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Bill C-24: Strengthening Canadian Citizenship – Weakening Global Security

11 hours 1 min ago

By: Hannah Buckley

PDF Version: Bill C-24: Strengthening Canadian Citizenship – Weakening Global Security

Statute Commented On: Strengthening Canadian Citizenship Act, SC 2014 c 22

On June 11, 2015 the final host of amendments created under the Strengthening Canadian Citizenship Act (Bill C-24) came into force. Among those were amendments to section 10 of the Citizenship Act, RSC 1985 c C-29 greatly expanding the government’s ability to revoke Canadian citizenship. The amendments apply to naturalized Canadians, dual citizens and Canadian-born citizens who are eligible to obtain dual citizenship. Prior to Bill C-24, only naturalized citizenship could be revoked, and revocation was limited to cases where citizenship was obtained by means of fraud or false pretenses (See Parliamentary Information and Research Service, Legislative Summary of Bill C-24: An Act to amend the Citizenship Act and to make consequential amendments to other Acts by Julie Béchard, Penny Becklumb, & Sandra Elgersma (Ottawa: Library of Parliament, 2014) available here). Now treason, terrorism, aiding the enemy, espionage, and communicating safeguarded or operational information have been added to the list of exile-worthy offences.

The government announced that the measures, “underscore the government’s commitment to protecting the safety and security of Canadians and promoting Canadian interests and values [and] reinforces the value of Canadian citizenship” (See the backgrounder published by Citizenship and Immigration Canada). However, opponents contend that the amendments are unconstitutional and create a highly-problematic two-class system of citizenship in which naturalized Canadians are vulnerable to having their citizenship arbitrarily revoked.

I have three main issues with the recent amendments to the Citizenship Act. First, in a globalized world, readopting the long-abandoned archaic practice of banishment is not an effective response to terrorism. Second, Bill C-24 and the Anti-terrorism Act, 2015 Bill C-51 (which received royal assent on June 18, 2015) work together to reimagine the word “terrorist” in broad, amorphous terms, potentially encompassing people who would not typically be considered terrorists. Third, providing the Minister with discretionary powers to revoke citizenship denies people due process in what is likely one of the most critical decisions of their lives. Each of these concerns are addressed below.

We live in a globalized world. Never has it been easier to share ideas, transport goods, and exercise personal mobility. Consequently, terrorism is no longer an issue that can be confined within borders. The legislation must reflect this conceptual evolution. Terrorism is a global issue that requires a global response. It is irresponsible for Canada to revoke citizenship of convicted terrorists and send them to countries that may not have the ability to adequately or appropriately deal with the situation. In a featured article by the Canadian Security Intelligence Service (CSIS), Director Michael Coulombe astutely wrote , “even if a Canadian extremist does not immediately return, he or she is still a Canadian problem. Just as Canada expects other nations to prevent their citizens from harming Canadians and Canadian interests, we too are obligated to deny Canadian extremists the ability to kill and terrorize people of other countries.” (emphasis added). If every country were to adopt Canada’s response to terrorism, the solution would look like a global conveyer belt of terrorists being transferred between countries.

In recent headlines is the case of Hiva Alizadeh. In September 2014, Alizadeh pled guilty to the offence of possessing explosive materials for the purpose of endangering life or causing serious property damage involving Canadian citizens in their homeland (R v Alizadeh, 2014 ONSC 5421). Though Alizadeh did not in fact carry out a terrorist attack, he admitted to travelling to Iran and then Afghanistan in 2009 to attend a terrorist training camp and to smuggling customized circuit boards into the country with the intention to build explosive triggering devices, upon his return to Canada. During sentencing Justice Colin McKinnon stated, “you are now a convicted terrorist. The fact carries with it an utterly deplorable stigma that is likely impossible to erase … . You have betrayed the trust of your government and your fellow citizens” (Alizadeh at para 1). Alizadeh was sentenced to 24 years in prison. Alizadeh is a dual Canadian and Iranian citizen. This month the government began to take the initial steps under the   Strengthening Canadian Citizenship Act to revoke Alizadeh’s Canadian citizenship (See here). The question for me is whether deporting Hiva Alizadeh or similar cases actually increase Canadian security?

Since 2012 Canada has listed Iran as a state that supports terrorism (See Foreign Affairs, Trade and Development Canada on Terrorism). It is difficult to believe that Canada’s solution to terrorism is to send a known terrorist to Iran instead of keeping him in a Canadian prison where we can have confidence that the risk to the public is low and he may even be able to rehabilitate. Terrorists do not need to be on Canadian soil to undertake attacks. Canadians and consular services can be found in almost every country in the world. By sending known terrorists to foreign countries Canada is shirking its responsibilities and naively relying on other governments to keep Canadians safe.

For many supporters of the amendments to the Citizenship Act, Canadian citizenship is a privilege not a right (See Debates of the Senate, 41st Parl, 2nd Sess, Vol 149, Issue 73 (17 June 2014) at 1930 (Hon Nicole Eaton)). Canada prides itself on being a peaceable and safe nation. It is easy to sympathize with those who hold the position that a person who has committed a terrorist offence (naturalized or Canadian-born) does not deserve to be a Canadian citizen. What makes this position more difficult to grasp is when it is accompanied with an understanding of the recent redefining of what it means to be a terrorists. When one imagines a “terrorist” they may conjure up images of groups such as the Islamic State of Iraq and the Levant (ISIL), the Irish Republican Army (IRA), Boko Haram, or the Revolutionary Armed Forces of Columbia (FARC). What one likely does not picture is someone who shares a blog over social media or who was convicted of a terrorism offence in a country that does not respect the rule of law. However, as a result of the passing of Bills C-51 and C-24, such expressions and situations may constitute a terrorism offence and could lead to revocation of citizenship.

Changes to the definition of terrorism:

  • Bill C-51 amended and expanded the Criminal Code, RSC 1985 c C-46 definition of “terrorism offence” by adding provision 83.221, which states:

“Every person who, by communicating statements, knowingly advocates or promotes the commission of terrorism offences in general-other than an offence under this section-while knowing that any of those offence will be committed or being reckless as to whether any of those offences may be committed, as a result of such communication, is guilty of an indicatable offence and is liable to imprisonment for a term of not more than five years” (emphasis added)

Opponents contend that this provision is problematic because it is written in broad vague terms and consequently has the potential to convict people who may have no intention of promoting a terrorism offence.

  • Bill C-24 amended the Citizenship Act and added section 10(2)(b), which states:

(2) The Minister may revoke a person’s citizenship if the person, before or after the coming into force of this subsection and while the person was a citizen,

(b) was convicted of a terrorism offence as defined in section 2 of the Criminal Code — or an offence outside Canada that, if committed in Canada, would constitute a terrorism offence as defined in that section — and sentenced to at least five years of imprisonment (emphasis added)

To understand opponents’ concerns with this provision, take for example the case of Saudi Arabian human rights activist Waleed Abu al-Khair. Waleed Abu al-Khair is currently serving a 15 year sentence in Saudi Arabia, convicted on terrorism charges stemming from his “peaceful activism, including comments to news outlets and on Twitter criticizing Saudi human rights violations” (See Human Rights Watch “Saudi Arabia: Prominent Activist Marks Year Behind Bars”). Commentators worry that if someone like Waleed Abu Al-Khair were to one day become a Canadian citizen, they would be vulnerable to having their citizenship revoked under section 10(2)(b) of the Citizenship Act. It is difficult to imagine a court of law interpreting this section to encompass Al-Khair’s acts (since the provision specifies that the offence committed abroad must constitute a terrorism offence as defined by the Criminal Code). However, a court would not be making this interpretation; the decision is left to the Minister or one of his delegates.

An enormous amount of trust has been placed in the hands of the Minister or one of his delegates to make the critical decision as to whether or not an individual’s citizenship should be revoked. The government claims that by separating this process from the judicial system, they are cutting financial costs and increasing efficiency. While this may be true, we must ask, “at what social cost”? In allocating this power, the government is denying due process. All citizens should be entitled to a federal court hearing to determine whether their citizenship should be revoked. It is fundamentally unjust to leave a decision of this magnitude to an arbitrary body.

The changes to the Citizenship Act introduced through Bill C-24 are a smoke and mirrors response to terrorism. In an effort to appear “tough on terrorism” Canada is placing its energy and focus on reintroducing a model of security that it outgrew hundreds of years ago. Canada owes a responsibility to the global community to deal with Canadian terrorists on Canadian soil. This is no longer an era of kingdoms, castles, and moats. We can’t simply throw someone outside of the Kingdom walls and expect that the problem is exiled along with the perpetrator. The changes introduced by Bill C-24 fail to protect the safety and security of Canadians from what is today, a threat that has no boundaries.

Update: the government has recently started a second application under the Strengthening Canadian Citizenship Act to revoke the Canadian citizenship of Misbahuddin Ahmed.

This post originally appeared on Rights Angle.

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Some Observations about Evidence in the Electronic Age

Tue, 07/28/2015 - 10:00am

By: Shaun Fluker

PDF Version: Some Observations about Evidence in the Electronic Age

Case Commented On: Kon Construction v Terranova Development, 2015 ABCA 249

This Court of Appeal decision concerns a dispute over the performance of a contract. Terranova retained Kon Construction to grade lands for residential development. The work was to be done in 2005 but was delayed into 2006 and the agreement went sour. Kon Construction filed a claim for unpaid invoices and Terranova counterclaimed that Kon Construction breached the agreement on a number of grounds thereby allowing it to retain another firm to complete the grading work. At trial Madam Justice B.A.Brown ruled that Terranova did not have grounds to terminate its contract with Kon Construction and was therefore liable for a portion of the unpaid invoices which she found had been improperly inflated (Kon Construction v Terranova Development, 2014 ABQB 256). The issues on appeal were primarily on the admissibility of certain electronic records.

Under the contract Kon Construction was to be paid on the basis of earth moved in the grading work. The evidence in dispute here was entries and calculations made by site surveyors to measure the amount of work completed. Terranova argued these electronic records were inadmissible because they consist of expert evidence which was not properly admitted through a qualified expert (at paras 11 and 12). The Court rejects both of these arguments, and in doing makes some remarks on electronic records and expert evidence. The Court makes reference to some law with respect to qualifying expert witnesses (at paras 30 to 43), which I do not comment on here. Terranova also argued the records are inadmissible as hearsay because the raw data was entered by surveyors who did not testify to its accuracy, and the Court rejects this argument on the business records exception to the hearsay rule (at para 49).

Evidentiary issues is not an area of law that I spend much time with, but the reason this decision caught my attention is because I do think about how the computer age – and the capability of the internet in particular – is affecting how we make and practice law. The Court of Appeal makes some brief remarks in this regard as it relates to electronic evidence:

The electronic age has affected many aspects of society and business, and has had a particular impact on record creation and management. Information gathering is increasingly automated, and record keeping is now commonly done in electronic format. This appeal requires an examination of the effect of electronic record management on the laws of evidence, which were formulated on different assumptions about how records are kept. The laws of evidence must adapt to accommodate the current reality of record management (at para 13).

Electronically generated information is not a new concept for the law – but I do think the capacity of the internet and ever-increasing reliance on computers is stretching these issues into new territory: Consider the proliferation of Facebook or Twitter to communicate, and how email has almost replaced traditional means of information delivery. These mediums have and will continue to require some adjustments to traditional ways in the law.

One issue the Court looks at here is the reliability of mechanically generated records. A primary objective of the law on evidence is to screen out unreliable information. The Court observes that computer-generated records are generally admissible because of an inherent reliability, even though we are unable to precisely examine how the information is generated, and the person seeking to rely on this information does not have to prove the underlying processing technology works. The disputed evidence here consisted of survey data collected by electronic means and compiled in software, and the Court concludes this information easily passes the test for reliability (at paras 17 – 19).

Terranova also argued the compilation of information constitutes expert opinion and was not provided by a qualified expert. The admissibility of expert opinion evidence is a noted exception to the principle that opinions are generally not admissible (at para 21). The Court observes that the interpretation of computer-generated information may constitute expert opinion and require a properly qualified expert, but not in every instance. Certain programs are sufficiently routine or within common-usage such that the interpretation of information generated does not require specialized training or knowledge – the Court gives Excel as an example:

An example of a software program that does not usually rise to the level of “opinion”, for the purposes of the law of evidence, is the commonly used data spreadsheet program Microsoft Excel. That program is specifically designed to record raw data in rows and columns. The program can then be told to automatically organize (alphabetically, by date, etc.) and process that data (add, subtract, multiply, divide, etc.). It can also be told to isolate out data by characteristics (by date, amount, or other ascribed characteristic). The ordinary use of arithmetic formulas, and sorting of data by type, does not require “specialized knowledge”; just because a computer can do it faster does not change its categorization as evidence. Many people use Microsoft Excel, but few could actually describe how it works or what it is doing to the data. Few users could actually explain why the data are reliable, yet the results it produces are routinely relied on. That is because the program has been designed, tested, and used so repeatedly that it has been shown to be inherently reliable. The results from such a program are not “opinion evidence”, and they do not require introduction by an expert: R v George (1993), 146 AR 107 at para 34, 14 Alta LR (3d) 106 (PC) (at para 23).

The line where information generated by software crosses into the realm of expert opinion is drawn on a case-by-case basis, and in the Court’s words “[t]here is no automatic or universal rule that computer-generated reports are inadmissible hearsay, or only admissible through expert evidence” (at para 25). The Court rules that the records here did not require specialized knowledge to interpret and pass the test for reliability (at para 29).

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The Law on Mr. Big Confessions

Thu, 07/23/2015 - 10:00am

By: Caroline Law

PDF Version: The Law on Mr. Big Confessions

Cases Commented On: R v Magoon, 2015 ABQB 351; R v Campeau, 2015 ABCA 210

A Big operation is a common police sting tactic used to obtain confessions from suspects. It usually involves undercover police officers posing as members of a criminal organization and developing a friendly relationship with the suspect. The suspect is then asked to perform a series of seemingly illegal tasks, and is told those are tests to gain trust from the head of the criminal organization, Mr. Big. In the process, the police officers involved try to obtain evidence or a confession from the suspect in relation to an alleged crime. The operation culminates with a “job interview” between the suspect and the crime boss Mr. Big, which entails Mr. Big interrogating the suspect into his past criminal activities. Once the suspect admits to committing the crime, he or she is arrested. In this post I look at recent decisions in Alberta that have applied the law concerning the admissibility of Mr. Big confessions.

In R v Magoon the father of the victim and his partner were suspected of causing the death of 6-year-old Mieka Jordan through a series of physical abuses. A covert police operation was staged to try to discover the truth about the treatment of the victim. Two undercover officers posed as a couple to befriend the two suspects, Spencer Jordan and Marie Magoon, and involved them in what appeared to be a smuggling operation. During one of the scenarios in the Mr. Big operation, the police in Calgary attended the residence to arrest Jordan for the murder. This provided the pretext for a meeting between Jordan and Vic, an undercover officer who acted as a powerful member of the criminal organization. The meeting was for Vic to learn the truth of what happened in order to assist Jordan in getting rid of the charges. During this meeting, Jordan made admissions of violence against Mieka to Vic. The two suspects then went on to discuss the death of the victim in their hotel room, where their confessions were wiretapped (Magoon, at para 14-23).

In deciding the admissibility of these testimonies in Magoon, Madam Justice R.E. Nation applied the law set out by the Supreme Court of Canada (SCC) in R v Hart, 2014 SCC 52. This landmark 2014 SCC decision redefined the law concerning the admissibility of Mr. Big evidence. The Mr. Big tactics have been frequently used by police forces in Canada. However, Hart put into question the admissibility of confessions obtained under such method. In Hart, the SCC held that a Mr. Big confession could be unreliable, prejudicial and would encourage police misconduct. In Hart, the police suspected Hart of murdered his twin daughters. They targeted him for a Mr. Big operation where the undercover officers were trying to lure him to join a fictitious criminal organization. Hart was shown attractive benefits of working for the gang—he was taken to expensive restaurants and was flown across the country to carry out paid simulated criminal tasks carefully crafted by the police (Hart at para 58). This marked a stark contrast to his lifestyle prior to meeting the undercover officers–he was socially isolated, unemployed, and living on welfare (Hart at para 133). At first, Hart told Mr. Big that the death of his daughters was accidental, but after some further probing, he confessed to killing them (Hart at para 34-35).

The SCC recognized that the benefits of working for Mr. Big were powerful inducements for Hart to falsely confess. In recognizing the vulnerabilities of a target in a Mr. Big operation, Hart proposes a new test to assess the admissibility of Mr. Big confessions. Under this new test, confessions obtained during a Mr. Big operation are presumptively inadmissible unless the Crown can establish on a balance of probabilities that the probative value of the confession outweighs its prejudicial effects (Hart at para 85). In addition, the doctrine of abuse of process is considered in the second prong of the test to guard against state conduct that “society finds unacceptable, and which threatens the integrity of the justice system” (Hart at para 113). Furthermore, the trial judge retains the discretion to exclude evidence where its admission would compromise trial fairness (Hart at para 88).

R v Mack, 2014 SCC 58 was the first SCC ruling on a Mr. Big operation after Hart, and gave further clarification on how the Hart framework is to be applied. The confession obtained during a Mr. Big operation can be highly probative when there is confirmatory evidence and that the prejudicial effects to the accused is low. In Mack, the accused was gainfully employed and the amount of payment he received from working for Mr. Big was not significant (Mack at para 34-35, 59). Mack also provides guidance to trial judges on how to instruct juries in considering evidence stemming from a Mr. Big operation in order to reduce the prejudicial effects to the accused (Mack at para 51-54).

In Magoon, Justice Nation stated that confirmatory evidence is not necessarily a decisive factor to determine whether a Mr. Big confession is admissible. Rather, the existence of confirmatory evidence can provide a powerful guarantee of reliability (Magoon at para 10). The Mr. Big testimonies obtained from the two suspects in this case corroborated closely with the expert evidence concerning how the victim’s body injuries were caused. This made the evidence highly probative.

Mr. Big Evidence in Implicating a Party to the Crime

In R v Campeau the Alberta Court of Appeal has expanded the law to allow Mr. Big evidence to be admitted to implicate a party to the actus reus. Campeau suggests that Mr. Big evidence can be admissible against a third party of the crime provided that the evidence falls under the principled exception of hearsay as prescribed by R v Khelawon, 2006 SCC 57. In this case, Campeau challenged his conviction for manslaughter as a party to a robbery and killing. Up to this point, all the Mr. Big cases had involved only the accused’s own confession to a Mr. Big character. In Campeau, however, the Court of Appeal ruled the evidence made by the co-accused Worme concerning Campeau and others was admissible.

