CANADIAN NATURAL RESOURCES v SHAWCOR LTD, 2014 ABCA 289

FRASER, CONRAD and WATSON JJA

1.2: Purpose and intention of these rules
5.1: Purpose of this Part (Disclosure of Information)
5.11: Order for record to be produced
5.16: Undisclosed records not to be used without permission
5.17: People who may be questioned
5.30: Undertakings
5.3: Modification or waiver of this Part
5.4: Appointment of corporate representatives
5.6: Form and contents of affidavit of records
5.7: Producible records
5.8: Records for which there is an objection to produce
13.16: Deviations from and changes to prescribed forms

Case Summary

This Appeal primarily reviewed Part 5 of the Rules relating to the content of an Affidavit of Records where a party claimed privilege. The Action was in respect of a claim for damages from Canadian Natural Resources Limited (“CNRL”) having to replace a pipeline, designed and constructed by ShawCor Ltd. (“Shaw”), following a well blowout.

Shaw applied for an Order that CNRL provide a further and better Affidavit of Records because CNRL had allegedly not disclosed all of the records in its possession in a number of critical areas. The main issue turned on disclosure of evidence relating to CNRL’s testing and investigation of the pipeline after February 4, 2009, the date on which CNRL established a protocol to funnel all reports and communications to the legal department. It claimed that any records created after this date were subject to solicitor-client and/or litigation privilege. Shaw contended that CNRL made an improper “blanket” claim of privilege, failing to describe each record or privilege claimed. CNRL argued that the case of Dorchak v Krupka (1997), 196 AR 81 (ABCA) (Dorchak), remains the law with respect an Affidavit of Records, which does not require a description of the records claimed to be privileged. Shaw’s Application was dismissed by the Case Management Justice and Shaw appealed.

The Court held that the Rules must, like a provision in a statute, be read in a grammatical, purposive and contextual manner. Doing so promotes access to justice, and is further supported by the foundational purpose in Rule 1.2 and the intended purpose of Part 5, as expressed in Rule 5.1. The Rules reflect the cultural shift to create an environment promoting timely and affordable access to justice. This requires the Rules to be interpreted in a manner that maximizes the ability of opposing counsel or parties to resolve disputes over privilege and minimize the time and expense of taking further legal steps.

The primary Rules relevant to an Affidavit of Records are Rules 5.6, 5.7 and 5.8, and these must be read together. Rule 5.7 was intended to apply to all relevant and material records, even those a party objects to produce. Thus, in an Affidavit of Records, a party must number all records in a convenient manner and briefly describe them, regardless if there is a single record or a bundle. If a party objects to produce a prima facie producible record pursuant to Rule 5.8, it must identify the particular ground(s) of the objection with respect to each record or bundle in order to assist the other parties in assessing the validity of the claimed privilege. This means the party claiming privilege must do two things:

1.         state the actual privilege being relied upon with respect to the particular record (or bundle); and

2.         describe the record in a way that, without revealing information that is privileged, indicates how the record fits within the claimed privilege.

The Court also found support for this conclusion by referring to the format of Form 26 set out in Schedule A. While the format is not strictly binding, as per Rule 13.16, Form 26 provides a list of examples of privilege followed by a colon. This suggests that a party is expected to provide more detailed information once citing the privilege claimed.

The Court rejected Dorchak as authority on this issue because it was decided under a different set of Rules relating to disclosure, and those Rules have now been replaced. This new interpretation of the Rules regarding disclosure is also consistent with other jurisdictions and the evolving trend in Canada towards open disclosure.

CNRL suggested that it was unnecessary to require a description of the records claimed to be privileged because the Rules provide for several options in addressing whether privilege has been properly claimed. The Court rejected this suggestion, stating that the purpose of providing a brief description is to obviate the need to seek a remedy under these other Rules.

Ultimately, the Court held that CNRL’s Affidavit of Records inadequately described the documents claimed to be privileged and directed CNRL to prepare a new or supplementary Affidavit in compliance with the Rules and its Order. With regard to the privilege claimed on reports of CNRL’s testing and investigation of the pipeline after February 4, 2009, the Court held that the dominant purpose of creating these reports was not necessarily for litigation: the mere fact that a lawyer becomes involved is not automatically controlling. Without further information from CNRL in the Affidavit of Records as to what records were created and for what purpose, they could not fall within solicitor-client or litigation privilege.

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