Executive Summary: Key Legal and Evidentiary Issues

• GSI’s claims against CNRL were dismissed as being filed outside the 10-year limitation period, with no fraudulent concealment found to suspend the limitation.

• The court determined that CNRL’s incorrect affidavits regarding possession of GSI seismic data were mistakes, not fraudulent misrepresentations.

• GSI’s claims of copyright infringement, breach of confidence, unjust enrichment, conversion, and detinue were found to lack merit, particularly as there was no evidence of CNRL’s use of the seismic data.

• The New Action was considered duplicative of the Old Action, and the prior Consent Dismissal was not set aside since no fraud was established.

• CNRL, as the successful party, was awarded lump sum costs of $405,000, inclusive of GST and disbursements, after the parties could not agree on the amount.

• GSI’s persistence in unfounded fraud allegations and the high quantum of its claim were factors in the court’s decision to enhance the costs awarded to CNRL.

Background and facts of the case

Geophysical Service Incorporated (GSI) is engaged in creating, collecting, producing, reproducing, purchasing, processing, and storing seismic data, which it licenses to oil and gas companies for a fee. GSI was formed in 1993 as 599720 Alberta Ltd. and later purchased seismic data agreements from the original Geophysical Service Incorporated (“Original GSI”) that had been entered into with CNRL’s predecessors. The agreements in dispute include the Norcen Agreements and the Champlin Agreement, entered into between Original GSI and Norcen Energy Resources Ltd. (and related entities) and Champlin Petroleum Corporation, respectively.

CNRL’s involvement stems from a series of amalgamations and corporate transactions involving Norcen, Champlin, Union Pacific, Anadarko Canada, and ultimately CNRL. Communications between GSI and these entities from 2001 onward centered on the licensing and transferability of seismic data, with GSI repeatedly asserting that old license agreements were no longer valid and that new agreements were required.

In November 2012, GSI filed a Statement of Claim against CNRL and others (the “Old Action”), alleging wrongful possession of its seismic data, breach of contract, copyright infringement, interference with contractual relations, conversion, and unjust enrichment. In 2018, CNRL served an application to summarily dismiss the Old Action, supported by affidavits from its employees stating that CNRL did not possess GSI seismic data. The application was never heard, and a Consent Order dismissing GSI’s claims against CNRL was issued on June 20, 2018.

Subsequently, GSI continued litigation against other defendants and, based on information obtained in 2020, discovered that CNRL did possess GSI seismic data in the form of boxes stored in a warehouse (“Mystery Boxes”) and electronic data (“Electronic Data”). The Mystery Boxes were returned to GSI, and the Electronic Data was deleted from CNRL’s database. GSI commenced a new action (the “New Action”) in June 2020, alleging similar wrongful acts as in the Old Action. CNRL applied to strike or summarily dismiss the New Action, and GSI cross-applied for summary judgment.

Key legal issues and analysis

The court considered whether the New Action should be summarily dismissed or whether GSI was entitled to summary judgment. CNRL argued that the New Action disclosed no reasonable claim, was duplicative, and was barred by the limitation periods in the Limitations Act. GSI argued that CNRL’s affidavits in the Old Action were fraudulent and that the Consent Dismissal should be set aside.

The court found that while CNRL’s affidavits were incorrect, there was no evidence of fraud; the mistakes were inadvertent, given the large volume of records involved (35,928 boxes, with the Mystery Boxes comprising only 0.78%). The court concluded that CNRL’s affiants were simply mistaken and did not act fraudulently.

On the limitation issue, the court held that GSI’s claims were barred by the 10-year ultimate limitation period under section 3(1)(b) of the Limitations Act. The court found that GSI was aware of the relevant transactions by 2001 and that the ultimate limitation period applies even if the plaintiff was unaware of the potential claim. The only exception—fraudulent concealment—did not apply, as the court found no fraud or fraudulent concealment by CNRL.

The court also found that the New Action was duplicative of the Old Action, and that the Consent Dismissal was not procured by fraud. GSI’s application for summary judgment was dismissed, as the court found that there was a genuine issue requiring trial as to whether CNRL had used the seismic data, and that CNRL had viable defences to GSI’s claims.

Costs decision and outcome

After the decision, the parties were unable to agree on costs. CNRL submitted that its total legal fees incurred were $618,224.58 and sought at least 75% of this amount, or alternatively, costs based on Schedule C with a multiplier. GSI argued for costs based on Schedule C and took no position on the appropriate column or multiplier.

The court considered both the McAllister approach (partial indemnity, typically 40-50%) and the Schedule C approach. The court found that an enhanced award was appropriate due to GSI’s persistence in unfounded fraud allegations but considered CNRL’s requested 75% to be excessive. The court determined that 60% of CNRL’s fees would be $370,934.74. Under Schedule C, with doubling after a Calderbank offer and a multiplier of 4 or 5, the range was $339,120 to $423,900. CNRL also claimed disbursements of $32,778.58 ($34,417.51 with GST).

The court awarded CNRL a lump sum of $405,000, inclusive of GST and disbursements, as reasonable and proportionate costs for the litigation.

In summary, CNRL was the successful party, all of GSI’s claims were summarily dismissed as limitations-barred and lacking merit, and CNRL was awarded $405,000 in costs by the Court of King’s Bench of Alberta.