The Court found that the evidence of Worme against Campeau met the criteria of necessity and reliability under the principled exception in Khelawon (Campeau at para 14) as the testimony was not obtained by abusive police conduct. The Campeau Mr. Big operation used a truth verification strategy which involved telling the target that the fictional criminal organization could cover up the crime for him if the crime boss knew the truth. This was distinguished from the technique used in Hart, which was a strategy of false bragging (were you tough enough for our organization) (Campeau at para 21).

The Court of Appeal distinguished Campeau from the decision of the British Columbia Court of Appeal in R v Bradshaw, 2015 BCCA 195   on the basis of the facts. In Bradshaw, the accused was implicated in two murders by a former co-accused Thielen who refused to testify at trial, but agreed to re-enact the case for the police. The re-enactment was videotaped but was not under oath. During the re-enactment, Thielen inculpated Bradshaw to the murders (Bradshaw at para 6). The British Columbia Court of Appeal overturned the guilty verdict of Bradshaw from the lower court as it deemed that the re-enactment was hearsay evidence that did not demonstrate circumstantial guarantees of trustworthiness necessary to meet the threshold reliability test (Bradshaw at para 32). Thielen initially took full responsibility for the murders during his conversation with Mr. Big. Sometime later he implicated Bradshaw. As both Bradshaw and Thielen were present at the crime scene, forensic evidence could not decisively prove Thielen’s story. As it was not possible for the jury to determine the truth of Thielen’s testimony without cross-examining him, the court set aside the verdict of Bradshaw.

Mr. Big Evidence in Other Jurisdictions

The Mr. Big technique is a Canadian invention (Hart at para 56), and it has solved many cold cases in Canada. Nonetheless, Australia is the only jurisdiction outside Canada that adopts the technique (see Timothy E Moore et al, “Deceit, Betrayal and the Search for Truth: Legal and Psychological Perspectives on the ‘Mr. Big’ Strategy” 55 Crim LQ 348 2009-2010 at 353).

The Mr. Big technique is not used in the United Kingdom and the United States (see Moore et al, at 353). Nevertheless, the confession obtained from the suspect during the Mr. Big operation in R v Proulx, 2005 BCSC 184 conducted by Canadian authority on UK soil was admissible for the purposes of an extradition proceeding in the UK, where the accused was extradited and tried in Canada (Proulx at para 28). Nonetheless, whether the evidence itself would be admissible in a criminal trial in the UK was never determined (Proulx at para 51).

The Mr. Big technique is not used in the United States (see R v Osmar, 2007 ONCA 50 at para 55) and no cases have been found using the Mr. Big technique on American soil (see Hart, Factum of the amicus curiae at para 25 n 51). Nonetheless, it is worth noting that the American authorities used the evidence collected in a Mr. Big operation conducted in Canada to convict Sebastian Burns and Atif Rafay—two Canadians accused of a triple murder that took place in the US (see here).

The Implication to Future Mr. Big Operations

The SCC in Hart raised concerns that the Mr. Big technique could induce false confession (Hart at para 72). Although there is an absence of precise data, false confession has been recorded by researchers around the world as a phenomenon that occurs with regularity (see Steven M Smith et al, “Using the ‘Mr. Big’ Technique to Elicit Confessions: Successful Innovation or Dangerous Development in the Canadian Legal System?” (2009) 15:3 Psychology, Public Policy & L 168 at 180). Innocent people falsely confess due to psychological pressure placed upon them during police interrogations and confession contamination (see Brandon L Garrett, “The Substance of False Confessions” (2010) 62 Stan L Rev 1051, at 1053). Confession contamination could happen when police, inadvertently or intentionally, prompt the suspect on a little known detail of the crime, which provokes innocent people to not only falsely confess but also offer “surprisingly rich, detailed, and accurate information” (Garrett, at 1054) of the crime. Also, targets in Mr. Big operations are often exposed to simulated violent retribution by the crime boss first hand such as seeing a fellow member of the crime group being severely beaten as a result of disloyalty (see R v Bonisteel, 2008 BCCA 334 at para 15). The coercive nature of some of the scenarios could be a factor that induces unreliable confessions.

The presence of highly probative corroborative evidence seems to be an important element of the admissibility of Mr. Big confession, particularly considering a person could potentially lose his or her liberty, the possibility of dishonest witnesses giving a false testimony, the frailties of human eyesight and memories, and the increased availability of forensic and DNA testing.   In Mack, the confessions were subsequently confirmed by the finding of physical evidence that were highly probative. The Hart framework has tightened the rules on admissibility for evidence obtained during a Mr. Big operation, but it is still possible to admit Mr. Big confessions that are not corroborated by physical evidence and obtain a conviction. Campeau the Alberta Court of Appeal has extended the rule further to allow Mr. Big confession to be used against a third party of a crime, but there is a strong argument to be made that such evidence should only be admissible if other evidence exists to corroborate the Mr. Big confession.

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Implementing the New Liability and Financial Assurance Rules for Oil and Gas Operations on Federal Lands in the Arctic and for the East Coast Offshore

Wed, 07/22/2015 - 10:00am

By: Nigel Bankes

PDF Version: Implementing the New Liability and Financial Assurance Rules for Oil and Gas Operations on Federal Lands in the Arctic and for the East Coast Offshore

Regulations Commented On: [Draft] Canada Oil and Gas Operations Financial Requirements Regulations and accompanying Regulatory Impact Assessment Statement (RIAS), Canada Gazette, vol. 149, No. 28, July 11, 2015, [Draft] Canada-Newfoundland and Labrador Petroleum Financial Requirements Regulations, Canada Gazette, vol. 149, No. 28, July 11, 2015 and [Draft] Canada-Nova Scotia Petroleum Financial Requirements Regulations, Canada Gazette, vol. 149, No. 28, July 11, 2015

The current liability and assurance rules for oil and gas operations on federal lands and for the east coast offshore are, by any account, outdated and inadequate. The federal government undertook to review these rules following the Montara and Macondo spills and the National Energy Board (NEB) undertook its own review, The Past is Always Present: Review of Offshore Drilling in the Canadian Arctic, Preparing for the Future (2011). As a result of these initiatives the government introduced Bill C-22 which became the Energy Safety and Security Act, SC 2015 c.4 (ESSA). ESSA obtained Royal Assent on February 26, 2015 but will not (s.119) enter into force until 12 months after Assent or on an earlier date prescribed by Order in Council. The delay permits the development of the necessary regulations, including the three related regulations (supported by a common RIAS), that are the subject of this post. Bill C-22 once in force will, inter alia amend the liability and financial assurance provisions of the Canada Oil and Gas Operations Act, RSC 1985, c. O-7 (COGOA), the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, SC 1987, c.3 and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, SC 1988, c.28. This post will focus on the COGOA rules although what is said here for the most part applies equally to the areas covered by the Accord Acts. The first part summarizes the current COGOA provisions. The second part summarizes the changes that ESSA makes to COGOA. The third part discusses the regulations and the accompanying RIAS. The fourth part offers some comments on the regulations while the final part asks what is missing from this regime.

What follows is complicated. It is complicated still further because ESSA contains what are known as “co-ordinating amendments”. These are additional amending provisions which are contingent on amendments to other statutes. In this particular case s.118 of ESSA provides that COGOA will be further amended when both ESSA and Bill C-15, the Northwest Territories Devolution Act enters into force. Since that Act has already entered into force as SC 2014, c.2 the relevant trigger is that described above for ESSA to enter into force. Suffice it to say that these additional amendments will, inter alia, change our understanding of the application of the new liability cap provisions of COGOA. I am grateful to Nicole Godbout, legal counsel with the NEB, for drawing these coordinating amendments to my attention.

  1. The Current COGOA Regime

COGOA makes use of both absolute and fault based liability to try and create a regime to ensure that “the polluter will pay” for any costs associated with a spill from drilling or production. The Act channels absolute liability to the person who holds the drilling authorization (effectively the operator) (s.26(1)) for damage to third parties and clean-up expenses, up to a “prescribed amount”. The liability is absolute rather than strict because there are no grounds for exculpation listed in the statute. In addition, COGOA imposes fault-based liability on any person whose fault or negligence caused the spill or who by law are responsible for others whose fault or negligence may have caused the spill. Fault based liability is unlimited but requires proof of negligence. Under the current regime, the Oil and Gas Spills and Debris Liability Regulations, SOR/87-331 limits the absolute liability of the holder of the well authorization to between $10 and $40 million (the “prescribed amount”) depending on the location of the well (e.g. onshore or offshore). These amounts were first fixed in 1987 and have not changed in the intervening years. Experience with other spills, especially offshore spills such as Montara and Macondo, demonstrate that these amounts are completely inadequate. As for financial assurance (i.e. proof and security arrangements demonstrating ability to pay) the Act requires the holder of the well authorization (s.27) to provide the NEB “with proof of financial responsibility in the form of a letter of credit, a guarantee or indemnity bond” or other form satisfactory to the NEB and in an amount satisfactory to the NEB. The holder of the authorization must ensure that the “proof of financial responsibility” remains in force for the duration of the work or other activity. In the event of an incident, the Board may (s.27(2)) require that monies be paid out of funds made available through the financial instrument to satisfy “any case or class of cases” in respect of any claim that might be made under the statute, regardless of whether or not proceedings have actually been instituted. Neither the Act nor the regulations provides any guidance as to the amount or form of financial assurance that the NEB should require, neither as to a specific amount nor as to the criteria or methodology that the Board should apply in determining an appropriate amount. A Q & A statement on the Board’s website prepared as part of the Board’s Arctic Review describes the Board’s actual practice:

There is nothing in the Canadian Oil and Gas Operations Act that limits the amount of financial responsibility. In the past, the Board has required security in an amount equal to the limits of absolute liability. It has also required proof of financial responsibility in the form of audited financial statements or guarantees as evidence that the company is able to meet any financial liability that might be incurred as a result of drilling the well. It is up to the NEB to determine the amount of proof of financial responsibility.

It is perhaps worth emphasizing for the discussion that follows that the NEB’s discussion to some extent conflates two distinct concepts, financial security and financial resources. “Financial security” (or financial assurance or evidence of responsibility) generally refers to particular financial instruments such as letters of credit or promissory which serve to guarantee that an operator (and the regulator) will have funds on hand to cover losses and clean-up expenses. “Financial resources” on the other hand may simply refer to the idea that an operator’s assets exceed its liabilities by a sufficient amount that it can be expected to have resources on hand to pay for the costs (clean-up and compensation for damage) entailed by a spill.

  1. The Changes to COGOA

ESSA keeps the basic structure of absolute and fault-based liability outlined above but makes five main changes to the liability and financial assurance provisions of COGOA. First, the amendment adds a new head of recoverable damages in the form of liability for “all loss of non-use value relating to a public resource that is affected by a spill…”. For some discussion of the non-use value issues under ESSA as well as a broader discussion of Bill C-22 see the post by my colleague Martin Olszynski here. Second, the amendments significantly change the upper liability caps from $40 million to $1 billion, with the actual amount varying depending upon the same sorts of locational factors as before. In some cases, however, (e.g. onshore wells not located close to a waterbody in Nunavut) the cap (s.26(2.2)(c)) for absolute liability remains low – $10 million.

Third, the amendments effectively adopt the distinction (described above) that the Board has made in its practice with respect to financial assurance (responsibility) and available financial resources (although the Board’s terminology as suggested above is not completely consistent with that adopted in the Act). As for the provision of actual security (or financial assurance (responsibility)), the Act continues to require (s.27(1)) that this principally shall be in the form of a letter of credit, guarantee or indemnity bond. It is here that the coordinating amendment provisions become important. As the text will ultimately appear when these amendments are triggered s.27 will require that in any application for approval of a well, or for production, in any offshore area within the geographical scope of COGOA (hereafter COGOA offshore well) this shall be $100 million or such greater amount as might be determined by the Board (and in a particular case as described below, a reduced amount). In other areas, and for other types of authorization, the Act (s.27(1)(b)) reverts to the current approach and stipulates that this shall be “in an amount satisfactory to the Board.” There is nothing however which requires the Board to follow the practice referred to above of requiring an applicant for an authorization to provide financial assurance (responsibility) in an amount that equals the amount of its absolute liability. A further innovation in ESSA is that the amendment will permit an applicant (s.27(1.01)) to comply with the prescribed $100 million financial assurance requirement (i.e. COGOA offshore wells, but not other cases) by providing proof that it “participates in a pooled fund … established by the oil and gas industry … maintained at a minimum of $250 million” and meeting other prescribed requirements.

As for the availability of financial resources (not financial assurance (responsibility)), a new s.26.1 will require that a person proposing to drill a well or to produce oil or gas must provide proof “in the prescribed form” that it has the financial resources to pay up to the amount of its absolute liability limit (see above) or, if the NEB considers it necessary, a greater amount. The Act does not provide any specific guidance to the Board as to the matters that it should take into account in determining whether it is necessary to prescribe a greater amount, although it does provide that the NEB (s.26.1(3) “is not required” to consider the potential loss of non-use values.

Fourth, while the new Act, as noted above, prescribes absolute liability amounts and in one case (COGOA offshore wells) the amount of financial assurance (responsibility) that must be provided ($100 million), the new Act also introduces a power to prescribe lesser amounts under certain circumstances. The power is laid out in a new section of the Act (s.27.1) which provides that the Board may make a recommendation to reduce the prescribed amount of absolute liability (s.26(2.2) or the amount of financial assurance (responsibility) required under s.27(1)(a) (which deals exclusively with the provision of financial assurance for COGOA offshore wells). It is important to recognize that the section conflates two different concepts: that of the cap on absolute liability and that of the amount of financial assurance that should be made available. In any event the new s.27.1(2) & (3) goes on to provide that the lower adjusted amount, if approved by the Minister, serves to cap the amount of financial assurance that the applicant must provide (but note that, except in the case of operations within Nunavut, the actual amount of financial assurance (responsibility) to be provided is in the discretion of the Board and is not prescribed by the Act). The RIAS accompanying these draft regulations describes the power to prescribe a lesser amount as follows:

…. the Act also establishes the authority for the Boards to recommend to the ministers (i.e. in non-Accord Act areas: the Minister of Natural Resources or the Minister of Indian Affairs and Northern Development; and in the Accord Act areas: the federal Minister of Natural Resources as well as the provincial minister with jurisdiction over offshore oil and gas) that the absolute liability limit and corresponding financial resources amount, or the amount of financial responsibility, be lowered for certain low-risk projects on a per-project basis (emphasis supplied).

Finally, the Act (s.14) creates some new regulation making powers including the power to make regulations with respect to a pooled fund and concerning the circumstances under which the NEB might make a recommendation to reduce the level of financial assurance in any particular case. There is, however no regulation making power, either in the current Act or in the provisions introduced by ESSA, to limit the discretion of the Board with respect to fixing the amount of financial assurance that is to be provided by the applicant (but note, as above, that the amount is prescribed in respect of COGOA offshore wells (the new s.27(1)(a) as further amended by the coordinating amendment provisions).

In sum, it is important to emphasize that the new Act makes four distinctions as to “amounts” as follows:

  1. The amount of absolute liability (s.26(2.2))
  2. The amount of financial assurance\responsibility that must be provided (s.27) (presumably in a typical case less than (1) – otherwise the distinction that ESSA makes between financial assurance (responsibility) and proof of financial resources is a nonsense.)
  3. The amount of financial resources (s.26.1) that an applicant must demonstrate (the amount fixed under (1) – the level of absolute liability).
  4. The amount of prescribed financial assurance ($250 million) that can be covered by way of participation in a pooled fund operated by industry.

The result is that an applicant may not be required to post financial assurance (responsibility) as to the full amount of its absolute liability although it will always have to demonstrate that it has available financial resources up to that amount. The amendments to COGOA involved a trade-off between dramatically increasing the cap on absolute liability and a refusal to draw a tight connection between the cap and the provision of financial assurance.

  1. The Draft Regulations

The regulations deal with three issues which the Act left to be prescribed by regulations. These are, in the order discussed above: (1) details as to the pooled fund as a means of establishing financial assurance (responsibility); (2) the circumstances under which the Board should be able to recommend lesser amounts for financial assurance and\or the applicable absolute liability limit; and, (3) the means by which an applicant might be able to establish the availability of financial resources (not, financial assurance (responsibility)).

The Pooled Fund

As noted above, the Act provides that an operator may be able to meet its financial assurance (responsibility) requirements (at least in some cases) by membership in a pooled fund operated by industry. The regulations flesh out some of the requirements that an industry fund must meet. Thus, s.3 prescribes that a pooled fund must be located and administered in Canada and that it can be used “solely to make payments” with respect to oil and gas operations occurring in areas covered by the Accord Acts and at least some of the areas falling under COGOA (more on this below). The same section requires that such payments must be made to the relevant Board on demand and that the administrator of the fund must provide the Board with certain information including audited financial statements which establish that the fund is maintained at a minimum of $250 million. In addition, s. 4 effectively repeats the requirement of s.27(5) of the Act which stipulates that where there is a payment out of the fund the holder of the authorization in respect of which the payment was made has a duty to reimburse the fund. The regulation prescribes that this amount is due within seven days of the date of payment.

These provisions together make it clear that the fund is not a liability pooling fund or a mutual assurance fund of some sort. Instead, it is a simply a means by which an operator can share with others the duty to provide security (financial assurance (responsibility)) up front. The liability remains that of the holder of the authorization. While the fund will bear the loss if the authorization holder fails to pay, the fund has a right to reimbursement from the holder of the authorization.

The Case for Reduced Financial Assurance

As noted above, s.27.1 allows the Minister to reduce the applicable amount of financial assurance on the recommendation of the Board. Section 5 of the Regulations aims to describe the circumstances under which the NEB may make such a recommendation and as such establishes a number of conditions precedent. First, the Board must be satisfied in respect of a particular applicant that the estimated total of the losses, damages, costs and expenses (but not non-use value losses) for which the applicant could be held to be absolutely liable ($1 billion or $100 million as the case may be) is in fact less than that. The Board’s recommendation must (s.5(2))

… identify the hazards that are relevant to the proposed work or activity to which the application pertains and must include an assessment of the risks associated with each event that could reasonably be expected to occur in connection with each of those hazards and that could result in debris, in a spill or in an authorized discharge, emission or escape of petroleum.

