Court Orders Production Of Native Accounting Records Where Operator Fails To Maintain An Oil Sands Project Carried Account

In a recent decision of the Alberta Court of Queen's Bench, Bard v Canadian Natural Resources, 2016 ABQB 267, the Court considered issues respecting e-discovery in the context of a complex, multi-million dollar accounting action between sophisticated commercial entities.

Background

The Plaintiffs and the Defendants (collectively, "CNRL") are parties to a 1968 Memorandum of Agreement (the "Agreement") "according to which the Plaintiffs hold an undivided 5 percent working interest in Lease 18 for an oil sands project known as Horizon, while CNRL operates the project [the "Horizon Project"] as 95 percent shareholder" (para 2). The Plaintiffs' share of the proceeds and costs were to be recorded in a Carried Account, which tracks the Plaintiffs' financial interest, as the Plaintiffs do not get paid until and unless the proceeds exceed the costs recorded in the Carried Account (para 2).

In 2010, the Plaintiffs commenced an action against CNRL for breach of contract, breach of fiduciary duty and unjust enrichment in relation to CNRL's accounting of credits and debits posted to the Carried Account.

In 2014, CNRL issued new statements for the Carried Account, purporting to replace all previous statements. The new statements were based on a new interpretation of the Agreement and followed a significantly different methodology of accounting.

In 2014, the Plaintiffs applied to obtain (a) permission to amend the Statement of Claim to reflect, among other things, the implications of the new methodology; and (b) an order compelling CNRL to produce seven categories of native and other records.

The Decision Regarding Production of Records

In total, the Plaintiffs sought production of seven categories of records. Three of these categories, and the Court's decision regarding whether they should be produced, are of particular relevance to industry participants. The Plaintiffs sought production of:

Native spreadsheets, including embedded formulas and metadata, to supplement the copies already produced by CNRL in a TIFF format in accordance with the Complex Case Litigation Plan (the "Litigation Plan") agreed to by the parties; Certain of CNRL's electronic financial database records; and Miscellaneous records requested by the Plaintiffs' expert. Native Spreadsheets

CNRL had provided spreadsheets to the Plaintiffs in their TIFF image files in accordance with the Litigation Plan. However, the Plaintiffs argued that the TIFFs were not "usable" and they needed the...