Orphan Wells Association – Stay Application – Doctrine of Precedence
In this decision, the Alberta Court of Appeal (“ABCA”) considered an application by the AER and the Orphan Well Association (the “OWA”), seeking a stay of the enforcement of the majority decision in Orphan Well Assn. v. Grant Thornton Ltd. (the “ABCA Orphan Well Decision”) pending appeal to the Supreme Court of Canada (the “SCC”).
The ABCA denied the stay, for the reasons summarized below.
The ABCA characterized the three main questions before it as follows:
(a) Does a single ABCA judge have jurisdiction to grant a stay after a party has applied for leave to appeal to the SCC?
(b) If a single judge of the ABCA does have to grant a stay after such an application to the SCC, does that single judge have jurisdiction to issue an order that affects the acts of other receivers and bankruptcy trustees in other proceedings? and
(c) If so, do the applicants meet the three-part test for stays?
ABCA Decision: Orphan Well Assn. v. Grant Thornton Ltd.
In the ABCA Orphan Well Decision, in a 2-1 split decision, the majority of the ABCA held that a receiver and trustee in bankruptcy appointed under the Bankruptcy and Insolvency Act must use the sale-of assets proceeds to pay a bankrupt’s secured creditors before it pays the AER amounts required to discharge the bankrupt’s obligation to shut-in abandoned wells.
Jurisdictional Basis
Section 65.1(1) of the Supreme Court of Canada Act grants jurisdiction to a single judge of this Court to “order that proceedings be stayed with respect to the judgment from which leave to appeal [to the SCC] is being sought”.
The ABCA found that invoking the jurisdiction of the SCC by filing and serving a notice of application for leave to appeal does not deny the jurisdiction of the ABCA or a single judge of the ABCA to grant a stay of proceedings.
Definition of Stay
The ABCA explained that:
(a) A stay is a court order that abridges for a defined period the effect of a previous court order;
(b) A stay may direct a party or a third party whose acts affect the interests a party seeks to protect in the proceedings to refrain from undertaking some act authorized by the previous court order in the proceedings that are the subject of the stay; and
(c) By applying for a stay, the applicant asks the court to grant it relief that advances its interests within the confines of the proceedings and is consistent with the positions it advanced in the court below.
The Court Cannot Stay the Precedential Effect of Orphan Well Assn. v. Grant Thornton Ltd.
Regarding the doctrine of precedence, the ABCA explained that, in common law jurisdictions, courts resolve disputes in accordance with principles set out in binding precedents from previous decisions. The fundamental rule is that a court is bound by a decision of a court above it in the judicial hierarchy. The doctrine of precedent promotes consistency, predictability and stability in the law. The basis for resolution provides a principle that governs all future similar disputes.
The ABCA held that it cannot stay the precedential effect of one of its own decisions and create a new legal regime that affects other receivers and trustees in bankruptcy and other secured creditors who pursue their rights in other debt enforcement proceedings.
The ABCA noted that the judgment of the Court of Appeal that the AER and the OWA were seeking leave to appeal to the SCC simply stated that “[t]he Appeals of the Applicants are dismissed”. The ABCA found that the Court of Appeal judgment under appeal only dismissed the appeal. It did not authorize or order Grant Thornton Limited in its capacity as a receiver and bankruptcy trustee to do anything.
The ABCA found that there was nothing for it to stay. Only the SCC, in the short term, could change the law as set by the ABCA Orphan Well Decision.
Decision
For the reasons summarized above, the ABCA dismissed the application for a stay.