The Board must also provide additional supporting information including

(a) the estimated total of the losses, damages, costs and expenses referred to in subsection (1);

(b) the recommended amount that is less than the amount referred to in paragraph 26(2.2)(a) or (d) or 27(1)(a) of the Act, as the case may be;

(c) a summary of the reasons for the recommendation;

(d) a summary of any information provided by the applicant to the Board that the Board considers to be pertinent.

The structure of the Act and regulations make it clear that the minister can only act on the basis of a Board recommendation.

Opportunities for Establishing Financial Responsibility\Resources

As noted above, s.26.1 of COGOA requires an applicant to establish that it has the financial resources (not financial assurance (responsibility)) to cover the amount of absolute liability. The regulations elaborate on this requirement. Section 2(1) requires the applicant for an authorization to provide the Board with “a statement of its net assets or of funding arrangements that it has made that demonstrates to the Board’s satisfaction that it is able to pay the applicable amount.” Section 2(2) provides that the statement must be accompanied by

… one or more of the following documents that substantiate it:

(a) the applicant’s most recent audited annual financial statement and, if the applicant has been given a credit rating by a credit rating agency that is current at the time the application is made, a document that indicates that credit rating;

(b) a promissory note;

(c) an insurance policy or a certificate of insurance;

(d) an escrow agreement;

(e) a letter of credit;

(f) a line of credit agreement under which the funds identified in the statement are available;

(g) a guarantee agreement;

(h) a security bond or pledge agreement or an indemnity bond or suretyship agreement.

4. Commentary

This section comments on three matters: (1) the industry pooled fund provisions, (2) the “lesser amounts” issue, and (3) proof of financial assurance.

The Ability of an Applicant to Use an Industry Pooled Fund to Establish Financial Assurance

The RIAS described the intent behind the pooled fund provisions as follows:

Establishing the parameters for the use of a pooled fund as an alternative to other financial responsibility instruments will afford added flexibility to those interested or involved in exploring for, and developing, oil and gas resources in Canada’s offshore areas, while safeguarding the Boards’ ability to have access to liquid funds, as required. This flexibility could be beneficial to operators, as it could potentially save them some of the administrative costs associated with having to renew or maintain financial instruments with a financial institution (e.g. there are costs associated with having a bank issue a letter of credit and ensuring it remains valid and accessible for a predetermined period of time [one year or more]).

It seems fairly clear from this that the pooled fund is intended to be used for offshore operations on the east coast and in the Arctic where absolute liability levels are at $1 billion. In the case of the Arctic this idea is carried through into the regulations by providing that the pooled fund can be used for oil and gas operations for what was described above as COGOA offshore wells (here again one has to read the ESSA amendment through the lens of the additional co-ordinating amendment provisions to make sense of this; the regulations are premised on this contingency).

Lesser Amounts

The reduced financial requirement provisions are designed to accommodate offshore projects that don’t reflect the usual risk profile of such projects. The RIAS gives as examples shallow water natural gas extraction and onshore to offshore drilling. Such activities may not necessarily be low risk since much will depend on the geology and many such inshore areas may present highly valued environments both ecologically and for traditional use by aboriginal populations. Consider, for example, inshore areas in the Beaufort Sea and the Mackenzie Delta. Thus, while in principle it might be appropriate to lower the amount of financial assurance to be provided, this should only be permitted following a rigorous assessment premised on a worst case scenario review. While the regulations represent a valuable effort to limit the circumstances under which an applicant might be able to make a case for reduced financial assurance they do not seem to go this far and in particular do not use the language of worst case scenario planning. The regulations might usefully clarify this. For example, the provisions of the Inuvialuit Final Agreement (IFA) are much clearer in prescribing the importance of worst case scenario planning (IFA, s.13(11)).

Finally, I was surprised to see that the Act apparently contemplates (and certainly as interpreted in the RIAS) lesser amounts not only for the provision of financial assurance (responsibility) but also reductions in the amount of an operator’s absolute liability. It is also remarkable to me that this can be accomplished by means of a ministerial order (albeit on the recommendation of the NEB).

Proof of Financial Resources

The Regulation (s. 2(2)) offers an applicant a number of ways in which it can substantiate its claim that it has adequate financial resources to meet its level of absolute liability. While items (b) to (h) (quoted above) all require some form of security or assurance, item (a) is little more than a balance sheet exercise in which the applicant establishes that its assets exceed its liabilities by at least the amount of any level of potential absolute liability. It is obvious that most if not all applicants will aim to rely on this paragraph in order to demonstrate proof of available financial resources and will seek to avoid providing any form of additional assurance. Some will never qualify (see “Giving Away the Arctic Farm” post), but other cases may prove more difficult. Consequently it would be useful if the Regulation provided some guidance as to when the Board should require additional assurance under one of the remaining paragraphs. Clearly it should require additional assurance if the applicant cannot meet the basic coverage ratio as described above, but it is doubtful if that should be regarded as adequate, especially given the volatility of commodity prices. An oil and gas company that can demonstrate an appropriate coverage ratio when oil stands at $100 per barrel will be in a very different position if oil is at $55. Given this volatility the Board needs to demand a coverage ratio in excess of 1.0 and\or the opportunity to require additional proof where coverage falls below a prescribed amount. While the Act imposes a duty on the holder to maintain its “proof of financial resources” “in force” for the duration of the activity, it is not clear what this means in the context of an audited financial statement of assets and liabilities.

What is Missing from this Scheme?

I think that there is one important element that is missing from this scheme and that relates to the rules pertaining to the provision of financial assurance (responsibility). As noted above, the Act makes a distinction between the provision of financial assurance (responsibility) and proof of financial resources. The distinction is an important one for several reasons. First, the Act is prescriptive as to the form of financial assurance (s.27(1) – letter of credit, guarantee or indemnity bond), and, once provided, that assurance results in a dedicated fund that can be used to pay any claims that fall within the ambit of the statutory causes of action (s.27(2)). The Act is far less prescriptive in relation to proof of financial resources. Second, amounts provided by way of financial assurance (responsibility) are available to the Board to pay claims and make payments to those who incur costs or suffer losses in dealing with a spill (s.27(2)) without recourse to the ordinary courts. This would not be the case with respect to proof of financial resources, at least where such proof takes the form of balance sheet coverage of assets over liabilities. Thus at least from the perspective of potential victims of an oil spill it is clear that financial assurance (responsibility) has significant advantages over proof of financial resources. It is therefore unfortunate that both the Act and these new regulations are far more concerned with proof of financial resources than they are with the provision of financial assurance (responsibility).

The default rule under the Act (the new s.27(1)(b)) is that the amount of any financial assurance (responsibility) is to be determined by the Board (s.27(1)(b)). The one exception to this is for what are described above as COGOA offshore wells for which the assurance is fixed at a minimum of $100 million. Beyond this, neither the Act nor the regulations create a presumption as to the level of assurance that the Board must require, or offer the Board any guidance as to the factors that it should take into account in setting that level of assurance. In this area of financial assurance therefore the Act and the Regulations mirror the status quo (except for Nunavut). At the end of the day this is more a problem with the legislation than with the regulations; this is too big of a problem to be fixed by means of regulations and will require an amendment to the Act.

The draft regulations are open for comment for thirty days from gazetting, July 11, 2015.

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Mandatory Retirement of School Bus Drivers Again Before Alberta Human Rights Tribunal

Tue, 07/21/2015 - 10:45am

By: Linda McKay-Panos

PDF Version: Mandatory Retirement of School Bus Drivers Again Before Alberta Human Rights Tribunal

Case Commented On: Mortland and VanRootselaar v Peace Wapiti School Division No 76, 2015 AHRC 9

Once again, the Human Rights Tribunal has been asked to address the issue of mandatory retirement for school bus drivers in Alberta. In an earlier case involving a preliminary hearing, Pelley and Albers v Northern Gateway Regional School Division No 76, 2012 AHRC 2 (Pelly and Albers), the Tribunal held that the School Division was an “employer” for the purposes of the Alberta Human Rights Act, RSA 2000 c A-25.5 (AHRA), section 7. (See my previous post on Pelly and Albers).

Mortland and VanRootselaar were each school bus drivers employed by the Peace Wapiti School Division No 76. They were mandatorily retired at the end of the school year in which they attained the age of 65. They filed individual complaints of age discrimination under section 7 of the AHRC (employment) with the Alberta Human Rights Commission. The School Division argued that the “age 65 or less” standard for bus driver employment was a bona fide occupational requirement under subsection 7(3) of the AHRA.

The Tribunal resolved a number of interesting preliminary issues raised by the School Board, such as constitutional jurisdiction (the Board argued its transportation services are under federal regulation and thus are subject to federal human rights legislation – see paras 12 – 71), res judicata and abuse of process (at paras 72-96), unreasonable delay (at paras 97-108) and some other procedural complaints, all in favour of the complainants.

The Tribunal concluded that prima facie age discrimination was established (at paras 215-222), and that a bona fide occupational requirement defence was not established (at paras 387-435). Nor could the respondents rely on AHRA section 11 (reasonable and justifiable discrimination) to defend their actions (at paras 223-227).

The Tribunal heard expert evidence relating to driver age and the safe transportation of students, and concluded that an absolute age 65 or less standard applied to mandatorily retire school bus drivers, was not reasonably necessary for the safe transportation of students (at para 10). While visual and cognitive functioning declines slowly with age, the rate of change affects individuals differently. Individual driver assessment should be used to monitor safe driving performance and safe transportation of children by individual drivers, rather than a blanket age restriction at age 65 (at para 11).

The bulk of the case focused on whether mandatory retirement at the age of 65 is a bona fide occupational requirement or is reasonable and justifiable. The respondents sought to rely on Ensign and Board of Trustees of Clearview Regional School Division No 24 (1999), Alta HR Panel [CHRR Doc 99-054] to support their argument that it was reasonably necessary to assure the efficient and economical performance of the job of school bus driver, to require one to be less than 65 years of age. However, the jurisprudence on bona fide occupational requirement and mandatory retirement has changed and developed significantly since that case was decided.

The Tribunal relied on subsequent cases on mandatory retirement and adopted the test for bona fide occupational requirement set down in the case of British Columbia (Public Service Employee Relations Comm) v BCGSEU, [1999] 3 SCR 3 (Meiorin) at para 54:

(1) that the employer adopted the standard for a purpose rationally connected to the performance of the job;

(2) that the employer adopted the particular standard in an honest and good faith belief that it was necessary to the fulfilment of that legitimate work-related purpose; and

(3) that the standard is reasonably necessary to the accomplishment of that legitimate work-related purpose.  To show that the standard is reasonably necessary, it must be demonstrated that it is impossible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship upon the employer.

In applying the test to the case at hand, the Tribunal concludes as follows:

  1. The Tribunal was satisfied that the rule of “age 65 or less” was rationally connected to job performance because it related to safe student transportation (at para 391).
  1. The Tribunal was satisfied that the School Division maintained a mandatory retirement policy in an honest and good faith belief that it was necessary to its purpose of safe student transport (at para 395).
  1. The Tribunal held that the third step of the test was not met. First, the School Division had not demonstrated that the blanket restriction of “age 65 or less” standard was actually reasonably necessary. The Tribunal held that the expert evidence did not establish at what age, if any, an increase in collision rate or negative driving performance exists for school bus drivers (at para 397). Second, the Tribunal held that there were better approaches and alternatives to the issue of safety than maintaining an absolute age-based restriction. For example, if an employer has concerns about the risk of driver performance (regardless of the driver’s age), there can be more frequent medical exams and road evaluations. Other possible accommodations may include equipment modification such as mirrors or rear-view cameras (at para 430).

In finding that the mandatory retirement policy was discriminatory, the Tribunal found that the School Division could not rely on the defence of bona fide occupational requirement (at para 434). The Tribunal ordered reinstatement with updated training before the complainants were permitted to drive students. Mortland was awarded 18 months of lost wages and benefits. VanRoostelaar was to receive lost wages and benefits from the date of termination to the date he leased his farmland (less some deductions that the parties agree upon) (at paras 466-469). Each complainant was awarded $10,000 for injury to dignity and loss of self-respect (at para 478). In addition, the School Division was ordered to cease to mandatorily retire school bus drivers (at para 480).

Commentary

It is interesting to see that, perhaps because of the nature of the relationship between the bus drivers and the School Division, the respondent did not try to make the argument that the two bus drivers were not “employees” of the School Division. If this argument had been successful, the case against the School Division would have been dismissed. There is contradictory caselaw on the issue of whether school bus drivers are employees of School Divisions or of the contracting bus companies. For example, in Pelly and Albers, the School Division argued unsuccessfully it was not an employer because the employers (First Student Canada and 1098754 Alberta Ltd.) were contractors with the School Division. On the other hand, in Jurek v Rocky View School Division No 41, 2011 AHRC 6, Jurek complained to the AHRC that he was not allowed to bid in Southland’s rural bus routes under Rocky View School Division No. 41 because of his age. The School Division had a policy that drivers had to be less than 66 years of age as of September 1 of each school year. Jurek’s complaint against Southland was dismissed because Southland accommodated Jurek by assigning him to bus routes other than those in the Rocky View School Division (these others did not have an age restriction). He then complained against Rocky View School Division for age discrimination in employment. Tribunal Chair Shirley Heafy held that the School Division was not an employer, and hence was not an appropriate respondent.

These cases illustrate the unfortunate circumstance that, despite the current legal trend that discourages blanket mandatory retirement policies, whether or not a School Board can legally mandatorily retire a bus driver will depend on whether it is considered an employer of the driver under the AHRA. As with the case of Lockerbie & Hole Industrial Inc v Alberta (Human Rights and Citizenship Commission, Director), 2011 ABCA 3 I argued that an overly legalistic interpretation of “employment” for the purposes of human rights law would result in off-loading the liability from the policy-maker to the contractor who is the immediate employer, thus forcing the contractor to abide by the offensive policy in order to retain the policy-maker’s business and forestall an undue hardship (See my earlier post on Lockerbie).   This would, once again, mean that human rights are violated simply by setting up the working relationship in a way that would avoid the application of human rights legislation. And, the practical outcome will be that some school divisions will continue to be able to have mandatory retirement policies, while others will not.

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Fundamental Legal Questions and Standard of Review in Alberta

Mon, 07/20/2015 - 10:00am

By: Shaun Fluker

PDF Version: Fundamental Legal Questions and Standard of Review in Alberta

Case Commented On: Stewart v Elk Valley Coal Corporation, 2015 ABCA 225

The Court of Appeal has issued another strong statement on standard of review and clearly asserts its intention to place boundaries on the application of a presumption of deference in the judicial review (or statutory appeal) of tribunal decisions. Readers may recall my earlier post where I commented on the direction taken by the Court on standard of review in Edmonton (East) Capilano Shopping Centres Ltd v Edmonton (City), 2015 ABCA 85 particularly in relation to the Court’s reluctance to defer to the interpretation by a tribunal of its home statute. It has seemed in recent years that the Supreme Court of Canada has come out strongly in favour of deference to legal determinations by statutory tribunals concerning their home legislation, and so the Capilano decision struck me as an outlier. The Court’s reasoning in Stewart v Elk Valley Coal Corporation builds on its earlier Capilano judgment and thus further indicates the Court has plans to rework the presumption of deference in judicial review for Alberta.

The problem with these recent decisions isn’t so much the Court’s desire to curb the presumption of deference and apply correctness to review fundamental legal questions decided in the first instance by a statutory tribunal – this is well within the jurisprudence of Dunsmuir v New Brunswick, 2008 SCC 9 and seems to make good sense from most perspectives – but rather the ease with which the Court suggests we can decipher fundamental legal questions from the rest of the field in deciding when to apply the presumption of deference and when not to. When exactly is a legal issue ‘fundamental’ or simply a matter of concern within a particular area? I have doubts this line of reasoning will alleviate whatever seems to be troubling the Court about standard of review. Instead, I think this direction will ultimately take us back to the days when certain tribunals were subject to high judicial scrutiny because they were categorized into an area of fundamental or general concern– eg human rights tribunals – and others whose work was categorized into a specialized field – eg tribunals with more of economic mandate – were subject to less judicial scrutiny. Perhaps we have never left this categories approach, but the Supreme Court of Canada has certainly tried to make this appear like a more principled area of jurisprudence.

Stewart involves the appeal of an Alberta Human Rights Tribunal decision under the Alberta Human Rights Act, RSA 2000, c A-25.5 concerning alleged discriminatory action by Elk Valley Coal. I am going to leave the substantive discrimination aspects of this decision to others (my colleague Jennifer Koshan posted on Justice Peter Michalyshyn’s earlier decision at the Court of Queen’s Bench ruling in this matter – Bish v Elk Valley Coal Corporation, 2013 ABQB 756), and instead focus only on what the Court of Appeal has to say about standard of review in administrative law.

The Court sets out its standard of review analysis in paragraphs 47 to 59, and of note this aspect of the decision is unanimous (Justice Brian O’Ferrall dissents on other portions of the decision). The language chosen by the Court to explain standard of review seems curious to me, or at least suggests the Court is aware that its direction here will be scrutinized and thus wants to flex some legal muscle. Early on the Court cites Oliver Wendell Holmes – a noted legal realist – and pushes the legislature into the back of the room when it comes to lawmaking (at paras 48, 49). Next the Court describes earlier decisions concerning the test for discrimination under human rights legislation as “common law elaborations of statute” (at para 50). Now I’m not sure exactly what this phrase means, but I do know that some will see it as code for trumping the legislative branch when it comes to lawmaking. And lastly we are reminded that judicial review is “firmly entrenched in our Constitution” (at para 54). I can’t think of why this reminder is necessary here, except to emphasize that the superior courts ultimately trump the legislature in our legal order.

The standard of review analysis in this case is essentially dealt with in paragraph 47 where the Court makes 2 findings that point to correctness: (1) the test for discrimination under human rights legislation is legal issue of general importance to the legal system as a whole (Dunsmuir states this attracts correctness at para 60) and (2) jurisdiction over questions concerning discrimination is shared between the superior courts and statutory tribunals (Rogers Communications Inc v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 states this scenario of shared jurisdiction attracts correctness at paras 10-20). I also note that Justice Michalyshyn had also canvassed the precedents and determined the standard of review to be correctness when he heard this matter at the Court of Queen’s Bench in 2013 (Bish v Elk Valley Coal Corporation, 2013 ABQB 756 at paras 14-23).

