on in the judicial centre in which it is located, or (

b) at the request of the parties. (Emphasis added) [15] Those Rules have undergone significant amendment over the years.

In Apache Canada Ltd v Johnson, 2005 ABCA 71, theCourt said that prior to 1996, pursuant to then Rule 237, a plaintiff had the right to commence an action wherever it thought proper“provided the choice was non-capricious”, and that an applicant wishing to change judicial centre had the burden of proving a practicalpreponderance of convenience in doing so, quoting Wade Investments Ltd v Hat Travel Ltd (1979), (AB KB), 21 AR454 (Alta QB), which in turn quoted from Church v Barnett (1871), LR 6 CP 116 at 119: A plaintiff has the right to lay his venue where he thinks proper.

If he does so capriciously, a judge will change the venue to the placewhere the cause of action arose. But where he has not exercised a capricious choice, the defendant who seeks to deprive him of anundoubted right, must show that there will be a practical preponderance of convenience in trying the cause in the place where the causeof action arose.

It lies on him to make that out to the satisfaction of the judge. [16] In Wade Investments, the Court found that the plaintiff had not acted capriciously nor arbitrarily in naming Edmonton as theplace of trial of an action, despite inconvenience to the defendants to come to Edmonton. [17] Between 1996 and 2010, the relevant Rules were old Rules 6.1 and 12 (AR 243/96), which read in part: Where to commence action 6.1(1) A document commencing an action shall be issued or filed, as the case may be, at the clerk’s office in the closest judicial centreas determined under subrule (2).

(2) For the purposes of commencing an action, the closest judicial centre shall, unless otherwise directed by the Court, bedetermined in accordance with the following: (

a) the closest judicial centre is the judicial centre that, by highway travel, is the nearest to the residences or places ofbusiness of all the parties to the action; (

b) where a single judicial centre cannot be determined under clause (

a) to be the closest judicial centre for all the parties tothe action, the closest judicial centre shall be the judicial centre that, by highway travel, is the nearest to the residence or place ofbusiness of one of the parties to the action, that party being selected by the party commencing the action; (

c) where (

i) a single judicial centre cannot be determined under clause (

a) to be the closest judicial centre for all of the partiesto the action, and (ii) it is not obvious in the particular case which judicial centre is the closest judicial centre under clause (b), the party commencing the action shall select a judicial centre that for the purposes of the action shall be considered to bethe closest judicial centre; (

d) if a party to an action carries on business in more than one location in Alberta, the place of business in Alberta of that partyis the place of business that is the nearest to the location at which the matters in question in the action arose or were transacted; … Transfer

12. The Court may at any time direct that all proceedings in any action be transferred to the office of the clerk of any other judicialdistrict and thence-forward the proceedings shall be intituled and continued in the other judicial district. (Emphasis added) (

b) Selection of Judicial Centre – Old Rule 6.1 and New Rule 3.3 [18] In Apache Canada, the Court said old Rule 6.1 worked as follows: 1. A statement of claim must be filed in the judicial district that is nearest to the residences or places of business of all the parties tothe action (R 6.1(2)(a)); 2. If a plaintiff carries on business in more than one location in Alberta, the plaintiff’s place of business for purposes of the Rule isdeemed to be the one closest to the location at which the matters in question in the action arose or were transacted (R 6.1(2)(d)); 3.

When there is no single judicial district nearest to the residences or places of business of all the parties to the action, a plaintiffmust file in the judicial district nearest to the residence or place of business of one of the parties, selected by the plaintiff (R 6.1(2)(b));and 4. When a single judicial centre cannot be determined under R 6.1(2)(

a) and it is not obvious which judicial district is nearest underR 6.1(2)(b), the judicial district is to be selected by the plaintiff (R 6.1(2)(c)). (para 4) (Emphasis added) [19] In determining where a party carries on business, the Court said the purpose of the Rule was to “make a lawsuit moreconvenient and fair to all parties”, referencing Lim v Young, 2004 ABQB 489 (Alta M). This required a significant connection betweenthe parties and the selected judicial centre after considering: (

a) the structure of the party’s operations; (

b) the nature of and issues in the lawsuit; and (

c) the relationship between the parties in respect of those issues (para 3). [20] The Court of Appeal found that Apache had a substantial business presence in Provost, Alberta with many interactionsbetween the parties there relating to the issues in the lawsuit, such that the action should have been commenced in the Judicial Centre ofWetaskiwin, rather than the Judicial Centre of Calgary. [21] Rule 3.3 essentially carries on the scheme set out in Rule 6.1, and the test in Apache Canada would be restated: 1.

