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The Sequoia Chapter Half 4: Prices Misplaced in Time and Perpetual’s New Subsidiary


By: Drew Yewchuk

Instances Commented on: PricewaterhouseCoopers Inc v Perpetual Power Inc, 2022 ABQB 592

PDF Model: The Sequoia Chapter Half 4: Prices Misplaced in Time and Perpetual’s New Subsidiary

That is half 4 of a sequence on the litigation ensuing from the Chapter of Sequoia Assets Corp. (Sequoia). Half 1 coated the primary utility for abstract dismissal and an utility to intervene. Half 2 coated a prices determination in opposition to the trustee and the attraction of the primary abstract dismissal. Half 3 coated interlocutory choices and the attraction of the second abstract dismissal determination.

This half covers a prices determination on the King’s Bench stage regarding the primary and second functions for abstract dismissal (however not both of the appeals of these abstract dismissals). Ordinarily prices determination are comparatively easy, however the intricate timeline of the Sequoia-related litigation has made this one extremely sophisticated and has given it the texture of a poorly written time journey movie.

The Sequoia-related litigation is important as a result of the case pertains to the power of oil and fuel firms to make use of complicated company constructions and transactions to keep away from monetary accountability for abandonment and reclamation prices. The information are set out in my first put up on the Sequoia chapter, or in a brief abstract written by the Court docket of Enchantment (PricewaterhouseCoopers Inc v Perpetual Power Inc, 2021 ABCA 16 at paras 3-13).

I’ll proceed to make use of the quick varieties established within the earlier posts: Perpetual Power Inc, Perpetual Working Belief, and Perpetual Working Corp (The Perpetual Group), Abandonment and Reclamation Obligations (ARO), and PricewaterhouseCoopers (the Trustee).

The Confused Timeline

PricewaterhouseCoopers Inc v Perpetual Power Inc, 2022 ABQB 592 (CanLII) is a prices determination written by Justice D. B. Nixon, the identical justice who determined the primary and second abstract dismissal functions and the prices utility for the primary abstract dismissal. All three of these earlier choices in PricewaterhouseCoopers Inc v Perpetual Power Inc circumstances have been overturned by the Court docket of Enchantment. This determination might be overturned as effectively.

Justice Nixon obtained the events’ submissions on prices on July 23, 2021 however didn’t situation his determination till August 31, 2022. Nonetheless, on March 2022, the Court docket of Enchantment had issued a call overturning Justice Nixon’s determination on the second utility for abstract dismissal. Justice Nixon famous that the Court docket of Enchantment overturned his second determination concerning abstract dismissal however doesn’t handle or focus on the prices implications of the second abstract dismissal having been overturned or the Court docket of Enchantment’s findings in that attraction (at para 17).

Justice Nixon Disputes, Misinterprets, and Ignores Court docket of Enchantment Choices

Justice Nixon feedback on the Court docket of Enchantment’s conclusions that the Trustee’s declare based mostly on public coverage shouldn’t have been struck (at paras 29-34). His remark present that he disagrees with the Court docket of Enchantment. It’s not the position of a Trial Choose to dispute the findings of the Court docket of Enchantment within the guise of ‘feedback’.

Justice Nixon then misinterprets the Court docket of Enchantment’s feedback within the attraction of the primary abstract dismissal (2021 ABCA 16) to seek out that the potential Oppression declare beneath the Enterprise Companies Act, RSA 2000, c B-9 has been confined to solely the roughly one and a half million {dollars} in municipal taxes owed, and never the ARO prices (at paras 40-41). That is incorrect. As Justice Nixon famous, the Court docket of Enchantment left the chance that the oppression declare may influence the dealing with of the ARO open (at para 42). The Court docket of Enchantment was clear that they weren’t making any ultimate determinations on the Oppression treatment: “the state of the document and the complexity of the problems doesn’t allow a good disposition of this declare on a abstract foundation.” (2021 ABCA 16 at para 144) The order ensuing from the primary attraction is written out within the associated prices determination, and it doesn’t strike any a part of the oppression declare (2021 ABCA 92 at para 3). On the premise of this error, Justice Nixon finds that this “quantities to a win” for Perpetual and Ms. Rose (at para 43).

