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Access vs Privacy: A Mounting Rivalry

10 hours 17 min ago

By: Ronaliz Veron

PDF Version: Access vs Privacy: A Mounting Rivalry

Case Commented On: Covenant Health v Alberta (Information and Privacy Commissioner), 2014 ABQB 562

Covenant Health v Alberta, 2014 ABQB 562, addresses a difficult power struggle that can develop between government facilities responsible for caring for the elderly, and the family members who question that care. It also examines the conflicting interests that arise when a public health body is asked to disclose records that contain patient data and non-patient information. In navigating the interaction between the Health Information Act, RSA 2000, c H-5 and the Freedom of Information and Protection of Privacy Act, RSA 2000, c F-25 (Freedom of Information Act), Judge Wakeling’s reasons reveal a mounting rivalry between the right to access personal information and the right to privacy. In the end, the Court, after engaging in a balancing exercise, clearly chose to favour privacy rights over access rights.

Facts

Shauna McHarg’s parents are residents of the Edmonton General Continuing Care Centre, which is operated by Covenant Health. Ms. McHarg visited them regularly. However, Covenant Health imposed certain conditions on her visitation rights due to her alleged interference with her parents’ care. Employees of Covenant Health concluded that some of her acts (such as supplementing her parents’ nutritional and fluid intake, attempting to change their medications, and interfering with staff access to the residents’ room) put her parents’ health at risk. The imposed conditions limited her visitations hours, permitted and prohibited certain activities during her visit, and specified the names of Covenant Health representatives with whom she could discuss her parents’ care (at para 3).

In an attempt to challenge the visitation limitations imposed by Covenant Health, Ms. McHarg filed with Covenant Health an access request under s 7(1) of the Freedom of Information Act. She requested access to information relating to “everything and anything that Covenant Health has a record of, relating to me” from November 1, 2009 to April 30, 2011 (at para 5). In response to this request, Covenant Health released to Ms. McHarg parts of its records which were considered responsive to her request and were required by the Health Information Act and the Freedom of Information Act (at para 5). It deleted certain information from some records and disclosed an edited version to Ms. McHarg.

Ms. McHarg filed a complaint under the Freedom of Information Act questioning the lawfulness of Covenant Health’s disclosure and specifically, the information that was withheld. An adjudicator, who was the delegate of the Information and Privacy Commissioner ruled that, (1) the Health Information Act did not apply to any parts of the records that Covenant Health disclosed; and (2) the non-disclosure of certain parts of the records was not justified under the provisions of the Freedom of Information Act. As such, the adjudicator ordered Covenant Health to perform a new search for additional producible records (at para 6). Covenant Health applied for judicial review of this decision.

Issues at Judicial Review

Judge Wakeling was asked to consider three issues:

  • Were Covenant Health’s records referring to Ms. McHarg properly considered to be her parents’ health information (and therefore protected by the disclosure principles of the Health Information Act)? If so, should Covenant Health refuse to disclose this health information? If not, would the disclosure be an unreasonable invasion of her parents’ (or their agent’s) personal privacy pursuant to the Freedom of Information Act?
  • Was some of the information in Covenant Health’s records properly considered “advice, consultations, or deliberations involving officers or employees of a public body”, within the meaning s 24(1)(a) and (b) of the Freedom of Information Act? If so, was Covenant Health’s decision not to disclose this information to Ms. McHarg a lawful exercise of its discretion under s 24(1)?
  • Had Covenant Health properly discharged its duty under s 10(1) of the Freedom of Information Act given that s 10(1) requires a public body to make every reasonable effort to respond to an access request in an open, accurate, and complete manner (at paras 8-13)?

Decision

Issue 1

On the first issue, Justice Wakeling ruled that Covenant Health properly withheld some records that referred to Ms. McHarg because they were properly considered the health information of her parents. Specifically, her parents’ patient charts, files, and a clinical review of appropriate care were all properly withheld. The Court emphasized that “health information” includes “any other information about an individual that is collected when a health service is provided to the individual” (at para 66). Through the use of hypothetical scenarios, the Court further clarified that this phrase includes:

…information about the mental or physical health of others that relate to the physical and mental health of an individual or a health service provided to an individual and is collected when a health service is provided to an individual … (at para 78).

In addition, information about one person may, in certain circumstances, constitute health information of another person. Under s 4(1)(u) of the Freedom of Information Act, personal information, which is health information under the Health Information Act, is considered health information for all purposes (at para 79).

Two questions were considered to examine whether the information about Ms. McHarg constituted health information under the Health Information Act. First, did the information pertain to or could it directly affect the physical and mental health of her parents or a health service provided to them? If so, was this information obtained when Covenant Health provided a health service to her parents? (at para 80).

Both these questions were answered in the affirmative. The information about Ms. McHarg’s conduct had an effect on the physical and mental health of her parents and on the health services they need. Covenant Health concluded that some of Ms. McHarg’s actions (such as feeding them in an unsafe manner and interfering with the provision of health services to them) put her parents’ wellbeing at risk. Limitations on Ms. McHarg’s visitation privileges were put in place to guarantee the proper care for her parents (at para 85).

In this case, Ms. McHarg’s personal information was also the health information of her parents. This brought the disputed information under the protection of s 11(2) of the Health Information Act.

A subset of the remaining information not disclosed to Ms. McHarg included personal information of her parents’ agent under the Personal Directives Act, RSA 2000, c P-6. Disclosing this information would have contravened s 17(1) of the Freedom of Information Act. While the Court recognized that the agent’s decisions affected her parents, it held that the agent is a separate legal entity whose privacy interests require protection (at para 117).

Issue 2

Ms. McHarg also contested Covenant Health’s decision to withhold part of a memorandum from a Covenant Health Vice-President to the Chief Executive Officer and the Board Chair. The disputed passages contain proposed strategies for future dealings with Ms. McHarg and inquiries with regard to sending copies of Covenant Health’s response to Ms. McHarg’s letter to other members of the organization. The Court had to determine if this constituted “advice, consultations, or deliberations” within the meaning of s 24 of the Freedom of Information Act. After quoting dictionary meanings of “consultation” and “deliberation,” the Court was satisfied that it fell within the ambit of a “consultation” (at paras 136-144). The same conclusion was reached with regard to an email between the resident manager and a registered social worker with whom Ms. McHarg has regular communications (at paras 145-147).

Having decided that s 24 applied, Judge Wakeling next had to consider whether Covenant Health lawfully exercised its discretion to refuse to disclose the information. The Court concluded that Covenant Health properly considered Ms. McHarg’s right of access along with the effect of the disclosure on Covenant Health’s future decision-making capacity. The Freedom of Information Act requires a public body to act in good faith, to demonstrate a firm understanding of the competing interests and relevant facts, and to make a reasonable decision. Ms. McHarg was told why her visitation rights were limited. Her interests would not be furthered by being given information about the consultations and deliberations of Covenant Health employees. The Court concluded that the factors supporting non-disclosure outweighed any interests Ms. McHarg has in gaining access to the undisclosed information (at paras 149-153).

Issue 3

With regard to the third issue, the Court held that Covenant Health discharged its duty to make every reasonable effort to assist Ms. McHarg in her access request. Covenant Health released information that was responsive to her request, and it properly withheld certain health and third-party information in compliance with the Health Information Act and the Freedom of Information Act.

Commentary

This case demonstrates the increasing conflict between access and privacy. Open access and protection of privacy appear to be mutually exclusive concepts that are on two opposite sides of the spectrum. When access ascends, privacy seems to wane. In this case, the Court attempted to balance a person’s right to access her own information with the privacy rights of others. In the process of finding the appropriate balance between the two interests, more difficult questions arise. First, do provisions such as s 4(1)(u) of the Freedom of Information Act indicate a legal regime that favours privacy over access? Should protection of “health information” always be a reasonable limitation on a person’s access rights? Is there a danger that certain access requests will be disguised under the name “health information” to justify non-disclosure?

Another issue from an administrative standpoint merits attention. In particular, the Court did not clearly indicate the standard of review it used in its analysis. After quoting Dunsmuir v New Brunswick, [2008] 1 SCR 190 on the difference between the correctness and reasonableness standards, the Court went on to assess the “reasonableness of the adjudicator’s decision” (at para 66). In effect, however, the Court seemed to apply the correctness standard in substituting its own decision for the adjudicator’s. No deference was given to the adjudicator’s ruling, and the decision ultimately hinged on whether one favoured access rights over privacy rights (or vice versa). While the adjudicator’s decision favoured access, the Court clearly favoured privacy. This raises the question of who, as between the Information and Privacy Commissioner and the Court, should be the proper authority performing the balancing exercise?

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Disagreement in the Court of Appeal about the Wisdom of Judicial Economy

Tue, 10/21/2014 - 10:00am

By: Jonnette Watson Hamilton

PDF Version: Disagreement in the Court of Appeal about the Wisdom of Judicial Economy

Cases Considered: Calgary Jewish Academy v Condominium Plan 9110544, 2014 ABCA 279

In this judgement, the Court of Appeal reversed the decision of Justice Adele Kent in Calgary Jewish Academy v Condominium Plan 9110544, 2013 ABQB 134, where she had found the Academy’s lease of a portion of the Condominium Corporation’s land invalid. The Court of Appeal decision is of interest because of the different approaches taken by Justices Clifton O’Brien and Alan Macleod on the one hand, and Justice Brian O’Ferrall in a concurring opinion on the other, and what those different approaches might say about the wisdom of judicial or decisional economy. The case also illustrates (yet again) that no good deed goes unpunished.

The Calgary Jewish Academy, the plaintiff in this matter, and the condominium complex, the defendant, are neighbours on land adjacent to Glenmore Trail. The Academy has operated a school on their land since 1958. In 1978, the City of Calgary made changes to Glenmore Trail that cut off emergency access to the school. Fortunately, the City owned the land adjacent to the school and leased a portion of it to the Academy for use as a parking lot and for emergency access. The lease—the first lease—was for 10 years, and the Academy had an option to renew for a further period of 10 years on the same terms and conditions. The rent was one dollar per year. A caveat claiming an interest in land pursuant to the lease was filed against the City’s land.

In 1989 the city sold the land adjacent to the school to a developer, Statesman. In 1990 Statesman and the Calgary Jewish Academy entered into a new lease—the second lease—on the same terms and conditions as the Academy had with the City. Caveats protecting that second lease were filed against the titles to each of the 16 condominium units.

Shortly afterwards, Statesman asked the Academy to enter into yet another new lease that would be registered against the common property and on the Condominium Plan, rather than against the titles to the individual units. Agreeing to this request when there was nothing in it for them except their reputation as a good neighbour was the Academy’s good deed that would be punished (although in the end, after expending many resources, their punishment was overruled).

The new lease—the third lease—was between the Academy and the Condominium Corporation, whose only board member was Garth Mann, the president of Statesman. A unanimous owners resolution was signed by Mann on April 10, 1991 and Mann provided a letter certifying that the lease was approved by a unanimous resolution of the Condominium Corporation. On April 16 the Court of Queen’s Bench granted an order allowing the third lease to be registered against the Condominium Additional Plan Sheet. The Academy’s caveat protecting its second lease was discharged.

The timing of the third lease and its registration was crucial to the defendant’s argument. Statesman began selling units in March of 1991. Francis became a purchaser of a unit under an agreement for sale in March 1991 and she took possession of the property on April 8. Smith became a purchaser of a different unit under an agreement for sale in January 1991. Any equitable interests they had as purchasers under agreements for sale therefore predated the April 10 unanimous owners resolution and the order to register the third lease.

Justice Kent held that the granting of the third lease was ultra vires the Condominium Corporation because not all of those with an interest in the property—i.e., Francis and Smith with their equitable interests as purchasers under agreements for sale—had approved its execution as required by section 40(2) of the Condominium Property Act, RSA 1980 c C-22 (now section 49 of the Condominium Property Act, RSA 2000, c C-22). Justice Kent held that, because the formalities of the Condominium Property Act were not complied with, the lease was ultra vires the Condominium Corporation. The lease was, in her words, a “nothing” (at para 19).

No member of the Court of Appeal that heard the appeal agreed with Justice Kent. Justices O’Brien and Macleod overturned her decision on narrow grounds that were also based on section 40 of the Condominium Property Act. Justice O’Ferrall relied upon much broader principles of law.

The majority in the Court of Appeal focused on the certificate presented under section 40(4) of the Condominium Property Act, which requires that a certificate under the seal of the corporation stating that the unanimous resolution was properly passed, the lease conforms with the terms of it, and all necessary consents have been given must accompany a lease in order for the registrar to register. Section 40(5) then states that such a certificate is conclusive proof of the facts stated in it. The majority noted (at para 6) that the phrase “conclusive proof” is used in statutes to create an irrebuttable presumption that requires a factfinder to reach a certain conclusion. As a result, the defendant could not challenge the lease based on any of the formalities included in the certificate. Thus, the majority disposed of the appeal in nine short paragraphs.

Justice O’Ferrall’s judgement, concurring in the result, is much longer, although, to be fair, half of his 66 paragraph judgment is given over to a recitation of the facts and the judgement below. While concurring completely with the majority’s reasons (at para 47), Justice O’Ferrall notes that this dispute could have been decided “by applying the fundamental principle of our Torrens system of land titles, namely that purchasers of real property subject to prior dispositions validly made take title subject to those dispositions” (at para 47, citing section 62 of the Land Titles Act, RSA 2000, c L-4). That fundamental principle is, of course, indefeasibility. Justice O’Ferrall also noted that the Court of Appeal has previously held that statutory exceptions to indefeasibility should be interpreted strictly because indefeasibility anchors the Torrens system (at para 49, citing Petro-Canada Inc v Shaganappi Village Shopping Centre Limited, 1990 ABCA 261 (CanLII), (1991), 109 AR 237 (CA)).

How does the indefeasibility principle apply in this case? That’s where things get tricky. Section 60(1) of the Land Titles Act essentially says that the registered owner of land holds it subject to the encumbrances, liens, estates and interests that are endorsed on the certificate of title. The problem here was that the third lease was only registered against the common property by being endorsed on the Condominium Additional Plan Sheet on April 17, 1991, well after Francis and Smith had acquired their interest in the land. The certificate of title that they saw before and at the time of their purchase was for the land on which the condominiums were being built, a certificate of title that showed caveats for both the first and second leases.

That set of facts led Justice O’Ferrall to apply the indefeasibility principle—and not specific provisions of the Land Titles Act—less than straight-forwardly. According to Justice O’Ferrall, compliance with section 40 of the Condominium Property Act was not necessary because the Academy’s lease with the Condominium Corporation was “merely the substitution of a new party to a prior disposition, a novation, so to speak” (at para 52). Therefore, section 40 of the Condominium Property Act was not engaged (at para 60). Section 40 only applied to leases of the common property by the Condominium Corporation and, according to Justice O’Ferrall’s reasoning, no lease was granted by the Condominium Corporation. Why not? Because all that the Condominium Corporation owned or could own was the reversion (at para 55). On this point, Justice O’Ferrall’s reasoning is reminiscent of the common law’s nemo dat doctrine, i.e., that no one can give what they do not have.

This reasoning emphasizes the first lease. Because that portion of the common property required for the Academy’s parking lot and emergency access had been leased to the Academy long before the Condominium Corporation or its developer had taken title to the property and a caveat claiming an interest under the first lease was noted on the certificate of title shown to the condominium unit owners (at para 54), no lease was granted by the Condominium Corporation. Justice O’Ferrall found that the purchasers Francis and Smith had notice that some of the lands on which the condominium was being built were leased to the Academy. The caveat of the first lease and the purchasers’ notice of it affecting part of the land the condominium was being built on made the third lease binding on the purchasers. The indefeasibility appears to belong to the Academy’s leasehold estate, regardless of which lease was filed or registered against whichever title to what became the common property and regardless of who appeared to be granting the leasehold estate to the Academy.

Justice O’Ferrall did go on to state that, even if section 40 had to be complied with, it had been. The only parties with a registered interest in the common property at the time the unanimous resolution was passed were Statesman, the owner of all the units, and the Academy (at para 67). The parties with unregistered interests in the common property—Smith and Francis—had either agreed titles might be subject to a lease in favour of the Academy or had notice of the lease and had not acted in time to rescind the agreement (at para 68). Presumably the idea here was that persons with equitable interests in land are affected by notice of a pre-existing interest regardless of which lease was in effect at the relevant time.

It is interesting how each of the judges appear to accept that Francis and Smith, the purchasers of the condominium units, had an interest in land as purchasers under agreements for sale for which the remedy of specific performance would be available. While such status used to automatically result in the acquisition of an interest in land that could support a caveat, it has not done so for quite some time. Today, thanks to Semelhago v. Paramadevan, [1996] 2 SCR 415, 1996 CanLII 209 (SCC) and 1244034 Alberta Ltd. v. Walton International Group Inc. (2007), 422 AR 189, 2008 ABCA 53 (CanLII), there is a test to be applied and met before a purchaser has an interest in land. See the Alberta Law Reform Institute’s Final Report No. 97 on Contracts for the Sale and Purchase of Land: Purchasers Remedies for a summary of the change in the law and the problems it has caused purchasers.

The majority judgement—that subsections 40(4) and (5) of the Condominium Property Act meant what they said (at para 8)—is not only economical in the number of paragraphs and words that it uses, but it is also a good example of judicial economy. The concurring judgement of Justice O’Ferrall is not only longer, but its application of the general principle of indefeasibility seems to rely on common law and equitable principles not found in the Land Titles Act. It seems to be based on fairness, something the Land Titles Act is not noted for promoting (see, most famously, the dissenting judgment of Rinfret J in CPR v Turta, [1954] SCR 427, 1954 CanLII 58 (SCC) at 429-430).

Judicial economyis the phrase that is used to describe the idea of deciding the case on narrow grounds. It is a sort of judicial minimalism, or judicial restraint, i.e., saying no more than necessary to justify an outcome; see Cass R. Sunstein, One Case at a Time: Judicial Minimalism on the Supreme Court (Harvard University Press, 2001) at 3-4. According to Professor Sunstein (at 4-5), judicial economy has at least three advantageous. First, it reduces the burdens of judicial decisions, especially on multi-member courts. Second, and more importantly, it ensures that fundamental errors are made less frequently and are less damaging. Third, it reduces the risks of unanticipated bad consequences as a result of intervening in a complex system. The second and third reasons seem apropos to this case.