The appropriate standard of review in this case does not seem particularly contentious in light of the foregoing – until one considers the argument from the Human Rights Tribunal that its determination is entitled to deference based on paragraphs 166 to 168 of the Supreme Court of Canada’s 2013 decision in Saskatchewan (Human Rights Tribunal) v Whatcott, 2013 SCC 11. It is here where I think you can see the divide between the recent Supreme Court of Canada jurisprudence and the direction of the Alberta Court of Appeal on standard of review. In Whatcott the Supreme Court of Canada is also considering the interpretation of human rights legislation by a human rights tribunal and makes short work of the standard of review indicating that the law post-Dunsmuir clearly calls for deference to the interpretation by the tribunal of its home legislation on questions within its expertise.

The Court of Appeal appears to be on a mission to curb the presumption of deference as it has been developed by the Supreme Court of Canada and thus cannot avoid some grand theorizing in administrative law here, and this is where the task gets considerably more difficult for the Court and it most certainly cannot be accomplished in the 13 paragraphs devoted to standard of review in this decision. We are given the familiar dichotomy that superior courts get the last word on fundamental points of law and statutory tribunals get the last word on questions of fact (at paras 52-54), and a curious statement to conclude this portion of the judgment (at para 59):

With the Constitutionalization of judicial review as a central feature of the role of the superior courts in the guarantee and enforcement of the rule of law, it may be time for the legal evolution of judicial review / tribunal appeals to reach the stage of a comprehensive rationalization. It may be that due respect for legislative intent is reflected not in semantics or presumptions about what sort of review attends a question of law, but in realistically defining what is a question of law (as compared to exercise of discretion or mixed fact and law).

Apparently the Court abandoned a longer version of this analysis (at para 55), and that is unfortunate because this abbreviated version falls well short of addressing the real problem in administrative law today – the problem that the Supreme Court of Canada has expressed countless times over and with Dunsmuir has positioned the presumption of deference as the tool to address it. The problem is simply stated as follows: Develop a principled approach to reconcile traditional accounts of the rule of law with the modern reality that administrative agencies and statutory tribunals who do not operate like or resemble the ordinary courts but who nevertheless occupy a large amount of space in our legal system and cannot avoid making legal determinations in exercising their statutory duties which often implicate individual rights and interests to a greater extent than judicial decisions. It may be that the answer to this problem lies in a more robust understanding of how to separate truly fundamental questions of law from the rest of the field – but it will take plenty more than what we have seen thus far from the Court to sort this out.

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Expensive, Complex Appeals from Residential Tenancy Dispute Resolution Service Orders

Thu, 07/16/2015 - 10:00am

By: Jonnette Watson Hamilton     

PDF Version: Expensive, Complex Appeals from Residential Tenancy Dispute Resolution Service Orders

Case Commented On: Nee v Ayre & Oxford Inc, 2015 ABQB 402 (CanLII)

The decision by Justice Donald Lee in Nee v Ayre & Oxford Inc is one of several decisions that he has made dismissing tenants’ appeals of Residential Tenancies Dispute Resolution Service (RTDRS) orders because the tenant failed to file a transcript of the oral hearing that took place before an RTDRS officer. This decision builds on Justice Lee’s prior judgment in Herman v Boardwalk Rental Communities, 2011 ABQB 394 (CanLII), as it reproduces twelve paragraphs of his Herman decision to provide the reasons for dismissing Ms. Nee’s appeal. It is also very similar to Justice Lee’s decisions in Zibrowski v Nicolis, 2012 ABQB 236 (CanLII). Although Nee v Ayre & Oxford Inc does not make any new legal points, it is worth a post because it once again highlights how complex and expensive appeals from RTDRS orders are, especially for many self-represented litigants who are, after all, the people for whom the RTDRS process was designed.

What exactly does that complex and expensive appeal process entail?

The rules regulating the RTDRS are set out in the Residential Tenancy Dispute Resolution Service Regulation, Alta Reg 98/2006. Appeals are governed by sections 23 to 29 of that regulation. In order to appeal an order, the dissatisfied landlord or tenant must do all of the following things:

  • Appeal to the Court of Queen’s Bench (section 23(1)), a court that is more expensive and formal and less user-friendly than the Provincial Court of Alberta (see for example, the Provincial Court’s numerous web pages describing the “Residential Tenancies Process” in plain language, aided by easy to follow flowcharts and downloadable forms).
  • Appeal on “a question of law or of jurisdiction” (section 23(1)), even though the distinction between questions of law or jurisdiction, on the one hand, and questions fact or of mixed fact and law, on the other hand, has bedeviled courts and lawyers for decades (see, for example, the summary of these categories in Paul Daly, “The Unfortunate Triumph of Form over Substance in Canadian Administrative Law” (2012) 50 Osgoode hall Law Journal 317 at 331- 342)
  • Within 30 days of the RTDRS order, the landlord or tenant appealing must:
    • File a Notice of Appeal in the Court of Queen’s Bench that sets out the questions of law or of jurisdiction that are the basis of the appeal (section 23(1)(a)(i);
    • Pay the Court of Queen’s Bench fee for filing a Notice of Appeal from a RTDRS order, which appears to be $200, although this information is difficult to come by in Schedule B, Division 1 of the Alberta Rules of Court, AR 124/2010, and the fee may now be $250 under the Court Fees Amendment Regulation AR 71/2015, section 3(3)(a)(i); and
    • Serve the Notice of Appeal on the other party, the RTDRS, and anyone else the Court of Queen’s Bench orders them to serve (section 23(1)(a)(ii)).
  • Within seven days of the last day allowed for service of the Notice of Appeal, the landlord or tenant appealing must file three more documents in the Court of Queen’s Bench:
    • An Affidavit of Service of the Notice of Appeal (section 23(1)(b)(i));
    • A copy of their requisition to the RTDRS for a transcript of the oral hearing before the RTDRS officer — see Alberta Services Transcript Request Form (section 23(1)(b)(ii); and
    • Either a receipt for their payment of the transcript, or written confirmation from the RTDRS that a transcript is not available(section 23(1)(b)(ii)(A) or (B).
  • Within three months of the date the Notice of Appeal is filed, file a copy of the transcript unless either the Court of Queen’s Bench orders otherwise or the RTDRS said a transcript was not available (section 23(2)).

How is service to be made? According to section 31(1) of the Regulation, service of the Notice of Appeal must be done the way section 57 of the Residential Tenancies Act, SA 2004, c R-17.1 requires it be done. Section 57 of the Act requires that a notice be served personally, by registered mail (at a cost of $9, in addition to the normal postage price) or by certified mail (which is no longer a service offered by Canada Post). Section 57 tells you what address to use, what to do if a tenant is evading service, and what other statutes to look at if a landlord or tenant is a corporation. (The RTDRS has a helpful tip sheet of “RTDRS Document Service” how-to’s, and even though it is about starting RTDRS applications, not appealing them, it does explain registered mail service and other alternatives to personal service).)

A “Generic Affidavit of Service can be found under “Other Forms” under “Publications and Forms” on the Court of Queen’s Bench web site and an “Affidavit of Service by Tenant” is available on the Service Alberta RTDRS web site under “Application and Forms”. Then all that is needed is a Commissioner of Oaths before whom the Affidavit of Service must be sworn or affirmed. If you are in Calgary or Edmonton, Commissioners of Oaths are available at the RTDRS offices. All lawyers are Commissioners of Oaths and other individuals are too, but most of them charge for the service (see, for example, the $84 cost for non-members charged by the Calgary Chamber for their Commissioner of Oaths services).

And what about transcripts, the stumbling block for the tenant in this case and in the other cases cited in the first paragraph of this comment? The Alberta Services RTDRS web site includes a Transcript Request Form under “Application and Forms.” That form tells landlords and tenants the following:

The appeal process includes providing a transcript to the Court of Queen’s Bench. A transcript is an exact written record of the hearing. To get a transcript, you must hire a transcription business to convert the RTDRS audio recording into a transcript. These are the steps to take to obtain a transcript:

  1. Choose a transcription business. You will find a list of these businesses under “Court Reporters” or “Transcription” in telephone directories or on the internet. You may wish to contact several of these businesses to review their fees and availability. It is your responsibility to pay for the transcript.
  1. Submit the attached Audio Recording Request form to RTDRS by fax, email or in person at our Calgary or Edmonton offices. We will accept requests by letter, provided that it contains all of the same information as the form.
  1. Ask your chosen transcription business to submit a letter (on letterhead) to the RTDRS that confirms:

–   that you have hired them to transcribe the audio recording and

–   the RTDRS case numbers for the requested audio recordings.

  1. When the Audio Recording Request form and the letter from the transcription business are received by the RTDRS, the audio recording of the hearing is burned to a CD-ROM. RTDRS then advises the transcription business that the CD-ROM is ready for pick up at the RTDRS office. The transcription business arranges for a courier to pick up the CD-ROM and a copy of the Order (required for spelling names).
  1. The transcription business will contact you about the finished transcript. They will return the CD-ROM and Order copy to the RTDRS by courier.

So . . . “Choose a transcription business. . . . It is your responsibility to pay for the transcript.” translates into costs along the following lines. The Alberta Courts Transcript Management Services specifies how much a transcript will cost. It is based on a per character rate set out in the Alberta Rules of Court that varies by how quickly the transcript must be produced. If a transcript is required in two working days, the fee is $0.0072/character. If it is not required earlier than 30 calendar days, the fee is $0.0040/character. The Alberta courts website provides a handy formula for estimating costs:

To determine the approximate cost of your transcript use the following formula:

“X” Minutes x 900 (Characters/Minute) x Rate = Estimate

“X” Minutes x 54,000 (Characters/Hour) x Rate = Estimate

RTDRS hearings are normally scheduled for 30 minutes, unless the applicant wants more time (and even then they are usually limited to one half day). So if an RTDRS oral hearing lasts 30 minutes, and a tenant puts in a timely request in order to receive the lowest rate, the cost for transcripts would be 30 x 900 x $0.0040, or $108. However, an hour-long hearing quickly brings the costs over $200. A half-day hearing would cost substantially more, even at the lowest rate: 180 x 900 x $0.0040 = $648.

Even assuming a no-charge Commissioner for Oaths, service by the tenant by registered mail, a short 30 minute RTDRS hearing, and no time off work to serve documents, hire a transcription service, etc., a tenant is looking at over $300 to start an appeal of an RTDRS order. The costs could easily be double that, depending on the length of the oral hearing.

And a transcript, if available, is essential to an appeal of an RTDRS order. That is what Justice Lee determined in Nee v Ayre & Oxford Inc: failing to file a copy of a request for a transcript with the RTDRS and provide a receipt for the payment of that transcript was enough, by itself, to dismiss an appeal (para 6).

A transcript is essential for two reasons. First, because section 25(1) of the Residential Tenancy Dispute Resolution Service Regulation states that “no evidence other than the evidence that was submitted to the Dispute Resolution Service may be admitted” on the appeal. And second, because section 28 of the same Regulation states that “If an appellant fails to comply with the requirements of section 23, the appeal shall be dismissed by the Court of Queen’s Bench” (emphasis added).

On the first and more substantive point, Justice Lee noted in Herman v Boardwalk Rental Communities (at para 20), and reiterated in Zibrowski v Nicolis (at para 6) and now in Nee v Ayre & Oxford Inc (at para 6), because section 25(1) provides that the only evidence admissible in the appeal is the evidence before the RTDRS officer, if there is no transcript of that evidence:

To make a decision without all of the evidence before the Tribunal, including the representations and admissions made by both the Landlord’s representative and the Tenant/Appellant is an exercise fraught with problems which include requiring the Court to enter into the area of speculation as to what occurred at the RTDRS hearing and encouraging the improper rehearing of the case on appeal. In many instances hearing such an incomplete appeal also represents a breach of the principles of natural justice since the parties do not know the case that has to be met (emphasis added).

As an aside, that does leave up in the air what happens when the RTDRS confirms a transcript is not available, as they are expected to do at least occasionally under section 23(1)(b)(ii)(B) of the Regulation. Perhaps a not-so-improper rehearing of the case would be required, given that the requirement of section 23 would be complied with.

However, in Nee v Ayre & Oxford Inc, we have the more typical scenario of failure to file a request for the transcript and a receipt paying for the transcript, and a failure to file the transcript itself, all as required by section 23. And section 28 states such failures mean “the appeal shall be dismissed by the Court of Queen’s Bench” (emphasis added).

The production of transcripts has always been considered personal and not up to the courts or tribunals such as the RTDRS: Taylor v St. Denis, 2015 SKCA 1 (CanLII) at para 60. But arguments have been made recently, as in the Taylor v St. Denis case, that self-represented litigants should be exempt from the cost of mandatory trial transcripts because that costs prevents people from accessing courts. See Sarah Burton’s ABlawg comment, “A Constitutional Right to Free Transcripts?” The argument is an extension of the Supreme Court of Canada’s decision in Trial Lawyers Association of British Columbia v British Columbia (Attorney General), 2014 SCC 59 that found a hearing fee scheme unconstitutional because it prevented people from accessing courts. Transcript fees were distinguished in Taylor v St. Denis from hearing fees because the former are not government fees; they are fees charged by private businesses. However, as Ms Burton noted, an argument could have been made that the privatization of transcription services is a government policy.

In British Columbia, there are two Court of Appeal cases holding that there is no authority supporting a general right of access to justice that extends to transcripts: Pavlis v. HSBC Bank Canada, 2009 BCCA 450 (CanLII) at paras 8-9 and Allart v. Alec’s Automotive Machine Shop (2003) Ltd., 2014 BCCA 242 (CanLII) at para 23. Nevertheless, it should be noted that in the lower court decision in the latter case — Allart v. Alec’s Automotive Machine Shop (2003) Ltd., 2014 BCSC 476 (CanLII), dismissed for lack of evidence —Justice Bruce identified the costs of transcripts as an access to justice issue in the small claims context and “urge[d] the government to investigate ways in which the cost of appeal transcripts could be offset where the circumstances warrant such extraordinary measures” (at para 32). See also Ian Mulgrew, “Access-to-justice transcripts costs appeal rejected by B.C. Court of Appeal: Disabled woman needed to offer more proof that $750 fee was prohibitive”.

To make matters worse for many tenants, the Residential Tenancy Dispute Resolution Service Regulation provides in section 26 that “[t]he commencement of an appeal under this Part does not stay the order being appealed, unless the Court of Queen’s Bench on application stays enforcement or proceedings of the order pending appeal.” So a typical order for eviction of a tenant, as in this case, is still in effect unless the tenant brings a separate application. The tenant may have to leave the premises before the appeal can be heard, making the appeal rather pointless, as pointed out in a recent comment by Anna Lund in The Access Review about the decision in Boardwalk General Partnership v Montour, 2015 ABQB 242 (CanLII) on an application to stay an RTDRS order. (Ms. Lund also notes that the RTDRS appeal process can be prohibitively expensive for tenants who arrange for a transcript of the hearing to be prepared and filed as they can easily cost in excess of $200 and up to $1000 or more in exceptional cases.)

The steps in the appeal process might not seem like much to lawyers or even to repeat players such as property management companies or landlords with numerous rental properties. But try to imagine a tenant unfamiliar with legal language and court procedures contemplating doing the following: figure out a question of law or jurisdiction; write up a Notice of Appeal; file the Notice of Appeal, paying the filing fee; serve the Notice of Appeal on the landlord and the RTDRS; write up an Affidavit of Service; find a Commissioner of Oaths; swear the Affidavit of Service before a Commissioner of Oaths; fill in and file the Transcript Request Form with the RTDRS; find a few transcription businesses and get quotes; pick a transcription service and ask them to contact RTDRS; pay for the transcript, filing the receipt with the court; and file the transcript with the court. That is a rather intimidating list.

The RTDRS appeal process is too expensive and too complex for a system designed to be used by people who are self-represented. The informality of the RTDRS hearing and the complex and expensive appeal process both favour repeat players such as property management companies and landlords with multiple properties. The requirement for a question of law or jurisdiction is particularly chilling. A new appeal process would be a welcome small piece in increasing access to justice in the residential tenancy context. One piece of a new process and a way to alleviate the transcript cost burden could include a requirement that the RTDRS file its record, including a transcript, with the appeal court when the RTDRS is served with a Notice of Appeal.

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Alberta Decision on Knock-for-Knock Allocation of Liability in a Standard Form Drilling Contract

Wed, 07/15/2015 - 10:00am

By: Nigel Bankes

PDF Version: Alberta Decision on Knock-for-Knock Allocation of Liability in a Standard Form Drilling Contract

Case Commented On: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2015 ABQB 433

This case involves the interpretation of a standard form drilling contract. Under that contract, said (at para 5) to be negotiated between the Canadian Association of Oilwell Drilling Contractors and the Canadian Association of Petroleum Producers, the drilling contractor (here Precision) and the oil and gas operator (here Yangarra) agreed to accept an allocation of risks and liabilities based essentially on ownership interests rather than fault. Thus, Article 10.1 of the contract, subject to some listed exceptions, provided that:

Precision shall at all times assume all of the risk of and be solely liable for any damage to, loss of, or destruction of Precision’s Surface Equipment, regardless of the negligence or other fault of Yangarra or howsoever arising and Precision specifically releases Yangarra in regard to any claims that Precision may otherwise have in regard thereto.

By the same token, Yangarra (Article 10.3 and 10.4) agreed to accept risks and provide an indemnity in relation to any downhole issues:

Yangarra shall at all times assume all of the risk of and be solely liable for …any loss, damage to or destruction of:

(ii) Yangarra’s equipment …

(iii) the hole, reservoir or any underground formation …

regardless of the negligence or other fault of Precision or howsoever arising, and Yangarra shall defend and indemnify Precision from and against any and all actions, claims, losses, costs, damages and expenses resulting therefrom and specifically releases Precision from any claims Yangarra may otherwise make in regard thereto.

Yangarra shall at all times during a drilling program assume all of the risk of and be solely liable for the cost of repairing and re-drilling a lost or damaged hole, including, without limitation, the cost of fishing operations, regardless of the negligence or other fault of Precision or howsoever arising, and Yangarra specifically releases Precision from any claims Yangarra may otherwise have in regard thereto;

(emphasis added by the Court)

Master Prowse refers to this (at para 15) as a “negotiated form of bilateral no fault arrangement” but it is more commonly referred to a “knock-for-knock” contract. While unlawful or contrary to public policy in some jurisdictions (because the provisions potentially diminish the incentive to take care) they are common in some sectors (e.g. the offshore oil and gas industry) as an efficient way of resolving disputes especially where multiple parties (and especially sub-contractors) might be involved.

