Marathon Canada Ltd. v. Enron Canada Corp., 2008 ABCA 424

JudgePaperny, J.A.
CourtCourt of Appeal (Alberta)
Case DateDecember 10, 2008
Citations2008 ABCA 424;(2008), 446 A.R. 88 (CA)

Marathon Can. Ltd. v. Enron Can. Corp. (2008), 446 A.R. 88 (CA);

      442 W.A.C. 88

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. DE.071

Marathon Canada Limited (applicant/respondent/plaintiff/defendant by counterclaim) v. Enron Canada Corp. (respondent/appellant/defendant/plaintiff by counterclaim) and Marathon Oil Company and Husky Oil Operations Limited (applicants/respondents/defendants by counterclaim)

(0801-0242-AC; 2008 ABCA 424)

Indexed As: Marathon Canada Ltd. v. Enron Canada Corp.

Alberta Court of Appeal

Paperny, J.A.

December 11, 2008.

Summary:

Enron Canada Corp. (ECC) was an asset of Enron Corp. which filed for bankruptcy in 2001. ECC subsequently undertook a voluntary solvent liquidation and dissolution under the Canada Business Corporations Act. Marathon Canada Ltd., which was party to a master agreement to sell gas to ECC, terminated the agreement on the basis that a material adverse change (MAC) occurred when a credit rating agency cut Enron Corp.'s credit rating to junk bond status. Marathon commenced legal proceedings against ECC.

The Alberta Court of Queen's Bench, in a decision reported 447 A.R. 46, found that there was a MAC and that Marathon validly terminated the master agreement. The court awarded judgment on the contract to Marathon for the gas that was delivered (i.e., $811,561.03 plus post-judgment interest). ECC fully paid the judgment but appealed the trial decision. Marathon applied for security for costs under rule 524 of the Rules of Court in the amount of $3.5 million, that amount reflecting the total potential trial costs, which were as yet undetermined.

The Alberta Court of Appeal, per Paperny, J.A., dismissed the application.

Practice - Topic 8206.2

Costs - Security for costs - Security for costs of an appeal - Application - Considerations - Enron Canada Corp. (ECC) was an asset of Enron Corp. which filed for bankruptcy - ECC subsequently undertook a voluntary solvent liquidation and dissolution - Marathon Canada Ltd. terminated a master agreement to sell gas to ECC, claiming that a material adverse change in circumstances occurred when a credit rating agency cut Enron Corp.'s credit rating to junk bond status - Marathon sued ECC - The trial judge held that Marathon validly terminated the master agreement and awarded Marathon $811,561.03 for the gas that was delivered - ECC satisfied the judgment but appealed the trial decision - Marathon applied for security for costs of $3.5 million under rule 524 of the Rules of Court, that amount reflecting the total potential trial costs, which were as yet undetermined - The Alberta Court of Appeal, per Paperny, J.A., dismissed the application - The court held that although ECC was undergoing voluntary liquidation, Marathon failed to establish that it might not be able to recover costs and that special circumstances existed within the meaning of rule 524 - The court stated that even if special circumstances existed and it were accepted that ECC did not have a reasonable chance of success on appeal, Marathon's delay in bringing the application was unexplained and likely prejudicial to ECC - The application was filed almost three months after the notice of appeal was filed and one month before the appeal was to be heard.

Practice - Topic 8209

Costs - Security for costs - Security for costs of an appeal - Grounds for - Special circumstances - Rule 524(1) of the Rules of Court provided that "No security for costs shall be required in appeals unless by reason of special circumstances security is ordered by a judge" - The Alberta Court of Appeal, per Paperny, J.A., stated that "In determining whether special circumstances exist, the court considers whether there is proof that costs may not be recovered or only recovered with great difficulty ... Once special circumstances have been established, the appellant has the burden of establishing that it has a reasonable prospect of success on appeal: ... If a reasonable prospect of success is established, the security for costs application will generally fail ... An application for security for costs must be made promptly, or the applicant risks a dismissal for delay and resultant prejudice ..." - See paragraph 4.

Practice - Topic 8209

Costs - Security for costs - Security for costs of an appeal - Grounds for - Special circumstances - [See Practice - Topic 8206.2 ].

Cases Noticed:

Freyberg v. Fletcher Challenge Oil and Gas Inc. et al. (2003), 330 A.R. 130; 299 W.A.C. 130; 2003 ABCA 208, refd to. [para. 4].

Castillo v. Go et al. (2002), 317 A.R. 195; 284 W.A.C. 195; 2002 ABCA 271, refd to. [para. 4].

Ellis v. Friedland (2001), 277 A.R. 126; 242 W.A.C. 126; 2001 ABCA 45, refd to. [para. 8].