A statement of claim must be filed in the judicial centre that is nearest to the residences or places of business of all of the partiesto the action (R 3.3(1)(a)); 2. If a plaintiff carries on business in more than one location in Alberta, the plaintiff’s place of business for the purposes of the Ruleis deemed to be the one closest to the location that is nearest to the location at which the matters in issue arose or were transacted (R3.3(2)); 3.

When there is no single judicial centre nearest to the residences or places of business of all the parties to the action, a plaintiffmust file in the judicial centre that is closest to the Alberta residence or Alberta place of business of one of the parties, selected by theplaintiff (R 3.3(1)(b)); and 4.

The parties may agree on a judicial centre, unless the court otherwise orders (R 3.3(3)). (Emphasis added) (See 325303 Alberta Ltd v Prime Property Management Ltd, 2011 ABQB 817 at para 5) [22] The appropriate Rule for determining selection of judicial centre on this application is new Rule 3.3 and the case lawthereunder, including to the extent that it adopts portions of the test under old Rule 6.1. (

c) Transfer of Judicial Centre – Old Rule 12 and New Rule 3.5 [23] The Court in Apache Canada said for the purposes of old Rule 12, the selection made by the plaintiff in accordance with oldRule 6.1(2) would not be set aside lightly, and the defendant had to show that the balance of convenience clearly favoured transferringthe action to another judicial centre (para 5). (See also Suriyakumaran v Freedom Ford Sales Ltd (1990), (AB KB),40 CPC (2d) 202 (M)). [24] New Rule 3.5 says an action may be transferred from one judicial centre to another if it would be unreasonable for the actionto be carried on in the original judicial centre.

In determining unreasonableness, however, the test applied remains balance ofconvenience (see 325303 and Regular v Regular, 2016 ABQB 570). [25] The appropriate Rule for determining transfer of judicial centre on this application is new Rule 3.5 and the case lawthereunder, including to the extent that it adopts portions of the test under old Rule 12.

VII. Did the Master correctly determine that the action should have been commenced in Fort McMurray? [ 26 ] Pacific Investments argues that the application before the Master was for change of venue, rather than whether the initial choice of venue was appropriate. Wood Buffalo argues that Pacific Investments failed to comply with new Rule 3.3(2) in setting the original jurisdiction for the litigation. The application before the Master clearly sought a “declaration that the within action has not been commenced in the appropriate judicial centre”.

Therefore, selection of initial judicial centre was before the Master and the Master correctly determined that new Rule 3.3 and the case law thereunder were engaged. [ 27 ] Relying upon Wade Investments , which set out the case law prior to 1996, Pacific Investments argued that it had “not acted arbitrarily nor capriciously in choosing Calgary as the venue to commenced its action”, and “there must be a compelling reason for denying the Plaintiff’s rightful choice of venue”.

That, of course, is not the current test. [ 28 ] In 325303 Justice Michalyshyn rejected that test from Wade Investments and adopted the test in Apache Canada for commencement of an action. In Regular , Justice Renke did the same. [ 29 ] The test for initial selection of judicial centre has clearly moved from Wade Investments to Apache Canada , and that is the test applied by the Master when he found “far more connection of this action to Fort McMurray than there is to Calgary” in terms of facts and witnesses. [ 30 ] The place of business of Wood Buffalo and former residence of Laubenstein is Fort McMurray.

