Devon Canada Corp. v. PE-Pittsfield LLC et al., 2008 ABCA 393

• Judge: Hunt, Paperny and Rowbotham, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: October 10, 2008
• Citations: 2008 ABCA 393;(2008), 446 A.R. 62 (CA)

Devon Can. Corp. v. PE-Pittsfield LLC (2008), 446 A.R. 62 (CA);

      442 W.A.C. 62

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. NO.078

Devon Canada Corporation (appellant/plaintiff/applicant) v. PE-Pittsfield, LLC and Purenergy I, LLC, both carrying on business under the firm name and style of Pittsfield Generating Company, LP and the said Pittsfield Generating Company, LP, Alteresco, Inc. (sometimes known as Altresco Incorporated) carrying on business under the firm name and style of Pittsfield Generating Company, LP (formerly known as Altresco Pittsfield, LP) Pittsfield Partners, Inc., carrying on business under the firm name and style of Pittsfield Generating Company, LP (formerly known as Altresco Pittsfield, LP) and the said Pittsfield Generating Company, LP (formerly known as Altresco Pittsfield, LP)

(respondents/defendants/respondents)

Pittsfield Generating Company, LP (respondent/plaintiff by counterclaim/respondent) v. Devon Canada Corporation (appellant/defendant by counterclaim/applicant)

(0801-0189-AC; 2008 ABCA 393)

Indexed As: Devon Canada Corp. v. PE-Pittsfield LLC et al.

Alberta Court of Appeal

Hunt, Paperny and Rowbotham, JJ.A.

November 20, 2008.

Summary:

The plaintiff Devon Canada Corp. (Devon) commenced an action against several defendants including PE-Pittsfield, LLC (Pittsfield), carrying on business as Pittsfield Generating Company, LP (PGC). PGC was a registered Delaware limited partnership. Pittsfield was the general partner in PGC. Devon's claim related to the termination of two power sales agreements between PGC and two third parties who were not parties to this litigation. PGC's counterclaim related to Devon's subsequent failure to deliver gas to PGC under a natural gas supply agreement. General Electric Capital Corp. (GECC) and General Electric Credit Corp. of Tennessee (GECC-Tennessee) were limited partners in PGC but were not named in the litigation. Devon wished to examine them for discovery. Pittsfield had already been examined.

The Alberta Court of Queen's Bench, in a decision reported at [2008] A.R. Uned. 652; 2008 ABQB 394, declined the requested order for the examination of the limited partners. The court found that non-registration under the Act did not change the status of a limited partner in a foreign limited partnership and that rules 80(1) and 201 of the Alberta Rules of Court did not make a limited partner a party to an action against the limited partnership. The court held that the rationale underlying the rules was inapplicable to limited partnerships. Devon appealed. The grounds of appeal included that the court erred in concluding that non-registration did not convert a foreign limited partnership into a general partnership; and in concluding that rules 80 and 201 did not allow examination for discovery of limited partners as parties to the proceedings.

The Alberta Court of Appeal dismissed the appeal. The principles of private international law and the lack of clear statutory language that would change PGC's limited partnership status and turn it into an ordinary partnership supported the judge's conclusion. In addition, neither rule 80 nor rule 201 made limited partners parties to an action against the limited partnership.

Conflict of Laws - Topic 3609

Corporations and partnerships - General - Status of limited partnership - [See both Partnership - Topic 3904 ].

Conflict of Laws - Topic 9201

Practice - General - Comity - General - [See Statutes - Topic 526 ].

Partnership - Topic 3

General - Partnership legislation - Interpretation - [See Statutes - Topic 526 ].

Partnership - Topic 6

General - Nature of limited partnership - An appeal turned largely on the legal status of a foreign limited partnership that had not registered under the Alberta Partnership Act and of its limited partners, and whether rules 80 and 201 of the Rules of Court applied to limited partners - The Alberta Court of Appeal began its analysis with some general principles regarding the nature of a limited partnership, in contrast to the incidents of ordinary partnership - The court noted that, in a limited partnership, the limited partners could not participate in the control of the partnership if they wished to preserve their limited status, pursuant to ss. 57 and 64 of the Partnership Act - Accordingly, limited partners had no power to bind the partnership - A general partner, on the other hand, had the same implied authority to bind the partnership as in an ordinary partnership and the same corresponding liability - See paragraphs 21 to 23.

Partnership - Topic 6

General - Nature of limited partnership - [See Statutes - Topic 2263 ].