In this particular case Yangarra hired Precision to drill a number of wells. The first well was drilled successfully. During the drilling of the second well the facts (or the facts as claimed by Yangarra, since the case came before Master Prowse on a motion by Precision for summary judgment and thus Master Prowse accepted Yangarra’s version of the facts in the event of any conflict) suggested that an employee of Precision wrongly added sulfamic acid to the drilling mud rather than caustic potash and that as a result the drill string and bit became stuck. The well was subsequently abandoned and some of Yangarra’s equipment was lost downhole. As a result a substitute well was required. Precision commenced that operation but was ultimately replaced by another contractor. Precision sued for monies owing for its work on the drilling of these three wells. It appears (at paras 16, 28 & 29) that Yangarra in turn sought to set-off by way of counter claim any amount owed by Yangarra by its own damages including not only the value of the lost equipment but also the cost of the replacement well ($2.5 million) and the cost incurred by fishing operations on the second well in an attempt to recover equipment ($720,000). Precision sought summary judgment on these assumed facts on the basis that under the contract Yangarra had assumed liability for all of these costs and was therefore not entitled to any set-off.

Master Prowse concluded that this was an appropriate case for summary judgment and made the order sought by Precision. In so ordering Master Prowse rejected a number of arguments brought to bear by Yangarra.

The first such argument appears to have been that Yangarra might be able to recover on the basis of some legal theory (at para 34) (e.g. unjust enrichment) that was not covered by the allocation of risk in the contract. Not so, said Master Prowse quoting Article 10.13 of the contract:

For greater clarity, Precision and Yangarra acknowledge and agree that:

(a) the purpose of this Article X [ten] is to allocate contractually between Precision and Yangarra certain of the risks, responsibilities and potential losses or liabilities associated with the operations and activities involved in drilling a well under a drilling program; and,

(b) such allocation shall prevail in the place and stead of any other allocation of risks, responsibilities, or potential losses or liabilities that might be made on the basis of the negligence or other fault of either party or howsoever arising or any other theory of legal liability and notwithstanding the breach or alleged breach by either party of any provision of the drilling program not included in this Article X [ten]

(emphasis added by the Court)

While the contract might not cover the intentional infliction of harm there was no evidence that that was the cause of the harm.

The second argument was that the contract should be interpreted in light of a presumption that neither party would release the other from liability for gross negligence. Master Prowse’s response to this was that while such a presumption might be appropriate (at para 40) in situations involving “inequality of sophistication or bargaining power” that was not this case:

[43] In my view, it is entirely sensible to contemplate Precision and Yangarra releasing each other from claims based on gross negligence.

[45] Perhaps it is because, over time, drilling companies and petroleum companies have found it cheaper in time and money to insure their property and waive subrogated claims against the other, rather than retaining the right to sue the other?

A third argument was that an interpretation of the contract which relieved Precision from liability would lead to an absurdity or an inconsistency in the overall construction of the contract insofar as Precision had also contracted to drill the well in a good and workmanlike manner. Master Prowse found no such absurdity:

[57] In my view, in the context of a bilateral no fault contract, the court should not presume that Yangarra’s releasing of Precision from some of the consequences of not drilling in a good and workmanlike manner is commercially absurd.

[58] It is important to note in this context that Precision’s breach of its promise to drill in a good and workmanlike manner does have meaningful legal consequences under the contract.

[59] Significantly, the contract expressly allows Yangarra to remove Precision from the site, and take over the operation of Precision’s drilling rig “in the event of a default by Precision in performing its obligations under a drilling program” (see article 8.1)

[60] As well, these parties have an ongoing commercial relationship pursuant to a Master Contract under which specific jobs are added from time to time. In addition to removing Precision from this specific job under article 8.1, presumably Yangarra could also cease adding new jobs for Precision under the Master Contract.

[61] In other words, the interpretation I have given to this contract does not render Precision’s promise to drill in a good and workmanlike manner meaningless. There are negative legal and commercial consequences to Precision for breaching its covenant.

Nor was Precision’s approach inconsistent with the overall structure of the contract (at paras 62 – 65).

Master Prowse also rejected Yangarra’s argument to the effect that the exemption from liability should only apply to third party claims – an argument founded on Justice Hunt’s judgment in Erehwon Explortion Limited v. Northstar Energy Corp., 1993 CanLII 7238 (AB QB), in relation to the CAPL operating procedure. Master Prowse rejected the analogy principally on the grounds that this contract dealt clearly and separately with both inter-party and third party claims.

Finally, Master Prose considered the decision in Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways), 2010 SCC 4 (CanLII) with respect to exculpatory clauses, and in particular whether the clause in this case could be said to be unconscionable at the time the contract was made, and whether there might be public policy reasons for declining to enforce it. As for unconscionability, and given the usual informing considerations (grossly unfair, absence of legal advice, overwhelming imbalance in bargaining power, and vulnerability), Master Prowse wasted little time before ruling that the clause was not unconscionable. In particular stating (at para 88) “Since the no-fault provisions are bilateral, I do not believe them to be grossly unfair or improvident.”

It is evident from Master Prowse’s judgment that Yangarra mounted a very broad public policy attack on knock for knock provisions alleging that such clauses should not be permitted in the context of high risk activities since, absent liability for fault, those engaged in those activities would have no incentive to take care and, in this case (quoting from Yangarra’s brief at para 101) “safe drilling practices would be undermined.” Master Prowse gave four reasons for thinking that this overstated the case. First, and as already noted, there were (at para 104 & paras 58 – 61 quoted above) adverse contractual consequences for Precision. Second, there were reputational consequences for Precision (at para 105). And third, there was in any event a complex regulatory framework in place which offered further assurance that Precision would follow safe drilling practices (at paras 106 – 110). And finally

[112] We are not dealing with an inequality of bargaining positions here, where a commercially sophisticated entity is seeking to take advantage of a less sophisticated customer. We are dealing with an industry wide bilateral no fault contract, adopted by two very sophisticated parties.

This was an appropriate case for summary judgment. The principal issue was one of contractual interpretation and the contract was clear.

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The SGER Amendments and the New Treatment of Cogeneration

Tue, 07/14/2015 - 10:00am

By: Nigel Bankes

PDF Version: The SGER Amendments and the New Treatment of Cogeneration

Regulation Commented On: Specified Gas Emitters Amendment Regulation, Alta Reg 104/2015

In a previous post I reported on the Minister’s speech announcing a two-step procedure for developing a new climate change policy for Alberta. The first step involved changes to two of the key variables in the current Specified Gas Emitter Regulation (SGER), Alta Reg 139/2007 while the second step is the more comprehensive review to be conducted by Dr Andrew Leach to assess the full range of options for the management of greenhouse gas emissions in the province. At the time I wrote that post I had not examined the details of the amendments to the SGER to see what other changes (if any) were being proposed. This post picks up where the last left off.

Here is what I wrote in the previous post. The first paragraph offers a brief description of the SGER regime. The second paragraph describes the key changes to that regime.

The SGER imposes greenhouse gas emissions intensity reduction obligations (ultimately 12%) on regulated emitters (facilities that emit in excess of 100,000 tonnes of CO2e per year). A facility may achieve compliance in one of four ways: (1) meeting its target by producing its product with lower carbon inputs, (2) Alberta based offset credits (emission reductions over a business as usual scenario achieved by a non-regulated entity in accordance with an approved protocol), (3) emission performance credits (credits achieved by a regulated facility which beats its compliance target), or, (4) a contribution of $15 per tonne (for excess emissions over the compliance target) to the Climate Change and Emission Management Fund (the so-called compliance price).

The province will extend the SGER but will change two of the three key variables embedded in the regulation. While the amendments to the regulation have yet to be gazetted it appears that the regulation will be extended until the end of 2017. The coverage of the regulation will not change, i.e. the regulation will continue to apply only to emitters emitting more than 100,000 tonnes CO2e. However, both the ambition (or stringency) of the regulation and the compliance price will change. Thus, regulated emitters will be required to make emission intensity improvements of 15% in 2016 and 20% in 2017, and the compliance price will change to $20 per tonne in 2016 and $30 per tonne in 2017. The Minister estimates that these initiatives will reduce emissions by 13 megatonnes per year by 2017.

As one would expect, the amendments to the regulation implement the changes to the stringency requirement (new s.4). However no change to the regulation is needed to implement the new compliance prices because s. 8(2) of the SGER stipulates that this is to be effected by Ministerial Order rather than by Regulation:

The Minister may, by order, establish the amount of money that a person responsible must contribute to the Fund to obtain one fund credit equal to a one tonne reduction in emissions, expressed on a CO2e basis.

A moment’s reflection will confirm just how bizarre this is: one person gets to establish the marginal price of carbon in Alberta! While the reality no doubt is that the price of carbon is in fact a matter for cabinet, one wonders why such an important issue does not require an amendment to the regulation, if not an amendment to the governing legislation.

In addition to the changes to the stringency requirements, the amendments deal with two other matters, the treatment of cogeneration and the status of Ministerial guidance and standards, as well as some house-keeping issues.

The Treatment of Cogeneration

Cogeneration, also known as combined heat and power (CHP), is the simultaneous production of electricity and heat from a single fuel source. Cogeneration offers significant benefits over other forms of generation principally for efficiency reasons. The average global efficiency of traditional generators ranges between 35% and 37%. The most efficient turbines can bring efficiency close to 45% or 50%, but overall they remain significantly less efficient than cogeneration plants. Cogeneration allows 75% to 80% of fuel inputs, and up to 90% in the most efficient plants, to be converted into useful energy. Cogeneration does not, in itself, increase the power supply, but uses one fuel input to produce two outputs, i.e. heat and electricity. By making more efficient use of fuel inputs, cogeneration allows the same level of end-use energy demand to be met with fewer energy inputs. Thus, it reduces energy consumption, greenhouse gas emissions and other air pollutants. By locating close to load, cogeneration may also defer the need to construct new transmission and may reduce overall line losses.

According to the Alberta Electric System Operator’s 2014 Long-term Outlook, Alberta (as of the end of 2013) had an installed capacity of 4,250 MW of cogeneration (29% of the total installed generation capacity of MW 14,568) mostly in the oil sands sector (both mining and in situ operations). In situ operations require electricity for their operations and a large amount of steam. Steam can be produced through a stand-alone natural gas fired boiler or through cogeneration or some combination of the two. An in situ operator electing to construct cogeneration may size the generation to meet its steam needs or its electricity needs. If the project is sized to meet steam needs it will produce electricity considerably in excess of its requirements. This surplus must be exported to the Alberta grid. In this scenario oil sands operators will tend to pursue a strategy of bidding power into the pool at zero or close to zero to ensure dispatch (see Oil Sands Community Alliance, 2014 Oil Sands Co-generation and Connection Report, at 29 – 30). As such, cogeneration can provide lower emissions intensity base load to the system.

In sum, cogeneration offers considerable benefits to Alberta’s electricity system but it is not a panacea in the context of greenhouse gas emissions. To the extent that natural gas rather than biofuels remain the fuel of choice for cogeneration projects, cogeneration will still result in greenhouse gas emissions (unless captured and sequestered) although such emissions will be reduced when compared with stand-alone gas fired steam boilers and combined cycle gas generation each producing a single product.

The question for present purposes then is how the benefits of cogeneration are or should be recognized in the SGER scheme described above.

The Treatment of Cogeneration in the Pre-Amendment Version of SGER

The pre-amendment version of SGER said nothing whatsoever about cogeneration. As a result, any recognition of the greenhouse gas benefits of cogeneration had to be achieved within the general provisions of the regulations. It is not immediately obvious how this can be done and the resulting recognition was exceptionally opaque. While the offset scheme might offer the most obvious mechanism for accommodating cogeneration, this option will not generally be available, principally because a cogeneration facility will typically form an integrated part of an industrial facility which will itself be a regulated facility. A project can only qualify as an offset project if it is not part of a regulated facility (SGER, s 7). The whole purpose of the offset scheme is to create an incentive to reduce emissions over business as usual (BAU) in the unregulated sector.

The only other alternative was to recognize cogeneration facilities as capable of producing emissions performance credits (EPCs) and this indeed proved to be the Department’s chosen vehicle for recognizing the emission reduction opportunities associated with cogeneration. At the risk of oversimplifying, a regulated project with cogeneration can obtain EPCs based on the difference between deemed emissions and actual emissions. Deemed emissions are calculated by reference to each of the two products, steam and electricity. Deemed emissions for steam are calculated on the basis that in a BAU case the steam would have been produced by a gas fired boiler operating with an efficiency of 80%. Deemed emissions for electricity are calculated on the basis that electricity would otherwise have been produced by a combined cycle gas turbine with an emissions intensity of 0.418 tonnes CO2e/MWh. In addition, while the deemed baseline steam emissions were subject to the 2% per annum improved intensity requirements, the deemed emissions associated with electricity generation were not. All of this is (or at least was) achieved through technical guidance documents including Government of Alberta, Alberta Environment and Sustainable Resource Development, Technical Guidance for Completing Specified Gas Compliance Reports, Version 7.0, January 2014, at s 4.3.

Critiques of the Pre-Amendment Treatment of Cogeneration Under SGER

There is a lively debate about the treatment that has been accorded to cogeneration under the SGER. For some there is a threshold question as to whether cogeneration should generate credits at all. For others the debate is more about the level of crediting extended to cogeneration – is it too generous, is it not generous enough? And finally, from a legal perspective, there is a question about the lack of transparency of the crediting rules for cogeneration.

The threshold question is generally framed in terms of additionality which is a concept more frequently associated with offsets rather than EPCs. The concept is relevant here because of the way in which cogeneration facilities generate credits. In order to qualify a project for offset credits the proponent of the project (or in Alberta the developer of the crediting protocol) must establish additionality. Additionality means that but for the availability of carbon credits the proponent would not have engaged in this particular emissions reduction activity. In this context this would mean that the project proponent would not install cogeneration but for the availability of credits but would instead produce steam in a gas fired boiler and purchase electricity from the grid. If, however, the proposed activity is BAU (i.e. the proponent would engage in it anyway) then it is inappropriate to award any carbon credits since to do so simply undermines the stringency of the targets that the regulated emitter must meet. While the SGER only refers to additionality in the context of offsets and not in the context of EPCs, it is evident that the deemed approach to the calculation of EPCs for cogeneration is conceptually similar to the treatment of offsets. Hence, in order to qualify for EPCs some argue that a proponent of a cogeneration project should have to meet an additionality test. It is possible that some projects (or projects of a certain size) would meet an additionality test while others would fail. For example, the electricity market price risks associated with sizing cogeneration to meet project steam needs might suggest that a proponent requires a carbon price incentive in order to make that investment, whereas the installation of cogeneration to meet project electricity needs might be nothing more than BAU.

Beyond the threshold question there is also a debate about the level of crediting extended to cogeneration. As noted above, the calculation of EPCs turns on the difference between deemed emissions and actual emissions; the higher the deemed emissions the more generous the crediting. On one side of this debate are those who argue that the 0.418 tonnes CO2e/MWh reference used to calculate EPCs provides only limited recognition of the efficiency benefits of cogeneration. The recognition is said to be limited because the Alberta power grid has an emission intensity that is significantly higher than 0.418 tonnes CO2e/MWh. This leads some to take the position that EPCs should be calculated based on the annual average Alberta power grid emission intensity (most recently stated by ESRD to be 0.88 CO2e/MWh) to recognize the grid displacement benefits of cogeneration. Still more favourable would be a deemed intensity factor based on the assumption that in situ cogeneration curtails coal generation. On the other hand, if cogeneration is actually curtailing generation from renewables then the deemed emissions intensity factor should be lower.

A final criticism is that whatever the merits of crediting for cogeneration the current scheme is far too opaque, especially when one considers the scale of crediting attributed to cogeneration projects. The following table produced by the Department (April 2015) documents the compliance cycle for regulated facilities.

Compliance Cycle Emissions Reductions
at Facility
(Mt CO2e)
Offset Credits Submitted
(Mt CO2e)
Recognition of Cogeneration
(Mt CO2e)
Total Reductions
(Mt CO2e)
Fund Payment
($Million)
2007 (half year) 1.60 0.88 1.28 3.76 41.3 2008 1.35 2.68 2.58 6.61 85.4 2009 0.89 3.74 2.66 7.29 61.3 2010 1.02 3.85 2.55 7.43 67.4 2011 3.06 5.40 2.51 10.96 55.0 2012 1.20 3.20 3.41 7.80 87.7 2013 0.45 2.04 4.17 6.66 98.6 2014 5.01 2.55 3.11 10.66 83.4 Total 14.57 24.34 22.26 61.17 577.9

Note: Mt = Million Tonnes

Two features of the table are significant. The first is that “Recognition of Cogeneration” is accorded separate recognition on a par with offset credits and fund payments notwithstanding the fact that while these latter two categories are expressly recognized in the SGER there has (until this round of amendments) been no separate recognition in the SGER for cogeneration. Second, the table shows that the cumulative effect of recognizing EPCs associated with cogeneration is very similar in terms of scale to the crediting associated with all offset programs combined. With credits available at this scale, the availability of this crediting option arguably should be clearly articulated in the regulations themselves rather than in policy-level guidance documents. There are no doubt all sorts of reasons why offset projects have not generated more credits (including the low compliance price and the transaction costs associated with getting protocols approved and projects and credits registered) but the point here is simply that while the treatment of offsets under the SGER is completely transparent, the historical treatment of cogeneration is completely opaque.

