PÊCHERIES F.N. FISHERIES LTD., Plaintiff – v. –, 2022 NBKB 194

IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON Pêcheries F.N. Fisheries Ltd. v. The Attorney General of Canada & Irving Oil Limited and Irving Oil Company Limited 2022 NBKB 194 MC/544/2013 BETWEEN: PÊCHERIES F.N. FISHERIES LTD., Plaintiff – and – THE ATTORNEY GENERAL OF CANADA Defendant – and – IRVING OIL LIMITED and IRVING OIL COMPANY LIMITED Third Party DECISION BEFORE: Justice Robert M.

Dysart AT: Moncton, New Brunswick DATE OF HEARING: June 30, 2022 DATE OF DECISION: October 17, 2022 APPEARANCES: Corinne Bedford and Ami Assignon, for the Attorney General of Canada Edwin G. Ehrhardt, KC, for the Pêcheries F.N. Fisheries Ltd. Matthew T. Hayes, KC, for Irving Oil Limited and Irving Oil Company Limited

DYSART, J. INTRODUCTION [ 1 ] This is an appeal by the Attorney General for Canada [“Canada”] pursuant to Rule 59.11(8)(

a) of the Rules of Court , alleging that a Deputy Clerk of the Court of King’s Bench made a reversible error of fact in her assessment of allowable disbursements payable to the Plaintiff following the settlement by the parties of a motion filed by the Plaintiff. [ 2 ] The Third Parties, who were represented at the hearing, did not otherwise participate. [ 3 ] By way of background, the Plaintiff commenced an action against the Third Parties in 2003 (the “Irving Litigation”), claiming damages the Plaintiff alleges resulted from contamination to its property caused by the migration of petroleum hydrocarbons from the lands owned or formerly owned by the Third Parties, which at one time housed a bulk fuel storage tank and a distribution pipeline system.

The Court understands that litigation is ongoing. [ 4 ] In 2013, the Plaintiffs commenced the present lawsuit against Canada, alleging that, as owner of the federal wharf and surrounding lands in the Town of Shippagan (the “Federal Lands”), the federal government is responsible for the migration of petroleum hydrocarbon contamination onto the Plaintiffs property. The two lawsuits are, obviously, similar in nature. [ 5 ] In 2016, the Plaintiffs asked Canada for its consent to access the Federal Lands to conduct drilling for the purpose of identifying the presence of petroleum hydrocarbons.

In response, Canada asked for additional information and specifically requested that the Plaintiff provide a detailed proposal outlining its drilling plan and its rationale for the request. [ 6 ] This was done in 2016. The Plaintiff, through its environmental engineering consultant, prepared a detailed rationale and drilling plan, explaining precisely why and where the drilling would take place. In response, Canada requested time to consider the request. [ 7 ] Canada subsequently requested a further response from the Plaintiff, this time asking for a new, less detailed proposal.

It would seem that the original proposal and plan were too specific and complex, and that Canada wanted something simpler. In response, the Plaintiff again engaged it environmental engineering consultant to prepare a simpler rationale and drilling plan, which was submitted to Canada in or about June 2016. [ 8 ] Despite those two proposals, Canada failed to provide a response to the Plaintiff’s request to conduct drilling on the Federal Lands.

As a result, the Plaintiff filed a motion in September 2017, seeking an order of the Court allowing it to conduct drilling on the Federal Lands, so as to identify the presence of petroleum hydrocarbons which may explain the alleged migration onto the Plaintiff’s land.

The hearing of that motion was originally scheduled to be heard in January 2018, but it was subsequently adjourned to June 2018. [ 9 ] Prior to the hearing, the Plaintiff and Canada reached a resolution and entered into an agreement, whereby each party would be entitled to conduct testing and drilling on the other’s property subject to certain conditions.

The agreement reached between the Plaintiff and Canada specifically stated: “ The Parties remain entitled to bring the matter of costs on the motion before the Court if the Parties cannot agree .” [ 10 ] It would seem that the Plaintiff and Canada were able to agree upon legal fees, i.e. “costs” to which the Plaintiff was entitled, but there was no agreement with respect to recoverable disbursements.

Pursuant to Rule 59.08 (8) of the Rules of Court, a party who is entitled to cost is also entitled to its disbursements, as may be assessed under Tariff D of Rule 59. [ 11 ] Because there was no agreement, the Plaintiff prepared a Bill of Costs for the disbursements it was claiming, which were in the amount of $446,432.80. That amount was made up primarily of invoices paid to the Plaintiff’s environmental engineering consultants, Acer Environmental Services

(2015) Ltd. The disbursements also included over $100,000 in interest claimed by the Plaintiff. [ 12 ] The matter proceeded to a hearing before a Deputy Clerk of the Court of King’s Bench pursuant to Rule 59.11 of the Rules of

Court for an assessment of costs.

That hearing was conducted on April 20, 2021. [ 13 ] In a Decision rendered on February 28, 2022, the Deputy Clerk allowed only a portion of the Plaintiff’s claimed disbursements, rendering a Judgment in the amount of $105,583.25. [ 14 ] In her Decision, the Deputy Clerk noted that Canada had objected to the claim for those disbursements, arguing that they were excessive and that much of what had been claimed by the Plaintiff were expenses relating to the action against Canada globally, and were not uniquely incurred in relation to the Plaintiff’s motion, which was for leave to conduct drilling on the Federal Lands. [ 15 ] In her Decision, the Deputy Clerk suggests that there may well be merit to that argument, but the uncontroverted evidence before her, and indeed the evidence before this Court, is that the disbursements where uniquely related to the motion itself.