Partnership - Topic 3904

Relations between partners and third parties - Actions against partners or partnerships - General partnership vs. limited partnership - An appeal considered the effect of non-registration under the Partnership Act of Alberta, on the legal status of a foreign limited partnership and its limited partners when the partnership was carrying on business in Alberta - The plaintiff argued that by failing to register, the foreign limited partnership became a general partnership, making its partners general, rather than limited, and therefore parties to the action and examinable for discovery under rule 201 of the Alberta Rules of Court - The respondents submitted that under the principles of private international law, the legal status of the limited partnership and its limited partners was the same in Alberta as in Delaware, and therefore they were not proper parties to the proceedings or examinable for discovery - The Alberta Court of Appeal agreed with the respondents - As a matter of private international law, the limited partnership's status was a substantive matter to be determined by the law of the jurisdiction where it was created - Moreover, legal rights could not be removed without express language - See paragraphs 24 to 26.

Partnership - Topic 3904

Relations between partners and third parties - Actions against partners or partnerships - General partnership vs. limited partnership - The plaintiff sued several defendants including Pittsfield, carrying on business as Pittsfield Generating Company, LP (PGC) - PGC was a registered Delaware limited partnership - Pittsfield was the general partner in PGC - PGC was not registered as a limited partnership in Alberta under the Partnership Act - PGC could have registered in Alberta, but registration under the Act was not mandatory - General Electric Capital Corp. (GECC) and General Electric Credit Corp. of Tennessee (GECC-Tennessee) were limited partners in PGC but were not named in the litigation - The plaintiff wished to examine them for discovery - Section 77 of the Act provided that a limited partner, unless it was also a general partner, was not a proper party to proceedings against a limited partnership - Devon argued that by failing to register, PGC became a general partnership, making GECC and GECC-Tennessee general partners of PGC and, therefore parties to the action and examinable for discovery - A case management judge declined the requested order - The Alberta Court of Appeal dismissed the appeal - The principles of private international law and the lack of clear statutory language that would change PGC's limited partnership status and turn it into an ordinary partnership, supported the conclusion that non-registration did not convert the foreign limited partnership into a general partnership when it carried on business in Alberta - Accordingly, GECC and GECC-Tennessee retained their status as limited partners in Alberta - See paragraphs 24 to 35.

Practice - Topic 12

General principles and definitions - Substantive versus procedural rules or rights - An appeal turned largely on the legal status of a foreign limited partnership (PGC) that had not registered under the Alberta Partnership Act, and of its limited partners - PGC could have registered in Alberta, but registration under the Act was not mandatory - The parties disagreed about the effect of non-registration - The appellant submitted that the appeal did not address PGC's substantive rights, but only procedural rights - The Alberta Court of Appeal disagreed - Seeking to have limited partners treated as ordinary partners engaged substantive rights because as ordinary partners they would have joint and several liability - The right to conduct discoveries of ordinary partnerships was premised on the legal concept that all partners were jointly and severally liable and that the answers bound the partnership - That was not so for limited partners - The effect of making parties liable in a manner not contemplated by their constating documents was substantive - See paragraph 28.

Practice - Topic 4230

Discovery - Examination - Persons who may be examined - Nonparties - [See all Practice - Topic 4237.1 ].

Practice - Topic 4237.1

Discovery - Examination - Persons who may be examined - Limited partners - The plaintiff Devon Canada Corp. (Devon) sued several defendants including PE-Pittsfield, LLC (Pittsfield), carrying on business in Alberta as Pittsfield Generating Company, LP (PGC) - PGC was a registered Delaware limited partnership - Pittsfield was the general partner in PGC - General Electric Capital Corp. (GECC) and General Electric Credit Corp. of Tennessee (GECC-Tennessee) were limited partners in PGC but were not named in the litigation - Devon wished to examine them for discovery - Pittsfield had already been examined - A case management judge declined the requested order - The judge found that PGC's non-registration under the Alberta Partnership Act did not change the status of a limited partner in a foreign limited partnership and that rules 80(1) and 201 of the Alberta Rules of Court did not make a limited partner a party to an action against the limited partnership - Devon appealed - The grounds of appeal included that the judge erred in concluding that non-registration did not convert an otherwise properly constituted foreign limited partnership into a general partnership; and that rules 80 and 201 did not apply to limited partnerships - The Alberta Court of Appeal dismissed the appeal - The principles of private international law and the lack of clear statutory language that would change PGC's limited partnership status and turn it into an ordinary partnership supported the judge's conclusion - Therefore, GECC and GECC-Tennessee retained their status as limited partners in Alberta - In addition, neither rule 80 nor rule 201 made limited partners parties to an action against the limited partnership - See paragraphs 20 to 43.