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Ernst v Alberta (Energy Resources Conservation Board): The gatekeeper is alive and well

Mon, 10/20/2014 - 10:45am

By: Shaun Fluker

PDF Version: Ernst v Alberta (Energy Resources Conservation Board): The gatekeeper is alive and well

Cases Considered: Ernst v Alberta (Energy Resources Conservation Board), 2014 ABCA 285

This comment adds to the earlier post by Martin Olszynski (here) on the Ernst litigation against Alberta Environment, the Alberta Energy Regulator/Energy Resources Conservation Board (AER/ERCB) and Encana Corporation concerning allegations of groundwater contamination from hydraulic fracturing. Readers interested in more details on the substance of the litigation will find it here. My focus in this comment is on whether the Alberta Court of Appeal has correctly applied the law on a motion to strike under Rule 3.68 of the Alberta Rules of Court, Alta Reg 124/2010 (the Rules). I argue the Court of Appeal has erred by applying the test too restrictively.

Simply put, Ernst alleges that Alberta Environment and the AER/ERCB owe her a duty of care and are negligent by failing to meet that duty. This is a question of regulatory negligence, and the parameters of the law on this question have been summarized by Professor Olszynski. The AER/ERCB applied to the Court to strike Ernst’s claim for failing to disclose a reasonable cause of action, and for summary judgment. In the first instance, Chief Justice Wittman granted the request to strike back in September 2013 (Ernst v Encana Corporation, 2013 ABQB 537).

The legal issue here is whether the AER/ERCB has met the test to strike under rule 3.68 of the Rules. The rule provides, in part, that the Court may strike any part of a claim where the pleading discloses no reasonable cause of action. It is this particular aspect of rule 3.68 that is at issue here. The AER/ERCB seeks to have the allegations of regulatory negligence struck (as well as a Charter argument) on the basis that it owes no private duty of care to Ernst and that the AER/ERCB is immune from liability for any acts done in the circumstances by reason of the statutory provisions of section 43 in the Energy Resources Conservation Act, RSA 2000, c E-10 (now repealed but in force at the relevant time). The onus or burden of proof lies on the AER/ERCB to establish that Ernst has failed to disclose a reasonable cause of action against it.

Rule 3.68 (and its predecessor) has attracted its share of commentary from Alberta courts over the years, no doubt in part because the consequences of its application can be severe. Judge Fradsham provides a good summary of the case law in his Annotated Rules of Court (Carswell, 2012) at pages 171 to 199. The overall sense of the jurisprudence – the guiding rules if you like – is that the test to be met by an applicant in a motion to strike for want of a cause of action is high, onerous and stringent. A court hearing a motion to strike should read the impugned pleadings generously and exercise caution. A claim should not be struck unless it is hopeless. Only those actions where are certain to fail should be struck. Pleadings should not be struck unless it is beyond a reasonable doubt that the plaintiff cannot succeed. The motion to strike is not the appropriate venue to decide difficult or novel questions of law.

In Ernst the Court of Appeal does not cite any of these Alberta cases, but rather points to the 2011 Supreme Court of Canada decision in R v Imperial Tobacco Canada Limited, 2011 SCC 42, where at paras 17 to 26 the Supreme Court sets out the test to be met for a motion to strike claims for the failure to disclose a reasonable cause of action. Surprisingly in Ernst the Court of Appeal only cites paragraphs 19 to 21 from Imperial Tobacco. I say surprisingly because the Supreme Court lays out the test in paragraph 17 of Imperial Tobacco:

This Court has reiterated the test on many occasions.  A claim will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action: Odhavji Estate v. Woodhouse, 2003 SCC 69 (CanLII), [2003] 3 S.C.R. 263, at para. 15; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at p. 980.  Another way of putting the test is that the claim has no reasonable prospect of success.  Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial: see, generally, Syl Apps Secure Treatment Centre v. B.D., 2007 SCC 38 (CanLII), [2007] 3 S.C.R. 83; Odhavji Estate; Hunt; Attorney General of Canada v. Inuit Tapirisat of Canada, 1980 CanLII 21 (SCC), [1980] 2 S.C.R. 735.

At paragraph 14 in the Ernst decision, the Court of Appeal recites paragraphs 19 to 21 of Imperial Tobacco which read more like the underlying policy to me than the actual test. More problematically I think, the Court goes from these policy considerations to declaring that the test to strike a claim for failing to disclose a reasonable cause of action under rule 3.68 has evolved from its earlier iterations (at para 15) to now being “whether there is any reasonable prospect that the claim will succeed, erring on the side of generosity in permitting novel claims to proceed” (at para 14).

The Court of Appeal seems to rely on Imperial Tobacco to suggest the test to strike has evolved and that it is no longer helpful to ask whether it is beyond a reasonable doubt that the plaintiff cannot succeed, that perhaps the test is not as onerous and stringent as it used to be. I don’t read paragraphs 17 to 26 in Imperial Tobacco to have changed the law on this point, and certainly not in any substantive way.

It seems to me the Court of Appeal did not require the AER/ERCB to meet a high and onerous test, and thus has erred in its application of the law under rule 3.68. There would appear to be a number of arguable points in the Ernst claim – regulatory negligence under the common law being one of them. The Court may be skeptical about the claim, but that is not a lawful basis upon which to strike it. With respect, I think both Alberta courts which have heard this application have focused too much attention on the merits of the Ernst claim rather than on whether the AER/ERCB has satisfied the test to strike under rule 3.68.

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Ernst v Alberta (Energy Resources Conservation Board): The gatekeeper is alive and well

Mon, 10/20/2014 - 10:00am

By: Shaun Fluker

PDF Version: Ernst v Alberta (Energy Resources Conservation Board): The gatekeeper is alive and well

Cases Considered: Ernst v Alberta (Energy Resources Conservation Board), 2014 ABCA 285

This comment adds to the earlier post by Martin Olszynski (here) on the Ernst litigation against Alberta Environment, the Alberta Energy Regulator/Energy Resources Conservation Board (AER/ERCB) and Encana Corporation concerning allegations of groundwater contamination from hydraulic fracturing. Readers interested in more details on the substance of the litigation will find it here. My focus in this comment is on whether the Alberta Court of Appeal has correctly applied the law on a motion to strike under Rule 3.68 of the Alberta Rules of Court, Alta Reg 124/2010 (the Rules). I argue the Court of Appeal has erred by applying the test too restrictively.

Simply put, Ernst alleges that Alberta Environment and the AER/ERCB owe her a duty of care and are negligent by failing to meet that duty. This is a question of regulatory negligence, and the parameters of the law on this question have been summarized by Professor Olszynski. The AER/ERCB applied to the Court to strike Ernst’s claim for failing to disclose a reasonable cause of action, and for summary judgment. In the first instance, Chief Justice Wittman granted the request to strike back in September 2013 (Ernst v Encana Corporation, 2013 ABQB 537).

The legal issue here is whether the AER/ERCB has met the test to strike under rule 3.68 of the Rules. The rule provides, in part, that the Court may strike any part of a claim where the pleading discloses no reasonable cause of action. It is this particular aspect of rule 3.68 that is at issue here. The AER/ERCB seeks to have the allegations of regulatory negligence struck (as well as a Charter argument) on the basis that it owes no private duty of care to Ernst and that the AER/ERCB is immune from liability for any acts done in the circumstances by reason of the statutory provisions of section 43 in the Energy Resources Conservation Act, RSA 2000, c E-10 (now repealed but in force at the relevant time). The onus or burden of proof lies on the AER/ERCB to establish that Ernst has failed to disclose a reasonable cause of action against it.

Rule 3.68 (and its predecessor) has attracted its share of commentary from Alberta courts over the years, no doubt in part because the consequences of its application can be severe. Judge Fradsham provides a good summary of the case law in his Annotated Rules of Court (Carswell, 2012) at pages 171 to 199. The overall sense of the jurisprudence – the guiding rules if you like – is that the test to be met by an applicant in a motion to strike for want of a cause of action is high, onerous and stringent. A court hearing a motion to strike should read the impugned pleadings generously and exercise caution. A claim should not be struck unless it is hopeless. Only those actions where are certain to fail should be struck. Pleadings should not be struck unless it is beyond a reasonable doubt that the plaintiff cannot succeed. The motion to strike is not the appropriate venue to decide difficult or novel questions of law.

In Ernst the Court of Appeal does not cite any of these Alberta cases, but rather points to the 2011 Supreme Court of Canada decision in R v Imperial Tobacco Canada Limited, 2011 SCC 42, where at paras 17 to 26 the Supreme Court sets out the test to be met for a motion to strike claims for the failure to disclose a reasonable cause of action. Surprisingly in Ernst the Court of Appeal only cites paragraphs 19 to 21 from Imperial Tobacco. I say surprisingly because the Supreme Court lays out the test in paragraph 17 of Imperial Tobacco:

This Court has reiterated the test on many occasions.  A claim will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action: Odhavji Estate v. Woodhouse, 2003 SCC 69 (CanLII), [2003] 3 S.C.R. 263, at para. 15; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at p. 980.  Another way of putting the test is that the claim has no reasonable prospect of success.  Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial: see, generally, Syl Apps Secure Treatment Centre v. B.D., 2007 SCC 38 (CanLII), [2007] 3 S.C.R. 83; Odhavji Estate; Hunt; Attorney General of Canada v. Inuit Tapirisat of Canada, 1980 CanLII 21 (SCC), [1980] 2 S.C.R. 735.

At paragraph 14 in the Ernst decision, the Court of Appeal recites paragraphs 19 to 21 of Imperial Tobacco which read more like the underlying policy to me than the actual test. More problematically I think, the Court goes from these policy considerations to declaring that the test to strike a claim for failing to disclose a reasonable cause of action under rule 3.68 has evolved from its earlier iterations (at para 15) to now being “whether there is any reasonable prospect that the claim will succeed, erring on the side of generosity in permitting novel claims to proceed” (at para 14).

The Court of Appeal seems to rely on Imperial Tobacco to suggest the test to strike has evolved and that it is no longer helpful to ask whether it is beyond a reasonable doubt that the plaintiff cannot succeed, that perhaps the test is not as onerous and stringent as it used to be. I don’t read paragraphs 17 to 26 in Imperial Tobacco to have changed the law on this point, and certainly not in any substantive way.

It seems to me the Court of Appeal did not require the AER/ERCB to meet a high and onerous test, and thus has erred in its application of the law under rule 3.68. There would appear to be a number of arguable points in the Ernst claim – regulatory negligence under the common law being one of them. The Court may be skeptical about the claim, but that is not a lawful basis upon which to strike it. With respect, I think both Alberta courts which have heard this application have focused too much attention on the merits of the Ernst claim rather than on whether the AER/ERCB has satisfied the test to strike under rule 3.68.

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The Debate over the Charter’s Reach Continues: A Question Regarding Free Expression at Airports

Fri, 10/17/2014 - 10:00am

By: Sarah Burton

PDF Version: The Debate over the Charter’s Reach Continues: A Question Regarding Free Expression at Airports

Cases Considered: The Calgary Airport Authority v Canadian Centre for Bio-Ethical Reform, 2014 ABQB 493

In The Calgary Airport Authority v Canadian Centre for Bio-Ethical Reform, 2014 ABQB 493 (“CAA v CCBR”), Chief Justice Wittmann granted an interim injunction prohibiting an anti-abortion group from protesting at the Calgary International Airport. Separate and apart from the polarizing subject-matter, this case is interesting because it raises some basic Charter questions that stubbornly refuse to be settled. Despite raising interesting questions regarding the reach of the Charter to quasi-governmental entities and the meaning of public property, the Court did not provide any answers at this stage. Given the nature of an interim injunction application, Chief Justice Wittmann was only asked to determine if the matters raised “serious issues to be tried” – a decision he had little difficulty making. Even without final answers though, this decision still merits attention. Not only are the issues themselves thought-provoking, the parties clearly viewed the application as one of massive importance, and accordingly prepared forceful arguments. At the very least, Chief Justice Wittman’s direction that the matter move expeditiously via case management signals that the Court will be providing a substantive answer to these questions in the not-too-distant future.

Facts

On three dates between 2011 and 2013, members of the anti-abortion group Canadian Centre for Bio-Ethical Reform (“CCBR”) staged protests in the Calgary Airport’s arrival and departure areas. The demonstrations featured approximately 10 members of CCBR, some of whom were holding large graphic signs of aborted foetuses. The demonstrators attempted to hand out pro-life literature and to engage passersby in conversations about abortion (at para 22). The Calgary Airport Authority (“the CAA”) received various complaints about the demonstrations (at para 23).

  • The first demonstration resulted in the protesters being relocated to facilitate pedestrian traffic. However, the CCBR protesters would not move to the area designated by the CAA (at para 24).
  • During the second demonstration, the CAA issued the protesters tickets under the Trespass to Premises Act, RSA 2000, c T-7 (“TPA”). The Calgary Policy then issued summons for contravening the TPA. The CCBR protesters were acquitted at trial (see R v Booyink, 2013 ABPC 185 (blogged about here)). Judge Fradsham relied on an exception in the TPA to conclude that the protesters, who were acting on legal advice, “acted under a fair and reasonable supposition that [they] had a right to do the act complained of” (TPA, 8). Alternatively, drawing on case law regarding freedom of expression in other Canadian airports, Judge Fradsham concluded that CCBR’s actions were protected by s. 2(b) of the Charter, and that the infringement was not justified by s. 1.
  • At the third demonstration, CCBR refused to leave the Airport when the CAA asked them to do so. The Calgary Police were called, but advised the CAA that they could not remove the demonstrators without a court order, unless the activities were violent or threatened violence.

After the third event, the CAA moved forward with an action seeking, inter alia, a permanent and interlocutory injunction banning CCBR protests on their premises. Soon after, the CAA brought an interlocutory injunction application pending final resolution of the action.

The Decision

Chief Justice Wittman granted the CAA’s application after applying the well-known three-part test for an interim injunction, as articulated in RJR MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311. I have outlined the salient points raised under each stage of the test below.

  1. Is there a serious issue to be tried?

The CAA satisfied Chief Justice Wittman that there was a serious issue to be tried, namely the correct characterization of CCBR’s conduct (a trespass or a constitutional exercise of free expression). In challenging this finding, the CCBR launched several interesting but ultimately unsuccessful arguments.

First, it argued that the issue was res judicata in light of Judge Fradsham’s acquittal in Booyink. As outlined above, Booyink was a prosecution under the TPA resulting from the second of the three CCBR protests. This argument passed the first two stages of the issue estoppel test – the issue determined was fundamental to the prior proceeding, and that proceeding was final. Ultimately, Chief Justice Wittman rejected the argument because it failed to meet the final hurdle – neither the CAA nor CCBR (nor their privies) were the same in both actions (at para 63). He noted, however that while not binding, Judge Fradsham’s “thorough analysis and findings [in Booyink] may be persuasive authority for this Court” (at para 64).

Second, CCBR argued that its actions were shielded by the Charter because s. 2(b) protects the right to expression on all public, government-owned property whether or not the CAA is “government”. Chief Justice Wittman rejected CCBR’s claim that this raised no serious issue. To do so, he drew on the recent (and somewhat controversial) decision of R v SA, 2014 ABCA 191 (ABlawg post forthcoming; see here and here for posts on earlier decisions in SA). Specifically, the ABCA held in R v SA that while government property is “public”, this does not create an automatic entitlement to unlimited access and protection under the Charter (SA at paras 91-97). Public ownership does not necessarily equate to public rights of use (CAA v CCBR at para 74). Therefore, CCBR’s entitlement to Charter protection while on government property raised a serious issue.

Lastly, CCBR argued that the Charter protected their protest because the CAA was either government itself, or if not, was performing a government activity. This argument raised an entire body of case law dedicated to the application of the Charter to entities that fall on a spectrum of government control, authority, or functions. While the CCBR emphasized the government mandate, objectives, and activities of the CAA, the CAA countered with affidavit evidence painstakingly outlining its relationship with (and emphasizing its independence from) the federal government. Chief Justice Wittman declined to wade into the debate, but held that the Charter application issue raised a serious issue to be tried (at para 87).

If the Charter indeed applied, Chief Justice Wittman held that application of s. 2(b) raised a serious issue to be tried (at para 88).

  1. If the injunction is not granted, will the plaintiff suffer irreparable harm?

Chief Justice Wittman accepted the CAA’s evidence of irreparable harm. The CAA argued, among other things, that CCBR’s actions disrupted passenger flow, created safety risks, interfered with its ability to fulfill its mandate and contractual obligations, and negatively impacted its reputation (at paras 91, 92). CCBR attempted to undercut these arguments by emphasizing that core Airport functions (including safe air travel, Airport services, systems and operations) were not disturbed. The Court accepted that irreparable harm can occur despite the maintenance of these core functions (at para 94).

  1. Who does the balance of convenience favour?

Chief Justice Wittman was asked to balance the CAA’s right to govern use of its property with the right of demonstrators to express their views (at para 99). Ultimately, the balance of convenience favoured the CAA. While emphasizing that the content of CCBR’s message did not impact his decision, Chief Justice Wittman was guided by the fact that it would be able to express its views through other means until the case was finally determined.

As a condition to granting the application, Chief Justice Wittman ordered that the litigation proceed to trial or other resolution “with reasonable dispatch” (at para 100). To this end, he appointed a case management judge to oversee the action, and invited CCBR to apply to vary this injunction if the CAA failed to proceed with its case at a reasonable pace.

Discussion: What is the Future of Freedom of Expression in Canadian Airports?