The Treatment of Cogeneration in the Amendment

As noted above, prior to the amendment, a regulated facility could meet its net emissions intensity limit in one of four ways: actual efficiency gains, offset credits, EPCs and fund contributions. The amendments add one “additional” (see new s.6(1)) way of meeting the target: a “cogeneration compliance adjustment” (CCA) which is to be defined in the Standard for Completing Greenhouse Gas Compliance Reports. At the same time, the government has amended s.9 (dealing with EPCs) to add a subsection specifying the maximum number of EPCs that the Director can issue in any year. The formula specifies that the Director must subtract the facility’s CCA for that year. The inference is clear. Cogeneration projects associated with regulated facilities will no longer generate EPCs but instead what appears to be a much less fungible CCA. While we have yet to see the precise rules for calculating a facility’s CCA, such a CCA would appear to be conceptually different from EPCs, offset credits and fund credits. While s.10 of SGER states that these compliance tools are merely “revocable licences” and that nothing in the regulation “ensures or guarantees” the availability of offsets or EPCs, it would seem that the drafter intended that the CCA should not even have the status of a tradeable revocable licence. Thus it would seem that a CCA is not fungible and can only be used by the facility owner, and, on the face of it, only in that particular compliance year. Thus, while an EPC is tradeable, bankable and can be used in different compliance periods (even when the compliance cost changes), none of that would appear to be the case for a CCA. On the other hand, it should be noted that while the director may require (s.26 as am) the facility owner to take prescribed remedial action where problems are subsequently identified with respect to emissions offsets or EPCs, there is no corresponding authority with respect to CCAs.

In sum, the amendment has changed the arrangements for crediting the greenhouse gas benefits of cogeneration at both the formal and substantive levels. At the formal level, cogeneration earns express recognition in the SGER as a means for attaining compliance. This is clearly a step in the right direction in terms of both the rule of law and transparency. However, the SGER is not as clear as it could be with respect to the status of the new CCA and it is unclear why the new prescribed remedial action provision applies to offsets and EPCs but not CCAs. At the substantive level it appears that some steps have been taken to limit the benefits associated with cogeneration credits. While much will depend on the terms of the Standard my reading of the amendment suggests that the CCA will not be tradeable or bankable.

Clarification of the Status of Departmental Guidance

Sections 61 and 62 of the Climate Change and Emissions Management Act, SA 2003, c. C-16.7 provide as follows:

Adoption by reference

61(1) A regulation under this Act may adopt or incorporate in whole or in part or with modifications documents that set out standards, practices, codes, guidelines, objectives, methods or other rules of any government, organization or person, including, without limitation, any standards, practices, codes of practice, guidelines, objectives or methods developed by the Minister under section 62, as they read at a particular time or as amended or replaced from time to time relating to any matter in respect of which a regulation may be made under this Act.

(2) Subsection (1) applies to any standard, practice, code, guideline, objective, method or other rule that has been adopted or incorporated into a regulation before or after this section comes into force.

(3) Where a standard, practice, code, guideline, objective, method or other rule is adopted or incorporated by regulation under this Act, the Minister shall ensure that a copy of the standard, practice, code, guideline, objective, method or other rule is made available to a person on request.

Codes of practice, guidelines

62 The Minister may develop standards, practices, codes of practice, guidelines, objectives or methods relating to any matter in respect of which a regulation may be made under this Act.

The Department has issued a number of important technical guidance documents with respect to the interpretation and application of SGER. These documents include guidance as to the completion of baseline emission intensity applications, compliance reports and verification approaches. The SGER did make some reference to Ministerial guidelines issued under s.62 of the Act (see, for example, ss.7(2)(d), 8(3)(e) & 9(2)(e)) but there was perhaps some room for doubt about the precise status of these guidance documents. While any such doubts may not be completely resolved (since the Regulation still contains the above references) the Regulation has clarified the status of a number of standards (no longer referred to as Technical Guidance). Thus a new s.3.1 provides that

The following standards are adopted and form part of this Regulation:

(a) Standard for Completing Greenhouse Gas Baseline Emissions Intensity Applications;

(b) Standard for Completing Greenhouse Gas Compliance Reports;

(c) Standard for Greenhouse Gas Emission Offset Project Developers;

(d) Standard for Greenhouse Gas Verification.

And in each case the Standard is defined as the Standard “published by the department, as amended or replaced from time to time”.

The Period of Extension

The amendment extends the Regulation from June 30, 2015 to December 31, 2017. It remains to be seen whether the Regulation will be further extended after that or whether Dr. Leach’s review will result in more comprehensive changes to Alberta’s carbon management policies.

Some Final Thoughts

I have three final thoughts. The first relates to consultation, the second relates to market considerations, and the third relates to overall cogeneration policy.

As to the first, I think that these amendments bring about a significant change to the carbon treatment of cogeneration. I think that the more explicit and transparent treatment of cogeneration is a good step forward but I think that there is still a need for more light to be shed on the details. My comment relates to the degree of consultation that accompanied these changes. I simply do not know how broadly the Department consulted on these changes. Did it talk to industry? Did it talk to ENGOs? Did it consult them on the details like fungibility and “bankability”? Did it prepare an options paper? I don’t know the answer to any of the above. I can certainly say that there was no broad public consultation and no pros and cons options paper posted on the Department’s website. Indeed, the website still does not contain a link to the new “Standards” that are supposed to be incorporated in the regulations. Now I understand that this government has not been in office long (although I suspect much of the contents of this package pre-date the current administration) but I for one am hoping that this government might make public policy differently from its predecessors and that consultations will be supported by published and reasoned options papers or white papers.

Second, as Duff Harper recently observed in a Blakes Bulletin, the compliance options for regulated emitters on a go-forward basis will, in practical terms, be very limited. This is because the $15 per tonne compliance price has crippled the offset market; that price is simply too low, and by waiting to the bitter end of the drop-dead date for the SGER (and then extending the bitter end – twice) the previous administration failed to provide a concrete and positive signal to the market as to the future compliance price. The new administration has now sent that signal but it is too little and too late. Not much will happen in the next two years to produce lots more offsets for compliance purposes over that period. And the message that is being sent to possible offset developers after 2017 is equivocal. On the one hand the amendments will increase demand for offsets and raise the compliance price, but on the other hand there is no certainty more than two years out, given the more comprehensive review that Dr. Leach will lead, that the offset program will still be part of Alberta’s compliance scheme. Thus, while existing offset project owners may in a sense earn a windfall over the next two years, two years is insufficient time to bring on many more new offset projects. One result of this might be positive. Given limited compliance options regulated projects may actually invest in emissions intensity improvements – but again a two year signal hardly seems adequate as a basis for making significant capital investments. The other result, compliance through payments into the Fund, seems far more likely. But this may also mean that government will be led to (re)consider the purpose of the Fund given what will undoubtedly be significantly increased contributions. For more discussion of this see the paper by Beck and Wigle referenced in this earlier ABlawg post.

Finally, cogeneration is an important part of Alberta’s electricity mix and its importance is likely to grow for two reasons. First, oil sands projects will continue to need process heat and electricity as part of their extraction, processing and upgrading. These requirements can be most efficiently met by on-site cogeneration facilities which provide stream and electricity for the operation. Second, the efficiencies associated with cogeneration mean that there are also greenhouse gas mitigation advantages associated with this technology, especially when compared with stand-alone carbon-based generating facilities. Despite its importance it is fairly clear that Alberta does not have a coherent cogeneration policy. Instead, the province has a de facto position on cogeneration created by the interaction of a number of different policy documents and statutes including the Industrial Systems Policy Statement (1997), the Transmission Development Policy (2003), the Electric Utilities Act, SA 2003, c.E-5.1, the Hydro and Electric Energy Act, RSA 2000, c. H- 16 the Transmission Regulation, Alta Reg 86/2007 and the SGER and the technical guidance documents designed to implement SGER. Given the scale and importance of cogeneration to the province’s industrial sector, and indeed to the province generally, it is perhaps time that Alberta developed a clear and coherent policy on cogeneration.

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“Inspired by the Past, We Shape the Future”

Fri, 07/10/2015 - 10:00am

By: Maureen Duffy 

PDF Version: “Inspired by the Past, We Shape the Future”

Matter Commented On: Conference on “Interdisciplinary Approaches to Security in the Changing World,” and attacks by extremists on educational institutions, “Inspired by the Past, We Shape the Future”

Recent terrorist and/or militant incidents have focused on universities and schools, assumed, by some, to be a desirable target for extremists because of their symbolic value. Another motivation for such attacks may be that education itself is viewed as an antidote to the spread of extremism, and suppressing education may be seen as a means of gaining control over the population — a theory expressed by Malala Yousafzai, from Pakistan, who, at the age of 15, was shot in the face on a school bus for advocating for education for girls. She has famously called on the United Nations to send “books and pens, rather than tanks,” to parts of the world struggling with extremist violence. Military intervention and legal enactments may have some impact on extremism, but they can also often escalate the problem, rather than diminishing it, and they can give rise to new human-rights abuses. Education appears to be a much more promising tool in many cases, and that is likely why it is under attack.

A statement by the Global Coalition to Protect Education from Attack explains the societal costs of recent attacks on higher education around the world:

Attacks on higher education affect all levels of education. Students and professors who are silenced, forced to flee, or killed leave behind a weakened education system, reducing the quality of education overall. Primary and secondary schools depend on teachers trained in higher education institutions, and on research that informs pedagogy and teaching methods. Students aspiring to the next stage in their education find their opportunities abruptly curtailed. These attacks crack the basic foundation of a functioning society; a society’s loss of academic capital causes disruptions that can take generations to heal.

They note that, in Iraq, 460 professors, scientists, and administrators have been murdered since 2003. Others have been kidnapped, or their families threatened. Continuing to run institutions of higher education has proven difficult and dangerous as violence in the region continues.

Other examples of the onslaught on education are disturbingly easy to find. Boko Haram has been responsible for major attacks on schools in northeast Nigeria, including the high-profile kidnapping of Nigerian schoolgirls in Chibok and, some believe, an attack on the College of Agriculture. In Kenya, Somali militants killed 147 students and wounded many others at Garissa University.

In India, an attack on professors has recently been blamed on people associated with the local government in Kolkata. In Mexico, 43 students at the Raúl Isidro Burgos Rural Teachers’ College of Ayotzinapa disappeared and are presumed dead. The Dean of Islamic studies at Pakistan’s University of Karachi was killed, apparently because of a speech he gave, which caused him to be accused of blasphemy. The list of examples could easily continue.

According to an article in the New York Times, academics and students are being forced to seek refugee status at alarming rates. The Syrian Civil War and the rise of ISIS have greatly accelerated this problem in that region, which is where much of the international focus on anti-terrorism is currently directed. A report by the Scholars at Risk Network characterized attacks on higher education around the world as a crisis.

In response to reports of the burning of thousands of books in law, philosophy, science, and poetry by militants in Mosul, Iraq, a UNESCO representative said:

This destruction marks a new phase in the cultural cleansing perpetrated in regions controlled by armed extremists in Iraq … It adds to the systematic destruction of heritage and the persecution of minorities that seeks to wipe out the cultural diversity that is the soul of the Iraqi people … Burning books is an attack on the culture, knowledge and memory, as we witnessed in Timbuktu recently, with the burning of the manuscripts at the Ahmed Baba Centre. Such violence is evidence of a fanatical project, targeting both human lives and intellectual creation.

Many of these issues were discussed at a security conference I attended in June 2015, in Krakow, Poland, at Jagiellonian University. The conference brought together people from around the world, with the ultimate hope of enhancing understanding of these current, difficult issues on a more international level. I discussed legal enactments that Canada has undertaken to attempt to thwart threats from extremist groups, most notably ISIS. Examples, which I discussed at the conference, include Bill C-51 (now the Anti-terrorism Act, 2015), security certificates and citizenship stripping, and I talked about problems with these initiatives, both in terms of a lack of effectiveness and in terms of the cost incurred for individual human rights.

It is easy to find fault with governmental responses to terrorism/extremism. What is less easy, though, is to find solutions. While no one thing will solve the growing threat of extremism, one thing that could make a significant difference is education, and the history of Jagiellonian University vividly illustrates that point.

“Inspired By the Past”

It was fascinating to be discussing such forward-looking issues in a place so steeped in history. Jagiellonian University just celebrated its 650th anniversary, with the slogan “inspired by the past, we shape the future.” Aside from the ideas that came forward regarding security, the setting of this conference also served as a reminder of the very important role that universities have traditionally played, and continue to play, in overcoming extremism.

A blog post could not possibly include a comprehensive history of this remarkable university, but some of the highlights are impressive. It is the oldest university in Poland and one of the oldest in the world. Jagiellonian University was founded in 1364 by King Casimir III the Great. The Collegium Maius, the site where much of the conference was held, was established in the early 15th Century, after Queen (Saint) Jadwiga left a portion of her estate to the University.

I have posted a couple of pictures I took of the Collegium Maius.

Collegium Maius

The courtyard inside of Collegium Maius

Jagiellonian University has seen significant changes in its fortunes over the years. It flourished during the Renaissance and counts Nicolaus Copernicus among its esteemed graduates from that era. It then struggled to continue during the partitions of Poland, as the occupation forces threatened to close it down entirely, but it survived that period and flourished again.

In November 1939, the Nazis, who had invaded Poland two months earlier, arrested 184 professors from Jagiellonian University and other Krakow universities and sent them to a concentration camp. Called Sonderaktion Krakau, the incident began after the Gestapo called the unsuspecting professors to a meeting at Collegium Novum at Jagiellonian University, as a way of gathering people in one place, and then arrested and deported them. Some of the professors died in the camps, and the university was officially closed for the duration of the Occupation.

Public pressure from various places, including Nazi allies, led to some of the professors ultimately being released, basically those who were not Jewish and were over the age of 40. Some of those who were released participated in a secret re-opening of Jagiellonian University in 1942. This secret education continued through the Occupation, and approximately 800 students studied there during that time, including Karol Wojtyla, who later became Pope John Paul II.

The story of Jagiellonian University staying open in secret and at great risk was made especially poignant when I visited the Krakow Ghetto – famously portrayed in Schindler’s List – and the nearby Auschwitz-Birkenau Concentration Camps, where conservative estimates suggest that two million people were murdered, often after being kept in barbaric conditions. It was against that backdrop, and after spending time in concentration camps themselves, that many of those professors risked their lives to continue the University’s educational mission. That resistance to an extremist attack on education took amazing courage and was truly heroic.

The University reopened after World War II, but the Communist Government was initially hostile to it, and much of the faculty research activity was suppressed. There were numerous student protests during the following years against the Government, again a courageous action on the part of the students in defense of higher education.

Jagiellonian University again survived that period of repression and is now home to approximately 50,000 students, describing its “timelessness and unwavering symbolism” as defining features. The University now sprawls across a significant portion of the city.

“We Shape the Future”

Although the notion of the “Ivory Tower” is often used in a pejorative way, the importance of universities as places where human knowledge is stored, created, advanced and disseminated cannot be overstated. Some threats to universities can be overt, such as the Nazi closing of Jagiellonian University, or recent, violent attacks on scholars around the world. Others may be more insidious, such as incursions on academic freedom, which can take many forms. The Scholars at Risk Network, in a report called “Free to Think,” identified a range of threats, not just including violent extremism, but incidents like firing of professors for views expressed or denying entry or exit visas to professors who have stated unpopular views.

One message that I took from this security conference was that, as the world faces an increasingly grim fight against extremists, the first, and potentially most effective, line of attack must be found in recognizing the critical importance of education in any free society. Education at all levels has value in its own right, aside from any practical impact it may have outside of the so-called “Ivory Tower.”

As extremists try to advance by attacking education, the world must attack extremism by advancing and protecting education. Extremists know this already, which is why so many educational institutions are under attack. Education is a critical tool if any inroads are to be made against current extremist threats around the world.

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Does a Privative Clause Completely Oust Judicial Review?

Thu, 07/09/2015 - 10:00am

By: Shaun Fluker

PDF Version: Does a Privative Clause Completely Oust Judicial Review?

Case Commented On: Green v Alberta Teachers’ Association, 2015 ABQB 379

Green v Alberta Teachers’ Association is a short judgment by Justice T.D. Clackson in a judicial review of disciplinary action taken by the Alberta Teachers’ Association. A hearing committee organized under the bylaws of the Association found that Green had committed professional misconduct. Green appealed that decision to a 4 person appeal committee under the Association bylaws, and the appeal committee split 2 – 2 on whether to grant Green’s appeal. The tie vote resulted in the committee dismissing her appeal because of an Association bylaw that states the decision of a committee shall be by majority. Green sought judicial review on the grounds that it was procedurally unfair to lose her appeal on a tie or, alternatively, that the appeal committee’s decision was unreasonable for failing to follow an earlier Court of Appeal decision on point. Justice Clackson dismisses Green’s application, and in doing so he makes some interesting remarks on the application of privative clauses to judicial review.

Professional conduct hearings are governed by sections 81 to 93 of the Alberta Teachers’ Association general bylaw (here). The bylaw particularly relevant to this case is section 84(4) which states the decision of any committee shall be by majority of those participating in the decision. I could not find a provision in the Association’s bylaws which prescribe the number of committee members who sit in a hearing, but apparently from this case it is possible for an appeal committee to have an even number of members. The problem with this of course being the possibility of an even split amongst committee members and a failure to reach a majority decision.

The composition of a tribunal hearing committee can definitely form the basis of a procedural fairness claim under bias. For example, a committee member whose past activities give the appearance they are partial to a particular outcome in a hearing is one of the more common grounds under this area of judicial review (a leading Alberta case on improper bias is Alberta Securities Commission v Workum, 2010 ABCA 405). But I hadn’t come across a procedural fairness case where the problem was alleged to be an even number of hearing members and tie outcome. Justice Clackson notes the Court of Appeal had an opportunity to rule on this issue back in 1996 (Ostrensky v Crowsnest Pass (Municipality) Development Appeal Board, [1996] 181 AR 96), finding that the result did not breach procedural fairness.

One might argue the result here is unreasonable on the basis that bylaw 84(4) requires the appeal committee to make decisions by majority rule and that the committee has decided to dismiss Green’s appeal without a majority. However there is no reference to this sort of argument being made by the applicant here. Instead it appears Green argued the committee’s decision was unreasonable because it failed to follow Eggerston v Alberta Teachers Association, 2002 ABCA 262. In Eggerston the Court of Appeal set aside a finding of professional misconduct by the Association. The facts in Eggerston involve critical comments made by Eggerston – a teacher but also a parent of elementary school aged children – in a parent-teacher conference. The basis of her misconduct was criticizing the professional competence of other members of the Association in a non-confidential manner. The Court of Appeal set aside this finding on the basis that the rule ought not be read literally to prevent Eggerston from making such critical comments as a parent during the parent-teacher conference.

Unfortunately here Justice Clackson does not provide any details concerning Green’s misconduct. In light of Green’s argument that the committee acted unreasonably by not following Eggerston, we can surmise the facts are similar. Moreover it does appear the facts are similar since the appeal committee here split on whether Eggerston is distinguishable (at para 6). If the facts and law of this case are indeed similar to Eggerston – it does raise the increasingly interesting question of the extent to which a statutory tribunal is bound by earlier rulings even if the doctrine of stare decisis does not strictly apply in administrative law (For some discussion on this point see my recent ABlawg here).

