In the Court of Appeal of Alberta

Citation: Prosper Petroleum Ltd. v Her Majesty the Queen in Right of Alberta, 2020 ABCA
85
Date: 20200228
Docket: 2001-0036-AC
Registry: Calgary

Between:

Prosper Petroleum Ltd.

Respondent on Stay Pending Appeal Application

Respondent on Party Status Application
(Respondent)

- and -

Her Majesty the Queen in Right of Alberta, the Lieutenant Governor In Council, and The
Minister of Energy

Applicants on Stay Pending Appeal Application

Respondents on Party Status Application
(Appellants)

- and -

Fort McKay First Nation

Not a Party to Stay Pending Appeal Application

Applicant on Party Status Application

_______________________________________________________

Oral Reasons for Decision of

The Honourable Madam Justice Jo'Anne Strekaf
_______________________________________________________

Application for a Stay Pending Appeal

Application for Party Status
 _______________________________________________________

Oral Reasons for Decision of

The Honourable Madam Justice Jo'Anne Strekaf
_______________________________________________________

Introduction

(1) The applicants, Her Majesty the Queen in Right of Alberta, The Lieutenant Governor in
Council (Cabinet) and the Minister of Energy (Alberta), seek a stay pending appeal of a mandatory
interim injunction granted by a chambers judge on February 18, 2020. The order directed Cabinet
to make a decision in 10 days on whether to authorize a project by Prosper Petroleum Ltd.
(Prosper) under section 10 of the Oil Sands Conservation Act, RSA 2000, c O-7 (the Decision).
Reasons for the Decision were given orally, with written reasons issued subsequently: Prosper
Petroleum Ltd v Her Majesty the Queen in Right of Alberta, 2020 ABQB 127.

(2) The Fort MacKay First Nation seeks to be added as a party or, in the alternative, as an
intervenor, to this appeal. The First Nation also sought to be added as a party on the application
before the chambers judge. She denied that application but granted them leave to be heard at the
hearing, to file a brief of law limited to issues raised on the application, to attend at
cross-examinations, and permission to seek additional participatory rights from the court: Prosper
Petroleum Ltd v Her Majesty the Queen in Right of Alberta, 2020 ABQB 128.

Background

(3) Prosper applied in November 2013 to the Alberta Energy Regulator (AER) for approval of
its Rigel oil sands project (Project), located near the First Nation’s Moose Lake Reserve. Pursuant
to s 10(3)(a) of the Oil Sands Conservation Act, the AER may grant an approval on any terms and
conditions that it considers appropriate “if in its opinion it is in the public interest to do so, and with
the prior authorization of the Lieutenant Governor in Council”. In June 2018, the AER found the
Project to be in the public interest and approved it, subject to Cabinet authorization. The First
Nation was granted permission to appeal aspects of the AER’s decision. That appeal was heard in
October 2019 by a panel of this court and their decision is under reserve.

(4) Cabinet has not advised whether it will authorize the Project.

The Interim Mandatory Injunction

(5) In January 2020, approximately 19 months after the AER rendered its decision, Prosper
brought this application for an interlocutory mandatory injunction to compel Cabinet to decide
whether it would authorize the Project to proceed. The chambers judge granted that application on
February 18, 2020 and directed that Cabinet make a decision on the Project within 10 days. Alberta
has appealed that Decision and seeks a stay pending determination of the appeal.
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(6) The chambers judge acknowledged that injunctive relief was historically not available
against the Crown but found that under modern law, it was available if the party against whom the
relief was sought was acting as an agent of the legislature exercising a power conferred by statute.
She found that Cabinet owed Prosper an implied duty to make a decision under s 10 of the Oil
Sands Conservation Act. As the legislation granted Cabinet the power to approve the project, it
imposed “by implication a duty to exercise that power.” The chambers judge rejected the Crown’s
submission that mandamus was not available to compel a discretionary decision that it
characterized as “unqualified, absolute, permissive, or unfettered”. The chambers judge noted that
“(f)ailing to make a decision that one has a statutory duty to make is not a valid exercise of
discretion”.