From an academic perspective, this decision is intriguing, but nonetheless unsatisfying – one cannot help but notice that none of the important questions raised in it were answered. Of course, this is entirely appropriate for an interim injunction application, where it would be incorrect to move any further than determining that the facts and law raise “serious issues to be tried”. Thus, while inconclusive, interested parties will have to wait for another day to see how the Court finally determines this contentious dispute. In the meantime however, it is possible to use what is known about the case, the Booyink decision, and s. 2(b) jurisprudence to make some predictions about what this final determination will bring. My thoughts on this are outlined below.

A. The CAA Faces an Uphill Battle that it is not Subject to the Charter

As the CAA has undoubtedly realized by now, banning unwanted demonstrators from the Airport is a substantially more difficult task than it originally seemed. The CAA may go about its daily functions as a private landlord, but an inextricable link between air transport and government control complicates its relationship with the Canadian public. To clarify this area, the CAA has chosen to focus on ousting the Charter’s application entirely. While this is a wise strategy, it is undoubtedly an uphill battle. In order to successfully argue that they are not subject to the Charter, the CAA will either have to cleverly distinguish or completely overturn some forceful existing precedents.

To explain, the CAA’s most daunting challenge will be distinguishing the Supreme Court of Canada decision Committee for the Commonwealth of Canada v Canada, [1991] 1 SCR 139, 1991 CanLII 119 (SCC) [Commonwealth]. Commonwealth held that freedom of expression protected a political group’s freedom to hand out pamphlets in a Montreal airport terminal. Should the Charter apply, the CAA will have a very difficult time distinguishing this on-point, detailed, and impassioned precedent on the breadth of freedom of expression in airports.

However, the Court in Commonwealth basically assumed the Charter applied to the airport because it was government property – it failed to undertake any detailed analysis on this point. Thus, by challenging the Charter’s application, the CAA may be able to circumvent Commonwealth entirely by relying on more recent case law about the application of the Charter to quasi-government entities and distinguishing the now-defunct assumption that all activity on government property is protected by the Charter.

While this is an interesting strategy, it remains a precarious argument. The last 20 years of case law on Charter application is broad and emphasizes that the Charter cannot simply be ousted through the government delegating its duties to non-government agencies (see, for example Eldridge v British Columbia (Attorney General), [1997] 3 SCR 624, 1997 CanLII 327 (SCC), at para 42; Pridgen v University of Calgary, 2012 ABCA 139 at paras 78 – 98).

What’s more, in order to succeed the CAA will have to confront Judge Fradsham’s extensive and thorough discussion on this issue (and the case law) in Booyink. Judge Fradsham plainly concluded that the Charter applied to the CAA because the CAA was either government itself, or even if not, it carried out a government function (Booyink at paras 109, 114). While the CAA dodged a bullet when it successfully argued that its case was not res judicata in light of Booyink, it cannot expect to entirely avoid Judge Fradsham’s findings. Even Chief Justice Wittman stated that Judge Fradsham’s “thorough analysis and findings [in Booyink] may be persuasive authority for this Court” (at para 64).

As such, if the CAA is going to succeed in arguing that the Charter does not apply to its actions, it must compel the Court of Queen’s Bench to reach a different conclusion than Judge Fradsham when he was faced with the same question on largely overlapping facts. This will be no small feat, as Courts are loathe to reach inconsistent conclusions out of respect for the administration of justice.

B. If the Charter Applies, the CCBR will Likely Succeed in Establishing a s. 2(b) Breach

There is little doubt that, should the Charter apply, the CCBR will be able to establish a s. 2(b) Charter breach. CCBR’s protests are a non-violent attempt to convey meaning with clear expressive content, bringing it prima facie within s. 2(b)’s protections.

Furthermore, it is unlikely that the location of this expression will remove that prima facie protection. While most people would not traditionally associate an airport as an arena where public expression is fostered, Commonwealth likened airport terminals to “modern boulevards, extensions of Main Street” in firmly establishing that “the non-security zones within airport terminals…are properly regarded as public arenas” (Commonwealth at pp. 205, 206).

The Supreme Court’s more recent discussion regarding freedom of expression on public buses also suggests that CCBR would easily establish a s. 2(b) infringement. CCBR seeks freedom from undue state interference, not the creation of a sphere for their expression; the expressive activity in question does not impede the primary function of airports; and the expressive activity does not undermine the values underlying freedom of expression (see Greater Vancouver Transportation Authority v Canadian Federation of Students, 2009 SCC 31 at paras 29, 35, 42 – 46).

C. The CAA Must Mount a Forceful Argument on Section 1

In Booyink, Judge Fradsham had little time for the Crown’s attempt at a s. 1 justification, finding no evidence that the CAA’s actions were related to a pressing and substantial objective (Booyink at para 142). He noted that the CAA’s actions were most likely aimed at controlling the content (rather than the consequences) of the defendant’s expression, as there was no evidence that the defendants were harassing passers-by or obstructing traffic (Booyink at para 142, 143).

In the present case, the CAA has wisely heeded Judge Fradsham’s words. They have not surprisingly submitted affidavit evidence stating that the CCBR protesters were, among other things, harassing people, obstructing traffic, creating safety risks, and preventing the CAA from fulfilling its mandate. Whether this evidence will convince the Court of Queen’s Bench remains to be seen, but it clearly demonstrates that the CAA is ready to go to battle justifying its actions in a s. 1 analysis. Given the risks inherent in its Charter application and s. 2(b) arguments, this is a wise choice.

Presuming that the CAA’s evidence establishes a pressing and substantial objective, the debate will turn to proportionality and an examination of the CAA’s various attempts to relocate and ultimately remove the protesters. If its evidence regarding harassment and passenger obstruction is accepted, the CAA will likely succeed in arguing a rational connection between its actions and the protection of passengers from harassment, traffic hindrances and (perhaps) general safety.

If, as Judge Fradsham suggested, the CAA’s actions sought to control the content of CCBR’s messaging, a Court will closely examine whether those actions were minimally impairing. The answer to that question (as well as the proportionality inquiry) will likely depend on an examination of the exact location of the relocation zone the CAA initially proposed. If it was a “reasonable” relocation zone, the CCBR’s refusal to cooperate may help the CAA justify its ultimate resort to trespass legislation. Conversely, if the attempted relocation zone was unfair or unreasonable, the CAA will have a difficult time demonstrating that its later decision to charge the protesters with trespassing was proportional and minimally impairing.

Conclusion

This case, and ones like it, tests the limits on free expression in Canada and the reach of the Charter to entities that are not clearly public or private. Given the parties involved and their respective interests at stake, settlement appears unlikely in this case. Thankfully, Chief Justice Wittman directed that the matter proceed expeditiously via case management so answers to the serious issues raised in this application will be provided in the near future.

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Revisiting Regulatory Negligence: The Ernst Fracking Litigation

Wed, 10/15/2014 - 10:00am

By: Martin Olszynski

PDF Version: Revisiting Regulatory Negligence: The Ernst Fracking Litigation

Cases Considered: Ernst v. Alberta (Energy Resources Conservation Board), 2014 ABCA 285

On September 15, 2014, the Alberta Court of Appeal released its decision in Ernst v. Alberta (Energy Resources Conservation Board). Ms. Ernst owns land near Rosebud, Alberta, and is suing EnCana Corporation, the ERCB (now the Alberta Energy Regulator) and Alberta Environment (now Alberta Environment and Sustainable Resources Development) for negligence in relation to the alleged contamination of her groundwater as a result of EnCana’s hydraulic fracturing (fracking) activities in the area. The ERCB (but not Alberta Environment – a point further discussed below) applied to have the action against it struck. The case management judge, Chief Justice Wittmann, agreed that this particular negligence claim was not supported in law: he found that the ERCB owed no private law duty of care to Ms. Ernst and that, in any event, any claim was barred by s 43 of the ERCB’s enabling legislation (see Ernst v. EnCana Corporation, 2013 ABQB 537). The Alberta Court of Appeal (Justices Côté, Watson and Slatter, writing as “The Court”) dismissed Ms. Ernst’s appeal. This post considers the regulatory negligence aspects of both the Queen’s Bench and Court of Appeal decisions.

Canadian Negligence Law in a Nutshell

Under Canadian tort law, a plaintiff has to prove five elements in order to establish negligence: (1) that the defendant owed the plaintiff a duty of care; (2) that the defendant breached the applicable standard of care; (3) that the plaintiff suffered damages; (4) that these damages were the result of the defendant’s breach (causation); and (5) that the resulting damages are not too remote.

The Ernst decisions are concerned only with the first and most challenging element (especially in the context of an action for regulatory negligence): whether the ERCB owed Ms. Ernst a duty of care. The applicable test is the Anns/Cooper test, which the Supreme Court of Canada described in Cooper v. Hobbart, 2001 SCC 79 as follows:

[30] …At the first stage of the Anns test, two questions arise:  (1) was the harm that occurred the reasonably foreseeable consequence of the defendant’s act? and (2) are there reasons, notwithstanding the proximity between the parties established in the first part of this test, that tort liability should not be recognized here?  The proximity analysis involved at the first stage of the Anns test focuses on factors arising from the relationship between the plaintiff and the defendant.  These factors include questions of policy, in the broad sense of that word.  If foreseeability and proximity are established at the first stage, a prima facie duty of care arises.  At the second stage of the Anns test, the question still remains whether there are residual policy considerations outside the relationship of the parties that may negative the imposition of a duty of care. [emphasis in original]

With respect to proximity, the Supreme Court has stated that this “may involve looking at expectations, representations, reliance, and the property or other interests involved” (Cooper at para 34). In the specific context of regulatory negligence, the Supreme Court has recently distinguished between two situations: (1) where the alleged duty of care is said to arise explicitly or by implication from the statutory scheme (which the Court admits will be rare); and (2) where the duty arises from interactions between the claimant and the regulatory authority (most relevant here) (see R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42). In all cases, the driving determination is whether “it is just and fair having regard to that relationship [between plaintiff and defendant] to impose a duty of care in law upon the defendant” (Cooper at para 34).

As for the second, “residual policy considerations stage,” the Supreme Court in Hill v. Hamilton?Wentworth Regional Police Services Board, 2007 SCC 41 made clear that “even if a potential conflict could be posited, that would not automatically negate the prima facie duty of care… A prima facie duty of care will be negated only when the conflict, considered together with other relevant policy considerations, gives rise to a real potential for negative policy consequences…  a duty of care in tort law should not be denied on speculative grounds” (at para 43).

The Ernst Decisions

Perhaps the most striking aspect of both decisions is how much space is devoted to an issue that is technically obiter. The analysis of the ERCB’s duty of care seems unnecessary in light of both courts’ conclusion that any claim against the ERCB was barred by s 43 of the Energy Resources Conservation Act, RSA 2000, c. E-10 in any event (since repealed and replaced with s 27 of the Responsible Energy Development Act, SA 2012, c. R-17.3).

There are, of course, numerous good reasons why a court might choose to address all of the issues in a case such as this one, not least of which is the fact that there is another regulator – Alberta Environment – being sued for negligence here, one which has not applied to have the action against it struck. Perhaps Chief Justice Wittmann and the Court of Appeal wanted to make clearer to counsel the framework within which the action against Alberta Environment will be assessed and give some sense of their predisposition to such actions. Along these lines, it is reasonable to suggest that the Court of Appeal’s decision to state explicitly that which was not at issue before it, including “whether the pleading against the defendant Alberta could be struck as being frivolous or vexatious” (Ernst v. Alberta at para 9), reflects judicial scepticism.

As for the duty of care analysis, although the outcome is the same in both decisions the analysis is actually quite different. Chief Justice Wittmann begins and ends his analysis at the first stage of the Anns/Cooper test, which as noted is concerned with foreseeability of harm and proximity. Situating Ms. Ernst’s relationship with the ERCB as more like that between the unsuccessful investors and the Registrar of Mortgage Brokers in Cooper than the miners to whom government inspectors were held to owe a duty in Fullowka v Pinkerton’s of Canada Limited, 2010 SCC 5 (CanLII), the Chief Justice concluded that there was “no sufficient proximity to ground a private duty. Nor was there a relationship established between Ernst and the ERCB outside the statutory regime which created a private duty” (Ernst v. EnCana at para 28). It was thus “unnecessary to determine whether the harm to Ernst was foreseeable. It [was] also unnecessary to consider the second part of the Anns test, that is, whether there would be any policy reason, assuming proximity, to [not] impose a private duty” (ibid, at para 29).

The Court of Appeal, for its part, seemed to jump immediately to the second, “residual policy considerations” stage, laying out a series of reasons reflected in the jurisprudence as to why any prima facie duty of care owed by regulators is usually negated. These include the difficulty of distinguishing between policy and operational decisions (the former being immune from liability), the potential for conflict between private and public duties, and indeterminacy problems (Ernst v. Alberta at para 17). In the Court of Appeal’s view, many of these considerations were relevant to the case at bar:

[18]  Forcing the Board to consider the extent to which it must balance the interests of specific individuals while attempting to regulate in the overall public interest would be unworkable in fact and bad policy in law. Recognizing any such private duty would distract the Board from its general duty to protect the public, as well as its duty to deal fairly with participants in the regulated industry. Any such individualized duty of care would plainly involve indeterminate liability, and would undermine the Board’s ability to effectively address the general public obligations placed on it under its controlling legislative scheme.

Bearing in mind the teaching from Hill, one might have expected the following paragraphs to elaborate on these otherwise fairly generic concerns. The Court of Appeal, however, switched gears entirely and simply concluded that Chief Justice Wittmann “correctly applied the test for determining whether the Board owed a private law duty of care to the appellant” (Ernst v. Alberta at para 19). This conclusion is jarring because, as noted, the Chief Justice did not even engage the second stage. Rather, he focused on proximity and, adopting what could be called the “spectrum” approach applied by Justice Cromwell in Fullowka, concluded that the interactions between Ms. Ernst and the ERCB were more like those of the unsuccessful plaintiffs in Cooper than those of the miners in Fullowka. The Court of Appeal actually dismissed Fullowka as an “anomaly” (Ernst v. Alberta at para 16), which if anything suggests that they didn’t agree with the Chief Justice’s approach at all.

Discussion

As noted by Professor Feldthusen, “[d]ecoding the law governing the negligence liability of statutory public authorities in Canada has always been a challenge” (see “Simplifying Canadian Negligence Actions Against Public Authorities – or Maybe Not” (2012) Tort L Rev 176 at 176). Indeed, Professor Feldthusen suggests that it may be time to revisit the basis upon which liability for regulatory negligence will be founded (ibid at 184). Certainly, recent events like the Lac Megantic disaster and the Mount Polley spill do point to something rotten within the regulatory state (University of Ottawa Professor Jennifer Quaid provides a compelling explanation here) to which the common law could potentially respond.

The Ernst case may or may not be the right one for such a discussion. At the very least, however, it bears recalling that the Supreme Court’s decision in Cooper is valued first and foremost for bringing some much needed transparency to the duty of care analysis. It would be preferable, then, for the courts to apply the Anns/Cooper test in a predictable, sequential manner – something that both the Chief Justice and the Court of Appeal failed to do here.

As noted above, the first step is to determine foreseeability of harm. Contrary to the Court of Appeal’s assertion (Ernst v. Alberta at para 16), this is actually something that most regulatory negligence plaintiffs have very little difficulty establishing (see e.g. Cooper at para 42, Hill at para 32, Imperial Tobacco at para 57). It is precisely because foreseeability represents a relatively low bar that finding a prima facie duty of care requires both foreseeability and proximity. As in Cooper, then, it seems reasonably foreseeable that Ms. Ernst would suffer some harm if the ERCB were negligent in carrying out its duties, especially with respect to compliance and enforcement.

With respect to proximity and the second situation through which a duty of care may arise (Imperial Tobacco, above), the “spectrum of regulatory relationships” approach applied by Justice Cromwell in Fullowka and adopted by Chief Justice Wittmann may be a good place to start, but it also has the potential to mask important distinctions. For example, although there were differences in the relationship and interactions between the plaintiffs and the relevant public authorities in Cooper and Hill (where police officers were held to owe a duty of care to their suspects), a fair reading of Hill suggests that an equally important factor was the very significant personal interest (i.e. liberty) at stake (see Hill at paras 34 – 38). Arguably, Ms. Ernst’s interest in the safety of her water supply is more like the interest in Hill than in Cooper – which was a case for pure economic loss – where “[p]roximity and foreseeability are heightened concerns” (Imperial Tobacco at para 42). Chief Justice Wittmann himself seems to recognize that further analysis is required when he states that a private duty cannot arise simply because an individual communicates with a regulator (Ernst v. EnCana at para 28).

Turning to the second, “residual policy considerations” stage, it is not obvious to me how owing a private law duty to those individuals particularly vulnerable or susceptible to a regulator’s negligence would be unworkable or create indeterminacy problems. Generally speaking, regulators like the ERCB and Alberta Environment are not monolithic entities – they have branches or sectors that carry out specific functions, including a compliance and enforcement branch. When this branch is engaged, the problem of indeterminacy would seem to be largely resolved: compliance activities are concerned with specific incidents at discrete locations. The Supreme Court’s approach in Hill, which affirmed the existence of a tort of negligent investigation but also recognized the role of the standard of care in mediating the spectre of liability (see paras 54, 58 and 67 – 73) seems perfectly suited for such situations. At the very least, however, counsel for the defendant should have to explain – and the courts should set out in their reasons – the overarching policy considerations that justify negating any prima facie duty of care in the specific instance before them.

The Court of Appeal is certainly correct that there are a number of reasons why a duty of care is not generally placed on a regulator (Ernst v. Alberta at para 17), but it is equally true that sometimes it is, and that regulatory negligence is a recognized tort in Canada.

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Divergence at the Court of Appeal on What Amounts to Unreasonable Decision-making

Thu, 10/09/2014 - 10:00am

By: Shaun Fluker

PDF Version: Divergence at the Court of Appeal on What Amounts to Unreasonable Decision-making

Cases Considered: Hunter v College of Physicians & Surgeons of Alberta, 2014 ABCA 262

In this judgment the Court of Appeal reviews a disciplinary decision made by the College of Physicians & Surgeons of Alberta against one of its physician members. I think the judgment is noteworthy to a broader audience of administrative law scholars and practitioners because of the stark contrast in how the majority and the dissent apply the reasonableness standard to review the College’s decision. The majority judgment written by Justice Slatter and Madam Justice Veldhuis dismisses the appeal by the physician using only 6 paragraphs of reasons to conclude the disciplinary decision is reasonable. The dissenting opinion written by Justice O’Ferrall concludes the College’s decision is unreasonable and in doing so probes much further into the impugned regulatory process and the record in this case. There would appear to be a divergence of views at the Court of Appeal in how to apply the reasonableness standard in judicial review.