Justice Clackson observes that since the time Eggerston was decided by the Court of Appeal the legislature added a privative clause in section 57 of the Teaching Profession Act, RSA 2000 c T-2 to protect Association decisions from judicial review. The applicable provisions are as follows:

57 (2) A decision made by a committee is final and binding on the parties in respect of whom the decision is made and, subject to subsection (3), shall not be questioned, reviewed or restrained by any proceeding in the nature of an application for judicial review or otherwise in any court.

(3)  On a question of jurisdiction only, a decision is reviewable on an application for judicial review of the decision.

(4)  An application referred to in subsection (3) for judicial review of a decision must be commenced within 15 days from the day the decision is made.

This is known as a ‘strong’ privative clause as opposed to a weak one, since it not only states the committee decision is final and binding it also purports to shield decisions from judicial review.

It is trite law in Canada that the presence or absence of a privative clause in legislation is not determinative of how much scrutiny a reviewing court should apply to a tribunal decision, but rather a factor in how much deference is owed in judicial review. Privative clauses are almost a given in statutes governing administrative tribunals these days, and the Supreme Court has repeatedly affirmed that a privative clause cannot completely oust judicial review. The authority on this point is Crevier v Quebec, [1981] 2 SCR 220. However, a strong privative clause is typically regarded as an indication that more deference than not is owed by a reviewing court to the impugned administrative decision.

In this case I think Justice Clackson relies too heavily on the privative clause when he concludes his jurisdiction to consider whether the committee erred in distinguishing Eggerston is ousted by section 57. As Justice Clackson puts it (at para 13):

In this case, the real issue is nothing more than whether the tribunal made a reasonable decision. By refusing to apply a precedent because it reasoned the precedent to be distinguishable. In my view, my jurisdiction to consider that question is clearly ousted by the privative and preclusive clause in s. 57.

This appears to give section 57 a literal reading and purports to limit judicial review of a committee decision under the Teaching Profession Act to matters of jurisdiction only. This cannot be the correct outcome under current administrative law principles following Dunsmuir v New Brunswick, 2008 SCC 9 which generally state an administrative decision must be reasonable given the applicable law and facts. To put it another way – the question of whether this statutory committee properly distinguished the Court of Appeal’s decision in Eggertson must surely be within the jurisdiction of a reviewing court.

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First Nations Education Funding: The Case of Sloan & Marvin

Wed, 07/08/2015 - 10:00am

By: Elysa Hogg

PDF Version: First Nations Education Funding: The Case of Sloan & Marvin

Sloan and Marvin Miller are twin children with Down Syndrome and because of where they live, their government refuses to provide them with the special education support that they need to go to school.

This story does not take place in Apartheid South Africa, or the Jim Crow South – Sloan and Marvin live in Ontario.

It was estimated by the Mississaugas of New Credit First Nation, where Sloan and Marvin reside, that $80,000 a year would be needed for the Miller twins to receive the education that they need. Aboriginal Affairs and Northern Development Canada (AANDC) denied a request for funding, and instead recommended that the Nation take the needed amount from their already insufficient $165,000 a year education budget. In June of 2009 the Mississaugas lodged a formal human rights complaint with the Canadian Human Rights Commission on behalf of Sloan and Marvin. The claim will be heard at the Tribunal sometime this year, but there has already been great speculation about the arguments both sides will raise.

Background

Insufficient First Nations education funding has been on the political radar for some time. However, after the fallout from then-Assembly of First Nations Chief Shawn Atleo and the government’s unsuccessful attempt at educational reform in 2014 (see here) there has been no further attempt to modernize the governance of First Nations education. The governing legislation begins and ends with the outdated provisions of the Indian Act, RSC 1985, c I-5. Beyond allowing the Minister to “establish, operate and maintain schools for Indian children” (section 114(2)), to make regulations regarding “standards for buildings, equipment, teaching, education, inspection and discipline in connection with schools” and to “provide for the transportation of children to and from school” (section 115), the legislation deals primarily with mandatory attendance (sections 116-117). Meanwhile, students on reserve receive far fewer resources and support than their peers off reserve, as the Assembly of First Nations has documented.

While Sloan and Marvin’s case is especially troubling, underfunding of First Nations education in Canada is far from an isolated issue. As noted by James Anaya in the Report of the Special Rapporteur on the rights of indigenous peoples (at para 18), the Federal government is generally responsible for funding education on reserves, which is then administered by First Nations governments. Exceptions to this general rule are British Columbia and Nova Scotia. In BC, on reserve education is coordinated through a province-wide authority and delivered and regulated by individual Nations. These Nations are provided with stable funding through a tripartite agreement with the provincial and federal governments. In Nova Scotia, many bands are self-governing in education due to an agreement made in 1997. In other provinces, off reserve schools are funded by provincial and territorial governments and administered by local school boards.

In early June, Perry Bellegarde, the current National Chief of the Assembly of First Nations, called on the government to step up and meet its financial obligations to First Nations people after it was reported that the Canadian Government fell about $1 billion short in Aboriginal Affairs spending over five years. This shortfall is acutely felt in education, with off-reserve schools receiving significantly more funding than comparable ones on-reserve.

This means that if Sloan and Marvin lived on the North side of the road that separates the New Credit reserve and Haldimand County, they would be in a public school and would have their special education costs covered by the provincial government. Given the difference in outcome based on a geographical (and racial) determination, there is a strong argument to be made that the Miller twins are being provided an insufficient education due to systemic discrimination.

Discrimination Claim

Section 5 of the Canadian Human Rights Act, RSC 1985, c C-H-6 (CHRA) prohibits discrimination by government bodies based on a number of protected grounds. It reads:

  1. It is a discriminatory practice in the provision of goods, services, facilities or accommodation customarily available to the general public:

(a) to deny, or to deny access to, any such good, service, facility or accommodation to any individual, or

(b) to differentiate adversely in relation to any individual, on a prohibited ground of discrimination.

The test for a prima facie finding of discrimination under section 5 was set out by the Supreme Court of Canada in Moore v British Columbia (Education), 2012 SCC 61, [2012] 3 SCR 360. The test in Moore requires complainants to show that: (1) they have a characteristic protected under the human rights legislation, (2) they have experienced an adverse impact with respect to the service in question, and (3) the protected characteristic was a factor in the adverse impact (at para 33).

The application of this test in the case of under-funding for First Nations education would be as follows:

(1) Is there a Protected Ground?

Race and national or ethnic origin are protected grounds under section 2 of the CHRA. Given that underfunding of education on reserves primarily affects First Nations children, race or ethnic origin can form the basis for a section 5 claim. In the case of Sloan and Marvin, the ground of disability is also engaged by the lack of funding for their specific educational needs.

(2) Is there an Adverse Impact?

The inequality between the quality of off and on reserve education certainly creates an adverse impact. Currently, students who are attending public or private schools off reserve are receiving nearly 50 per cent more government funding than those attending on-reserve schools, as the Assembly of First Nations reports. There are over 100 school buildings on reserves nationwide that do not meet minimum safety guidelines in terms of physical facilities, let alone the necessary standard as effective places for learning (reported here). In addition to failing physical structures, children on reserve have limited to no access to modern technology or library support because most on reserve schools do not have gymnasiums, libraries or any computers (reported here).

Problems in secondary education may lead to problems in later education as well. The Centre for the Study of Living Standards reports that while the majority of Canada’s off reserve population aged 15 and over have a diploma, certificate or degree (76 per cent), some reserves have less than 10% of their population with some sort of completed tertiary education. Even further down the road, the adverse impacts are more severe. Only two reserves in 2006 had unemployment lower than the national average of 6.6 per cent, and the highest unemployment rate was 66.7 per cent, ten times the national average.

Lack of education funding is of course not solely to blame for the often-marginalized position of First Nations people in Canadian society, but it is certainly a factor that contributes to the lower health and employment achievements of First Nations people compared to the rest of the Canadian population.

(3) Is the Protected Characteristic a Factor in the Adverse Impact?

The final step in the Moore analysis requires the complainant to demonstrate that the protected characteristic was a factor in the adverse impact. The claimant does not need to prove that the adverse effect was intentional (Ontario Human Rights Commission v Simpson-Sears, [1985] 2 SCR 536, 1985 CanLII 18), merely that it happened at least partially because of the characteristic (Peel Law Association v Pieters, 2013 ONCA 396 at para 126). Even if the government did not explicitly set out to discriminate against First Nations children on reserve, the unequal funding between on and off reserve education still creates a prejudicial effect, an effect that can only be explained by racially determined policies that very likely run afoul of section 5(b) of the CHRA. And, as suggested earlier, disability is also a factor in the adverse impact experienced by children such as Sloan and Marvin.

The Federal Government’s Anticipated Response

The Federal government in responding to this complaint could argue that education funding is not “the provision of goods, services, facilities…” as contemplated by section 5. After all, the federal government does not actually educate anyone on reserve, it does not employ teachers or principals and does not build the schools, it only provides the money. This argument begins to fall apart though in light of sections 114-122 of the Indian Act. These provisions allow the Minister to enter into agreements for elementary and secondary school services to Indian children on reserve. These agreements, and the broad oversight powers of the federal government over First Nations education make it more likely than not that the funding itself can be seen as provision of a service.

If provision of a service is found to exist, then a government body responding to a CHRA discrimination claim faces two main tasks: first, to show that there is no prima facie case which must be answered, and second, if a prima facie claim is established, to show that there is a bona fide justification for the discrimination.

Refuting a Prima Facie Claim?

In light of the arguments raised above, it will be difficult for the government to defeat a finding that there is a prima facie claim of discrimination. However, there are several potential arguments it could adopt, based on the requirements of the Moore test: that there is no protected ground, no adverse impact, and that even if there are, the two are not linked.

In arguing against the presence of a protected ground, the government could try and reframe the issue not as discrimination against First Nations children, but merely as discrimination against children who happen to live in certain areas – which does not engage a protected ground. For example, children in poor inner city areas tend to have lower educational outcomes than wealthy suburban children (see e.g. here and here), and this has not been the subject of any human rights claims. However, it is the race and ethnicity of First Nations children that dictate where they live, such that they are marginalized by on-reserve education systems based on those grounds.

The next facet of the government’s case could attack the position that an adverse impact exists, and if it does, that it is caused by government action. While no one could seriously argue that First Nations children on reserve do not face significant challenges, there is a causation argument to be made. The Crown could put forward the case that adverse effects on aboriginal children are the result not of a lack of education funding but of systemic socio-economic problems within First Nations communities.

This argument was addressed in the Report of the Special Rapporteur on the Rights of Indigenous Peoples in Canada, above. It noted that: “government representatives have attributed the gap in educational achievement in large measure to high levels of poverty, the historical context of residential schools, and systemic racism” (at para 17).

While forcing current education policy to take the blame for the effects of centuries of mistreatment is overstating the case, the Supreme Court has recently found (in the context of section 15 of the Charter) that “If the state conduct widens the gap between the historically disadvantaged group and the rest of the society rather than narrowing it, then it is discriminatory” (Quebec (Attorney General) v A, 2013 SCC 5, [2013] SCR 61 at para 332). This approach to discrimination is cited in the Memorandum of Fact and Law of the First Nations Child and Family Caring Society in a similar discrimination claim currently before the Canadian Human Rights Tribunal (at para 95). If the Tribunal chooses to import this reasoning, then this government argument is almost certain to fail.

Bona Fide Justification: Grismer Analysis

Once a prima facie case of discrimination is established the onus shifts to the defendant to prove (on a balance of probabilities) that the discriminatory standard had a bona fide and reasonable justification (CHRA s 15(1)(g)). The test from Grismer (British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 SCR 868, 1999 CanLII 646) is the applicable test for this defence provision. There are three elements that must be proven (at para 20):

1. Did the defendant prove that it adopted the standard for a purpose or goal rationally connected to the function being performed?;

2. Did the defendant adopt the standard in good faith with an honest belief that it was necessary for the fulfillment of the purpose or goal?; and

3. Did the defendant prove that the standard is reasonably necessary to accomplish the purpose or goal?

The government justifications for claims of discrimination in education funding may be centered around the impracticality of providing additional funding outside of the Federal budget for education or special education. As mentioned earlier though, auditors’ reports have uncovered more than a billion dollars in unspent funds sitting in the coffers of Indian and Northern Affairs. Given this surplus, arguments around limited resources cannot get too far.

Remedy

A successful claim would result in a remedy under the CHRA. Unfortunately, legislation such as the Indian Act cannot be changed through CHRA claims, as human rights commissions lack jurisdiction to make such an order. The appropriate remedies for this claim are found under section 53(2) of the CHRA, which includes an order for the “adoption of a special program, plan or arrangement”. It is through this remedy that First Nations communities could seek educational programs that are both well-funded and in keeping with their aspirations for a self-determined curriculum.

If the panel does find in favour of the complainants, then hopefully children such as Sloan and Marvin Miller will be able to access the resources that are readily available to other children, including those with disabilities, across Canada. The immediate impact that equalizing education funding can have is illustrated by an example from Manitoba.

The Waywayseecappo reserve school sits just five miles away from a provincially funded, off reserve school called Rossburn Collegiate. Despite the close proximity, a Waywayseecappo student received only $7,300 annually from the federal government while a Rossburn student receives $10,500 a year from the provincial government. Chief Clearsky of the Waywayseecappo band convinced the provincial and federal governments to let them join the local school board. In effect, the Waywayseecappo students became provincial students. As a result of this change, the Waywayseecappo students can access specialists who help with curriculum and special development, the Waywayseecappo teachers received anywhere from $13,000 to $18,000 more a year, and literacy and learning rates amongst on reserve children improved almost immediately.

Conclusion

While equalizing education funding between on and off reserve children will not solve all the disadvantages faced by First Nations children living on reserves, it could certainly help. Given the strong prima facie case of discrimination based on the Moore test, it seems likely that the Canadian Human Rights Tribunal will rule in favour of the Mississaugas of New Credit First Nation. This could prove to be an important first step in making a high quality education accessible to all Canadian children.

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Supreme Court: EPA Should Have Considered Cost When Deciding Whether Mercury Limits for Power Plants Were Appropriate

Tue, 07/07/2015 - 10:00am

By: James Coleman

PDF Version: Supreme Court: EPA Should Have Considered Cost When Deciding Whether Mercury Limits for Power Plants Were Appropriate

Case Commented On: United States Supreme Court, Michigan v. United States Environmental Protection Agency (June 29, 2015)

On Monday the United States Supreme Court held that the Environmental Protection Agency (EPA) improperly refused to consider costs when determining whether it was “appropriate and necessary” to regulate mercury emissions from power plants under the Clean Air Act. Ultimately, the EPA may be able to keep the same rules after going back and explaining why the cost of the regulations is justified in the circumstances. But the decision is an important victory for advocates of cost-benefit analysis and those who think environmental agencies should pay more attention to the costs of regulation.

Section 112 of the Clean Air Act directs the EPA to regulate hazardous air pollutants from power plants if it finds “regulation is appropriate and necessary.” 42 U.S.C. §7412. The EPA said that regulation was “appropriate and necessary” even without considering costs because 1) power plant emissions posed risks to human health and the environment that were not eliminated by other provisions of the Clean Air Act and 2) there were controls available to reduce those dangerous emissions. So there was no need for the EPA to consider costs to make its initial decision to regulate, but it promised to consider costs when adopting the actual final regulations for power plants.

Although the EPA said it ignored costs when it made its initial decision to regulate, it still estimated the costs and benefits of the final rules that it adopted. The EPA estimated that its rules would cost power plants $9.6 billion dollars a year. The EPA couldn’t estimate all the possible benefits of limiting mercury emissions, but the little it could quantify came to about $5 million dollars a year—less than 0.1% of the cost of the rule. On the other hand, the EPA said that cleaning up mercury would have massive side benefits: it would lower sulfur dioxide emissions and these reductions would be worth between $37 and $90 billion per year. So if you counted these ancillary benefits, they far outweighed the costs of the EPA’s rule, but if you didn’t count them, the EPA’s rule imposed costs far in excess of its benefits.

Justice Scalia, writing for a 5-4 majority, held that the EPA must consider costs of regulation before making its initial decision to regulate, reasoning that “No regulation is ‘appropriate’ if it does significantly more harm than good.” The four dissenters agreed that, generally speaking, “an agency must take costs into account in some manner before imposing significant regulatory burdens” but agreed with EPA’s argument that the agency could consider those costs later, when adopting regulations for specific source categories.

The Supreme Court’s decision may not have much impact on mercury regulation. Power utilities are already complying with the mercury rules that the Court struck down in this case. And the case will now go back to the appellate court, which could decide to leave the rules in place while the agency rethinks whether these rules are “appropriate and necessary” factoring in the costs that they impose. The EPA already determined that the benefits of the rules far outweighed their costs if you consider ancillary benefits, so it will probably reach the same decision. On the other hand, the Court’s decision raises very important questions for the future.

First: Can agencies consider ancillary benefits? The Court left the question open, but at oral argument, some justices seemed to suspect it was inappropriate to consider the benefits associated with pollutants other than mercury. After all, if the other pollutants are the problem, why not adopt regulations aimed at the other pollutants? On the other hand, it has long been standard practice for agencies to consider ancillary or “co-benefits” of reducing pollutants other than the main target of regulation. If an agency is going to consider all the important costs of a regulation, why shouldn’t it consider all the important benefits? In some ways, the mercury rule may just be an outlier case because EPA estimated that the co-benefits of reducing sulfur dioxide were 10,000 times greater than the direct benefits of reducing mercury itself. But over half of the benefits of EPA’s Clean Power Plan come from co-benefits in reducing pollution other than greenhouse gases, so the question does have wider importance.

Second: How much cost-benefit analysis will the Court require for other regulations? Today’s decision may be seen as part of a trend that is making cost-benefit analysis a kind of default background principle for agency decision-making. Just fourteen years ago, Justice Scalia wrote an opinion for eight justices, holding that EPA could not consider the cost of regulation when the Clean Air Act demanded a standard at the level “requisite to protect the public health.” In that case, Justice Scalia explained that EPA could consider costs later when it implemented the standard. Last year, the Court held that EPA could consider the cost of emissions controls when it decided whether a State “contributed significantly” to air pollution in another state; Justice Scalia dissented. Now, the Court holds that EPA must consider the cost of regulation when it determines whether regulation is “appropriate and necessary.” Justice Scalia writes the opinion, and all justices agree that EPA must consider costs at some stage. Observing this trend, litigants will feel increasingly bold to demand that EPA consider the costs at each stage of adopting new environmental regulations.