(7) The chambers judge considered whether Prosper had met the requirements to obtain a
mandatory interlocutory injunction, which was described in R v Canadian Broadcasting, 2018
SCC 5 as a “modified RJR-MacDonald test” (para 16):

(1) The applicant must demonstrate a strong prima facie case that it will succeed at trial.
This entails showing a strong likelihood on the law and the evidence presented that,
at trial, the applicant will be ultimately successful in proving the allegations set out
in the originating notice;
(2) The applicant must demonstrate that irreparable harm will result if the relief is not
granted; and
(3) The applicant must show that the balance of convenience favours granting the
injunction.

(8) An extensive review of the merits is required at the interlocutory stage of a mandatory
injunction because of the potentially severe consequences for the defendant, including “effective
final determination of the action in favour of the plaintiff” (para 15).

(9) In applying the modified three part test for an interlocutory mandatory injunction, the
chambers judge found that:

(1) there was a strong prima facie case that Prosper would succeed at trial;
(2) Prosper had demonstrated that it would suffer irreparable harm as it was a relatively
small energy company, the Project was its principal asset and the future of the
Project and its survival were in jeopardy without near term certainty resulting from
a Cabinet decision. In particular, “without a decision in the near future, it will not
be able to undertake the necessary pre-construction work to be able to use the next
winter season for construction”; and
(3) the balance of convenience favoured granting the mandatory injunction because the
significant and irreparable harm to Prosper and third-parties must be weighed
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against the absence of harm to Alberta, who had not explained the basis for the
delay, beyond indicating that the AER appeal was not the reason.

(10) The chambers judge concluded that the requirement for mandamus articulated in Apotex
Inc. v Canada (Attorney General) (1993), 18 Admin LR (2d) 122 (Fed CA), aff’d [1994] 3 SCR
1100 had been satisfied. She was satisfied that s 17 of the Proceedings Against the Crown Act,
RSA 2000, c P-25 did not preclude granting an injunction against a Crown officer, if such an
injunction may have issued at common law.

(11) The chambers judge granted Prosper’s application for a mandatory interim injunction and
order of mandamus and directed that a decision on the Project be made by Cabinet within 10 days.

Grounds of Appeal

(12) Alberta appeals on the grounds that the chambers judge committed the following errors in
granting the mandatory interim injunction:

(1) finding that Cabinet, when acting under section 10 of the Oil Sands Conservation
Act, is acting as an agent of the legislature and not an agent of the Crown and,
therefore, is not immune from coercive court orders;
(2) reading into the Oil Sands Conservation Act an implied duty on Cabinet to make a
decision within a reasonable time;
(3) interpreting Cabinet's discretion under the Oil Sands Conservation Act as other than
"unfettered, absolute, permissive, or unqualified" and thus subject to mandamus;
(4) finding that Cabinet had engaged in an abusive delay that was ultra vires its
authority under the Oil Sands Conservation Act;
(5) finding that Prosper had satisfied its onus of showing irreparable harm;
(6) failing to apply the presumption that Cabinet is acting in the public interest; and
(7) giving only 10 days from the date of the Decision for Cabinet to comply.

Stay Pending Appeal

(13) An application to stay proceedings or enforcement of a decision pending appeal may be

brought pursuant to Rule 14.48. The test for a stay pending an appeal is well known and is set out
in RJR-MacDonald Inc v Canada, [1994] 1 SCR 311. A stay may be ordered if the applicant
satisfies the court:

(1) that there is a serious question to be determined on appeal;

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(2) that the applicant will suffer irreparable harm if the stay is not granted; and
(3) that the balance of convenience favours granting the stay.
Serious question

(14) The parties differ on the nature of the onus to be met by the applicant to demonstrate a
serious question for the purposes of the first aspect of the test.

(15) Alberta submits that the standard generally applied to the determination of whether there is
a serious question when a stay pending appeal is sought is low; a preliminary assessment of the
merits of the case is undertaken to determine whether the appeal is frivolous: RJR at paras 54-55.

(16) Prosper submits that in this case a stay will finally determine its appeal. If a stay pending
appeal is granted Cabinet will not issue a decision on the Project within 10 days and Prosper will
suffer irreparable harm. In such circumstances, Alberta should be required to establish a “strong
prima facie case” rather than the lesser “serious question” standard that is usually applied on an
application for a stay pending appeal.

(17) I am not convinced that granting a stay would have the effect of determining the appeal.
The granting of a stay will not determine the substantive issue raised on the appeal - whether an
order for mandamus can and should have been issued - but will affect only the timing of when
Cabinet would be required to issue a decision on the Project if the appeal is dismissed.