Justice Nixon then considers if the Perpetual Group and Ms. Rose improperly superior inconsistent positions concerning the values of the Oppression declare. Justice Nixon concludes that not one of the Perpetual Group and Ms. Rose’s arguments have been improper (at para 44-52). We already know that is incorrect as a result of the Court docket of Enchantment determination that Justice Nixon doesn’t cope with discovered that the Perpetual Group did take inconsistent and improper positions (2022 ABCA 111 at paras 99-102).

Justice Nixon finds Perpetual and Ms. Rose (the events he present in favour of in his three earlier choices) merited prices for each the primary and second units of functions.

Justice Nixon determined to award prices on Column 5 and not using a multiplier (at para 72-78) although the Court docket of Enchantment decided the complexity of the problems concerned merited multipliers of 5 occasions and thrice Column C for the totally different appeals. (2021 ABCA 92 at para 7). This odd determination to disagree with the Court docket of Enchantment additionally finally favours Perpetual and Ms. Rose, as the dimensions of prices on the King’s Bench stage determines the presumptive scale of prices for the attraction. Rule 14.88(3) of the Alberta Guidelines of Court docket, Alta Reg 124/2010 units the default prices rule for an attraction: “Except in any other case ordered, the dimensions of prices in an attraction shall be the identical as the dimensions that applies to the order or judgment appealed from.”

Commentary

Justice Nixon used components of the prices determination to attempt to defend his earlier choices and interpret the primary Court docket of Enchantment determination as extra beneficial to his findings than it was. That’s not the position of a Justice making a prices determination.

Justice Nixon’s option to solely handle the primary of the 2 Court docket of Enchantment choices overturning his abstract dismissals makes the choice incorrect. If Justice Nixon was meant to think about the Court docket of Enchantment choices (and I believe he was) he ought to have thought of each of them. Justice Nixon awarded prices to a celebration for bringing an utility that the Court docket of Enchantment had already decided was an abuse of course of (2022 ABCA 111 at 83-103). That can not be right.

Justice Nixon ought to have both issued this determination previous to the Court docket of Enchantment issuing the choice overturning the second utility for abstract dismissal, or requested the events to make new submissions after the Court docket of Enchantment launched their second determination. That strategy was utilized in various administrative regulation circumstances following the adjustments to the usual of evaluation introduced by Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65. See for example: Sarker v Canada (Citizenship and Immigration), 2020 FC 154 at paras 7-8. Issuing a call that overlooks a more moderen determination of a better court docket in the identical litigation produces a damaged chronology and all however ensures an attraction might be needed.

The requirement of one other attraction on prices will additional delay the decision of litigation with essential authorized and sensible implications for oil and fuel ARO in Alberta.

Perpetual Power Inc.’s New Company

One other wrinkle is that in this prolonged litigation Perpetual Power Inc. created a brand new subsidiary referred to as “Rubellite Power Inc.” and has tried to switch belongings to that subsidiary. The Trustee submitted a quick opposing the restructuring; arguing that Perpetual Power Inc. would already be unable to pay for the ARO at situation within the Sequoia litigation (at para 15), and that:

The impact of the Rubellite Transactions is to switch worth from Perpetual to its shareholders, specifically Ms. Rose, in circumstances the place it can not fulfill its current obligations, together with to its contingent creditor just like the Trustee. (at para 122)

The Trustee’s temporary could be discovered right here. In Perpetual Power (Re), 2021 ABQB 718 Justice M. J. Lema discovered that the Trustee had no standing to oppose the plan of association (at para 6), and accredited the plan of association in September 2021. If the Trustee is right, Perpetual might be unable to pay for the ARO prices at situation in PricewaterhouseCoopers Inc v Perpetual Power Inc whatever the authorized end result. I additionally be aware that transferring licenses for oil and fuel belongings in Alberta requires the approval of the AER, and the AER has not but accredited the switch (see utility no.1938806 on the AER’s Built-in Software Registry).

 


This put up could also be cited as: Drew Yewchuk, “The Sequoia Chapter Half 4: Prices Misplaced in Time and Perpetual’s New Subsidiary” (September 21, 2022), on-line: ABlawg, http://ablawg.ca/wp-content/uploads/2022/09/Blog_DY_Sequoia_4.pdf

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