The Plaintiff provided an affidavit of Gerald Pelkey, Senior Engineer with Acer, sworn February 23, 2021. At page 123 of the Record, Mr. Pelkey states: None of the investigations, data and information obtained as set out above will be used, or assist in the claim as against Irving Oil Limited, but were conducted, assembled and prepared and required to show contamination was flowing from lands owned by the Defendant onto the Plaintiff’s property, and that there was thus a requirement to conduct investigations and drilling on the Defendant’s [i.e. Canada’s] property.

The costs incurred for the drilling investigations, preparation of reports, review, site visits, meetings and literature searches as set out herein, were solely incurred for the purpose of assembling the evidence necessary in supporting the motion to obtain an Order allowing the Plaintiff to carry out investigations and drill on the property of the Defendant. [ 16 ] In the end, the Deputy Clerk was satisfied that at least some of those claimed disbursements were justified and recoverable, but she reduced the Plaintiff’s claim for those disbursements “somewhat arbitrarily” (see paragraph 23 of the Decision) to reflect the need for proportionality.

She reduced the disbursements for the period of February 2016 to June 2016 – the time frame in which Canada had asked the Plaintiff to submit its two proposal – by 50%. [ 17 ] She then reduced the remaining claim, for the period after the Plaintiff’s simplified proposal until the hearing that had been scheduled in June 2018, by 75%.

She wrote at paragraph 25 of her Decision: Considering the amount of work carried out before the “clarifying” letter of June 2016 it is somewhat puzzling that an additional expenditure of almost a quarter of a million dollars was needed to advance an argument to a Motions Judge that an access/drilling order was required. Negotiations were not succeeding. The Plaintiff was confident in its desire to drill, it would seem as early as 2016 if not sooner.

I question why the filing of a Motion would not have been viewed as a more prudent step earlier than continuing down a path paved with exorbitant costs for what amounted to more than a year before the Motion was filed. [ 18 ] As noted, she awarded the Plaintiff a judgment in the amount of $105,583.25 – representing just under 25% of the amount claimed in the Bill of Costs. THIS APPEAL [ 19 ] Canada appeals the Deputy Clerk’s Decision, arguing that she made errors of fact.

In essence, Canada argues that: 1) the disbursements incurred by the Plaintiff were, in reality, in relation to the Plaintiff’s broader action against Canada, and not uniquely in relation to the motion; or 2) the disbursements were, in truth, incurred for use in the Irving Litigation; and 3) in any event, the disbursements claimed are excessive and unnecessary. THE LAW [ 20 ] Rule 59.11(8) of the Rules of Court provides that a party may appeal any decision rendered by a Clerk or Deputy Clerk with respect to the assessment of costs. It is a genuine appeal, and not a hearing de novo.

The Court cannot simply substitute its own assessment for that of the Deputy Clerk unless there is reversible error committed. [ 21 ] Both the Plaintiff and Canada agree that the Deputy Clerk, in exercising her function under Rule 59, has discretion. They also agree that this Court owes the Decision a degree of deference unless there has been an error of principle.

ANALYSIS [ 22 ] Here, Canada’s primary argument is that the disbursements claimed by the Plaintiff and allowed by the Deputy Clerk (though significant reduced) were not, in fact, incurred primarily or solely for use on the motion. Rather, Canada argues that the real purpose for which those costs were incurred by the Plaintiff was for use either in its action (globally) against Canada or, more likely, in the Irving Litigation. [ 23 ] Unfortunately for Canada, there is no evidence to support that argument.

In fact, the uncontradicted evidence before the Deputy Clerk, and before this Court, is that the disbursements claimed by the Plaintiff were incurred solely for use on the motion for leave to conduct drilling on the Federal Lands. That was the uncontroverted evidence of Mr. Pelkey, the senior engineer who oversaw the work which resulted in the claimed disbursements.

This uncontroverted evidence renders Canada’s arguments just that – arguments without any basis in fact. [ 24 ] Canada also disputes that the disbursements were necessary, arguing that it was still considering the Plaintiff’s request to conduct drilling and that the costs should not have been incurred. Effectively, Canada is arguing that the Plaintiff was unreasonable in pursuing its motion because Canada apparently needed more than two years to decide whether to allow the drilling.

Recall that a resolution of the issue was not achieved until shortly before the hearing of the motion, and months after it was filed along with the supporting affidavit evidence of the Plaintiff’s experts. Canada’s argument that the expenses were unnecessary or premature is not tenable. [ 25 ] As for the argument that the disbursements are excessive, the Deputy Clerk reduced the Plaintiff’s claims by a significant amount to account for proportionality. That, in view, was entirely reasonable, and Canada’s argument that she did not exercise that discretionary power in a reasonable manner is without merit.

DISPOSITION [ 26 ] There is no basis to conclude that the Decision reached by the Deputy Clerk is based on an error of principle. There is no reversible error in my view, and no basis to disturb the Decision. [ 27 ] The appeal is dismissed with costs payable by Canada to the Plaintiff in the amount of $2,500 inclusive of disbursements. DATED at Moncton, New Brunswick this 17 th day of October 2022. _____________________________________ Robert M. Dysart, Judge of the Court of King’s Bench of New Brunswick