Executive Summary: Key Legal and Evidentiary Issues

• Pembina Pipeline Corporation twice applied under Rule 9-5(1)(a) of the Supreme Court Civil Rules to strike Steelhead's claims against it as disclosing no reasonable claim.
   
• Blanket allegations treating Pembina and the Cedar entities as one were improper, since Pembina held distinct roles as shareholder, limited partner, Project Operator and party to its own tolling agreement.
   
• Claims resting only on Pembina's status as a shareholder or limited partner of Cedar offended the principle that a corporation is legally separate from its owners.
   
• Reliance on a publicly filed 2019 notice of civil claim did not give Steelhead a sufficient factual basis to plead that Pembina knew of the Steelhead–7G/ARC contracts.
   
• Steelhead's pleading did not clearly seek relief against Pembina for inducing breach of contract or acting in concert, a gap the court flagged in 2025 that remained unamended in 2026.
   
• Unjust enrichment survived because it was not plain and obvious that the claim had no reasonable prospect of success.
   

Facts of the case

Steelhead LNG Limited Partnership and Steelhead LNG Corp. (together, Steelhead) allege that over several years they shared confidential information with Seven Generations Energy (7G), with a view to entering into agreements to develop possible liquefied natural gas (LNG) export facility projects. According to the pleading, 7G eventually ended those discussions, moved forward with other projects involving different participants, and improperly used Steelhead's information in pursuing them. In or about April 2021, 7G was amalgamated with ARC Resources Ltd. (ARC), and Steelhead says the misuse continued under ARC. Marty L. Proctor, formerly 7G's President and CEO, later became a director of ARC.

This action concerns the Cedar LNG Project, an LNG export terminal under construction roughly 3 kilometres west of Kitamaat Village in British Columbia, within the traditional territory of the Haisla Nation. The Project includes a floating LNG facility intended to eventually process approximately 400 million standard cubic feet of natural gas per day. Cedar LNG Partners LP is the owner and proponent of the Project, and Cedar LNG Partners (GP) Ltd. is its general partner. The Haisla Nation indirectly holds 50.1% of Cedar GP's common shares, while Pembina owns the remaining 49.9%. Pembina also serves as the Project's Operator under an Operating and Management Agreement.

On or about April 4, 2024, ARC and Cedar GP signed a 20-year Liquefaction Tolling Services Agreement (LTSA) covering 200 million standard cubic feet per day, about half the Project's anticipated capacity. Pembina signed a substantially similar LTSA with Cedar GP for the other half on the same date. With full capacity committed, the Final Investment Decision was made in June 2024. Steelhead claims ARC could only conclude its LTSA so quickly by exploiting Steelhead's confidential information, and that Cedar and Pembina benefited from that misuse. The notice of civil claim was filed December 23, 2024.

After the court struck the original claim against Pembina in July 2025 with leave to amend, Steelhead filed an amended notice of civil claim on September 5, 2025. Pembina applied to strike that pleading on December 19, 2025, and the application was heard July 30, 2026. At that hearing, the parties focused on inducing breach of contract and unjust enrichment as the claims Steelhead was pursuing against Pembina, together with an allegation that Pembina acted in concert with Cedar.

Policy and legislative provisions at issue

Rule 9-5(1)(a) allows the court, at any stage of a proceeding, to strike or amend all or part of a pleading that discloses no reasonable claim or defence. Under Rule 9-5(2), no evidence is admissible on such an application. Applying Nevsun Resources Ltd. v. Araya, 2020 SCC 5, a claim is struck only if it is plain and obvious that it has no reasonable prospect of success. The pleaded facts are assumed true unless they are manifestly incapable of being proven.

The contracts underlying the inducing breach claim were a Mutual Non-Disclosure Agreement between Steelhead and 7G dated April 10, 2014, extended by written agreements effective April 10, 2017 and April 10, 2018, and a set of agreements dated August 5, 2016. Those 2016 agreements were an Amended and Restated Master Investment Agreement, a Second Amended and Restated Limited Partnership Agreement, and Amended and Restated Development and Option Agreements; the Development and Option Agreements were amended and restated again on February 6, 2017. Steelhead pleads that ARC succeeded to 7G's interest and that ARC's obligations under the Master Investment Agreement and Limited Partnership Agreement, including confidentiality obligations, remain in effect. Pembina also relied on s. 77 of the Partnership Act in arguing that limited partners, as passive investors, are not automatically liable for claims against the partnership.