The governing legislation here is the Health Professions Act, RSA 2000, c H-7 and the decision in question is a disciplinary decision issued by the Council of the College under sections 87 to 89 of the Act. The physician was found guilty by the Council of ‘unprofessional conduct’ as defined in section 1(1)(pp) of the Act for contravening the College’s Standards of Practice by terminating a physician-patient relationship to pursue a personal relationship with the patient. The physician appealed this finding to the Court of Appeal under the statutory appeal provisions set out in section 90 of the Act, arguing that the personal relationship in question was not of the predatory or exploitive sort contemplated by the prohibition in the Standards of Practice and that entering the relationship did not amount to professional misconduct.

The majority of the Court dismisses this application by observing that judicial deference is owed to disciplinary decisions made by self-regulatory professional tribunals and concludes the Council’s finding of unprofessional conduct in this case was an available outcome given the facts and the law in question (at para 3). In short, the majority concluded there was no reviewable error of law or unreasonable exercise in discretion by the Council.

Justice O’Ferrall agrees that the applicable standard of review here is reasonableness, but he approaches this case from a very different perspective than the majority. Justice O’Ferrall’s reasons include a description of the governing legislative framework, noting in particular (at paras 20 to 24) the relation between the Standards of Practice and the Act as well as making the point that the Council enacts the Standards of Practice under statutory authority. He also provides a detailed description of the facts as determined in the disciplinary hearing process, including a summary of how the relationship between the physician and the patient developed over the years (at paras 25-39). Justice O’Ferrall parts ways with the majority starting at para 58, where he probes into the reasoning provided by the College in its disciplinary decision and undertakes a contextual interpretation of what is meant by ‘personal relationship’ in the Standards of Practice. This investigation leads him to conclude the College erred in its interpretation and application of the Standards of Practice in this case – there was no evidence to conclude the personal relationship here was predatory or exploitive (at para 75). Justice O’Ferrall also notes that the disciplinary proceeding was commenced by an anonymous complainant who refused to be interviewed by the College and moreover that there was no evidence to support a finding that the conduct in question would harm the integrity of the medical profession (at paras 76-77).

Certainly it is not unusual for a dissent to significantly part ways with the majority in an appellate decision, and there is little doubt that consensus in how to administer substantive judicial review remains elusive for the Canadian judiciary despite pronouncements by the Supreme Court of Canada back in 2008 that Dunsmuir v New Brunswick, 2008 SCC 9 was a game-changer and would help to alleviate these difficulties. The troublesome application of the reasonableness standard, in particular, has attracted some scholarly attention – Professor Paul Daly has an article on point forthcoming in the Alberta Law Review (see here).

My initial reaction here was that Justice O’Ferrall is far too intrusive in his review of the College’s disciplinary decision to be consistent with the deferential reasonableness standard of review. And indeed there is very little sense of deference in his reasoning. But on reflection and giving closer consideration to the governing legislative framework, I wonder if perhaps his dissent is the more appropriate approach and outcome for this case. We shouldn’t overlook the fact that the Act provides a physician with the ability to appeal disciplinary decisions to the Court of Appeal without the need to seek leave of the Court, and that the substance of the appeal is not limited to questions of law or jurisdiction (section 90). In the conduct of the appeal, the Court is entitled to make findings of fact based on the record and may quash, confirm or vary the impugned College decision (section 92). These are unusual provisions for a statutory appeal to the Court of Appeal, and on reflection they provide pause for thought on whether the very deferential and brief majority decision in this case is consistent with the role contemplated for the Court by the legislature. Justice O’Ferrall makes reference to these provisions at para 51 but he also cites the earlier Court of Appeal decision in Sussman v College of Alberta Psychologists, 2010 ABCA 300 for authority that the reasonableness standard of review should normally apply in these cases despite the legislative provisions that allow for an intrusive review.

I will conclude this comment by simply suggesting that such widely divergent approaches towards applying the reasonableness standard is not terribly helpful for scholars and practitioners in administrative law charged with either having to advise their clients or instruct their students on what it means to apply the reasonableness standard of review.

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Sentencing in an Unusual Domestic Violence Case

Fri, 10/03/2014 - 10:00am

By: Jennifer Koshan

PDF Version: Sentencing in an Unusual Domestic Violence Case

Cases Considered: R v Hernandez, 2014 ABCA 311

The most recent edition of Eugene Meehan’s Supreme Advocacy newsletter lists R v Hernandez, 2014 ABCA 311, as the Court of Appeal case of the week nation-wide. The case involves a Crown sentence appeal in the domestic violence context. Sadly, domestic violence cases are not uncommon, so what is so remarkable about this case?

First, it involves a female perpetrator. As annual Statistics Canada reports on family violence show, domestic violence is a gendered crime. In the most recent Stats Can report, 80% of all domestic complaints made to police in 2011 were made by women, a number which is consistent over time. At the international level, gender-based violence has been recognized as a form of discrimination against women in documents such as General Recommendation No. 19 to the Convention on the Elimination of All Forms of Discrimination Against Women. But in this case, Luisa Amelia Hernandez was the accused, and the complainant was her former common-law husband.

Second, the case involves unusual facts and charges. Hernandez pled guilty to two offences: intent to cause death or bodily harm through the setting of a trap, and assault with a weapon, to wit, an insulin-filled hypodermic syringe. According to the facts laid out by the Court of Appeal, the complainant served Hernandez with an eviction notice following their separation and refused her request to loan her $1000. The next evening, Hernandez entered the complainant’s home and “set a trap” by pouring oil and placing insulin-filled syringes on the floor. When arriving home, the complainant slipped on the oil but did not fall; if he had, “he likely would have been pricked by an uncapped, exposed needle.” Hernandez then confronted the complainant, again asking him for money, and when he refused she stabbed him in the back of the neck with syringe filled with insulin that she, a nurse, had stolen from her employer. Hernandez told the complainant that the syringe contained insulin and Hepatitis C, and while the latter was not true, it took some time for the complainant to determine that. Hernandez also tried to block the complainant from calling the police. He was eventually taken to the hospital, where he was kept overnight for observation as his blood sugar levels were extremely low (at paras 2-3).

The offence of setting a trap with intent to cause bodily harm is set out in section 247(1) of the Criminal Code, RSC 1985, c C-46. It is one of the more uncommon offence provisions in the Code, and has been subject to little judicial commentary. The only decision I was able to find involving a similar offence – that of knowingly permitting a trap to remain in place on one’s property for the purpose of committing another indictable offence under section 247(3) – is R. v. Legge, 2011 CanLII 5561 (NL PC). In this case, the Newfoundland and Labrador Provincial Court considered a scenario where the accused owned property where numerous marijuana plants were growing, and were surrounded by 100 feet of line connected to fish hooks, with barbed fish hooks attached to branches within the perimeter. A hand written sign close to the plants warned people in very colourful language that if they were caught stealing, their throats would be slit. The Court discussed the history of the “trapping” provisions of the Criminal Code, which have been in place since the time of the first Code in 1892. In rather archaic language, the original provision was aimed at “man-traps”, and did not extend to “any gin or trap usually set or placed with the intent of destroying vermin or noxious animals” (Legge at para 15). (I had to look up the definition of “gin”, which is a trap used for catching animals (as well as a beverage made with juniper berries and a card game)).

In Legge, the Court indicated that it had not been able to find any reported decisions interpreting this provision or its successors, and ascertained the elements of the offence through the process of statutory interpretation (at para 20). Under section 247(1), the Crown must prove that a trap was set, that the accused intended to cause death or bodily harm by doing so, and that the nature of the trap made it likely to cause such harm, even though proof of actual harm is not necessary (at para 21). Different elements are in place for section 247(3), and without getting into the details, the Crown proved all of those beyond a reasonable doubt in Legge.

Hernandez pled guilty to setting a trap, so there was no discussion of the elements of the crime, but they are still important for understanding the gravity of the offence. The penalty for contravening section 247(1) is a maximum of 5 years incarceration, or 10 years if bodily harm is actually caused.

Assault with a weapon is certainly a more common offence, though the particular weapon used in this case was unusual, as were the circumstances in which Hernandez obtained it. Under section 267 of the Criminal Code, this offence has a maximum of ten years or 18 months imprisonment, depending on whether the Crown proceeds by indictment or summarily.

The sentencing judge in Hernandez, Judge L.G. Anderson, imposed a sentence of 6 months incarceration on each offence, to be served concurrently. The Crown appealed on the basis that this sentence was demonstrably unfit. The Albert Court of Appeal agreed with the Crown’s submissions, and increased the sentence to 18 months imprisonment concurrent on each count.

In a decision written by Justice Ellen Picard (Justices Barbara Lea Veldhuis and Russell Brown concurring), the Court noted the principle that appellate courts should be deferential to sentencing courts, interfering only where the original sentence was demonstrably unfit. This high burden will be met where the sentencing judge made an error in principle, failed to consider or underemphasized a relevant factor. As required by section 718.1 of the Criminal Code, the sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender (at para 5).

One problem with the original sentence, according to the Court of Appeal, was that Judge Anderson failed to give adequate weight to the gravity of the offence, which can be measured by the risks created by the offender’s conduct and their level of responsibility. In this case, it was not only the contents of the needle that caused potential harm to the complainant, but also the serious risks inherent in receiving a “random, aggressive stab” to the back of the neck, near the spine. As a nurse, the accused would have known these risks. And these risks materialized into harms, given the complainant’s low blood sugar levels and his mental stress associated with fear of having contracted Hepatitis C (at paras 7-9). The sentencing judge also gave insufficient weight to the offender’s level of responsibility, in particular the facts that she planned the offence (with a trap and a backup plan if it failed), and stole from her employer to execute her plan. The Court called Hernandez’s conduct “premeditated, cruel, and vindictive”, with her motive elevating her moral culpability (at para 12). She did not have a criminal record, and was given credit for her guilty plea, though the Court questioned whether she was in fact remorseful (at para 13).

The other difficulty with the original sentence noted by the Court of Appeal was that it failed to give adequate weight to the principles of denunciation and deterrence. Domestic violence offences involve a breach of trust, which make specific and general deterrence and denunciation “paramount considerations” (at para 14). Though the Court of Appeal did not cite it, this principle is codified in section 718.2(a)(ii) of the Criminal Code, which stipulates that “evidence that the offender, in committing the offence, abused the offender’s spouse or common-law partner” is an aggravating factor for sentencing purposes. Although Judge Anderson recognized that a breach of trust is aggravating, he found that this case did not involve “a vulnerable victim trapped in a dependent relationship.” The Court of Appeal indicated that this characterization was an error based on stereotyping, which improperly diminished the responsibility of the accused (at para 15). The sentencing judge also failed to account for the breach of trust Hernandez committed in using her professional skills and connections to injure her former partner, and placed too much weight on her prospects for rehabilitation.

These difficulties collectively resulted in a sentence that was demonstrably unfit, and as noted, the term of incarceration was increased to 18 months, with credit for time served.

Interestingly, in its list of leave to appeal decisions rendered this week, Supreme Advocacy notes another spousal assault case involving a female accused. In R. v. Kim, 2013 ONSC 4333, the accused’s conviction for assaulting her husband and her 12-month conditional discharge were upheld by the Ontario Supreme Court, sitting as a summary conviction appeal court.  Her applications for leave to appeal to the Court of Appeal and Supreme Court of Canada were dismissed. Two cases do not a trend make, and as argued here, the Hernandez case in particular is quite unusual – which is likely why it was Meehan’s appellate case of the week.

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A ‘Victimless’ Crime Just Lost its Perpetrators

Fri, 09/26/2014 - 10:00am

By: Bryce Tingle

PDF Version: A ‘Victimless’ Crime Just Lost its Perpetrators

Case commented on: Walton v. Alberta (Securities Commission), 2014 ABCA 273

In Walton v. Alberta (Securities Commission), 2014 ABCA 273 (the “Eveready” decision), the Alberta Court of Appeal has just decided the most important insider trading case in recent memory. It may also be the last insider trading case for a long time.

Here is how insider trading happens: a business person in possession of inside information is chatting with friends or family members. Someone asks him how his company is doing and he replies along the lines that, “I can’t really tell you what is going on, but it might be a really good idea to buy some stock in the next month or so.” Maybe he isn’t that discrete. Maybe he actually says, on the golf course or over lunch, “listen, there is a pretty good chance we’re going to be acquired in the next month or two, you might think about grabbing some stock.”

Why does he do this? Well, he might feel responsible: he can help a less well-off family member without giving them something that feels like charity. But it could also be showing-off, doing a favour, of just making himself feel big. We are a species that likes being liked, that likes having people feel grateful to us, and disclosing inside information advances these objects.

It doesn’t hurt that the victims in insider trading are difficult to see. The seller’s decision was freely made; the trade presumably was in its interests. Perhaps the seller decided to sell because she needed the money right away. In any event, the counterparties to an insider trade usually remain forever anonymous. Some corporate law scholars debate whether insider trading should even be against the law, given that it sends valuable pricing signals to the market.

For all of these reasons there is a considerable amount of insider trading in Canada’s markets. One recent study that looked at 1,859 merger and acquisition (M&A) deals in Canada and the U.S. found evidence that roughly 25% of all transactions were accompanied by abnormal trading in the options market during the run-up to the deal announcement. The odds of the trading abnormalities they identified arising by chance were “three in a trillion.” Another study found aberrant trading patterns in the shares of target companies in 41% of deals in the U.S. and 63% in Canada. (America’s superior performance may be due to the fact that America has the strictest insider trading laws in the world, affords a private cause of action against individuals that engage in the practice and seems to have higher rates of prosecutorial success. It also doesn’t hurt that, unlike Canada, American insiders regularly go to jail for increasingly long periods of time.)

The impact of insider trading is material. In testimony to Congress one American scholar noted that, “beginning about 12 days before takeovers or a merger, roughly 30 to 50 percent of the premium that is going to be ultimately paid… is already reflected in the stock’s price…” A 2009 study found that only 49% of leaked deals complete, compared with 72% of non-leaked transactions. Leaked deals also took 70% longer to complete.

Most of us feel that insider trading should be against the law, if only because it doesn’t seem fair for someone to be trading with a massive informational advantage. As well, the best evidence is that vigorous enforcement of insider trading laws significantly reduces the cost of equity for all firms in a market. Unfortunately, insider-trading cases are notoriously difficult to prosecute. Unless one of the parties confesses and turns evidence against the others, or the insider trading is sufficiently organized and consistent that law enforcement authorities can mount a long-term investigation with wiretaps and microphones, there is never any direct evidence.

The instances of alleged insider trading that reach triers of fact are almost always, therefore, decided on the basis of circumstantial evidence: a suspicious trade was made, there is some connection between the buyer of the stock and an insider, there is some reason for the insider to have disclosed the information to the person making the trade. The significance of the Alberta Court of Appeal’s decision in Eveready is that it sets the standards for making this circumstantial case so high that it is difficult to imagine it being met.

The facts in Eveready are typical of insider trading cases. An insider, Holtby, is accused of tipping a wide circle of associates during the run-up to an acquisition of his company, Eveready Inc. His investment advisor admitted to the Commission that he had been tipped and entered into a settlement agreement. Everyone else issued denials and provided alternative explanations for their unusual purchases of Eveready shares. Nearly all of them were found guilty by the Alberta Securities Commission, but let off by the Court of Appeal.

How they got off:

1. A statute that presents challenges – The “insider trading” offense under the Securities Act, RSA 2000, c S-4 (the “Act”) provides in s. 147(2) that someone in a “special relationship” to an issuer commits an offense if she trades. This “special relationship” includes anyone who has learned material, non-public information from someone they know to be an insider (even if this information is communicated second-hand). There can thus be a chain of people in a special relationship connecting an accused to the original insider, like a felonious version of the children’s game “telephone”.

Of course, if no material fact is disclosed, or if the accused didn’t know the information came from an insider, there is no crime. An insider can be prosecuted for “encouraging” others to trade in securities (s. 147(3.1)), but the recipient of this encouragement does not offend the Act if she trades. Thus, the enforcement staff of the Securities Commission must, from circumstantial evidence, prove the trade followed the communication of information by an insider and also prove that the information contained material non-disclosed facts and was not just a vague encouragement to purchase stock. This is difficult to do without wiretaps or email.

The best circumstantial evidence a prosecutor has – the timing of the conversation relative to the trade – is thus nearly valueless. As the Court of Appeal says (at para 29), “even if a certain trading pattern might be consistent with ‘tipping’, it might equally be consistent with merely having been ‘encouraged’.”

2. A high standard of proof – The Court in Eveready articulates the appropriate standard of proof for these cases as being very high: “given the serious consequences of a finding of culpability, clear and cogent evidence should be expected before any particular inference is drawn” (at para 29). In practice, this obviously makes any case based on circumstantial evidence very difficult prove. Inferring “knowledge of a material fact, merely because of opportunity and general motive, is weak” (at para 33).

This high standard of proof is displayed in a variety of ways throughout the decision. One accused is a “bare acquaintance” of Holtby; the Court doesn’t believe Holtby would therefore bother to tip him (at para 69). There was an atmosphere of “cautious optimism” about the stock at the time an accused made his trades – that is sufficient explanation for them (at para 72). Holtby’s brother made a big investment in Eveready shares ahead of the acquisition, but he had recently inherited some money and why wouldn’t he have invested in his brother’s company? His investment could have been a “fortuitous coincidence” (at para 101). His brother’s close friend also made an unprecedented acquisition of Eveready stock, but there is no evidence he received inside information or knew Holtby was an insider of Eveready (at para 97). Holtby’s accountants made a series of equally fortuitous trades ahead of the announcement, but their trades didn’t happen immediately after the relevant conversations with Holtby (at para 135), and they had other explanations to do with tax planning (at para 138).

