On March 21, 2017, the Court of Queen’s Bench of Alberta ruled against the Alberta government in Alberta (Attorney General) v. ENMAX PPA Management Inc. et al., a controversial legal action brought in 2016 by the provincial government against several former buyers of power purchase arrangements (PPAs). In doing so, the court provided additional guidance to litigants regarding cross-examination principles in Alberta.

Blakes successfully represented ENMAX in this matter.

BACKGROUND

In July 2016, Alberta’s Minister of Justice and Attorney General (Attorney General) brought an originating application against several former buyers of PPAs, alleging that those parties improperly terminated the PPAs. The PPAs included provisions allowing the buyers to terminate the PPAs if, among other things, the Alberta government imposed a legal change that could reasonably be expected to render continued performance of the PPAs to be “unprofitable, or more unprofitable” to the buyers for the balance of the terms.

In June 2015, the provincial government amended the Specified Gas Emitters Regulation (SGER) to, among other things, increase the operational efficiency requirements on regulated facilities from 12 per cent to 15 per cent for 2016 and to 20 per cent for 2017. The new changes to SGER required regulated facilities to reduce emissions intensity levels below prescribed baseline levels or otherwise comply by using emissions performance credits or emissions offsets or, alternatively, by contributing to the Climate Change and Emissions Management Fund (Fund). The government also increased the cost of contributing to the Fund from C$15 per tonne for 2015 to C$20 per tonne for 2016 and to C$30 per tonne for 2017.

As a result, all buyers of coal-fired PPAs terminated them in 2016. Some argue that it should have been obvious to the Alberta government that such legal changes in a historically low electricity price environment would result in those PPA terminations. However, in its originating application, the Attorney General sought a declaration that the relevant section of the PPA should be read as if the words “or more unprofitable” are excluded and argued that the process by which the words “or more unprofitable” were added was unlawful (ultra vires) and void (ab initio).

In support of the application, the Attorney General filed an affidavit attesting to, among other things, the current government’s understanding of the relevant legislation, the background policies and the process for approving and amending the PPAs (Claimed Background Facts). The affiant was cross-examined and, in the course of the cross-examination, refused a number of undertakings. The affiant also refused to answer a substantial number of questions. The Attorney General took the position that the affiant’s statements about what the current government knew or didn’t know were irrelevant, as was the affiant’s understanding of the Claimed Background Facts.

DECISION

On the subsequent motion by the defendants, Chief Justice N. C. Wittmann rejected the Attorney General’s positions. The Chief Justice noted that both the originating application and the Attorney General’s affidavit contained multiple paragraphs purporting to comment upon those very subjects and, as a result, it would be unfair to allow the affiant, who acknowledged that he spoke for the current government, to attest to certain issues and not be subject to related cross-examination questions on those subjects.

In overruling the objections to undertakings and questions advanced by the Attorney General, Chief Justice Wittmann usefully summarized a number of cases and stated the following principles:

  1. Questioning on an affidavit is cross-examination
  2. Questioning on discovery is not cross-examination; it is in the nature of cross-examination
  3. The purpose and scope of questioning is distinct in each case
  4. The scope of cross-examination on an affidavit is framed by the motion that the affidavit is made in support of, but when the motion itself is the entire lawsuit, for example with an originating application, permissible cross-examination on the affidavit can “cover the whole lawsuit”
  5. In addition, where the affidavit puts forward any other matter expressly deposed to, or exhibited to the affidavit, cross-examination can extend to it “even if the matter deposed to is irrelevant to the relief claimed”
  6. The principle of proportionality is a consideration and undertakings otherwise answerable had the deponent had the information available at oral questioning ought to be answered provided the provision of the information would not be “overly onerous” and would likely significantly help the court in the determination of the application

This decision provides additional guidance to litigants to take more considered positions and avoid the time and expense of such applications, especially having regard to the significant burdens the court is already experiencing.