In the Court of Appeal of Alberta
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- Lilian Hawkins
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1 In the Court of Appeal of Alberta Citation: Canadian Natural Resources Limited v Arcelormittal Tubular Products Roman S.A., 2013 ABCA 87 Date: Docket: AC AC Registry: Calgary Between: Docket: AC Canadian Natural Resources Limited Fluor Canada Ltd. (Plaintiff) (Third Party) Mittal Steel North America Inc., Vass Pipe and Steel Co. Inc., BHD Tubular Limited and Arcelormittal XYZ Corp. Appellants (Defendants) Arcelormittal S.A., formerly Mittal Steel, N.V., Arcelormittal USA Inc., Mittal Steel North America Inc. formerly known as ISPAT North American Inc., Vass Pipe and Steel Co. Inc., BHD Tubular Limited, BNB Trading Inc., Trident Steel Corporation, Pioneer Steel & Tube Corp., TIC Canada ULC, PCL Industrial Constructors Inc., Willbros Canada Holdings ULC, Canadian Natural Resources Limited, John Doe, ABC Company and XYZ Company Not a Party to the Appeal (Third Parties)
2 Between: Docket: AC Canadian Natural Resources Limited Fluor Canada Ltd. (Plaintiff) (Third Party) Mittal Steel North America Inc., EMCO Corporation carrying on business under the firm name and style Westlund, Vass Pipe and Steel Co. Inc. and Arcelormittal XYZ Corp. Appellants (Defendants) Arcelormittal USA INC., Mittal Steel North America Inc. formerly known as ISPAT North America Inc., Vass Pipe and Steel Co. Inc., EMCO Corporation carrying on business under the firm name and style Westlund, BNB Trading Inc., Trident Steel Corporation, TIC Canada ULC, PCL Industrial Constructors Inc., Willbros Canada Holdings ULC, Canadian Natural Resources Limited, John Doe, ABC Company and XYZ Company Not a Party to the Appeal (Third Parties) The Court: The Honourable Madam Justice Ellen Picard The Honourable Madam Justice Marina Paperny The Honourable Mr. Justice Peter Martin Memorandum of Judgment Appeal from the Order by The Honourable Madam Justice E.A. Hughes st Dated the 1 day of November, 2012 (Docket: ; )
3 Memorandum of Judgment The Court: [1] The issue on this appeal is whether the case management judge erred in failing to allow certain proposed amendments to statements of defence on the ground that there was no evidence to support the allegations made in those proposed amendments. [2] The facts and the underlying actions are complicated, but may be summarized as follows. The appellants, Arcelormittal Tubular Products Roman S.A. and Mittal Steel North America Inc., manufacture and distribute steel pipe. Some of the pipe manufactured by the appellants were, through various distributors, sold to the respondent Canadian Natural Resources Limited (CNRL) for use in its oil-sands production facility known as the Horizon Project. Fluor Canada Ltd. (Fluor) is the designer of the Horizon Project. [3] CNRL alleges that some of the pipe was defective and had to be removed and replaced. It commenced three actions: the two actions to which these appeals relate, brought against the appellants and other parties in the supply chain for the subject pipe, and a third action in which CNRL sued Fluor for breaches of duty in relation to Fluor s engineering and procurement services on the Horizon Project. CNRL s action against Fluor was discontinued. [4] The appellants say the difficulty with the pipe was the result of an engineering error and negligence on the part of CNRL and Fluor. They sought to amend their statements of defence in the two actions to, among other things, allege that CNRL and Fluor committed the engineering error by installing the incorrect pipe in critical areas of the Horizon Project, plead certain provisions of the Safety Codes Act, and allege that CNRL and Fluor failed to disclose the engineering error. [5] The case management judge allowed most of the amendments sought by the appellants. However, she agreed with CNRL and Fluor that some of the proposed amendments effectively allege that the within actions constitute a fraud. She further concluded that those particular allegations were not supported by any evidence. Accordingly, she refused to permit those amendments to be made. [6] In reaching her conclusion, the case management judge set out the classic rule for the amendment of pleadings: that any pleading can be amended no matter how careless or late is the party seeking to amend (Balm v Canada Ltd., 2003 ABCA 98), subject to certain exceptions. In this case, the amendments were opposed on the basis that they are hopeless. [7] The case management judge reviewed the evidentiary burden and nature of the evidence required for substantive amendments to pleadings, as set out in Balm. As she noted, the evidentiary burden is generally low. With respect to those amendments that amount to allegations of fraud or high-handed or malicious conduct, however, the case management judge concluded that a higher evidentiary burden or stiffer test applies. She found that there was no evidence to support such amendments here.