None of this is to say the Court of Appeal is wrong either in its articulation of the “clear and cogent” standard of proof or its application to the facts in Eveready; it is to say that it is better to be a fortuitous trader than to be employed in prosecuting them.

3. A narrow view of the purpose of penalties – All the evidence cited earlier in this post suggests that a significant amount of insider trading occurs in Canada. A casual review of the enforcement records of the securities commissions suggests that little of it is discovered and prosecuted. Worse, Eveready shows that successfully prosecuting it is extremely challenging.

In these circumstances securities commissions have only one tried and tested tool: large penalties. The lower the chances of something occurring, the greater the penalties must be to act as a deterrent. (Lotteries are predicated on this kind of logic: people will buy even very remote chances to win a prize, provided the prize is very large.) The Court in Eveready found the Securities Commission’s awards against Holtby and the others too high: “The resulting penalty [$1,750,000] is very severe and one can argue that it extends well beyond what the public interest might require” (at para 160). The matter of sanctions was remanded back to the Commission for reconsideration – though with the strong implied suggestion they be reduced significantly.

What are the take-away lessons of Eveready? First, the Securities Commission should focus its enforcement activities somewhere else. Unless someone admits wrongdoing the chances of success are too low to justify much expenditure on insider trading cases. Second, the best advice for someone accused of wrongdoing is to deny it. Third, if we are serious about keeping insider trading a crime, we will have to rethink our enforcement practices.

Why focus on enforcement practices rather than our legislative provisions? The United States is the most effective jurisdiction in the world at prosecuting insider trading. When scaled for the relative size of our markets, the U.S. prosecutes 20 times the number of trading violations that we do. They also impose penalties 17 times greater than ours. But their insider laws, which have an element of scienter mostly absent from ours, set a higher standard for prosecutors. The difference in prosecutorial success seems most likely, therefore, to be a function of the additional tools afforded prosecutors of white-collar crime in America. These would need to be the subject of another post, but there is a reason they haven’t evolved in Canada.

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Tweeter or Twitter? Teaching a Federation Approved Legal Ethics Course

Wed, 09/24/2014 - 10:00am

By: Alice Woolley

PDF Version: Tweeter or Twitter? Teaching a Federation Approved Legal Ethics Course

This summer I again provided the Federation of Law Societies with the syllabus for my legal ethics course. The Federation requested the syllabus for, presumably, the purpose of verifying that the University of Calgary’s course complies with the Ethics and Professionalism Competency as set out in Table B of the Federation’s Implementation Report for the Approved Law Degree. As it did the past two summers fulfilling the Federation’s request left me feeling both uneasy and uncertain.

Uncertain because I am not sure what the Federation wants to do with the syllabus. Are they simply ascertaining that it is a stand-alone course on professional responsibility? Is this just something to let them demonstrate that they really are reviewing those programs they approve? Or are they going to review it more substantively to see if it addresses the broad variety of topics set out in Table B (noted below and here)? Will they tell me if they do not think I am teaching the right topics? Will they go beyond the syllabus to see what I am actually teaching in various areas? And – ultimately – is the status of our degree as approved at stake as a result of what my syllabus contains? How much freedom do I still have?

My guess is that, right now, the Federation’s review is more of the former kind – simply doing enough to ensure that the approval process has some substance to it. But in my experience (which includes a few years working in regulatory law) regulatory powers tend to get exercised sooner or later. Further, what is the legitimacy in the approval process if it doesn’t have some rigour to it? If the Federation is approving our degree as meeting their competencies, and it has stated that that approval requires a review of the content of a stand-alone ethics course, then does an approval process which does not provide that review mean anything?

And uneasy for a variety of reasons, not least of which is that I can say with confidence that there is no way that my syllabus conforms with Table B. That competency requires that an applicant have “demonstrated an awareness and understanding of the ethical dimensions of the practice of law in Canada and an ability to identify and address ethical dilemmas in a legal context.” The Table further specifies that an applicant must know 1) the law governing lawyers in relation to when ethical issues arise; fiduciary duties, conflicts of interest, administration of justice, confidentiality and privilege, professionalism and the administration of justice; 2) the nature and scope of the lawyer’s duties; 3) the range of responses to unethical conduct and professional incompetence; 4) different models concerning the role of lawyers. They must additionally have the skills for identifying and making “reasoned decisions about ethical problems” and to think critically about ethical issues.

I do cover many of these topics, but I certainly don’t cover all of them. I mention fiduciary duties in passing. While I think I could argue that I cover the administration of justice, I do so more indirectly than directly. Access to justice is always listed in my syllabus, I also always run out of time before I get to it. Sound pedagogy favours depth over breadth; it is better for students to really understand one concept than to have minimal understanding of many. If anything, my syllabus already contains too much material to engage with students in the right way, so its coverage of the Table B topics is likely to go down, not up.

Further, even with respect to the topics that my syllabus does cover, there is no way that a student who has completed my course actually has the knowledge and skills the competency contemplates. How could they? It is a 36 hour course. Coming into it students know little about the area. While I am increasingly incorporating practice problems and analysis into the course, I do not think that any purely academic setting gives students the skills necessary to “identify and make informed and reasoned decisions about ethical problems in practice”. And those students who pass the course with a C or C- can hardly be said to have demonstrated a really sound knowledge of the area. They deserve their passing grades, but I wouldn’t overstate what they know. I hope that my students are better off after my course than they were before it, but that’s as far as I’d go.

Most importantly, while I recognize the Federation’s legitimate concern with the education we provide to law society applicants, having that concern extend to reviewing the content and delivery of specific courses seems fundamentally wrong. Law schools and law school classes, including required courses in legal ethics and professional responsibility, are places for intellectual inquiry and critical thought. The ability to explore new ideas, to criticize existing practices, to question accepted wisdom is at the heart of what universities provide. While I would be unlikely to do so, in my view a professor could cut conflicts of interest from her curriculum while still providing an outstanding course on legal ethics. The resources for learning about conflicts are easily accessible, and are almost certain to be well covered in the bar course and examination, allowing other more foundational questions about the role of lawyers in society to be more richly explored. That may not be my course, but I think it could be a terrific and important one.

If the university legal ethics course loses the freedom of intellectual inquiry, if all it is is a delivery service for the Federation, then in what way is that a university course? And in what way is the professor who teaches it still a professor enjoying the freedom of academic inquiry and practice?

I don’t dismiss the weight of the standard response – if we want our graduates to enjoy the privilege of bar admission, then we need to give them what the Federation thinks they ought to have. It is the privileges and qualifications law societies offer that ensure applicants want to attend our school. In my view the Federation and law societies do have a legitimate interest in the education we provide.

But at the same time, if the Federation wants its applicants to have a university education, an academic course in legal ethics, then they also need to recognize that universities have certain essential characteristics without which they cease to provide the legitimacy and intellectual authority that the law societies want their lawyers to enjoy by virtue of their LLB or JD degrees. Dictation of the content of an ethics course eliminates those characteristics; the education in that course may be something, but it is not university education. And the person who provides it is a source of information, but she is not a professor.

This post originally appeared on Slaw.

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Learnings from the Demographic Data on Litigants Without Counsel

Mon, 09/22/2014 - 10:00am

By: John-Paul Boyd

PDF Version: Learnings from the Demographic Data on Litigants Without Counsel

The demographic information on litigants without counsel available to date reveals a number of interesting patterns: most litigants appear to be 40 years old and older, and people in that age range are involved in litigation at rates far higher than those in younger age groups; although most litigants have lower incomes, a significant number have incomes around or exceeding the average income; and, litigants’ often high incomes match their educational achievements, which often exceed the average. All of this information strikes me as potentially useful when designing services and reforming processes for litigants without counsel.

In her 2013 report Identifying and Meeting the Needs of Self-represented Litigants, Julie Macfarlane obtained demographic data from 230 litigants without counsel in Alberta, British Columbia and Ontario. The Nova Scotia Department of Justice surveyed 58 litigants without counsel for its 2004 report Self-represented Litigants in Nova Scotia. For their 2005 report BC Supreme Court Self-help Information Centre Initial Evaluation Report, John Malcolmson and Gayla Reid surveyed about three hundred of the centre’s users.

Age 

In Alberta, British Columbia and Ontario, litigants without counsel belong disproportionately to the 40 plus age group. In Nova Scotia, the 35 to 44 year old age group is disproportionately represented among litigants without counsel:

  • In the Macfarlane report, 45% of the litigants surveyed were 50 and older. 32% were age 40 to 50 and 14% were age 30 to 40.
  • In the Malcolmson and Reid report, 27% were 50 and older. 41% were age 40 to 49 and 25% were age 30 to 39.
  • In the Nova Scotia report, 13% were age 55 and older. 19% were age 45 to 54 and 45% were age 35 to 44.

Here’s a chart comparing the percentage of litigants without counsel in each age group with Statistics Canada census data from 2006 and 2011 on the percentage of the general population in each age group.

(I could only find the 2006 data in mid-decade age cohorts, and it’s a bit difficult to compare the findings in the Malcolmson and Reid report with the census data as a result).

Income

Although the lion’s share of litigants without counsel have incomes that are lower than average, the studies to date show that a significant number have incomes that are toward the middle and high ranges:

  • In the Macfarlane report, 40% of the litigants surveyed earned less than $30,000 per year. 17% earned $30,000 to $50,000, and a whopping 31% earned $50,000 or more.
  • In the Malcolmson and Reid report, 61% earned $24,000 or less per year. 22% earned between $24,000 and $36,000, and 16.7% earned in $36,000 or more.
  • In the Nova Scotia report, 60% earned $29,999 or less per year. 28% earned $30,000 to $59,999 and 10% were had incomes in excess of $60,000.
  • In An Evaluation of Alberta’s Parenting After Separation Seminars, a 1999 report by the Canadian Research Institute for Law and the Family, 1,180 participants were surveyed. 40% earned less than $33,754 per year in 2014 dollars. 31% earned between $33,755 and $60,757, and 29% earned more than $60,758 per year.

Here’s a chart, from Statistics Canada’s Table 202-0407, Income of Individuals by Sex, Age Group and Income Source, showing the average income by age group in 2011 dollars for: Alberta, British Columbia and Ontario combined; Alberta; British Columbia; and Nova Scotia.

(Note that the average incomes will likely vary between urban, rural and remote communities.)

Educational attainment

The reports also suggest that litigants without counsel tend to have taken more schooling than most Canadians:

  • In the Macfarlane report, 73% of the litigants surveyed earned had attended college or university. 16% had completed or partially completed high school.
  • In the Malcolmson and Reid report, 65% had attended college or university. 35% had completed or partially completed high school.
  • In the Nova Scotia report, 71% had attended college or university. 29% had completed or partially completed high school.
  • In the Canadian Research Institute study, 47% had attended college or university.  52% had completed or partially completed high school.
  • A survey of a small number of litigants for the 2009 Calgary Judicial District report of the Alberta Legal Services Mapping Project found that 50% had attended college or university and that 30% had completed or partially completed high school.

According to Statistics Canada’s 2011 Education in Canada: Attainment, Field of Study and Location of Study report, 64% of Canadians have a post-secondary qualification of some nature, 23% have graduated high school and 13% have neither. Here’s a chart from the 2011 census showing the educational attainments of people age 25 and over for: Alberta; British Columbia; Ontario; and Nova Scotia.

(Note that this data shows only completed diplomas, certificates and degrees, and thus excludes people who took a year or two of post-secondary education before leaving school. Note also that the average level of educational attainment will likely vary between urban, rural and remote communities.)

A few preliminary conclusions and a few tentative suggestions

The reports’ findings on age are interesting. First, according to the Statistics Canada data, Canadians’ peak earning years are between 45 and 55. This is probably helpful for people involved in a court proceeding, as the bubble of litigants noted by the Macfarlane and Malcolmson and Reid reports falls right in the midst of this age group. However, given that the reports also show that the significant majority of litigants without counsel are unrepresented because they can’t afford to hire a lawyer, it seems that these particular litigants cannot afford to retain counsel even at their peak earning years.

Second, the data on age suggests that some adjustments may be required on the part of public legal education groups, who may want to retool their publications to accommodate the declining visual acuity of their prime markets in their web and print offering. Further, as the baby boomers work their way through Statistics Canada’s age groups, other issues are foreseeable such as an increased need for public health services relating to competency, the redesign of courthouses to accommodate increasing numbers of people with lower levels of mobility, and an increase in the number of elderly Canadians living in poverty as divorces split fixed incomes. The nice people at CARP will tell you that the impact of divorce on seniors can be disastrous, particularly for women.

The reports’ findings on income also suggest the need to increase the income threshold for the provision of legal aid. To recap, 40% of the litigants in the Macfarlane report earned less than $30,000 per year, 61% in the Malcolmson and Reid report earned less than $24,000 per year, and 60% in the Nova Scotia report earned less than $29,999 per year. However, according to Canadian Lawyer magazine’s 2014 survey of legal fees:

  • the average contested divorce costs $10,406, or as much as $39,522;
  • the average two-day trial costs $12,769, or as much as $27,591; and,
  • the average five-day trial costs $26,591, or as much as $59,700.

Clearly lawyers are unaffordable for the majority of litigants without counsel. Nevertheless, the data also suggests that litigants can afford at least some services, and that litigants with mid to high incomes can afford even more. It seems to me that this data argues powerfully for both increasing eligibility for legal aid, so that fewer litigants are left without counsel, and lawyers to consider the unbundling of legal services, providing services at a flat rate or on a barter basis, and exploring other creative approaches to paid legal services than the billable hour. I’ve written about the adverse effect of the billable hour model of legal services elsewhere.

Further, given the vicious spiral that self-representation can lead to, which I’ve also written about previously, one wonders whether increasing the legal aid limits to provide more people with lawyers would in fact increase the rate of settlement, reduce the number of trials and result in a net savings to the justice system as whole. Just a thought.

Finally, the data on educational attainment makes me wonder what has happened to all of the people with high school diplomas or less. The national Action Committee on Access to Justice in Civil and Family Matters notes in its final report that only about 6.5% of legal problems ever make it to court, but it is unlikely in the extreme that so many of the people with high school diplomas or less are bundled into the 93.5% who manage to resolve their legal issues outside of court, especially when we know that for people with low incomes, legal issues tend not come one at a time but cluster and multiply into other areas of the law. Are these people simply never entering the formal justice system and abandoning their rights and entitlements? It seems to me that the providers of public legal assistance services need to examine their client population and ask how to better engage people with lower levels of educational attainment.

This post originally appeared on Access to Justice in Canada.

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Federal Court of Appeal Reviews CEAA “Justification” Determination for Lower Churchill Falls

Fri, 09/19/2014 - 7:48am

By: Martin Olszynski

Case commented on: Council of the Innu of Ekuanitshit v. Canada (Attorney General), 2014 FCA 189 (CanLII)

At least three times in the course of the past year, an environmental assessment (EA) panel convened under the Canadian Environmental Assessment Act 2012, SC 2012, c 19 (CEAA, 2012) has concluded that a project is likely to result in significant adverse environmental effects: Shell’s Jackpine Mine Expansion, Taseko’s New Prosperity Mine, and Enbridge’s Northern Gateway Pipeline.  In the case of both Jackpine and Northern Gateway, the federal Cabinet determined that these effects were “justified in the circumstances,” but not so for New Prosperity. In none of these instances, however, did the relevant “Decision Statement” pursuant to section 54 of CEAA, 2012 contain any explanation or reasons for Cabinet’s decision. The Federal Court of Appeal’s recent decision in Council of the Innu suggests that this approach is wrong. This litigation involved the Lower Churchill Hydroelectric Project proposed by Nalcor in Newfoundland. This project was reviewed under the previous CEAA regime but the relevant provisions are virtually unchanged. Like the three EAs referred to above, the panel concluded that the project was likely to result in significant adverse environmental effects. Unlike the three projects referred to above, however, the government did provide a detailed explanation for its determination that the significant adverse environmental effects were justified in the circumstances. The Council challenged this determination (the Council also challenged the sufficiency of Aboriginal consultation; this post focuses only on the justification issue). 

The Council’s primary argument was that the project as proposed and assessed involved two plants, a larger Gull Island plant and a smaller Muskrat Falls plant, but that at the time of Cabinet’s decision-making a construction date for the Gull Island plant had yet to be confirmed, such that it was unreasonable for Cabinet to rely on the benefits of both plants when making its decision about justification. The Federal Court of Appeal ultimately disagreed (see para 58), but not without first setting out a framework for reviewing a “justified in the circumstances” determination. Beginning with the standard of review, the Court endorsed the trial judge’s approach:

[40] …the Court will only intervene with the [Governor in Council’s] and Responsible Ministers’ decisions under subsections 37(1.1) and 37(1) if it finds that: 1) the CEAA statutory process was not properly followed before the section 37 decisions were made; 2) the GIC or Responsible Ministers’ decisions were taken without regard for the purpose of the CEAA; or 3) the GIC or Responsible Ministers’ decisions had no reasonable basis in fact; which is tantamount to an absence of good faith.

The vast majority of CEAA litigation has focused on the first criterion, with applicants alleging various deficiencies with the EA process. In fact, to the best of my knowledge the Council of Innu decision is the first to challenge the legality of the GiC’s decision directly. And while the parameters of review here (the second and third criteria above) are deferential to be sure, it is equally clear that they require something by way of explanation.  Otherwise, it is simply impossible to carry out what the Court of Appeal stated was its duty (at para 44): “a reviewing court must ensure that the exercise of power delegated by Parliament remains within the bounds established by the statutory scheme” (essentially the same approach I argued for here). Turning to the GiC order with respect to Lower Churchill, the Court noted (at para 53) that Cabinet “determined, after consulting the Joint Review Panel Report as well as several government studies, that [translation] ‘the significant energy, economic, socio-economic and environmental benefits outweigh the negative environmental impacts of the Project identified in the Panel’s Report.’” The Court then addressed the Council’s argument with respect to the Gull Island Plant in a passage that suggests that, notwithstanding its subjective and policy-laden nature, the justification determination must be able to withstand at least some scrutiny:

[54] I share the appellant’s view that the abandonment of the Gull Island plant, if this were proven to be true, would raise serious questions about the validity of the environmental assessment and the impugned decisions. The Project authorized by the Governor in Council and responsible authorities following the balancing exercise imposed by section 37 of the CEAA included the Muskrat Falls plant as well as the Gull Island plant… If Nalcor were to forego construction of the larger of the two plants assessed (Gull Island), or if there was an unreasonable delay in its construction, the balancing exercise carried out for one of the Report’s findings would be necessarily compromised.

