In a previous post, BLG blogged about SemCAMS ULC v Blaze Energy Ltd. 2015 ABQB 218 (“SemCAMS”) where the Alberta Court of Queen’s Bench granted summary judgment under a “pay first, audit later” clause. In that case, the Court of Queen’s Bench noted that SemCAMS ULC needed “to be able to rely on a reliable cash flow.” Although, in the usual case, a party seeking payment would not be able to get summary judgment where the amounts owing were in dispute, the parties’ agreement to allocate the risk meant Blaze might pay amounts it didn’t actually owe, and that SemCAMS could get summary judgment.
In a brief decision, the Alberta Court of Appeal recently upheld Justice Strekaf’s decision in SemCAMS. The Court of Appeal held that Justice Strekaf’s decision in SemCAMS was based on a reasonable interpretation of the agreements in issue and business efficacy considerations which supported that interpretation. With no error in Justice Strekaf’s decision, the Court of Appeal dismissed the appeal.
Following the Court of Appeal decision, it appears that where a “pay first, audit later” arrangement is present, it will be easier for industry players to obtain judgment on delinquent invoices regardless of any dispute over the actual amount owing. The SemCAMS case continues to provide some certainty over payments made under common industry arrangements. It means that parties to contracts may have to pay invoices even where there is a legitimate dispute, and will have to rely on audit and refund provisions as their remedy.