(18) I am satisfied that the test that Alberta must meet to satisfy the first step of the test for a stay
pending appeal is the lower standard generally applied on such applications, that is, that the appeal
raise a serious issue that is not frivolous.

(19) Alberta set out in summary form in its written and oral submissions the nature of the
arguments they intend to advance on the various issues raised by them on the appeal. In response,
Prosper submits that the Decision is entitled to deference and denies that the chambers judge
committed a reviewable error.

(20) For the purpose of this application, I am satisfied that Alberta has met their onus of
establishing that the appeal raises a serious question. It is not helpful for me to comment further on
the merits of any of these issues; they will all be addressed in more detail before the panel hearing
the appeal.

Irreparable harm

(21) Alberta must demonstrate that they would suffer irreparable harm if the stay is not granted,
that is, harm that cannot be remedied if the appeal were to succeed. This includes harm that cannot
be quantified in monetary terms and compensated in damages.
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(22) Alberta submits that its appeal will be rendered nugatory if the stay is not granted because
the Decision provides the final relief sought by Prosper, a direction that Cabinet issue a decision
with respect to whether or not it will approve the Project. If Cabinet is required to make that
determination on the time frame imposed by the chambers judge, its decision cannot be undone.

(23) It is recognized that irreparable harm will generally be established when a refusal to grant a
stay might render an appeal nugatory: Knox v Conservative Party of Canada, 2007 ABCA 143 at
para 17; Maverick Equities Inc v The Owners: Condominium Plan No 942 2336, 2008 ABCA 190
at para 11.

(24) Alberta has satisfied this aspect of the test.

Balance of convenience

(25) The third aspect of the test requires the court to weigh the competing interests to determine
if Alberta will suffer greater harm if the stay is refused than Prosper will suffer if the stay is
granted.

(26) Alberta submits that the balance of convenience favours granting a stay to maintain the
status quo pending the appeal. Otherwise, they lose any value of the appeal and “the public interest
in allowing Cabinet itself to prioritize the making of policy decisions and in taking the time it
needs to make such decisions is impaired”. They argue that it should be assumed that irreparable
harm to the public interest would result “from Cabinet having been required to defer consideration
of other matters it had prioritized ahead of this decision, in order to comply with the Decision”.

(27) The chambers judge noted that Alberta had “refused to give specific reasons for the lengthy
review, citing Cabinet confidentiality”. She was not prepared “to assume that Cabinet is acting in
the public interest” where there was no information before her to support that assumption or enable
her to draw that inference.

(28) Alberta has not provided on this application any explanation for the delay or any evidence
as to what harm they would suffer if they were required to make a decision on the Project within
the time specified by the chambers judge.

(29) Alberta has committed to proceed with the appeal on an expedited basis if the stay is
granted and submits that any harm claimed by Prosper can be mitigated by prompt resolution of
the appeal.

(30) Prosper argues that the balance of convenience favours denying a stay pending appeal as
that will deprive them of the benefit of the Decision they obtained and that they will suffer the very
irreparable harm that the Decision sought to avoid. Prosper’s President and CEO deposes in the
affidavit filed in support of Prosper’s application, which is on the record on this application, that
they have already missed two construction seasons for the Project, which must commence during
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the winter, and that any further delay in the issuance of a decision approving the Project would
threaten their ability to commence construction in the 2020/2021 winter construction season.
Prosper has already expended $65 million on the Project. Its principal assets are the Project and
leases. Delay costs Prosper approximately $133,000 per day, and the ongoing uncertainty has
placed Prosper “in an untenable situation such that the future of the company is now in jeopardy”.

(31) Prosper submits that fast tracking the appeal does not resolve their concerns. However,
Prosper has not provided any evidence why it has the financial wherewithal to undertake the
Project yet the additional time to permit an expedited appeal to proceed would be critical.

(32) The exercise of determining the balance of convenience requires the court to compare the
impact on Alberta if a stay is refused with the impact on Prosper if the stay is granted. The impact
on Alberta if a stay is denied is that the substance of its appeal, that mandamus should not have
been ordered, is rendered nugatory and it would be required to deliver a decision on the Project by
February 28, 2020. The effect of denying a stay is to effectively determine the appeal against
Alberta, even if they would have ultimately succeeded had the appeal proceeded.