As noted above, the Court of Appeal ultimately concluded that the Council failed to prove that the Gull Island plant had been abandoned or that it had been unreasonably delayed (at para 57), but the above framework and its application to this case leave little doubt that the federal government’s current practice with respect to justification is insufficient.

Nor would it seem sufficient for the government to simply rely on the justification occasionally provided by panels as in the case of Jackpine, which was a joint review panel with the Alberta Energy Regulator and which concluded that that project was in the public interest, or Northern Gateway. As a starting point and consistent with the Federal Court’s recent decision in Greenpeace Canada v Canada (Attorney General), 2014 FC 463 (CanLII), such panels lack democratic legitimacy.  Another reason, and something that I have noted before, is that there often exists a yawning gap between panel recommendations and the conditions that the government ultimately imposes on proponents (see e.g. the recommendations with respect to a Traditional Land Use (TLU) management framework under the Lower Athabasca Regional Plan in the context of Shell’s Jackpine project). Practically, this means that there is often a real difference between the “balance” reached by panels and that struck by the government.

Judicial Dissent over Priorities in Civil Justice: Queue-Jumping and the Commercial List

Tue, 09/16/2014 - 10:00am

By: Sarah Burton

PDF Version: Judicial Dissent over Priorities in Civil Justice: Queue-Jumping and the Commercial List

Cases Considered: Lustre Studio Inc. v West Edmonton Mall Property Inc, 2014 ABQB 525

In Lustre Studio Inc. v West Edmonton Mall Property Inc, 2014 ABQB 525, the Honourable Mr. Justice B.R. Burrows provided a candid window into judicial frustrations with access to justice in Alberta.  In pointed words, he expressed dissatisfaction with the courts’ willingness to prioritize and accommodate commercial cases through mechanisms unavailable in family and non-commercial matters. While Justice Burrows clearly criticizes this preferential treatment, he also expresses resignation in quelling the tide. This decision implicitly questions the priorities of our justice system and the preference given to commercial matters over non-commercial cases, even when they urgently require the court’s attention. Practically speaking, Justice Burrows may be correct in stating that expanded accommodations for commercial cases are here to stay. If so, this innovative project should be harnessed to create equally effective mechanisms for family and other non-commercial cases.

Facts

On August 22, 2014, Justice Burrows was completing a week on Edmonton Chambers Duty (sitting in Family, Regular and Special Chambers). Many of the matters he heard in Family and Regular Chambers were complicated and required a Special Chambers hearing. Unsurprisingly, however, there was a significant queue for Special Chambers dates stretching until the winter and/or spring of 2015.

That same day, Justice Burrows received a request from counsel for Lustre Studio Inc. (“Lustre”) to have an interim injunction application heard as part of the Commercial/Duty Justice Initiative at a full day hearing on September 12, 2014. The injunction revolved around a commercial lease dispute between Lustre and its landlord West Edmonton Mall Property Inc. (“West Ed”), wherein West Ed invoked a lease provision requiring Lustre to relocate by January 16, 2015, which Lustre sought to avoid.

Lustre’s effort to have its case heard in September 2014 (rather than early 2015) is permitted by the Commercial/Duty Justice Initiative (the “Commercial List”). The Commercial List is a 2010 initiative of the Court of Queen’s Bench (Notice to the Profession #2010-08) that creates a separate queue for commercial cases to access specialized judges on an expedited basis. Practically speaking, if a case falls within the Commercial List mandate, it can be heard by a judge from the Commercial Practice Group within weeks, not months. While it began as a Calgary/Edmonton project to accommodate bankruptcy, insolvency and related matters, the Commercial List was expanded in a Notice to the Profession issued by the Chief Justice and Associate Chief Justice of the ABQB (NP#2014-04) in April 2014 to include non-bankruptcy commercial matters such as:

  • Mareva Injunctions;
  • Anton Pillar Orders;
  • Third-Party Production (Norwich) Orders;
  • Remedies under Business Corporations or Securities legislation; and
  • Other matters permitted by a Commercial Duty Judge sitting in Commercial Appearance Court or a Co-Chair of the Commercial Practice Group or her designate (at paras 5, 6).

Counsel for Lustre relied on the last of these headings.  In its letter to Justice Burrows, Lustre did not allege that its matter was urgent, as urgency is not a requirement of the expanded Commercial List initiative (at para 8).

Reasons

Justice Burrows granted Lustre’s request (at para 12). The expanded Commercial List initiative did not provide guidance for his exercise of discretion. Since it fit within the mandate and nothing else was scheduled on that day, he had no reason to refuse the request.

Justice Burrows explained, however, that he was granting the request despite his fundamental disagreement with the expanded Commercial List initiative. While it is uncharacteristic for a judge to highlight his disagreement with a law, Justice Burrows was compelled to make this comment because the law in question was a judicial policy implemented by the Alberta judiciary. As such, he wished to make his personal disagreement with this law crystal clear. In his words:

[15] … My oath requires me to apply the law even when I am of the view that the law is not what it should be. This is a situation where I am obliged to apply “law” with which I fundamentally disagree.

[16] Ordinarily, it would not be relevant or even appropriate for a judge to point out where he does not agree with the law he is obliged to apply.  In my view that is not the case where, as here, the judge is a member of the policy setting body which adopted the law in question and might otherwise be thought to have agreed with the law as adopted.

Justice Burrows’ objection was not based in opposition to Lustre’s argument, injunction applications, lease disputes, or commercial matters generally. Rather, he was motivated by the inequity of dedicating scarce judicial resources to prioritize commercial matters over family and non-commercial civil actions. The Commercial List plainly prioritizes non-urgent commercial cases over urgent family and non-commercial civil matters. Thus, while bound to apply the law, Justice Burrows expressed his palpable distaste for it. He concluded:

[17] The Court clearly requires a triage system to deal with matters which have an element of urgency.  In this Court there is no formal triage system.  A family and non-commercial civil litigant who feels their matter requires priority judicial attention can do little more than hope that a judge will agree and make some ad hoc arrangement for the early hearing of the application.  As noted, pursuant to the Notice to the Profession, commercial business matters are simply given automatic priority assuming there is free time on the schedule of the commercial duty judge.  In Edmonton at least, such free time occurs frequently.

[18] I have on several occasions made my view on this subject known to my colleagues.  I have been unable to prevent the adoption of this Notice to the Profession.  I record here that, though I am bound to apply it, I believe it institutes an extremely ill-advised policy.

Commentary

The Priority of Commercial List

Commercial litigators in Calgary and Edmonton often praise the efficiency, specialization, and practicality of the Commercial List. As a former commercial litigator, I have some familiarity with the Commercial List where matters are often undeniably urgent and the stakes are high. The Commercial List itself is not inherently bad, nor does it impede access to justice. It is an intelligent response to a problem facing commercial litigants who need to access the courts on time sensitive matters. The Commercial List has undeniably advanced access to justice for many commercial parties who (for example) face immediate and irreparable harm from a creditor-induced bankruptcy application, or a permanent injunction that could destroy a business and put many people out of work.

The problem with the Commercial List arises from its inequity in relation to non-commercial cases. While certain commercial litigants are able to access a formal queue-jumping system, as Justice Burrows stated “[a] family and non-commercial civil litigant who feels their matter requires priority judicial attention can do little more than hope that a judge will agree and make some ad hoc arrangement for the early hearing of the application” (at para 17).

As matters stand, the expanded Commercial List effectively creates a two-tiered system whereby non-urgent commercial matters are blatantly prioritized over urgent family and non-commercial civil cases. This distinction is unfounded and unacceptable.

I would not, however, suggest that we abolish the Commercial List to rebalance the current inequity. It is an example of a positive and practically based solution to the problem of accessing courts.  Therefore, instead of attacking the program, we ought to use it as an example. The same innovative thinking used to develop the Commercial List (and the resources needed to implement it) would be well-utilized developing a similar program for family and non-commercial litigants in urgent cases. This would rebalance the current inequity while promoting innovative solutions to make courts more accessible.

The Emergence of a Trend?

On a concluding note, the timing of Justice Burrows’ comments also merits discussion. Earlier this month, I blogged on R v Smart, 2014 ABPC 175, where the Honourable Assistant Chief Judge Anderson stayed proceedings against three accused persons who could not afford counsel, but did not qualify for Legal Aid. Like Lustre, Smart contained considerable commentary on the barriers to justice faced by parties who fail to fit within a particular initiative (in that case, Legal Aid). While couched in different terms, both decisions expressed frustration with the justice system’s failure to adequately serve the people who use it.

Strikingly, despite their stated views on increasing access to justice, in both cases the adjudicators ultimately sacrificed civil and family law matters in favor of cases with a greater priority. In Lustre, Justice Burrows was ultimately required to accommodate the applicant’s request to the detriment of non-commercial civil and family law cases. In Smart, Judge Anderson leveraged the constitutional priority given to criminal cases to demand that the accused persons be appointed Legal Aid counsel. As discussed in my earlier blog, this decision will likely come at the expense of civil and family litigants seeking Legal Aid.

Lustre and Smart were released approximately two weeks apart. It is likely premature to label two cases a “trend”, but they are consistent with recent reports on access to civil justice, and this recent judicial commentary does provide an invaluable perspective on how barriers to justice are directly encountered and perceived in the courtroom. These decisions also highlight the fact that barriers to justice are often systemic. In their decisions, Judge Anderson and Justice Burrows both clearly wanted to increase access to justice. Their decisions, however, were ultimately compelled by the application of a triage system that prioritizes some cases over others. Unfortunately, when there aren’t enough resources to go around, family and non-commercial civil matters are continually left in the cold. Clearly, this inequity cannot be remedied on a case-by-case basis in the courtroom. Policies and (before that) perspectives on the importance of civil justice must change if we want to level the playing field.

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Federal Court to Syncrude: Climate Change is a Real, Measured Evil, Whose Harm has been Well Documented

Mon, 09/15/2014 - 9:29am

By: Martin Olszynski

Case commented on: Syncrude Canada Ltd. v Attorney General of Canada, 2014 FC 776

“The fall term in the 1997-1998 academic year,” wrote Professor David Beatty, “was a constitutional law teacher’s dream.” Professor Beatty was referring to the release of two Supreme Court of Canada decisions that touched some of the “most politically charged issues” of the day and which “together raised almost every important issue in constitutional law” (one of which was R v. Hydro Quebec, [1997] 3 SCR 213, 1997 CanLII 318 (SCC), central to the Syncrude decision being commented on here; see David Beatty, “Canadian Constitutional Law in a Nutshell” (1998) 36(3) Alta L Rev 605). As it turns out, the summer of 2014 has shaped up to be an environmental law teacher’s dream.  In May, the Federal Court released its decision in Greenpeace Canada v Canada (Attorney General), 2014 FC 463 (CanLII), a decision that I have suggested represents a major development in Canadian environmental assessment law. Then in August, the Federal Court handed down its judgment in Syncrude, which my colleague Professor Nigel Bankes has observed is the “first case in which a party has challenged the constitutional validity of any federal greenhouse gas regulations.”  This post focuses on that very issue; Professor Shaun Fluker has also written a post on the decision, focusing on the administrative law issues.

The Constitutional Question

Subsection 5(2) of the Renewable Fuel Regulations, SOR/2010/189 (RFR), being regulations made pursuant to subsection 140(1) of the Canadian Environmental Protection Act, 1999, SC 1999 c 33 (CEPA), requires that diesel fuel produced, imported or sold in Canada must contain renewable fuel of at least 2% by volume.  Compliance can be achieved by either blending diesel with biodiesel, which is made from either biological waste matter or feed stocks, or by purchasing compliance units from those who have more than 2% renewable fuel in their diesel fuel.

Canada argued that subsection 5(2) “is in pith and substance a legitimate use of the federal criminal law power to suppress the evil of air pollution by mandating a 2% renewable fuel content in diesel fuel produced” (at para 12). For its part, Syncrude argued that the provision’s “dominant purpose and effect…is to regulate non-renewable resources and promote the economic benefits of protecting the environment,” and in particular “to create a demand for biofuels in the Canadian market place,” such that any prohibition of harm is merely ancillary (ibid).

Justice Zinn first set out the applicable framework as recently set out in Québec (Procureur Général) v Canada Procureur (Procureur Général), 2010 SCC 61 (CanLII) [Re: Assisted Human Reproduction]. The first step is to determine the dominant matter – the pith and substance – of the impugned provisions, a contextual analysis that requires asking “[w]hat in fact does the law do and why?” (at para 16, citing para 22 of Re: Assisted Human Reproduction). The second step is to determine which of the heads of power such matter falls under.

Justice Zinn then began by considering the purpose of the RFR and, because it is subordinate legislation, the CEPA as well. Referring to the preamble of both, Justice Zinn observed that CEPA is designed “to address environmental degradation, protect the environment and human health, and place the cost and responsibility of pollution on the polluter”, while the RFR were considered by the Governor in Council (GiC) as contributing to “the prevention of, or reduction in, air pollution…” (at para 17).  Following the teaching in Bristol-Myers Squibb Co v Canada (Attorney General), 2005 SCC 26 (CanLII), Justice Zinn also considered the various Regulatory Impact Analysis Statements (RIAS) related to the RFR, which in his view confirmed that the driving concern was the reduction of greenhouse gas (GHG) emissions (at para 21).  Readers interested in the history and evolution of the federal government’s position on climate change should check out paragraphs 22 – 28 of the judgment. Justice Zinn himself summarized those documents as follows:

[30] …The RIAS for both the RFR and its amendment…make clear that GHG emissions pose a significant, enduring effect on the environment, have high global warming potentials, and can directly affect the health of Canadians.  The RIASs also explain that renewable fuels have been shown to make a significant contribution to lowering GHG emissions on a life-cycle basis.  While the provinces currently have regulations imposing renewable fuels requirements, Parliament was of the view that federal regulation could contribute above and beyond the provincial contributions and would fill gaps and address inconsistencies in provincial legislation.

While Justice Zinn recognized that the RFR were “also intended to increase the demand for renewable fuels and develop new market opportunities” (at para 31), it was equally clear that these economic effects were part of a larger strategy, the purpose of which was to reduce GHG emissions: “Creating a demand for renewable fuels was…a necessary part of the overall strategy to reduce GHG emissions, but it was not the dominant purpose.  The reason the government wanted to create a demand for the fuels was to make a greater contribution to the long term lowering of GHG emissions” (at para 35).

Consequently, Justice Zinn had no difficulty concluding that “the dominant purpose of the RFR was “to make a significant contribution to the reduction of air pollution, in the form of reducing GHG emissions” (at para 39). Turning to the regulations’ effect, the bulk of this part of the decision was aimed at rejecting Syncrude’s efforts to have the Court assess the efficacy of the RFR. However, Justice Zinn was also of the view that even if this was part of the test, Syncrude “has failed to present convincing evidence to show that the blending of renewable fuels would not ‘make a significant contribution to the prevention of, or reduction in, air pollution’” (at para 45; see also para 49).

Having determined that the pith and substance of the RFR is the reduction of GHG emissions and potentially other emissions (at para 54), Justice Zinn turned to classification.  The federal criminal law power requires that there be (1) a prohibition; (2) backed by a penalty; (3) with a criminal law purpose (Reference re Firearms Act (Can), 2000 SCC 31 (CanLII)). There was apparently no dispute with respect to the first two criteria; the issue was whether the RFR were enacted with a valid criminal law purpose (at paras 58, 59).

The Minister relied on R. v. Hydro Quebec, the landmark but also controversial Supreme Court ruling that grounded CEPA’s toxic substances regime in the criminal law power. In that case, both the majority and minority agreed that Parliament’s use of the criminal law power was not limited to protecting public health; “the protection of the environment is itself a legitimate basis for criminal legislation” (Hydro Quebec, at para 43). Where the parties disagreed, and where the majority ultimately prevailed, was whether the impugned regime was more regulatory than prohibitory in nature. Writing for the majority, Justice La Forest held that environmental issues did not always lend themselves to blunt prohibitions but that this should not preclude Parliament from relying on the criminal law power, especially where the alternative is the seemingly more drastic reliance (from a federalism perspective) on its residual power to pass laws for peace, order and good government (POGG).

Applying this reasoning to the RFR, Justice Zinn acknowledged that they appeared “more regulatory in nature than prohibitory.  However, like the majority in Hydro, I am of the view that this particular evil – GHG emissions by combustion of fossil fuels – is not well addressed by specific [sic] prohibitions.  For example, much of society runs on fossil fuels and Parliament should not be expected to prohibit the use of fossil fuels entirely in order to meet progressive goals of GHG emission reduction” (at para 67).

Where the decision gets really interesting, in my view, is around paragraph 78. Here, and in contrast to the public messaging from industry and industry groups such as the Canadian Association of Petroleum Producers (i.e. that they support action on climate change), Syncrude argued that “the production and consumption of petroleum fuels is not dangerous and does not pose a risk to human health or safety,” and that “there is no evil to be suppressed.” To this, Justice Zinn responded that “[t]he evil of global climate change and the apprehension of harm resulting from the enabling of climate change through the combustion of fossil fuels has been widely discussed and debated by leaders on the international stage.  Contrary to Syncrude’s submission, this is a real, measured evil, and the harm has been well documented” (at para 83).