Rushton v. Owners - Condominium Plan No. 8820668 et al. (1998), 219 A.R. 51; 179 W.A.C. 51; 1998 ABCA 217, refd to. [para. 8].

Elkow v. Sana et al., [2008] A.R. Uned. 96; 2008 ABCA 93, refd to. [para. 8].

Sorrel 1985 Limited Partnership et al. v. Sorrel Resources Ltd. et al. (1998), 219 A.R. 2; 179 W.A.C. 2 (C.A.), refd to. [para. 8].

Statutes Noticed:

Rules of Court (Alta.), rule 524(1) [para. 4].

Counsel:

J.L. Lebo, Q.C., J.P. Flanagan and D. Dear, for the applicants;

D.W. McGrath and M. O'Brien, for the respondent.

This application was heard on December 10, 2008, before Paperny, J.A., of the Alberta Court of Appeal, who filed the following reasons for decision in Calgary, Alberta, on December 11, 2008.

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4 practice notes
  • Marathon Canada Ltd. v. Enron Canada Corp., 2009 ABCA 31
    • Canada
    • Court of Appeal (Alberta)
    • January 15, 2009
    ...total potential trial costs, which were yet to be determined. The Alberta Court of Appeal, per Paperny, J.A., in a decision reported (2008), 446 A.R. 88; 442 W.A.C. 88 , dismissed the application. Submissions on trial costs The Alberta Court of Queen's Bench, in a decision reported (2009)......
  • Marathon Canada Ltd. v. Enron Canada Corp.,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 10, 2008
    ...confirmed on appeal - see 439 A.R. 59 ; 2009 ABCA 31 . A decision respecting posting of security of costs for the appeal is reported at 446 A.R. 88; 442 W.A.C. 88 ; 2008 ABCA 424 . Practice - Topic 7082 Costs - Party and party costs - Witness fees and costs of preparation for trial or......
  • The Owners: Condominium Plan No 982 6403 v CPI Crown Properties International Corporation, 2018 ABCA 232
    • Canada
    • Court of Appeal (Alberta)
    • June 28, 2018
    ...Aski at para 9; Collins v Collins (Estate of), 2005 ABCA 41, 363 AR 91 [Collins]; Marathon Canada Limited v Enron Canada Corp, 2008 ABCA 424, 446 AR 88 [Marathon]. The party applying for security for costs is to be prompt in its application so that the appellant may not go on incurring expe......
  • Orubor v Borden Ladner Gervais LLP,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • February 22, 2022
    ...v Collins (Estate of), 2005 ABCA 41, 363 AR 91 [Collins]; Marathon Canada Limited v Enron Canada Corp, 2008 ABCA 424, 446 AR 88 [Marathon]. The party applying for security for costs is to be prompt in its application so that the appellant may not go on incurring expenses whic......
4 cases
  • Marathon Canada Ltd. v. Enron Canada Corp., 2009 ABCA 31
    • Canada
    • Court of Appeal (Alberta)
    • January 15, 2009
    ...total potential trial costs, which were yet to be determined. The Alberta Court of Appeal, per Paperny, J.A., in a decision reported (2008), 446 A.R. 88; 442 W.A.C. 88 , dismissed the application. Submissions on trial costs The Alberta Court of Queen's Bench, in a decision reported (2009)......
  • Marathon Canada Ltd. v. Enron Canada Corp.,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 10, 2008
    ...confirmed on appeal - see 439 A.R. 59 ; 2009 ABCA 31 . A decision respecting posting of security of costs for the appeal is reported at 446 A.R. 88; 442 W.A.C. 88 ; 2008 ABCA 424 . Practice - Topic 7082 Costs - Party and party costs - Witness fees and costs of preparation for trial or......
  • The Owners: Condominium Plan No 982 6403 v CPI Crown Properties International Corporation, 2018 ABCA 232
    • Canada
    • Court of Appeal (Alberta)
    • June 28, 2018
    ...Aski at para 9; Collins v Collins (Estate of), 2005 ABCA 41, 363 AR 91 [Collins]; Marathon Canada Limited v Enron Canada Corp, 2008 ABCA 424, 446 AR 88 [Marathon]. The party applying for security for costs is to be prompt in its application so that the appellant may not go on incurring expe......
  • Orubor v Borden Ladner Gervais LLP,
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • February 22, 2022
    ...v Collins (Estate of), 2005 ABCA 41, 363 AR 91 [Collins]; Marathon Canada Limited v Enron Canada Corp, 2008 ABCA 424, 446 AR 88 [Marathon]. The party applying for security for costs is to be prompt in its application so that the appellant may not go on incurring expenses whic......

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