Practice - Topic 4237.1

Discovery - Examination - Persons who may be examined - Limited partners - A case management judge found that rules 80(1) and 201 of the Alberta Rules of Court did not make a limited partner a party to an action against the limited partnership, holding that the rationale underlying the rules was inapplicable to limited partnerships - The judge relied in part on case law where the court held that a limited partnership enjoyed a statutory existence apart from the limited partner, primarily because of the limited liability of the limited partner - The judge characterized a limited partnership as a hybrid of sorts between a corporation and a general partnership - On appeal, the appellant argued that the judge erred in finding that rules 80 and 201 did not apply to limited partnerships - The Alberta Court of Appeal upheld the judge's finding - Neither rule 80 nor rule 201 made limited partners parties to an action against the limited partnership - The rules did not change the substantive law of limited partnerships - This was consistent with the case law interpreting rule 201 and by analogy, rule 187(3) (document discovery of a person for whose benefit an action was prosecuted or defended) - See paragraphs 36 to 43.

Practice - Topic 4237.1

Discovery - Examination - Persons who may be examined - Limited partners - An appeal related to a foreign limited partnership that had not registered under the Alberta Partnership Act and its limited partners, and whether, inter alia, rule 201 of the Alberta Rules of Court applied to limited partners - Rule 201 provided that a "member of a firm which is a party and a person for whose benefit an action is prosecuted or defended shall be regarded as a party for the purposes of examination" - The Alberta Court of Appeal upheld the case management judge's conclusion that rule 201 did not apply to a limited partnership - The word "firm" referred to an ordinary partnership and reflected the underlying legal principles that all members of the firm could bind each other and share liability for the acts of their partners and all were parties - That was not the case in a limited partnership, a key feature of which was the restricted role played by limited partners on behalf of the partnership - Nor was a limited partner a "person for whose benefit an action is prosecuted or defended" unless one of the exceptions in s. 77 of the Partnership Act applied (i.e., was also a general partner, or the proceeding was to enforce a limited partner's right against the limited partnership) - See paragraphs 38 to 39.

Practice - Topic 8800.2

Appeals - General principles - Duty of appellate court regarding findings of law - An appeal turned largely on the legal status of a foreign limited partnership that had not registered under the Alberta Partnership Act and of its limited partners, and whether rules 80 and 201 of the Rules of Court applied to limited partners - The Alberta Court of Appeal began its analysis by noting that an interpretation of the Rules of Court or of the Partnership Act was reviewable on a standard of correctness, while orders relating to the nature and scope of examination for discovery were within a case management judge's discretion and were entitled to considerable deference - See paragraph 18.

Practice - Topic 8804

Appeals - General principles - Duty of appellate court regarding discretionary orders - [See Practice - Topic 8800.2 ].

Statutes - Topic 526

Interpretation - General principles - Consistency with comity of nations or international law - An appeal considered the effect of non-registration under the Partnership Act of Alberta, on the legal status of a foreign limited partnership and its limited partners when the partnership was carrying on business in Alberta - The Alberta Court of Appeal noted that the Act was silent as to the effect of non-registration - It did not contain anything that explicitly took away the limited liability of a limited partner in a foreign limited partnership - In fact, s. 105 specifically protected rights, as it provided that "[t]he rules of equity and of common law applicable to partnership continue in force except where they are inconsistent with the express provisions of this Act" - Thus, common law principles, including that of comity of nations, had not been displaced - That conclusion was reinforced by reference to the general scheme of the Partnership Act - See paragraphs 30 to 35.

Statutes - Topic 2263

Interpretation - Presumptions and rules in aid - Against interference with vested rights (incl. pending litigation) - An appeal considered the effect of non-registration under the Partnership Act of Alberta, on the legal status of a foreign limited partnership and its limited partners when the partnership was carrying on business in Alberta - The Alberta Court of Appeal observed that legal rights could not be removed without express language - This was in keeping with the "well-established principle that rights are held not to have been taken away or affected by a statute unless expressed in clear language. ... It is presumed that the legislature does not intend to abolish, limit or otherwise interfere with rights, whether statutory or common law, absent words that clearly indicate the legislature's intention to interfere ... Or, as the Court put it in Crystalline Investments Ltd. v. Domgroup Ltd., 2004 SCC 3 ... 'explicit statutory language is required to divest persons of rights they otherwise enjoy at law.' The limited liability that goes with being a limited partner is such a right" - See paragraph 29.

