There was no error in granting partial summary judgment on more than $5 million dollars in gas facility invoices, the Alberta Court of Appeal held in SemCAMS ULC v Blaze Energy Ltd, 2016 ABCA 113, despite the gas producer's objections that a trial was needed to determine the amounts owing. While the producer is free to pursue an audit of the disputed amounts and a counterclaim for any adjustments, it faces a current liability for the amounts invoiced.
The Court held that the lower court's decision was founded on a reasonable interpretation of the relevant agreements that was supported by considerations of business efficacy. The relevant agreements used the "pay first, dispute later" structure common in the oil and gas industry. As we noted in our post discussing the summary judgment decision (see: Operator Granted Summary Judgment Against Producer for Disputed Invoice Amounts), the lower court accepted that in light of the operator's need to ensure a steady cash flow, it was not unreasonable for the parties to allocate the risk of inaccurate monthly invoices to the producer, subject to contractual audit rights.
The Court of Appeal also held that the Chambers Judge was entitled to rely on evidence from an employee of the operator whose role regarding the specific receivables was somewhat indirect. Although the employee was responsible for production allocation and booking gas processing and transportation fees, he was not involved in preparing invoices and could not, for example, explain the volume of gas to which the invoices related. The Court of Appeal confirmed that the employee was nevertheless sufficiently well informed and qualified to provide reliable and material evidence concerning the quantum of the operator's claim. This aspect of the decision is consistent with longstanding Alberta case law that a corporate representative does not need to be personally involved in the transactions regarding which he or she provides evidence on a summary judgment application, as well as recent decisions that streamline the process for relying on summary procedures (see: Myth of Trial No Longer Governs: Alberta Embraces New Summary Judgment Test).
If you have any questions about how this decision might impact your business, please contact Mike Theroux, Laura Gill or Aaron Rankin.