Discussion

Several years ago at the annual “CBA-DoJ Day” in Ottawa (an event organized by the National Energy, Environment and Resources Law section of the Canadian Bar Association), someone asked counsel from Environment Canada if they thought that the toxic substances provisions of CEPA – the provisions upheld under the criminal law power in R. v. Hydro Quebec – would pass muster if they were to be challenged now, in light especially of the fact that there are now thousands of regulated substances under that scheme. If I recall correctly, the response was positive if somewhat tepid. Justice Zinn’s decision would seem to be put any doubt to rest, while at the same time swinging the criminal law door open for all manner of schemes to control GHG emissions, including cap and trade. And while it is pretty clear that this door is not one that the current federal government will be walking through, a future government just might.

Syncrude v Canada: Where is the gatekeeper when you need one?

Fri, 09/12/2014 - 10:00am

By: Shaun Fluker

PDF Version: Syncrude v Canada: Where is the gatekeeper when you need one?

Case commented on: Syncrude Canada Ltd v Attorney General of Canada, 2014 FC 776

This post continues on from the introductory comment posted by Nigel Bankes on September 11, 2014 (here) concerning this case, and discusses the administrative law aspects in Justice Zinn’s decision. Briefly put, Syncrude challenges the validity of the Renewable Fuels Regulations, SOR/2010-109 enacted pursuant to section 140 of the Canadian Environmental Protection Act, 1999, SC 1999, c 33 [CEPA]. Section 139 of CEPA together with the Renewable Fuels Regulations require diesel fuel produced, imported or sold in Canada to contain renewable fuel of at least 2% by volume.  Syncrude produces diesel fuel, and is thus subject to this requirement unless it can successfully argue the Renewable Fuels Regulations are ultra vires the authority of the  Governor in Council or that there is some other legal defect in how the rules have been administered against it. My comment focuses on two points in the decision, namely: (1) are the Renewable Fuels Regulations unlawful because they do not conform to the regulation making powers of the Governor in Council set out in section 140 of CEPA?; and (2) did the Minister err in law by failing to afford Syncrude procedural fairness in administering the regulations?

I would say the resolution of these points by Zinn J. represents a fairly straightforward application of settled law, and I can accordingly describe the essence of the reasoning in short order.  The law on the first issue was recently summarized by the Supreme Court of Canada in Katz Group Canada v Ontario (Health and Long-Term Care), 2013 SCC 64 at paras 24-28. An issue over the vires of a regulation involves the following considerations: (1) is the impugned regulation consistent with the objective of its parent statute – in order to demonstrate invalidity a person must establish that the regulation is not consistent with such objective or that it addresses a matter which is not set out in the regulation-making provision of the parent statute; (2) there is a presumption of validity such that the onus or burden is on the challenger to demonstrate that the regulation is ultra vires – so where possible a regulation will be read in a ‘broad and purposive’ manner to be consistent with its parent statute; (3) the inquiry into the vires of a regulation does not involve assessing the policy merits of the regulation, nor does the reviewing court assess whether the regulation will successfully meet its objective. There is also, of course, always the prospect that a regulation is unlawful because it has been enacted for an improper purpose that amounts to an abuse of discretion.

After citing the Katz decision, Justice Zinn considers various arguments put forward by Syncrude to support its position that the Renewable Fuels Regulations are invalid because they fail to conform with CEPA. Zinn J. rejects all of these arguments, and I will comment on these in turn.

Syncrude argues the Governor in Council erred by failing to form the opinion that the Renewable Fuels Regulations could make a significant contribution to the prevention of, or reduction in, air pollution before enacting the regulations – an opinion which section 140(2) of CEPA requires it to form. Here Justice Zinn references the preamble to the regulations, which states such an opinion was formed and he applies the presumption of validity noted above to assert that the validity – or in my words the bona fides – of this opinion as set out in the regulations is not open to question in this case without tangible evidence from Syncrude that such opinion was not actually formed (at paras 114 – 118).

Syncrude argues a Cabinet Directive on strategic environmental assessments concerning policy proposals imposes a mandatory obligation on a Minister to perform such an assessment before enacting the Renewable Fuels Regulations. This argument required Syncrude to establish that the Cabinet Directive is law rather than policy, which it fails to do (at paras 119-123). Justice Zinn is rather short on reasoning here, and perhaps little was made of this in argument. However, the distinction between legislative instruments which are binding and policy instruments which are not binding is a complex area, and resolving these questions is typically more involved than what is set out in this case. A good summary of the applicable law on this point can be found in John Mark Keyes, Executive Legislation, 2d ed (Lexis Nexis, 2010) at 19 – 63.

Syncrude argues the Renewable Fuels Regulations do not accord with the purpose and objective of CEPA because they do not protect the ‘environment’ as defined in CEPA to mean air, land and water. In this regard, Syncrude emphasizes the conjunctive aspect of this definition and asserts that the record did not include material to demonstrate the regulation was intended to protect land and, moreover, that the renewable fuel requirement would actually result in negative impacts to these components. Again citing the Katz decision, Justice Zinn rules that a vires inquiry cannot go into the merits of the policy underlying the regulation save for those egregious cases where abuse of discretion is evident. And moreover, he lists several reasons for rejecting the conjunctive interpretation of ‘environment’ offered by Syncrude (at paras 124 – 137).

The second issue concerns whether the Minister failed to afford Syncrude procedural fairness in rejecting Syncrude’s request for a review of the Renewable Fuels Regulations before they were enacted. Syncrude argues that before rejecting such request, the Minister was required to consult with Syncrude on the issue and also that the Minister provide Syncrude with reasons for its decision not to initiate the review. This argument by Syncrude is based on the Minister’s power under sections 332 and 333 of CEPA to establish a board of review – on the request of a person who objects to a proposed regulation – to inquire into the nature and extent of the danger posed by the substance in respect of which the regulation is proposed. The legal question here is whether the Minister owed Syncrude a duty of procedural fairness under the common law, since the statute is silent on these questions of consultation and reasons.

Justice Zinn has little trouble ruling the Minister has no such duty of procedural fairness towards Syncrude or any other person for that matter in deciding whether or not to establish a board of review (at paras 144 – 161).  The law on this point is well settled: The common law duty of procedural fairness does not apply to decisions of a legislative or general nature. Syncrude argues the decision is specific and directed at it, however Zinn J. points to the wording in CEPA that any such review would address general matters pertaining to the substance in question under the regulation rather than the specific circumstances of a person objecting to the regulation.

I will end this comment by returning to the title – where is the gatekeeper when you need one? The constitutional law aspects of this decision aside, which I have not considered here, it seems to me there was little prospect of success on these administrative law arguments by Syncrude.  One can’t help but read this judgment and contrast it with the many leave to appeal decisions of the Alberta courts on applications involving Alberta’s energy regulatory boards, which seem to hold the applicants to an unbearably high burden of showing not just the prospect of success but more than a reasonable probability of success in their arguments, before even getting the chance to argue their case on the merits!

The Federal Renewable Fuels Regulations Survive an Aggressive and Comprehensive Challenge from Syncrude

Thu, 09/11/2014 - 10:00am

By: Nigel Bankes

PDF Version: The Federal Renewable Fuels Regulations Survive an Aggressive and Comprehensive Challenge from Syncrude

Case commented on: Syncrude Canada Ltd. v Attorney General of Canada, 2014 FC 776

In the dog days of summer (August 6, 2014) Justice Russel Zinn of the Federal Court of Canada handed down his judgement in a case in which Syncrude sought to challenge the validity of the federal Renewable Fuels Regulations, SOR/2010/189 (RFR) on both constitutional and administrative law grounds. The judgment seems to have passed almost without comment in the media. The RFR require that diesel fuel produced, imported or sold in Canada must contain renewable fuel of at least 2% by volume. This requirement can be met by blending diesel with biodiesel (although this can be challenging at cold temperatures). Failure to comply with the RFR is an offence although a regulated entity can achieve compliance by purchasing compliance units from other regulated entities who have exceeded their own compliance targets. See the judgement at para 4.

It is a pity that the decision did not attract greater media attention because the case is politically important and also legally significant on a number of fronts. For example, this is the first case in which a party has challenged the constitutional validity of any federal greenhouse gas regulations. The decision gives strong support to the federal government’s reliance on the criminal law power to legislate in this area. The case also offers useful guidance at the administrative law level as to the preconditions that the Governor in Council must meet before making regulations under the Canadian Environmental Protection Act, 1999, SC 1999, c.33. The decision confirms that the courts will not interfere with the manner in which the executive goes about meeting its policy objectives even if the efficacy of the measure (either absolutely or comparatively) may be open to question. And there are other interesting tidbits in the case as well. For example, there is a useful discussion of the Cabinet Directive on Strategic Environmental Assessments and on the distinction between a Cabinet Directive and a regulation made by Order in Council. We hope to post individual comments on some of the specific legal issues over the coming week(s).

Finally, it is interesting to consider the greenhouse gas politics of this decision. This set of federal regulations represents a tiny, tiny step towards meeting Canada’s post-Kyoto diluted Copenhagen challenge of minus 17% of 2005 emission levels by 2020. I am sure that compliance with the regulations will increase operating costs but I am equally sure that this increase is nothing more than a drop in the bucket for Syncrude. This litigation therefore suggests that at least the sector of big oil represented by the Syncrude interests will fight federal greenhouse gas regulations in all of its forms and that it will fight them hard. There was no stone left unturned in this litigation. Counsel for Syncrude pursued every possible avenue no matter how small the chance of success or creative the argument. Big carbon may be just like big tobacco in protecting its turf – one of several similarities that my colleagues Martin Olszynski and Sharon Mascher hope to explore more fully in a forthcoming research project.

Big carbon might want to think more carefully about the politics of this. So who stands behind Syncrude? Who should the press be asking questions of? Answer: (37%) Canadian Oil Sands Partnership, (9%) SINOPEC, (25%) Imperial Oil Resources, (5%) Mocal Energy, (5%) Murphy Oil Company, (7%) Nexen Oil Sands Partnership, (12%) Suncor Energy Ventures Partnership. Perhaps Imperial Oil would be a good place to start given their important global carbon position.

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The Vicious Spiral of Self-Representation in Family Law Proceedings

Wed, 09/10/2014 - 10:00am

Written by: John-Paul Boyd

PDF Version: The Vicious Spiral of Self-Representation in Family Law Proceedings

A lot of good research on litigants without counsel has been published in the last three years, most notably, in my view, Julie Macfarlane‘s Identifying and Meeting the Needs of Self-represented Litigants, a trio of papers published by the Canadian Research Institute on Law and the Family on the views of Alberta judges and family law lawyers, and a report by the Canadian Research Institute on Law and the Family with professors Nicholas Bala and Rachel Birnbaum (in press) on the results of a national survey of judges and lawyers. Although this research doesn’t necessarily label it as such, I’ve noticed that there’s a bit of a slippery slope effect to litigating without counsel, in which the decision to self-represent, whether a choice was involved or not, seems to trigger a cascade of adverse effects that ultimately result in litigants without counsel achieving worse results in every major area of family law than would have been achieved with counsel.

The judges and lawyers surveyed firstly said that by and large litigants without counsel have unrealistically high expectations of the outcomes they are likely to achieve. (In the Alberta research, three-quarters of judges and almost 90% of lawyers said that litigants without counsel “always” or “usually” have unrealistic expectations of outcome; almost half of judges and lawyers outside Alberta said the same thing in the national survey, and 30% said that litigants without counsel “sometimes” have unrealistic expectations of outcome.)

Perhaps as a result of their overly optimistic expectations, litigants without counsel are more likely to go to trial than settle. (In Alberta, 87% of judges and 89% of lawyers said that settlement without trial or before the end of trial is “less likely” or “much less likely” if one party is self-represented. In the national study, almost 60% of judges and lawyers said that settlement is “less likely” or “much less likely”. The national survey also showed that 70% of respondents from Alberta and 55% of respondents from the rest of Canada believe that litigants without counsel are more likely to take unreasonable positions based on principle.)

When litigants without counsel get to trial, problems arise as a result of their unfamiliarity with the law and court processes. (In the Alberta study, a range of 85 to 100% of judges said that additional challenges “always” or “usually” arise in cases involving a litigant without counsel because of their unfamiliarity with the applicable legislation, the rules of evidence, the rules of court and hearing and trial processes. A range of 70 to 77% of judges and lawyers outside of Alberta said the same thing in the national survey.)

At the end of the day, litigants without counsel achieve worse results than litigants with counsel. (In the national research, a range of 51 to 55% of judges and lawyers in Alberta thought that litigants without counsel achieved worse results on child support and spousal support, parenting arrangements and the division of property; 32 to 44% of judges and lawyers in the rest of Canada felt the same way. About 18% of judges and lawyers said that there is no difference in the results achieved by self-represented litigants on support issues, about 20% said that there is no difference in the results on support issues and about 13% said that there is no difference in the results for property division.)

(However, despite their difficulties with court and court processes, litigants without counsel are generally treated well by judges. In The Rise of Self-representation in Canada’s Family Courts (summary), a study which included a survey of Ontario litigants, Nicholas Bala, Rachel Birnbaum and Lorne Bertrand found that 14% of litigants without counsel believed that they were treated “very well” by the bench, 39% thought the way they were treated was “good” and 13% thought they were “not treated well at all.” According to the national survey, 97% of the lawyers from Alberta and 74% of the lawyers from the rest of Canada believe litigants without counsel receive “very fair” or “fair” treatment from the bench.)

It appears from the research that litigants without counsel find themselves caught in a vicious spiral. Self-represented litigants generally have unrealistically high expectations for the outcome of their cases, which reduces the likelihood that their cases will be resolved without trial. When they do proceed to trial, their lack of knowledge of the governing legislation, the rules of evidence, the rules of court and court processes frequently causes additional problems and doubtless increases the length of trials and the number of adjournments, and, when their trials do complete, self-represented parties usually achieve worse results than they would have with counsel.

I’ll provide some thoughts on ways of interrupting the slippery slope in a future post; in the meantime, the results of the research on the attitudes and outcomes of litigants without counsel should be factored into the family justice reform work being undertaken across the country. Mandatory mediation and other diversionary steps strike me as an obvious contribution to a solution.

This comment was originally posted on Access to Justice in Canada.

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The Quiet Decline of Canada’s IPO Markets

Tue, 09/09/2014 - 10:00am

By: Bryce Tingle

PDF Version: The Quiet Decline of Canada’s IPO Markets

The Toronto Stock Exchange’s parent company has been travelling the country raising the profile of its new venture, TSX Private Markets.  At the same time, Canada’s securities commissions are engaged in the most comprehensive overhaul of the private placement regime in more than a decade.  In Ontario, in particular, this would reverse the increasingly restrictive trends of previous reforms and liberalize its private capital markets.

This is a curious state of affairs. The TSX is chipping away at the incentives for a company to go public and the Ontario Securities Commission (OSC) is making it easier for companies to raise money outside of its regulatory “gold standard”: the public company prospectus system.  What is going on?

Canada’s public markets are failing to do their job of supplying capital to innovative businesses in this country.  Canada is uniquely dependent on its public markets.  We have the largest number of public companies relative to our population in the world – more than double the next highest country (and four times higher than the United States).  But our Initial Public Offering (IPO) market has been collapsing for over a decade.

Research published in the most recent issue of the Canadian Business Law Journal by Ari Pandes, Michael Robinson and myself, sets out, for the first time that we are aware of, an analysis of the rate operating businesses have been going public in Canada since statistics became readily available in 1993.  Between 1993 and 2000 there were an average of 42.6 IPOs on the TSX each year; following 2000 the average was 18.2 IPOs a year – less than half.  Even when the markets were awash in liquidity and commodity prices climbed sharply, TSX IPOs in the best years of this century never exceeded the average rate of the previous decade and only amounted to 40% of its best year.

The decline becomes even more visible when the inflation-adjusted proceeds of IPOs over the past two decades are examined.  Both in absolute terms and as a percentage of Gross Domestic Product (GDP), the IPO market of the 1990s was in significantly better health than at any time in the years since then.  The best year this century for IPOs was 2010, which generated proceeds equal to 0.28% of GDP – or just over half of the proceeds generated during any one of several years in the 1990s.

Reference to the dot-com boom and bust, and then the 2008 financial crisis, provide little assistance in explaining these statistics.  The Canadian market is largely resource-driven, not particularly oriented towards technology stocks.  Low commodity prices in the second half of the 1990s likely explains why this country’s IPO rates actually declined, even as the United States IPO market developed a bubble.  Similarly, Canada’s IPO market was only comparatively briefly impacted by the 2008 crisis, with 2010 being the best year for IPOs in the past decade.

The United States has convened congressional hearings (see here and here) and blue-ribbon panels (see here, here and here) to look into the causes of the decline in public companies in that country.  Canada has done nothing.  But the fact that we are experiencing the same kind of decline as the United States makes us an important part of any analysis of the problem.  The most common explanation in America for the decline in IPOs is the cost of complying with Sarbanes-Oxley era regulation – but Canada did not import most of this regulation and avoided, in particular, the most expensive requirements such as the auditing of financial controls.

Other common American explanations for the decline of IPOs, such as America’s toxic litigation climate (see here and here), changes in the benefits conferred by scale in the high-tech industry, or alterations to the market structure affecting investment banks (see here and here), also run afoul of the Canadian counterfactual.

We are left with the simplest of all explanations: the public markets have become much less congenial to business.  Spend any time in Canada’s boardrooms these days and you will hear the same message.  Whereas there were once incentives to management teams to take their companies public, there are now incentives to avoid the public markets if at all possible.  The result is a climbing cost of capital, less transparency and fewer investment opportunities for a Canadian middle class increasingly responsible for its own retirement.

Professor Edward J. Waitzer, has recently argued for a comprehensive review of Canada’s capital markets by our securities regulators to ensure we are working on our most urgent priorities as a country.  I second the motion.

An earlier version of this comment appeared in the National Post.