Words and Phrases

A person for whose benefit an action is prosecuted or defended - In the context of an appeal concerning whether rule 201 of the Alberta Rules of Court applied to limited partners, the Alberta Court of Appeal considered the rule's words "a person for whose benefit an action is prosecuted or defended". The court contrasted those words with the more specific language in s. 77 of the Partnership Act, providing that a limited partner (who was not also the general partner) was not a proper party to a proceeding against the limited partnership, thereby removing the presumption of party status in the case of a limited partner - See paragraph 41.

Cases Noticed:

Marigold Holdings Ltd. et al. v. Norem Construction Ltd. et al., [1988] 5 W.W.R. 710; 89 A.R. 81 (Q.B.), refd to. [para. 12].

McLean (J.R.) & Associates Ltd. v. Glenrobin Place Developments Limited Partnership, [1993] B.C.T.C. Uned. F39; 22 C.P.C.(3d) 354 (S.C.), refd to. [para. 13].

Gemini Group Automated Distribution Systems v. PWA Corp. et al. (1993), 68 O.A.C. 205; 16 O.R.(3d) 239; 20 C.P.C.(3d) 385 (C.A.), refd to. [para. 14].

Sorrel 1985 Limited Partnership v. Sorrel Resources Ltd. et al. (1992), 130 A.R. 231; 3 Alta. L.R.(3d) 90 (Q.B. Master), dist. [para. 15].

Gienow Building Products Ltd. v. Tremco Inc. et al. (2000), 255 A.R. 273; 220 W.A.C. 273; 78 Alta. L.R.(3d) 40; 2000 ABCA 105, refd to. [para. 19].

International Association of Science and Technology for Development et al. v. Hamza, [1995] 6 W.W.R. 75; 162 A.R. 349; 83 W.A.C. 349 (C.A.), refd to. [para. 27].

Board of Education of Etobicoke Township v. Highbury Developments Ltd., [1958] S.C.R. 196; 12 D.L.R.(2d) 145, refd to. [para. 29].

Crystalline Investments Ltd. v. Domgroup Ltd., [2004] 1 S.C.R. 60; 316 N.R. 1; 184 O.A.C. 33; 2004 SCC 3, refd to. [para. 29].

155569 Canada Ltd. v. 258524 Alberta Ltd. et al. (2000), 255 A.R. 1; 220 W.A.C. 1; 2000 ABCA 41, dist. [para. 37].

Western Canadian Shopping Centres Inc. et al. v. Dutton et al., [2001] 2 S.C.R. 534; 272 N.R. 135; 286 A.R. 201; 253 W.A.C. 201; 2001 SCC 46, refd to. [para. 39].

Petrifond Midwest Ltd. v. Esso Resources Canada Ltd. et al. (1996), 187 A.R. 107; 127 W.A.C. 107 (C.A.), refd to. [para. 43].

Hirtz v. Public Trustee (Alta.) (2000), 267 A.R. 52; 2000 ABQB 326, affd. (2002), 303 A.R. 25; 273 W.A.C. 25; 2002 ABCA 29, refd to. [para. 43].

Statutes Noticed:

Partnership Act, R.S.A. 2000, c. P-3, sect. 52(2) [para. 6]; sect. 77 [para. 7]; sect. 105 [para. 30].

Rules of Court (Alta.), rule 80(1) [para. 9]; rule 201 [paras. 8, 36].

Authors and Works Noticed:

Castel, Jean-Gabriel, and Walker, Janet, Canadian Conflict of Laws (6th Ed. 2005) (2008 Looseleaf Update), § 30.1 [para. 26].

Lindley and Banks on Partnership (18th Ed. 2002), p. 28-01 [para. 21].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 476, 477 [para. 29].

Counsel:

S. Carscallen, Q.C., and C.A. Crang, for the applicant;

P.T. Linder, Q.C., and R. Van Dorp, for the respondent.

This appeal was heard on October 10, 2008, by Hunt, Paperny and Rowbotham, JJ.A., of the Alberta Court of Appeal. Paperny, J.A., delivered the following reasons for judgment reserved of the Court of Appeal, filed at Calgary, Alberta, on November 20, 2008.