4 Page: 2 [8] The case management judge also noted that the appellants sought to rely on statements made in CNRL s Statement of Claim in the discontinued action against Fluor as some evidence supporting the proposed amendments. The case management judge considered when a court may rely on pleadings filed in another action as evidence in support of amendments to pleadings and concluded, at [71] of her reasons: I find admissions by CNRL in the CNRL/Fluor Statement of Claim are admissible as evidence in the present proceedings against CNRL but are not admissible against any other Party. Any other statements made by CNRL in the CNRL/Fluor Statement of Claim are not evidence and cannot support [the appellants ] amendment applications. [9] The appellants allege that the case management judge committed the following errors: 1. determining there was insufficient evidence to support the rejected amendments; 2. not applying an exceptional circumstances test to allow the rejected amendments without imposing a higher evidentiary burden; and 3. declining to treat pleadings in another action as evidence in support of those allegations. [10] Identification of the legal test to apply in considering amendments to pleadings is a question of law reviewable on a correctness standard. Consideration of whether the evidence tendered can satisfy that test is a question of mixed fact and law and is entitled to deference absent palpable and overriding error or an extricable error of law. Whether something amounts to admissible evidence is a question of law, but a finding of whether, if admissible, the evidence supports allowing the amendment, is entitled to deference. [11] The evidentiary threshold to amend pleadings is generally low. However, as was noted by this Court in Mikisew Cree First Nation v Canada, 2002 ABCA 110, 303 AR 43, the threshold is significantly elevated when the proposed amendment raises allegations of fraud, high handedness or malicious conduct. The Court in Mikisew held that the appellant must show good ground or exceptional circumstances for such amendments and that good ground cannot be shown without significant evidence. The case management judge was alive to the test, correctly stated it, and applied it. [12] In our view, neither iteration of the test set out in Mikisew can be met without significant evidence. We do not read the cases from this Court as establishing an alternate test, with a different evidentiary threshold, where exceptional circumstances exist, as the appellants suggest. In any event, there are no exceptional circumstances apparent here that would relieve the appellants of the usual burden of adducing evidence to support proposed amendments that amount to allegations of fraud, high handedness, or malicious conduct.
5 Page: 3 [13] Moreover, we see no error in the case management judge s characterization of the rejected amendments as allegations of such conduct. As the respondents point out, the amendments that were permitted successfully add allegations that CNRL s and Fluor s negligence caused, contributed to, or aggravated CNRL s damages. The case management judge found that the allegations in the rejected amendments went further and alleged fraud or high-handed or malicious conduct. We are not persuaded that she committed a palpable and overriding error in making that finding. Likewise, we see no reviewable error in her conclusion that there was no evidence to support those amendments. [14] Finally, the submission that allegations in a statement of claim can be used as evidence to support the rejected amendments must fail. The allegations in this context are mere allegations and are not admissions as correctly pointed out by the case management judge. [15] The appeal is accordingly dismissed. Appeal heard on March 04, 2013 Memorandum filed at Calgary, Alberta this 6th day of March, 2013 Picard J.A. Paperny J.A. Martin J.A.
6 Page: 4 Appearances: J.E. Sharpe P.G. Chiswell for the Canadian Natural Resources Limited L.A. Westersund, Q.C. J.D. Fraese for the Fluor Canada Ltd. S. Carscallen, Q.C. K. Lee for the Appellants
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