The current residence of Laubenstein is Victoria. The head office of Pacific Investments is Calgary. It has projects around Calgary and Fort McMurray. As a result, Rule 3.3(1)(

a) does not assist in determining the appropriate judicial centre for commencement of the action. [ 31 ] Moving to the second stage of the test, one has to determine whether Pacific Investments carries on business in more than one Alberta location and if so, what is the nearest location at which the matters in issue in the action arose. Whether Pacific Investments “carries on business” in both Calgary and Fort McMurray must be determined by reviewing the structure of the corporation’s operations, the nature of the issues in the lawsuit, and the relationship between the parties in respect of those issues.

Pacific Investments is involved in land development and syndication including in the area of Fort McMurray. The lands in question in the transaction before the Court are located in Fort McMurray. Representatives of Pacific Investments make periodic visits to Fort McMurray, approximately three to five times annually, to visit contractors and see the condition of the lands, although the major contact between the parties is done by telephone, correspondence or video between Calgary and Fort McMurray.

In October 2016, two representatives of Pacific Investments travelled to Fort McMurray to make a presentation to an executive director and persons involved in planning. Wood Buffalo says that the only reason Pacific Investments has a relationship with Wood Buffalo is because it chose to develop land in the Fort McMurray area. [ 32 ] Pacific Investments has two other country residential-oriented properties by the airport near Fort McMurray and they work with an engineering firm and real estate broker with respect to those properties.

The alleged representations made by Laubenstein were with respect to the development of land in the Fort McMurray area, and the taxation of those lands is pursuant to policy and governed by staff in Fort McMurray. Pacific Investments plans to sell individual properties in the Fort McMurray area to other companies and seeks continuing subdivision approval of those lands in phases. [ 33 ] Wood Buffalo says that much of the relief sought in the litigation is integrally and inextricably connected to the policies, procedures and governance of Wood Buffalo.

Wood Buffalo asserts that all of these factors weigh in favour of finding that Pacific Investments carries on business in Fort McMurray in that there is a significant connection between Pacific Investments and Fort McMurray based upon the corporation’s operations, the nature of and issues in the lawsuit, and the relationship between the parties in respect of those issues. I agree. VIII.

Did the Master correctly determine that the action should now be moved to Fort McMurray? [ 34 ] On change of venue, Pacific Investments correctly identified the test under new Rule 3.5 as being whether it would be “unreasonable” for the action to be continued in the judicial centre in which it was commenced. Referencing Regular , it acknowledged that the current jurisprudence continues the “balance of convenience test” from old Rule 12.

However, it submits that the balance of convenience test is not entirely consistent with new Rule 3.5 and says that the venue should be changed only if the current venue is unreasonable; and relying upon Apache Canada , that the change of venue “clearly favours transferring the action to another judicial district”. [ 35 ] Wood Buffalo, relying upon 325303 and Regular says that new Rule 3.5 in setting the test for “unreasonableness” adopted the “balance of convenience test” under old Rule 12. [ 36 ] In 325303 , Justice Michalyshyn adopted a balance of convenience test which “favours transferring the action to another judicial district” where it “would be unreasonable not to do so” (paras 19 and 22).

The Court transferred the action, on that basis, from the Judicial Centre of Edmonton to the Judicial Centre of Grande Prairie. [ 37 ] In Regular , Justice Renke identified two lines of authority on the

interpretation of “unreasonableness” in new Rule 3.5. In Siver v Siver , 2010 ABQB 755 (Alta QB), the Court adopted a literal or plain meaning approach, defining “unreasonable” in the words of Wade Investments as being arbitrary or irrational, having “no logical grounding”. However, he determined that the significant weight of authority in interpreting new Rule 3.5 utilized the “balance of convenience” test in old Rule 12 (see Abou-Morad v Aboumourad , 2015 ABQB 584 ; 325303 Alberta ; and Wickstrom v Wetter , 2007 ABQB 402 ).

