JL Energy Transportation Inc v Alliance Pipeline Limited Partnership, 2023 ABKB 445

Court of King’s Bench of Alberta Citation: JL Energy Transportation Inc v Alliance Pipeline Limited Partnership, 2023 ABKB 445 Date: 20230726 Docket: 1601 06322 Registry: Calgary Between: JL ENERGY TRANSPORTATION INC.

Plaintiff - and - ALLIANCE PIPELINE LIMITED PARTNERSHIP, ALLIANCE PIPELINE LTD., ALLIANCE PIPELINE L.P., ALLIANCE PIPELINE INC., AUX SABLE LIQUID PRODUCTS LP (formerly known as ALLIANCE PIPELINE NGL, LP), and AUX SABLE LIQUID PRODUCTS INC. (FORMERLY KNOWN AS ALLIANCE PIPELINE NGL INC.) Defendant _______________________________________________________ Endorsement on Costs of the Honourable Justice K.M.

Horner _______________________________________________________ [ 1 ] The Defendants, Alliance Pipeline Limited Partnership, Alliance Pipeline Ltd., Alliance Pipeline LP, Alliance Pipeline Inc., (Alliance) and Aux Sable Liquid Products LP, Aux Sable Liquid Products Inc. (Aux Sable) have an application to dismiss portions of the claim of the Plaintiff, JL Energy Transportation Inc. (JLET) based on missed limitation periods and this court’s jurisdiction (Dismissal Application).

In response JLET filed several Affidavits, 5 of which were the subject of a Strike application made by Alliance and Aux Sable before me on June 28, 2023. They sought to have the court strike some 79 paragraphs, sub paragraphs and/or portions thereof from ultimately 4 of the said Affidavits.

Additionally, on the same day the same Defendants made an application for Security for Costs (Security) the entitlement and quantum of which was not at issue but some form of security over and above an Undertaking was at issue. [ 2 ] The outcome of the Application to Strike was that all but 4 of the paragraphs identified by the Defendants were ordered struck with revised impacted Affidavits to be filed by July 31, 2023. A total of over 40 such paragraphs were impacted by the ruling. The

outcome of the Application for Security for Costs was that a form of security acceptable to the Defendants was to be the subject of additional and ongoing discussions. [ 3 ] The parties asked to make brief written submissions on costs to be awarded arising from the Strike Application and these reasons provide my decision on the matter of costs for that application. The Applications were made jointly between Alliance and Aux Sable, as were the materials filed in support of their position.

Additionally, counsel for Alliance took the lead in making oral submissions with counsel for Aux Sable supplementing only where the facts specifically related to them, or a point needed to be re-emphasized, or a point had been missed. This reduced the materials filed in support of the application and streamlined the hearing itself. It did not turn a joint application into an application solely by Alliance. [ 4 ] Alliance asks for costs on

Schedule C item 20 with a multiplier of 3 including first and second counsel. This results in a total of $18, 225. Aux Sable claims a costs total of 50% of this or $9, 112. The Defendants say that as there is over $600 million claimed in the action, the issues were originally complex and not straightforward, and all parties had second counsel both in the preparation of written materials but also present in court at the hearing, that the costs should be granted using item 20 as the guide and that a second counsel fee is warranted. [ 5 ] JLET takes the position that item 20 of

Schedule C is for matters before the Court of Appeal and that the appropriate item number on the

Schedule is 8(1) which relates to contested applications in this court where filed materials are required.

It says that the ultimate hearing was simple and straightforward, that the issue on nearly all paragraphs ordered removed was whether they were evidence of subjective intent or evidence of a mutual consensus on the meaning of the Attornment Clause in the parties’ agreements. [ 6 ] Further, JLET says the application was unnecessary as the Defendants have indicated that their position at the hearing of the Dismissal Application will be that the meaning of the Attornment clause is irrelevant as the Alberta courts have no jurisdiction over a US patent infringement allegation and an attornment clause that purports to give them such jurisdiction is not valid or enforceable.

As a result, why would evidence on the meaning of the Attornment clause between the parties need to be struck as it is simply irrelevant. Further, had the Defendants made this position clear before the application perhaps the Plaintiff would have withdrawn more than the approximately 40 paragraphs it agreed to withdraw on May 24, 2023. [ 7 ] JLET started trying to discuss common ground on the paragraphs with the Defendants in early May 2023. Agreement could not be reached and JLET voluntarily withdrew the paragraphs on May 24,2023.

The Defendants materials for the hearing were required to be filed by June 9,2023 as per a Consent Order of April 2023 between the parties setting out filing deadlines and other matters. The Dismissal Application and the Affidavits had all been filed many years before however, JLET takes the position that it should be given some discount on costs as its actions reduced the number of paragraphs to be considered by the court at the hearing. [ 8 ] Rule 10.33 sets out certain factors which the court may consider in its deliberations on a costs award. Using these factors as a guide I make the following findings.

The Defendants were almost wholly successful. The result will be to streamline the evidence in the Dismissal Application which will in turn narrow the potential issues. This will by necessity narrow the cross examinations and potential document production by the affected affiants. In protracted litigation such as this action where nearly every step is contested and multiple applications have been made and have yet to be made, streamlining and reduction of materials and issues is to be rewarded.

As stated above the amount claimed is $600M, a significant sum attracting considerable attention and a high level of engagement by all parties. [ 9 ] Additionally, although the actual hearing of the Strike application did proceed in a straightforward manner that occurred as a result of the materials filed and discussions had with counsel beforehand. None of this would have occurred had not the application been made. There is no question that JLET’s concessions, albeit nearly on the eve of materials being filed, did shorten the actual hearing but not by much.

There were still nearly 40 paragraphs that remained to be examined and opined upon. More importantly, the necessity for a hearing remained.

Unquestionably the outcome of the application will be to shorten the Dismissal Application however, although the parties agreed on the law they disagreed entirely on its application to the evidence in question and each paragraph or portion thereof had to be reviewed. [ 10 ] Given the amount of the claim, the complexity of the issues, and the degree of success I am satisfied that costs in favour of the Defendants should be awarded under item 20, that a second counsel fee is appropriate and that a multiplier of 3 is reasonable and proportionate.

I direct that Alliance be paid $18,225 and Aux Sable be paid 50% of that or $9,112, for a total to the Defendants of $27,337 payable forthwith. Heard on the 28 th and 29 th day of June, 2023. Dated at Calgary, Alberta this 26 th day of July, 2023. K.M. Horner J.C.K.B.A. Appearances:

Roger Smith K.C., Kelly Moffett-Burma and S. Frazer for Aux Sable Liquid Products et al Ariel Breitman and Jonathan Bourchier for JL Energy Transportation Inc. Matthew Lindsay K.C., Andrew Wilkinson and Michelle Herron for Alliance Pipeline Limited Partnership et al Perry R. Mack K.C. and Elena Semenova for Omni Bridgeway Capital (Canada) Limited, Bentham IMF Capital Limited and Omni Bridgeway Limited, IMF Bentham Limited