(33) The impact on Prosper if a stay is granted is that while there will be delay pending the
appeal process, if it ultimately succeeds on appeal and it is entitled to an order for mandamus, that
can proceed in due course. If the stay is granted and the appeal is dismissed, Prosper will still be
entitled to the benefit of the substance of the order obtained, subject to any delay occasioned by the
appeal.

(34) Having considered the competing interests, I am of the view that the balance of
convenience favours granting the stay so that the appeal will not be rendered nugatory. The delay
inevitable with an appeal can be reduced by having the appeal proceed on an expedited basis.

(35) The Decision is stayed pending appeal on the condition that the appeal proceed on an
expedited basis.

Party/Intervenor Status for the First Nation

(36) The First Nation seeks to be added as a respondent to the appeal pursuant to Rule 14.57.
Alternatively, the First Nation seeks to be added as an intervenor.

(37) The test for adding parties is set out in Carbon Development Partnership v Alberta (Energy
and Utilities Board), 2007 ABCA 231 at para 9:

This court has inherent power to add parties to an appeal, especially if an

applicant’s interests are not represented. ... The joinder test is whether or not the
applicant has a legal interest in the outcome of the proceeding. If so, there are two
different sub-tests. The first is whether it is just and convenient to add the applicant.
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The second is whether or not the applicant’s interest would only be adequately
protected if it were granted party status.

(38) To be added as an intervenor, the applicant should be specially affected by the decision or
have some special expertise or fresh perspective to bring to bear on the issues: Carbon
Development Partnership at para 10; Suncor Energy Inc v Mining Assn of Canada, 2016 ABCA
265 at para 10-11.

(39) Alberta takes no position on the First Nation’s application to be added as a party or as an
intervenor.

(40) Prosper opposes the First Nation’s application to be added as a party, submitting it is not a
proper party as its legal rights will not be affected by the outcome of the appeal. Prosper takes no
position on the First Nation’s request for intervenor status.

(41) The First Nation’s position is that development of the Project within the 10 km buffer zone
surrounding the First Nation’s Moose Lake Reserves without a Moose Lake Access Management
Plan in place would be a breach of its s 35 constitutional right to accommodation. The First Nation
says that the timing of the Project’s authorization will affect its legal interests.

(42) The First Nation is a party to other litigation currently before the courts with respect to this
Project, has participated in the AER proceedings, and participated in the court below on the
hearing of Prosper’s mandatory injunction application, although the chambers judge declined to
grant party status to the First Nation at that time. The subject matter of this appeal is not the
substantive decision that will ultimately be made by Cabinet to authorize the Project or not. The
appeal deals only with whether the court can and should issue a mandatory injunction requiring a
decision be made and within a certain time frame. The First Nation’s legal interests may arguably
be affected by the former, but not the latter.

(43) Neither Alberta nor Prosper oppose the First Nation’s application to be afforded intervenor
status. The First Nation clearly has an interest in relation to the Project and in these proceedings
and its perspective should be before the court on the appeal.

(44) Accordingly, the First Nation’s application to be added as a party to this appeal is denied.
Its application to be added as an intervener is granted.

Conclusion

(45) Alberta’s application for a stay pending appeal of the Decision is granted on the condition
that the appeal is prosecuted on an expedited basis. The appeal shall be heard on April 27, 2020 in
Edmonton, Alberta. The parties and the intervenor are directed to contact the Case Management
Officer for the setting of filing deadlines.
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(46) The First Nation’s application to be added as a party is denied and its application to be
added as an intervenor is granted on the following terms:

(1) The First Nation may file a factum on the appeal which shall not exceed 15 pages
and which shall be filed after Alberta’s factum is filed and before Prosper’s factum
is filed; and

(2) The First Nation may make oral submissions to a maximum of 15 minutes, unless
otherwise directed by the appeal panel.

Application heard on February 26, 2020

Reasons filed at Calgary, Alberta

this 28th day of February, 2020

Strekaf J.A.
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Appearances:

M.E. Killoran, Q.C

S. Sutherland
for Prosper Petroleum Ltd.

D.C. Mueller
P. Buijs
for Her Majesty the Queen in Right of Alberta, the Lieutenant Governor In Council, and
The Minister of Energy

J.M. Coady, Q.C.

G.E. Rafter
T. Razzaghi
for Fort McKay First Nation