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R v Navales and Reasonable Suspicion

Fri, 09/05/2014 - 10:00am

By: Shaun Leochko

PDF Version: R v Navales and Reasonable Suspicion

Cases Commented On: R v Navales, 2014 ABCA 70; R v Canlas, 2014 ABCA 160; R v Ng, 2014 ABPC 62; R v Tosczak, 2014 ABQB 86

The engagement of section 8 and section 9 of the Canadian Charter of Rights and Freedoms (the Charter) in the drug sniffer dog cases has captured the interest of civil libertarians and law enforcement for what is required for a “reasonable suspicion.”  The 2013 Supreme Court decisions of R v Chehil, 2013 SCC 49, and R v MacKenzie, 2013 SCC 50 effectively lowered what would be required of police officers to form the reasonable suspicion necessary to conduct a “sniff” search. This resulted from the Supreme Court allowing an officer’s training and experience, in the totality of the circumstances, to form the objective requirement necessary to the forming of reasonable suspicion.  The Alberta Court of Appeal in R v Navales, 2014 ABCA 70, was tasked with applying this law in Alberta.  At issue was how officers would use their training and experience, and a constellation of neutral “no win” behaviours on the part of the accused to form the objective grounds needed to find reasonable suspicion. The result has been what dissenting judges have referred to as a lowering of the standard to that of a generalized suspicion. Significantly, this line of decisions has been applied outside of the drug sniffing dog context, and even outside of the reasonable suspicion context, to other areas of criminal law in R v Canlas, 2014 ABCA 160, R v Ng, 2014 ABPC 62, and R v Tosczak, 2014 ABQB 86. Drug sniffing dog cases have proven to be an interesting area for developing criminal law jurisprudence regarding sections 8 and 9 of the Charter. Drug sniffing dog investigations by their very nature generally involve both a detention and a search. The Supreme Court found in R v Kang-Brown, 2008 SCC 18, that an officer would require a reasonable suspicion to perform the dog sniff search. Flash forward four years later, and both the Supreme Court, and the Alberta Court of Appeal are still trying to determine what will amount to a reasonable suspicion to perform the sniff search.  Reasonable suspicion requires a subjective belief that is objectively reasonable and subject to judicial scrutiny (Kang-Brown at paras 26, 75). The Supreme Court of Canada in Chehil found that an officer’s training and experience can provide the objective component necessary to form a reasonable suspicion (Chehil at paras 46, 47). Mackenzie dealt with “no win” behaviour, which is “characteristics that apply broadly to innocent people – he looked at me, he did not look at me” (Mackenzie, at para 71). Justice Moldaver found that this behaviour does have “some value” in forming reasonable suspicion when looked at as part of a constellation of factors assessed against the totality of the circumstances (at para 71).

There was also a strong dissent in Mackenzie written by Justice Lebel for himself, Chief Justice McLachlin, Fish J., and Cromwell J. The dissent highlighted a point from the Court’s previous decision of Kang-Brown, that after the fact judicial scrutiny must be rigorous as exclusion of evidence is the only check on police powers regarding breaches under sections 8, 9 or 10 of the Charter (Mackenzie, para 96). The dissent’s main concern was that the approach taken by the majority transformed the reasonable suspicion requirement into a requirement of only a generalized suspicion (at para 97). The dissent was concerned with courts and police draw

A Smart Decision – Access to Counsel for the Poor and Disabled in a Legal Aid Crisis

Thu, 09/04/2014 - 10:00am

By: Sarah Burton

PDF Version: A Smart Decision – Access to Counsel for the Poor and Disabled in a Legal Aid Crisis

Case commented on: R v Smart, 2014 ABPC 175

Access to justice advocates should to take a few moments to review R v Smart, 2014 ABPC 175, where the Honourable Assistant Chief Judge Anderson stayed proceedings against three accused persons who could not afford counsel, but did not qualify for Legal Aid. While such applications are not uncommon, the evidence considered in Smart extends far beyond the norm. This extensive evidence, coupled with Judge Anderson’s probing commentary on access to justice, places a welcomed spotlight on Alberta’s Legal Aid funding crisis. In Smart, Judge Anderson sought to provide concrete guidance to courts facing similar applications. While he accomplished this task, his engagement with access to justice issues may be the more lasting legacy of the judgment.

Facts

Three accused persons in unrelated cases were denied Legal Aid counsel because they exceeded the program’s financial limits. Each accused derived substantially all of their income from the Assured Income for the Severely Handicapped (“AISH”) program – $1,588.00/month (in one case $1608.00/month). They each submitted affidavits stating that they were denied legal aid, had little to no disposable income and could not afford to pay a lawyer. They all expressed discomfort self-advocating and communicating orally. With the exception of one accused, they had each made various unsuccessful efforts to retain counsel outside of Legal Aid.

Each accused was facing a charge of assault in addition to other offences (including possession of a weapon for a dangerous purpose, uttering threats, indecent exposure, breaking and entering, and breach of probation). Their defences were varied – self-defence, deceit by the alleged victim, and issues relating to mental capacity. Each accused was afflicted with at least one mental disorder (including Fetal Alcohol Spectrum Disorder, Attention Deficit Hyperactivity Disorder, and anxiety with a severe lack of memory). The Crown was seeking jail time in all cases.

The applicants sought to stay the proceedings against them pending the appointment of state counsel (commonly known as a “Rowbotham Application”). To increase efficiency, and to allow for extensive evidence on Alberta Legal Aid, the separate applications were consolidated.

The Nature of a Rowbotham Application

A Rowbotham Application (named for R v Rowbotham, [1988] OJ No 271, 1988 CanLII 147 (Ont CA)) is a conditional stay of proceedings granted where trial fairness is compromised by a lack of counsel. While the Charter does not contain a blanket right to legal representation, ss. 7 and 11(d) of the Charter demand that counsel be appointed if a case is so complex and serious that a fair trial cannot proceed without a lawyer. Judge Anderson aptly described the Rowbotham Order as a “pay or stay” system – either the government pays for state-funded counsel, or the charges against the accused are stayed (at para 17).

There are three basic elements of a successful Rowbotham Application: “(a) the accused must have sought the assistance of Legal Aid and been rejected, having exhausted any avenues of appeal, (b) the accused must be indigent, and (c) the charges must be sufficiently serious and complex to warrant judicial action” (at para 19). When jail time is sought, the case is often considered sufficiently serious (at para 149). Complexity requires an examination of the charge, the defences and the capacities of the accused (at para 161).

Evidence and Submissions

A typical Rowbotham Application focuses on the accused’s income and expenses, and an assessment of the case against him or her. In this regard, the accused persons in Smart submitted affidavit evidence of their financial circumstances, and the Court received summaries outlining the nature of the charges against them.

The affidavits were not ideal – they outlined each accused person’s estimated income and expenses with little (or no) exhibits to back up the figures. These estimates sometimes created the impression that the accused had a significant surplus of cash at the end of each month. Yet in oral examination, each accused indicated they never had extra money by month-end.

In addition to this typical evidence, Smart also considered the social restraints and background context of the applications. This evidence was provided through the CEO of Legal Aid (Ms. Suzanne Polkosnik Q.C.) and a member of the junior Edmonton criminal defence bar with experience working for Edmonton Student Legal Services (Ms. Tara Hayes). This additional evidence was candid and striking. It detailed the extent of Legal Aid’s limitations, and the relative lack of options for persons who (barely) do not qualify for Legal Aid. For present purposes, the following key points were discussed:

    • Legal Aid has three categories of service. As the level of service increases, the financial eligibility limit decreases. Only the third category (with the lowest eligibility cap) provides the full legal representation relevant to a Rowbotham Application (at para 26).
    • Financial eligibility guidelines are based on income and family size. Legal Aid officers have the discretion to exceed these guidelines by up to 15%, and no more. For a single person seeking full legal representation, the financial guideline is $1,348/month, and $16,170/year (both thresholds must be satisfied). Persons receiving AISH earn $38.00 more than the 15% discretionary threshold permits (at paras 3, 30).
    • $2.5 million of Legal Aid’s budget is a “contingency fund” to cover unpredicted costs, which includes court-ordered legal aid representation. This amount is in peril of being exhausted, at which point money will come from a different source of Legal Aid’s budget (at paras 23, 24).
    • Student Legal Services is a student legal assistance office. The students operate as agents, not lawyers for an accused. They only act on summary conviction offences, and they do not act in cases where there is a foreseeable risk of jail (at para 43).
    • For a non-complicated matter, Ms. Hayes seeks a retainer of $1,500. Her quoted fee for an uncomplicated one-day trial was approximately $3,000 (at para 44).

The Decision

Judge Anderson granted the three Rowbotham Applications. He did this despite significant shortages in the affidavit evidence, unexplored appeals to Legal Aid, and questions regarding the prospect of jail time.

With regards to the affidavit evidence, the applicants’ quoted figures were often lacking in both accuracy and documentary corroboration. In some cases, they failed to demonstrate that the accused could not afford counsel. Judge Anderson held that the affidavits were made with best efforts, but that they (significantly in some cases) understated the applicants’ expenses (see e.g. at paras 194, 195). Each applicant lived below the poverty line and testified that they had no money at the end of the month. The Court accepted this evidence. Further, the Crown’s complaints did not resonate, because it failed to question these inaccuracies while cross examining the applicants (see e.g. at para 184).Thus, these clearly lacking affidavits (somewhat counterintuitively) lent credence to the applicants’ claims that they required counsel.

Judge Anderson was not persuaded that the charges were insufficiently serious to require counsel. The Crown argued in one case that jail time, while sought, was unlikely to be ordered. Judge Anderson was not swayed, noting that the Crown’s decision to seek jail time caused the accused’s Student Legal Services counsel to withdraw (at para 199). The fact that jail time was possible, though unlikely, seemed to further support the applicant’s position that he needed counsel.

Judge Anderson’s decision was also impacted by the accused persons’ clear (though yet unproven) brain injuries and/or mental disorders. While there was no proof that the persons suffered from the mental disorders, Judge Anderson refused to ignore “the elephant in the room” (at para 206). A person under a mental disorder is less able to defend themselves adequately. Moreover, proving that a mental disorder impacted the accused persons’ mens rea (as in the FASD case) is very difficult and complex. Being under a mental disorder added weight to the argument that counsel was needed.

Lastly, Judge Anderson was not swayed by the fact that unexplored (though likely futile) efforts to retain counsel existed. Each of the accused persons in some respects failed to (a) follow through the Legal Aid appeal process, (b) contact community and support groups, and/or (c) exhaust the gambit of private criminal defence lawyers. Judge Anderson drew from Ms. Polkosnik’s and Ms. Hayes’ evidence to conclude that these efforts had no realistic chance of success. The accused persons had no money to retain counsel and an appeal to Legal Aid would plainly not succeed. In the interests of the timely administration of justice, the accused persons should not have to jump through useless hoops to be appointed counsel (at para 203).

Commentary on Access to Justice

While the Smart decision will undoubtedly be a valuable tool when adjudicating future Rowbotham Applications, its utility will extend beyond those borders. Anyone grappling with access to justice (accused persons, civil litigants and academic commentators) will find value reviewing this decision, which touches on several recurring themes in access to justice commentary. A few of these themes are explored below.

The Focus on Practical Reality 

Judge Anderson repeatedly emphasized the need to focus on the practical reality that courts and accused persons face when attempting to access justice. The Legal Aid budget has created a crisis for the poor and middle class to access counsel. While lawyers are comfortable making legalistic arguments grounded in evidentiary thresholds, precedents and technical language, this approach can frustrate rather than facilitate justice. As such, when faced with access to justice concerns, judges should be focused on the realistic lived experience of the applicants. For example, Judge Anderson held that:

    • The technical possibility that an accused could, over a series of months, possibly save enough to retain a lawyer should not lead to a rejection of counsel. Judges must remain focused on the accused’s ability to retain counsel in a realistic timeframe (at paras 7, 197, 205).
    • Applying precedents from complex cases with sizable assets may only muddy the water. The vast majority of Rowbotham Applications deal with those who are “poor…marginalized…at a low point in life” and “tend to be those just getting by” (at para 130). The precedents from more complicated cases may not be of use for the majority of these applications (para 96, referring to R v Malik, 2003 BCSC 1439).
    • Just because an affidavit would, on its face, suggest that counsel could be retained, a judge should look at the substance of the material and inquire if those figures are realistic. In doing so, judges should not ignore the presence of mental injuries or disorders (at para 194).
    • Judges should not demand that accused persons jump through useless hoops before their application is granted. Legal Aid’s discretion is set in stone. Until funding changes, there is no point delaying justice while the accused pursues a doomed appeal (at paras 176, 203, 204).
    • When assessing case complexity, judges often underestimate or ignore the complexity of a defence. Cases that first appear simple can become exceptionally complex when a defence is raised. In these cases, judges will find themselves drawing heavily on basic life and judicial experience (at paras 164, 167).

Underlying this focus on practicality is the recognition that Rowbotham applicants are often self-represented. They are often the least equipped to be making their application, and they often arise in the least favourable setting (a faced-paced, high volume docket court) (at para 115).

In such circumstances, judges must recognize that self-represented parties should not be treated as though they are experienced counsel. Assistance is needed, but at the same time, judges have to respect the boundaries of the adversarial system (at para 113).

The Proper Role of Judges

Stemming from this, some have suggested that the risk of trial unfairness without counsel is overblown because judges can ensure that a trial proceeds fairly. Judge Anderson cautioned against this approach for two reasons. First, it ignores the role of defence counsel in creating a fair playing field. Judges cannot advise an accused on strategy or preparation – they can only address the unfairness present in the courtroom. The trial is only the tip of the iceberg when launching a criminal defence (at paras 111-112).

Second, relying on the trial judge to protect self-represented parties draws the judge “into the fray” and risks creating a reasonable apprehension of bias (at para 110). Judges have to remain impartial and neutral in the courtroom. They must not only ensure a fair trial proceeds, but that the trial appears fair in the eyes of the public. When judges get pushed out of the neutral role, the appearance of fairness to in the courtroom can be compromised.

The Costs Associated with Legal Aid

Discussions about Legal Aid must proceed unburdened by false assumptions. In particular, people generally believe that Legal Aid and Rowbotham Orders are a drain on taxpayer dollars. This belief is built on two false notions.

First, Rowbotham Orders are not an additional cost on taxpayers – the money to pay a lawyer comes out of Legal Aid’s existing budget (at para 14). Second, the assumption that Legal Aid costs money fails to consider the costs incurred by the justice system when counsel is not present. As Judge Anderson noted:

[15] Anyone on the front lines of the justice system will recognize the important role that defence counsel plays in allowing matters to proceed efficiently. Judicial experience shows that when accused persons are not represented, the number of appearances tends to increase, the number of adjourned trials tends to increase and the length of trials tends to increase, each of which involves significant cost to the government through judicial, prosecutorial, clerical and security costs.

The Responsibility to Support Indigent Accused Persons  

The Crown attempted to argue that Rowbotham Applicants must seek out pro bono counsel or financial assistance from friends or family before being appointed counsel. Judge Anderson unequivocally rejected both suggestions.

As for pro bono counsel, Judge Anderson found it insulting to suggest that the criminal bar ought to be burdened with fulfilling the government’s obligation to provide counsel. He stated:

[140]  The Court categorically rejects this expectation as a requirement to show need in a Rowbotham application. As is well known to the courts, no segment of society does more to assist the indigent facing prosecution by the state, on a pro bono basis, than the defence bar.

[141]  Providing access to justice is the obligation of the government, not good-willed citizens. The Charter protects against state failures not the failure of citizens to make up for state short-comings. With the greatest of respect to the contrary views expressed in some of the jurisprudence, this expectation and its underlying assumptions are insulting to both the impecunious and to the Bar.

He was equally affronted by the suggestion that an accused must seek money from family and friends:

144 … [I]t would be dangerous and in many cases unfair to both the accused and the third parties, if the Court was to make [requesting money from family or friends] a pre-requisite to a Rowbotham Order.

[145]      It is the state that is seeking to hold the accused to account for his or her actions and ensure that the prosecution of that action is fair. Prosecutions are not brought by individuals and it would not be fair to require individuals to fund a matter that is not being brought on their behalf but rather on behalf of society at large.

These statements firmly place the responsibility for ensuring counsel on the government. While members of society can step in to assist a particular person in need, this cannot minimize the government’s Charter obligation to guarantee a fair trial.

Concluding Thoughts: Rowbotham Orders and the Future of Civil Legal Aid

Given the position of the accused persons in Smart, I would predict that most readers approve of Judge Anderson’s order to appoint them counsel. This is a sentiment I share, but one which is complicated by my concerns for the civil legal aid system.

The vast majority of Rowbotham Orders are made in criminal cases. Persons accused in the criminal legal system do not enjoy a blanket constitutional right to counsel, but Rowbotham Orders provide a solid footing to prevent trial unfairness. This is not so in the civil system. Section 11(d) of the Charter does not apply outside the criminal sphere. As jail time is not on the table in civil actions, they are often not serious enough to trigger s. 7 Charter protections. As such, civil litigants largely operate without any right to counsel (for an exception to this rule, see New Brunswick (Minister of Health and Community Services) v G. (J.), [1999] 3 SCR 46).

Presently, Legal Aid offers assistance to parties outside the criminal system under extremely restrictive financial guidelines. This would include (for example) family law, immigration, foreclosure, bankruptcy, and general civil actions. However, as Ms. Polkosnik’s testimony made clear, the increasing number of Rowbotham Orders have exhausted Legal Aid’s contingency fund. Future orders must draw from another source of Legal Aid’s budget. While not stated, one may assume that the money to fund Rowbotham Orders is coming at the expense of the civil Legal Aid budget.

Any civil litigator can attest to the fact that the litigation system is flooded with self-represented parties who plainly cannot afford a lawyer. This slows the justice system while these litigants attempt to navigate a complex and seemingly impenetrable maze of legal procedures. For the self-represented litigant, facing (for example) financial ruin, a child custody battle, or losing their home, “access to justice” is an empty phrase that means nothing for those without money or connections (The Canadian Bar Association, Access to Justice Committee, Reaching Equal Justice: An Invitation to Envision and Act, (Ottawa: The Canadian Bar Association, November 2013) at Part 1).

So, while Judge Anderson’s decision may be applauded, we cannot ignore the fact that criminal Rowbotham Orders are merely re-shuffling the burden of an underfunded Legal Aid system to other unfortunate people with fewer protections.

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