CNOOC PETROLEUM NORTH AMERICA ULC v 801 SEVENTH INC, 2023 ABCA 97
SLATTER, VELDHUIS AND FEEHAN JJA
5.1: Purpose of this Part (Disclosure of Information)
5.11: Order for record to be produced
5.13: Obtaining records from others
5.16: Undisclosed records not to be used without permission
5.17: People who may be questioned
5.18: Persons providing services to corporation
5.28: Written questions
5.3: Modification or waiver of this Part
5.37: Questioning experts before trial
5.4: Appointment of corporate representatives
5.5: When affidavit of records must be served
5.6: Form and contents of affidavit of records
5.8: Records for which there is an objection to produce
5.9: Who makes affidavit of records
6.38: Requiring attendance for questioning
14.27: Filing Extracts of Key Evidence
14.28: Record before the Court
The landlord Defendants appealed an Order allowing the tenant Plaintiff to question two consultants hired by the Defendants (the “Order”) pursuant to Rules 5.18 and 6.38. The Appeal was allowed because the Order was inconsistent with the Part 5 Questioning practice in Alberta and the Rules. The Court of Appeal found that the Order was based on an overreading of Rule 5.18 and its effect on the litigation constituted an error of principle.
The Plaintiff terminated the lease claiming the Defendants’ building was unfit and unsafe for occupancy due to asbestos. The Defendants counterclaimed for breach of lease, lost rental revenue to the end of term, costs to restore portions of the building, lost revenue from third parties, and loss value of building. To mitigate their losses, the Defendants hired two non-parties, Altus and Colliers, to re-lease the space and negotiate the property tax assessment.
The Order contemplated a deadline for record production and Questioning. By the time the deadline passed, there had been 100 days of Questioning generating 2,300 Undertakings and over 4,000 Interrogatories. The work of Altus and Colliers was also explored, and certain documents under their possession had been produced by the Defendants.
The Order was obtained by the Plaintiff pursuant to an amended Application invoking Rule 5.18 to compel answers to Interrogatories related to the work of Altus and Colliers. Rule 5.18 contemplates Questioning of non-party witnesses if the Court permits it, or if the Parties agree in writing. The Order was premised on the Plaintiff’s entitlement to “test the veracity of the re-leasing efforts” as re-leasing efforts were relevant and material to the Action. However, the Order did not impose limits on the topics that could be covered, duration, or costs incurred by the Parties.
The Court of Appeal explained that the Rules set up a regime that ensures the parties to litigation are fairly informed about their opponent’s case. For example, Rule 5.1 summarizes the purpose of pre-Trial Questioning: to disclose evidence, narrow issues, and encourage settlement. Rule 5.3(1)(b) limits the rights under Rule 5.1 in circumstances where the Court finds that compliance with the Rule will lead to expense, delay, danger, and will be disproportionate to the likely benefit.
Further, each Party is required to serve an Affidavit of Records under Rules 5.5, 5.6, and 5.9. Rule 5.11(2)(b) allows Parties adverse in interest to apply for further production to cross-examine on the supporting Affidavit. Therefore, the Court can order the production of missing records under Rule 5.11 if necessary. As part of the regime, undisclosed records cannot be used at Trial by the Party who fails to produce them without the Court’s permission under Rule 5.16.
Non-parties can produce relevant and material documents by virtue of Rule 5.13, but they are not required to serve an Affidavit of Records. Parties adverse in interest are questioned on relevant and material topics under Rule 5.17, orally, or by written interrogatories under Rule 5.28. However, the Court of Appeal emphasized that the Alberta pre-Trial Questioning regime is not intended to allow Questioning of every potential witness.
If a Party that is being questioned is a corporation, it is mandated to appoint a corporate representative under Rule 5.4. In addition to the corporate representative, an adverse Party can question a present or former employee of the corporation under Rule 5.17. Notably, there is no right to question agents or third-party contractors who deal with an adverse Party.
The Court of Appeal held that the general Rules on Questioning do not extend to experts, and experts are under no obligation to produce an Affidavit of Records. These principles have been codified under Rules 5.8(5) and 5.18(3). Rule 5.37 allows for the examination of experts before Trial if the parties agree or in exceptional circumstances.
Turning its attention to the Order, the Court of Appeal held that Rule 5.18 was intended to “slightly modify the rules for questioning under Rule 5.17, not override the long-established Rule 5.13 for obtaining records from non-parties”. Essentially, the Order authorized the Plaintiff to question non-parties to see if they had relevant and material records. This was contrary to the Rules and case law, which were clear that the Rules cannot be used to engage in a fishing expedition and to obtain document discovery of a non-party.
As a cautionary tale, the Court of Appeal noted that the Extracts of Key Evidence filed by the Parties were excessive in length. Counsel are expected to review the material and include only material that is necessary to solve the issues on Appeal, as prescribed by Rule 14.27(1). Especially since Rule 14.28(1) ensures that all exhibits received by the Trial Court are part of the Appeal record even if they are not filed with the Court of Appeal.View CanLII Details