The much-debated and closely-monitored Re Redwater Energy Corp. litigation (we previously posted about Bulletin 2016-10, Bulletin 2016-21, the decision, and the impact outside of Alberta) is now proceeding through appeal. The latest development in this proceeding is that a number of industry participants have sought and obtained permission to intervene in the Appeal.

In Orphan Well Association v Grant Thornton Limited, 2016 ABCA 238 (“Orphan Well v Grant Thornton”), the Canadian Association of Petroleum Producers (“CAPP”), the Canadian Association of Insolvency and Restructuring Professionals (“CAIRP”), the Attorney General for Saskatchewan (“Province of Saskatchewan”) and Her Majesty the Queen in Right of the Province of British Columbia as represented by the Ministry of Natural Gas Development and the British Columbia Oil and Gas Commission (“Province of BC”) sought leave to intervene with respect to constitutional issues regarding the interpretation of federal and provincial legislation, the division of legislative powers and the doctrine of paramountcy. The Alberta Court of Appeal granted permission to intervene to all four entities.

Background

This is an appeal from the decision of Re Redwater Energy Corp., 2016 ABQB 278 (“Re Redwater”). We have previously reported on that decision.

Test for Permission to Intervene

The Court of Appeal clarified the test for permission to intervene in an appeal. The authority to grant permission to intervene and impose conditions on the intervention arise from rules 14.37(2) and 14.58 of the Alberta Rules of Court, AR 124/2010. Following Papaschase Indian Band (Descendants of) v Canada (Attorney General), 2005 ABCA 320, a two-step approach should be used to determine whether leave should be granted:

  1. the court will consider the subject matter of the proceeding;
  2. the court will determine the intervener’s interest in that subject matter.

When determining the intervener’s interest in the second branch of the test, the Court should consider:

  1. whether the intervener will be directly and significantly affected by the appeal’s outcome; and
  2. if the intervener will provide some expertise or fresh perspective on the subject matter that will be helpful in resolving the appeal.

The Court clarified that in order to grant leave, both criterion in relation to the intervener’s interest must be met – simply having an affected interest is not enough to grant leave. A fresh perspective or special expertise in relation to the subject matter is required.

The Court followed Pedersen v Alberta, 2008 ABCA 192, which set out relevant factors to be considered in determining whether to grant intervener status:

  1. Will the intervener be directly affected by the appeal;
  2. Is the presence of the intervener necessary for the court to properly decide the matter;
  3. Might the intervener’s interest in the proceedings not be fully protected by the parties;
  4. Will the intervener’s submission be useful and different or bring particular expertise to the subject matter of the appeal;
  5. Will the intervention unduly delay the proceedings;
  6. Will there possibly be prejudice to the parties if intervention is granted;
  7. Will intervention widen the lis between the parties; and
  8. Will the intervention transform the court into a political arena?

The Court of Appeal clarified that interveners should be allowed when they will significantly add to the complex constitutional issues, especially ones which have serious and wide-ranging policy implications. Further, the Court of Appeal strongly encouraged that interveners follow rule 57(2) of the Rules of the Supreme Court of Canada, SOR/83-74, which requires applicants to identify the position the intervener intends to take and set out the submissions to be advanced, the questions on which the applicant proposes to intervene, the intervener’s relevance to the proceeding and the reasons why the intervener believes its submissions will be different from other parties and therefore useful to the Court.

Application

Following the Pedersen factors, the Province of BC laid out its arguments for leave to intervene in support of the Appellants. The Court of Appeal found that the Province of BC would have an interest which would be directly and significantly affected by the outcome of the Appeal. Further, the Province of BC would bring an extra-provincial perspective; however, it would not be entitled to widen the lis by explaining the differences between British Columbia and Alberta legislation. Overall, the Court of Appeal found they met the criteria for permission to intervene.

CAPP sought intervention in favour of the Appellants. CAPP argued that it is a key player in the oil and gas industry as it is the primary source of funding for the Orphan Well Fund and the Alberta Energy Regulator; therefore the Appeal directly affects CAPP’s members. CAPP argued that it has special expertise in relation to the oil and gas industry, and could provide perspective on public interest considerations, which would be broader than the arguments of the Appellants. The Court of Appeal found CAPP met the criteria for permission to intervene.

The Court of Appeal also granted intervener status to the Province of Saskatchewan. Firstly, Saskatchewan has legislative provisions similar to Alberta. If the trial decision is upheld, it would negatively affect Saskatchewan’s orphan well program, oil and gas industry and taxpayers. Secondly, the Province of Saskatchewan would bring a fresh perspective on common law bankruptcy principles focusing on the principle that bankruptcy proceedings should not place a creditor in a better position than it would have been in absent the proceedings. Lastly, the Province of Saskatchewan would address broader constitutional issues, such as co-operative federalism and interjurisdictional immunity.

Lastly, CAIRP was granted intervener status as it is a professional association representing receivers, trustees, agents, monitors and consultants in the insolvency field and is uniquely positioned to provide insight on insolvency and restructuring. CAIRP also has expertise on the interplay of provincial regulatory legislation and federal insolvency legislation. The Court of Appeal found that CAIRP will be able to assist the Court with the practical outcomes of the policy decisions to be heard.

Implications

As a result of the foregoing interveners being granted intervener status in this Appeal, the Court of Appeal will have a more fulsome understanding of the context and implications to industry from additional stakeholders that may not have been available to the lower Court, where there were no interveners. These perspectives are expected to supplement the important policy debate that the Court of Appeal faces in this Appeal.

Of note, despite one of the relevant factors that the courts consider in determining whether to grant intervener status being whether permitting an intervener to participate will result in the court turning into a political arena, that does not appear to have factored heavily into the analysis of the Court of Appeal in granting intervener status to these industry participants.