[ 38 ] Regular additionally held that in the balance of convenience test, location of counsel was not a decisive factor, following Christensen v Proprietary Industries Inc , 2002 ABQB 97 and Silver Springs Oil Recovery Inc v UMA Engineering Ltd , 2004 ABQB 942 . [ 39 ] Regular set out a balance of convenience test somewhat similar to what Apache Canada had set for original selection of jurisdiction under old Rule 6.1: (

a) the number of parties or witnesses in each judicial centre; (

b) the nature of the issues in the lawsuit; (

c) the relationship between the parties in respect of those issues; (

d) the parties’ respective financial resources; and (

e) the stage of proceedings. [ 40 ] Regular also found the following factors relevant, although of lesser weight: (

f) the convenience of location for pre-trial motions; and (

g) the location of relevant assets. [ 41 ] The appropriate test is the balance of convenience test as brought forward to new Rule 3.5 from old Rule 12, rather than giving a literal or plain meaning to the word “unreasonable”, hearkening back to the pre-1969 test of capriciousness, arbitrariness or irrationality. [ 42 ] The Alberta Civil Procedure Handbook, 2017, Vol. 1 concurs that the “test for transferring an action is a balance of convenience, having regard to such factors as the location of the parties, expense, and number of witnesses who will have to travel”. [ 43 ] On the balance of convenience, Pacific Investments says that its two or three principal witnesses reside in Calgary.

It says that potential witnesses who are former employees of Wood Buffalo now reside in Victoria, Edmonton and Calgary. The corporate representative of Wood Buffalo resides in Fort McMurray. [ 44 ] Examination for discovery of Mr.

Laubenstein was conducted in Fort McMurray and cross-examinations on affidavit and for discovery of representatives and employees of Wood Buffalo have occurred in Calgary. [ 45 ] Pacific Investments says that moving the venue to Fort McMurray will impose expense and inconvenience on all parties. [ 46 ] Wood Buffalo says that as the primary defendant, it is located in Fort McMurray, all of its present employees reside in Fort McMurray, and the city councillors for Wood Buffalo, one of whom is described as “a pivotal witness”, reside in Fort McMurray.

Laubenstein, although he now resides in Victoria, will need to access information necessary for the litigation in Fort McMurray. All persons who can speak to relevant tax policy, land development policy, and Wood Buffalo policies and procedures central to the determination of the allegations raised in the pleadings, reside in Fort McMurray. [ 47 ] With respect to the nature of litigation, Wood Buffalo says that the litigation is about land in the Fort McMurray area, and the inclusion of that land into the municipal boundary of the City of Fort McMurray, with resultant tax, zoning and development implications.

The matters at issue are clearly treatment of land in the Fort McMurray area, and the records and documents are largely found in Fort McMurray. [ 48 ] Wood Buffalo says that the relevant interactions between the parties took place in part by attendances in Fort McMurray and there is no evidence of physical attendances in Calgary. [ 49 ] With respect to balance of financial resources, there is no evidence of a clear difference between the financial resources of the parties; and with respect to the stage of proceedings, this litigation is still in its infancy and additional documentation, production and questionings thereon must still take place.

This is more conveniently accomplished in the location of those primary documents, Fort McMurray. Finally, the location of the relevant assets in this matter, the lands in question, are in Fort McMurray. [ 50 ] As a result, the balance of convenience test as set out in Apache Canada and 325303 , and particularized in Regular , clearly favours Fort McMurray as the appropriate jurisdiction for the continuance of this litigation. IX.

Conclusion and Costs [ 51 ] The Master was correct in determining that this action should have been commenced in the judicial centre of Fort McMurray pursuant to Rule 3.3 , and that it should now be transferred to that judicial centre pursuant to Rule 3.5 . Costs are awarded to Wood Buffalo on the appropriate column of

Schedule C of the Rules of Court . Heard on the 15 th day of June, 2017. Dated at the City of Edmonton, Alberta this 26 th day of July, 2017.

K.P. Feehan J.C.Q.B.A. Appearances: Philip A. Carson Miller Thomson LLP for the Plaintiff/Appellant Andrea M. Luft Parlee McLaws LLP for the Defendants /Respondents