AMOCO CANADA PETROLEUM COMPANY LTD., THE GEORGE R. BROWN PARTNERSHIP, ENCOR ENERGY CORPORATIONS INC., DAVID W. FEENEY, TRUSTEE OF THE ESTATE OF ELEANOR DEERING, DECEASED, FELICIANA CORPORATION, HEATHER OIL LTD., JOLI FOI PETROLEUMS LTD., LACANA PETROLEUM LIMITED, RALPH S. O’CONNOR, MARK RESOURCES INC., STAR OIL v. GAS LTD., UNION PACIFIC RESOURCES INC., WESTCOAST, 2003 ABQB 261

Amoco Canada Petroleum Company Ltd. v. Propak Systems Ltd., 2003 ABQB 261 Date: 2003 03 20 Action No. 9201-16105 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF CALGARY BETWEEN: AMOCO CANADA PETROLEUM COMPANY LTD., THE GEORGE R. BROWN PARTNERSHIP, ENCOR ENERGY CORPORATIONS INC., DAVID W. FEENEY, TRUSTEE OF THE ESTATE OF ELEANOR DEERING, DECEASED, FELICIANA CORPORATION, HEATHER OIL LTD., JOLI FOI PETROLEUMS LTD., LACANA PETROLEUM LIMITED, RALPH S. O’CONNOR, MARK RESOURCES INC., STAR OIL AND GAS LTD., UNION PACIFIC RESOURCES INC., WESTCOAST PETROLEUM LTD. AND WINTERSHALL OIL OF CANADA LTD.

Plaintiffs - and - PROPAK SYSTEMS LTD., LYNN TYLOSKY AND L. MOORE Defendants _______________________________________________________ REASONS FOR DECISION of the HONOURABLE MADAM JUSTICE B. E. ROMAINE _______________________________________________________ APPEARANCES: J. J. S. Peacock, Q.C. and M. E. Mestinsek for the Plaintiff D. A. McDermott, Q.C. and J. D. Surtees

for the Defendant INTRODUCTION [ 1 ] The issue in this application is whether the Court should make special procedural arrangements in the trial of an action involving a Pierringer agreement in order to alleviate prejudice alleged to have been caused to non-settling defendants. [ 2 ] I decline to make any special arrangements, and these are the reasons for my decision. BACKGROUND [ 3 ] The trial of this action commenced on March 10, 2003.

On February 24, 2003, the Defendants applied to have the Court call certain witnesses in the upcoming trial as “witnesses to assist the Court”, not to be deemed to be a witness of either party, so that both the plaintiffs and the defendants would be at liberty to cross-examine them. [ 4 ] These witnesses are officers of corporations previously named as defendants in the action, which involves a fire in a gas processing plant and resulting questions of liability and damages. The corporations and the Plaintiffs entered into a Pierringer agreement which settled issues between them.

A Pierringer agreement allows some parties to withdraw from the litigation through settlement and leaves the remaining parties at risk of liability only for the loss they actually caused, with no joint liability. [ 5 ] The case management judge in this action, Hart J., dismissed the non-settling defendants’ claims for contribution and indemnity, thereby giving effect to the Pierringer agreement and removing the settling parties from the lawsuit: (1999) 1999 ABQB 716 (CanLII) , 74 Alta. L.R. (3d) 194 . This decision was upheld by the Court of Appeal: (2001), 281 A.R. 186 (Alta.

C.A.) The non-settling defendants now request relief similar to that granted by Lee J. in another case involving a Pierringer agreement, Bucknor v. Ryder (2001), 2001 ABQB 1008 (CanLII) , 1 Alta L.R. (4th) 40 . [ 6 ] In Bucknor v. Ryder , ( supra ) Lee J. found that the effect of the Pierringer agreement was that the non-settling defendant would be at a procedural and substantive disadvantage, and ordered the settling defendant to attend as a witness at trial, on the basis that he was deemed not to be a witness of either party.

Both parties were given the right to cross-examine the settling defendant, and the Court granted a Rule 209 order to compel document production from the settling defendant in advance of the trial. ANALYSIS [ 7 ] I decline to follow the approach taken in Bucknor v. Ryder ( supra ). The Pierringer agreement in place in this case poses no obstacle to the defendants approaching the settling defendants, nor does it limit the defendants’ procedural rights in any way : Amoco Canada Petroleum Company Ltd. (C.A., supra at para. 48).

Both the decision of Hart J. giving effect to the Pierringer agreement and the dismissal of the appeal of his decision recognize that the effect of the agreement is to eliminate the non-settling defendants’ right to pre- trial discovery and automatic production of documents of the settling defendants.

However, as Hart J. says at paragraph 18 of his decision, “. . .Propak has had the advantage of significant oral examination and discovery of documents.” [ 8 ] Both Hart, J. and the Court of Appeal also recognized that the “potential prejudice which arises as a result of the third party disclosure regime in the Alberta Rules of Court is not a proper basis for refusing to give effect to a proportionate share settlement agreement”: Amoco Canada Petroleum Company Ltd. (C.A., supra , para. 47).

[ 9 ] The Court of Appeal distinguished British Columbia Ferry Corp. et al v. T & N plc. et al (1995), 1995 CanLII 1810 (BC CA) , 27 C.C.L.T. (2d) 287 (B.C.C.A.) , and disapproved of the special procedural structure put in place to deal with the issue of alleged prejudice in that case, noting that such an approach “undervalues the importance of settlement” ( supra , para. 27) As the Court points out, settlement is critical to the administration of justice, particularly in complex cases that would consume days of court time and lead to huge costs of litigation for the parties (para.27).

The strong public policy reasons that underlie a decision to give effect to a settlement agreement and the impetus of parties to settle could well be undermined if a settling party is drawn back into the litigation in order to restore the remaining defendants to their more favourable pre-settlement position. [ 10 ] The decision in Bucknor v.

Ryder (supra) refers to the decision of the Court of Appeal in this action and distinguishes the Pierringer agreement in that case on the basis it did not provide that the settling defendant would co-operate with the plaintiffs by making witnesses, documents and expert reports available to them. The terms of the Pierringer agreement in question will be important in determining whether the non-settling defendants should be entitled to any extraordinary procedural relief at or prior to trial. [ 11 ] I therefore dismiss the application for procedural relief.

The defendants are entitled to use the procedural steps available to them under the Rules of Court for production of records from non-parties, the normal procedure with respect to hostile witnesses and the use of existing examinations for discovery to impeach witnesses, if and when these issues arise during the course of the trial. HEARD on the 24th day of February, 2003. DATED at Calgary, Alberta this 20th day of March, 2003. __________________________ J.C.Q.B.A.