Reasoning and analysis

In its 2025 decision, the court found the original pleading ran roughly 42 pages, about 39 of them facts. It went well beyond material facts and in places pleaded evidence contrary to Rule 3-7(1), such as a partial podcast transcript. Relying on Canfor Pulp Limited Partnership v. Siemens Building Technologies Ltd., 2016 BCSC 2089, the court agreed that lumping Cedar and Pembina together was inappropriate because they did not stand in an identical relationship to Steelhead. The only express allegation of acting in concert described the two developing the Project together, not acting for an improper purpose or in furtherance of a wrong. Claims based solely on Pembina's shareholder or limited partner status offended Edgington v. Mulek Estate, 2008 BCCA 505, and should be struck. Knowing receipt, knowing assistance and agency theories were also unclear as to what trust property Pembina received or how any agency arose. References to Pembina's roles as Operator and LTSA party, however, suggested other possible bases for a claim, so leave to amend was granted.

On the amended pleading, the court applied the five elements of inducing breach of contract from Super-Save Enterprises Ltd. v. Del's Propane Ltd., 2004 BCCA 183. The parties appeared to agree that the relevant contracts had been identified. Knowledge was the first gap. Steelhead left unchanged a paragraph alleging that "Cedar, and by extension, Pembina" knew or ought to have known of the agreements, and appeared to rely on its public 2019 lawsuit against ARC as the basis for that knowledge. A publicly accessible court record was not, in the court's view, a sufficient factual basis to assert Pembina's awareness, and no authority was offered for that proposition. Although Steelhead alleged Pembina conducted due diligence for Cedar, it did not allege Pembina actually learned of the agreements in doing so. Without a pleaded basis for knowledge, the intent element also failed.

Causation was arguably met. Steelhead pleaded that Pembina solicited ARC, led due diligence and negotiations, created data rooms, and held bilateral meetings with ARC, though the capacity in which Pembina acted remained unclear. Damages proved decisive. Steelhead pointed to its claim for damages relating to misuse of confidential information and breach of contractual duties, but those paragraphs named only ARC and Mr. Proctor. Having flagged the absence of a clear claim for relief against Pembina in 2025, the court treated Steelhead's failure to address it as fatal unless cured by further amendment.

Unjust enrichment was assessed under Kerr v. Baranow, 2011 SCC 10. Steelhead now alleged that Pembina benefits independently in two capacities. As a natural gas producer and supplier, it avoided shouldering 100% of the investment, supply and offtake risk tied to the Project's liquefaction capacity. As Operator, it gained a project that reached FID. Pembina argued its alleged gains did not correspond to Steelhead's deprivation and that its contracts with Cedar supplied a juristic reason. Steelhead responded that the same conduct produced both Pembina's benefit and its own loss, and that juristic reason should be decided at trial. The court declined a detailed analysis of the two disputed elements. It noted Kazemi v. 1004633 B.C. Ltd., 2021 BCSC 1638, which recognized that a contract with a third party may suffice to constitute a juristic reason. The court concluded it was not plain and obvious that the claim had no reasonable prospect of success, and that it appeared arguable and should be determined at trial.

On acting in concert, Steelhead had amended its pleading to allege that Cedar and Pembina acted in concert to solicit, conduct due diligence on, negotiate and secure ARC's participation. The amended pleading described Pembina as primarily responsible for soliciting and due diligence, both for negotiating, and Cedar for securing ARC's participation. Because the deficient knowledge allegation applied equally to Cedar, an essential element of the tort was missing against both defendants, so a claim that they jointly committed it could not succeed. Steelhead also made no corresponding amendment to its relief sought. Finally, the court agreed with Pembina that references to its role as owner, shareholder and limited partner should have been removed after the 2025 order, and that their continued presence created unnecessary confusion.

Ruling and overall outcome

In July 2025, the court struck Steelhead's claims against Pembina with leave to file an amended pleading within 45 days. In October 2026, it struck the inducing breach of contract and acting in concert claims, dismissed Pembina's application on unjust enrichment, and ordered Steelhead to delete all references to Pembina as an owner, shareholder or limited partner of Cedar and to benefits received in those capacities. Steelhead was given leave to file a further amended pleading within 45 days if it wishes to try to address the deficiencies. Pembina, successful in 2025 and largely successful in 2026, was awarded its costs of each application from Steelhead in any event of the cause. Neither decision states a dollar amount for those costs, and no damages were awarded.