This post originally appeared on James Coleman’s blog Energy Law Prof.

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Law Students, Legal Services, and Access to Justice

Thu, 07/02/2015 - 10:00am

By: Eleanor A. Carlson

PDF Version: Law Students, Legal Services, and Access to Justice

Legislation and Rules Commented On: Legal Profession Act, RSA 2000, c L-8; Rules of the Law Society of Alberta; Law Society of Alberta Code of Conduct

In June, an ABlawg post reviewed the decision of R v Hanson, 2015 ABPC 118, written by Judge Gaschler. The judgment included an analysis of Calgary based court agent Emmerson Brando’s personal history, his ability to appear as agent on behalf of his client, and the factors that should be considered in making this decision. Judge Gaschler denied Mr. Brando’s leave to appear, finding that to do so would undermine the integrity of the justice system due in part to Mr. Brando’s criminal past as well as the deceptive information found on Mr. Brando’s website where he advertised his agent services (at paras 21 & 22). In their blog post (read the post here), Heather White and Sarah Burton discuss Judge Gaschler’s decision in relation to the unregulated nature of agents and paralegals in Alberta, access to justice, and the disparity in the quality of justice for the those who can afford lawyers and those with lower incomes who cannot. They conclude with the hope that Judge Gaschler’s decision will facilitate a conversation surrounding the regulation of agents in Alberta. In this post, I highlight an additional important player in the conversation surrounding the provision of legal services by non-lawyers and access to justice, the Alberta law student.

Legal Profession Act

Section 106(1) of the Legal Profession Act provides that only “active members” of the Law Society may practice as a “barrister and solicitor” as well as provide specific legal services. Section 106(2) provides an exception under which students may provide legal services “in respect of services permitted to be provided by that student by the rules that are provided in accordance with the conditions prescribed by the rules.” The exception, besides being abstruse, does not provide direction to any other specific rule within the Legal Profession Act that delineates the scope of the legal services that students are permitted to perform. Of note, this is not true of all the exceptions under section 106(2); for instance, the exception for students-at-law (i.e. articling students) directs us to another section within the Legal Profession Act.

Rules of the Law Society of Alberta

The Rules of the Law Society of Alberta provide the framework that specifies who has the authority to provide legal services in Alberta. Rule 81(1)(a) permits a law student enrolled in the faculty of law at a university in Alberta to provide legal services in the “student’s capacity as a member of a student legal services society” or in a “course of practical instruction approved by the faculty” if the student is under the supervision of an active member of the law society. At the University of Calgary, students who provide legal services with Student Legal Assistance fall into the former category and students who provide legal services through the Environmental Clinical course fall into the latter.

Rule 81(1)(b) permits a law student enrolled in a faculty of law at a university in Canada to provide legal services if the services are provided as an “employee of a society that provides legal services to indigent persons” and, again, the student is under the supervision of an active member of the law society. An Ontario law student who works during the summer at Calgary Legal Guidance, a non-profit society that provides legal services, would fall under this rule.

Rules 52 and 53: Authority to Provide Legal Services as a Student-At-Law

Rule 81 is silent as to the scope of legal services that a law student may provide. Section 47(m) of the Interpretation section of Part 2, under which Rule 81 falls, states that “provide legal services” means:

to engage in the practice of law

(i) physically in Alberta, except with respect to the law of a home jurisdiction, or

(ii) with respect to the law of Alberta physically in any jurisdiction,

and includes to provide legal services respecting federal jurisdiction in Alberta.

This section speaks to what providing legal services covers regarding where the services are carried out, but it does not delineate what a law student, not being an active member of the Law Society of Alberta, may carry out. Ostensibly the scope of services that a law student may provide is narrower than that of an active member of the Law Society.

Rules 52 and 53, which delineate what legal services a student-at-law may provide, also fall under Part 2 of the Rules of the Law Society of Alberta. A law student is not a student-at-law, but one could interpret rule 81 by referring to rules 52 and 53. This interpretation would assume that a law student could not have a scope of services broader than that of a student-at-law, and as such the legal services that a law student is permitted to provide would be no greater than those indicated in rule 53, although a law student’s services must be under the supervision of an active member of the Law Society. Accordingly, for example, a law student, like a student-at-law, cannot act as agent in the Court of Queen’s Bench during pre-trial conferences or in a judicial dispute resolution (rule 53(3)(a)). In Provincial Court, a student-at-law, and hence presumably a law student, may not act as agent in proceedings pertaining to an indictable offence unless a Provincial Court judge has absolute jurisdiction (Rule 53(5)(c). (See rule 53, Rules of the Law Society of Alberta, for a compete reference to the legal services a student-at-law may provide.) It would be preferable if the Rules would clarify the scope of legal services that a law student may provide, but since they do not, this post will assume that the scope is not greater than that of a student-at-law.

Law Society of Alberta’s Code of Conduct

The Law Society of Alberta’s Code of Conduct defines the manner in which legal services are to be provided and consequently guides the terms under which law students may provide legal services. The Code provides the how that accompanies the who stipulated by the Rules of the Law Society of Alberta.

Definitions: Lawyers, non-lawyers, law students, and students-at-law

The Code of Conduct differentiates between a lawyer and a non-lawyer. Lawyer, under the Code, is defined as:

an active member of the Society, an inactive member of the Society, a suspended member of the Society, a student-at-law and a lawyer entitled to practise law in another jurisdiction who is entitled to practise law in Alberta.

A law student is classified as a non-lawyer and must be supervised in accordance with rule 5.01(1) and the Commentary to the Code, discussed below.

Lawyer Delegation and Supervision of Law Students

Within the Code, there are two conditions that affect the ability of law students to provide legal services: rule 5.01(1) on the “specialized training, education, and competence of the non-lawyer” and rule 5.01(3) on “the extent of the supervision” of the non-lawyer. Further, there are specific tasks that a lawyer must not permit a non-lawyer to do.

The Commentary following rule 5.01(1) clarifies the extent of supervision required by a lawyer when delegating particular tasks and functions to a non-lawyer. Generally, a lawyer must maintain a direct relationship with the client; however, the extent of the supervision depends on [1] the type of legal matter – “degree of standardization and repetitiveness” and [2] the experience of the non-lawyer given the legal matter. It is the responsibility of the lawyer to both educate the non-lawyer about the task and to gauge the extent of the supervision required given the task as well as the experience and education of the non-lawyer. Independent work may only be delegated from a lawyer to a non-lawyer where the non-lawyer has received specialized training and education and is competent to do that work under the general supervision of the lawyer.

Further, rule 5.01(3) lists 14 tasks and functions that a lawyer must not permit a non-lawyer to do as well as some narrow exceptions to those specific tasks and functions. For instance, rule 5.01(3)(a) reads:

5.01 (3) A lawyer must not permit a non-lawyer to:

(a) accept cases on behalf of the lawyer, except that a non-lawyer may receive instructions from established clients if the supervising lawyer approves before any work commences; …

Other tasks and functions are complete prohibitions, for instance rule 5.01(3)(b), which provides that a lawyer must not permit a non-lawyer to give legal advice.

The Criminal Code

The Criminal Code of Canada, RSC 1985, c C-46, ss 800(2) and 802.1, permit an agent (who could be a student) to appear for a defendant who on summary conviction may be liable to imprisonment for a term not exceeding six months. The agent may not, however, appear or examine or cross-examine witnesses if on summary conviction the defendant may be liable to imprisonment for a term exceeding six months. Exceptions are permitted where the defendant is a corporation or the Lieutenant Governor in Council of a province approves the agent.

To summarize, the Rules of the Law Society of Alberta, the Legal Profession Act, the Criminal Code, RSC 1985, c C-46, and other laws that govern courtroom procedures generally must permit a task for it to be undertaken. Beyond that, the general tone of the Code of Conduct is that assuming a task assigned to the law student is not expressly prohibited in 5.01(3), a law student, if competent and supervision is appropriate, may perform that legal task.

Liberalizing the Rules

In my view, the current Rules of the Law Society of Alberta that apply to law students are out of date. The Rules came into force on August 15, 1994 and those rules applicable to law students have remained in their original form (see the Rules of the Law Society of Alberta Amendment History). As such, they fail to reflect the current state of the justice system and the influx of individuals who are forced to navigate the courts without counsel. I argue for a liberalization of the Rules so that they [1] better permit the legal community more generally to employ law students to provide legal services and [2] better permit law students to appear as agents for self-represented individuals on a wider array of matters and at more levels of court, both of which would increase law students’ ability to better effect access to justice.

The Law Society Rules in Practice

According to rule 81(1)(b) of the Rules of the Law Society of Alberta, Canadian law students must meet two criteria to provide legal services. They must be (i) an “employee of a society that provides legal services to indigent persons” and (ii) “be under the supervision of an active member.” The wording suggests that this rule was put in place either so that law students could assist poor Albertans by providing legal services through a society that provides legal services or, perhaps more broadly, so that law students could assist societies that provide legal services to “indigent persons,” thereby assisting both the society and “indigent persons.” Either reading would appear to come down to law students assisting “indigent persons.”

This rule stipulates a very narrow scope within which law students can provide legal services. They must be employees, rather than volunteers. The employer must be a society, rather than a firm or a sole practitioner. The society must provide legal services, rather than other types of services. The student must be helping “indigent” persons rather than non-indigent persons.

The Rules greatly limit the opportunities for law students to provide legal services and one may raise a number of questions regarding the restrictions set out in rule 81(1)(b). Why should a law student who volunteers with a society that provides legal services not be permitted to provide legal services to an “indigent” person? Why should a law student who is employed at a law firm not be permitted to provide legal services to an “indigent” person? Why should a law student employed by or volunteering with an organization that provides, instead of legal services, for example, housing services, not be permitted to provide legal services to an “indigent” person? If an active member of the law society supervises a law student, why should she not be permitted to provide legal services to “indigent” persons and thereby increase access to justice in all of these contexts.

Of particular concern is the fact that a law firm cannot employ a law student and have her provide legal services to “indigent” persons. The consequence is that if a law firm’s summer law student employees cannot fit within rule 81(1)(b), this rule arguably has the additional effect of stifling pro bono project innovations that are aimed at providing legal services to “indigent” persons, since engaging law firms in the promotion of access to justice is an ongoing objective for pro bono law organizations (see e.g. the work of Pro Bono Law Alberta).

Although it is significant that law students see their lawyer colleagues and mentors providing pro bono services and see that these activities are supported and encouraged by their law firms, it is also critical that law students have opportunities to fully participate in these activities. Beyond providing legal services for “indigent” persons who need assistance today, this is also about instilling the sense of a professional responsibility to provide pro bono legal services in the next generation of lawyers, an opportunity we cannot afford to miss given the abysmal state of access to our justice system.

The Rules should adapt to the current need to increase access to justice for many Albertans. Twenty years ago, the best estimates indicated that less than 5% of litigants were unrepresented. Today, that number ranges from 10% to 80% depending on the claim type and level of court. For instance, it is estimated that half of all family law litigants in Canada are self-represented (see the Canadian Bar Association, “Reaching equal justice: an invitation to envision and act,” The Canadian Bar Association, Access to Justice Committee (2013), p 42). It is likely that when these rules were implemented twenty years ago, one could not foresee the exponential growth of self-representation within the court system. However, in 2015 this growth is unmistakable and if law students were permitted to provide a greater range of legal services (with supervision), many individuals who would otherwise be forced to represent themselves could choose the option of having a law student appear on their behalf.

Impacts of Individuals Without Counsel on the Legal System and the Social System

A law student’s ability to provide legal services that increase access to justice not only benefits self-represented individuals during their legal proceedings but also the community more generally, since the effect of this assistance goes beyond the courtroom and the legal system. Within the courtroom there is a perception among judges and lawyers that self-represented individuals generally take up more court time and court services since proceedings take longer for self-represented individuals (see the Canadian Bar Association, “Reaching equal justice: an invitation to envision and act,” The Canadian Bar Association, Access to Justice Committee (2013), p 43). Further, foundational tenets of our legal system are affected by the influx of self-represented individuals. Although procedural fairness and judicial neutrality sit at the core of the legal system, studies have found that the increased number of self-represented individuals has altered this central judicial role. For instance, it has been found that judges find themselves in challenging positions where one side is represented by counsel and the other is not, and thus judicial intervention, such as providing procedural advice and coaching, has become an inevitable reality in many courtrooms (see Julie Macfarlane, (2013) The National Self-Represented Litigants Project: Identifying and Meeting the Needs of Self-Represented Litigants, Treasurer’s Advisory Group on Access to Justice Working Group Report, p 14). Hence, permitting law students to provide an expanded range of legal services in more courtrooms would have a positive impact on court resources. Additionally, through explaining court procedure and advocacy law, students can create a more balanced courtroom, thereby decreasing the pressures felt by many judges.

Outside of the courtroom, self-represented individuals may experience negative personal and economic outcomes as a result of their courtroom involvement. Personal savings are depleted and many find it difficult to maintain employment while managing their legal matters. In some cases, self-represented individuals struggle to preserve relationships with families and friends and experience emotional isolation (The National Self-Represented Litigants Project at p 14). Inevitably, what happens inside the courtroom affects lives beyond the courthouse, and therefore the increased assistance of law students can also positively impact communities more generally.

Risk Assessment: Law Student Delivery of Legal Services

Currently law students assist individuals in Provincial Court by providing legal services relating to a variety of legal matters. These legal matters have outcomes for those individuals that vary in risk and severity. It might well be argued that some legal matters have outcomes such that law students should not assist with them. A common position is that a law student should not act where an individual faces a risk of a custodial sanction. However, given the financial and systemic barriers and the lack of prohibitions on an individual representing herself at any level of court in Canada, the only option for many is to proceed without counsel. In this case, she will present evidence, cross-examine witnesses, and perhaps testify, all unaided. Accordingly, she will be responsible for the outcome of her trial regardless of whether she understood court procedures, rules of evidence, or even the very offence for which she was tried. The reality of the current situation is that law student assistance may well be better than the alternative, which is nothing. In fact, where individuals properly understand the risks of their situation and provide informed consent to being assisted by a law student, to deny them this last remaining option and effectively force them to proceed without counsel only makes more unjust the inaccessibility of access to justice.

For some, there remains the worry that allowing a law student to provide legal services comes with ethical concerns. Of course, it is true that a law student is at risk of committing ethical transgressions in the provision of legal services. However, expanding the scope of legal services beyond what they currently are able to provide does not increase these risks. As it stands, in the work that law students currently do, law student’s conduct is not regulated by the law society and not subject to professional misconduct hearings. Consequently, an increase in the range of legal services that a law student could provide does not alter the status quo nor increase the risk that a law student will breach her ethical duties. The risk of a breach of confidentiality is not altered whether a law student is in Provincial Court or Queen’s Bench Court.

Another potential concern is that if law students are permitted to provide more services, this may preclude the exploration of other options – e.g. regulating paralegals (as explored in the White and Burton post) or expanding legal aid coverage – which might be better for self-represented litigants than having law students do the work. However, increasing the services that law students can provide can still usefully add to the overall range of service providers without detracting from conversations about the need for regulation or an expansion of legal aid coverage.

Additionally, this post is not advocating an expansion of the Rules beyond what a law student is competent to provide. It goes without saying that the student must be adequately supervised, just as is any law student who currently provides legal services in the province. Equally important, the student must be competent to perform the legal service required, just as any law student or any lawyer who provides any legal services must be. Accordingly, expansion of the Rules to increase the services that a law student may provide will require an increased involvement from the legal community. At a minimum, it will require increased supervision and guidance by lawyers and education, training, and structural support, as well as coordination between law schools and pro bono oriented student legal organizations. Essentially, expansion of the scope of legal services that law students may provide will require a community effort. This position echoes Supreme Court of Canada Chief Justice Beverley McLachlin and the active role she has played in raising awareness of the state of access to justice in Canada. Specifically, the Chief Justice has repeatedly told Canadian lawyers that they have a responsibility to provide legal services to all Canadians (see Law Times, Chief Justice Beverley McLachlin, “Lawyers integral in making justice accessible” February 20, 2011). Changing the Rules of the Law Society of Alberta to increase the range of legal services law students may provide is one way to help meet this responsibility.

Lastly, I am not advocating that law students put more on their already busy plates, risk burning out, or sacrificing their academic performance. Nor am I advocating that law students necessarily do more work or take on more files. Rather, I would like to add to the conversation the idea that law students, in partnership with the greater legal community, have the ability, if given the resources, to take on a greater range of files and assist a greater range of Albertans needing legal services in our community.

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Announcing Oil and Gas Contracts: An ABlawg ebook

Tue, 06/30/2015 - 10:00am

Editor’s Note

ABlawg is pleased to announce the launch of the first in a series of ebooks which we will put together from time to time when we have a critical mass of posts in a particular area. Our first ebook, compiled by Nigel Bankes, concerns oil and gas contracts. Other ebooks that are currently planned will cover oil and gas leases, the Alberta Energy Regulator, Charter equality rights, standing, and carbon law and policy.

Our ebooks will be accessible from a new tab at the top of the ABlawg website, and each ebook will be introduced with a post that will go out by email, RSS feed and Twitter to our subscribers. Each ebook will have a table of contents with hyperlinks to the collected posts and will be fully searchable.

If readers have ideas for ebooks in particular areas or other feedback on this initiative we would be pleased to hear from you.

The introduction to our first ebook happens to be Nigel Bankes’ 200th post for ABlawg, and we congratulate him for being the first ABlawgger to reach this milestone. We also thank Evelyn Tang (JD 2016) for her hard work in producing the ebook.

Introduction: By Nigel Bankes

Oil & Gas Contracts Ebook

This ebook collects a set of ABlawg posts dealing with upstream oil and gas contracts between 2007 and June 2015.

Most of the posts in this collection deal with the standard form agreements of the Canadian Association of Petroleum Landmen (CAPL) including the farmout agreement (EOG Resources v UCRC, Solara v Richmount), the operating agreement (Adeco v Hunt) and, the property transfer agreement (Nexxtep v Talisman). Other posts cover unitization arrangements (Signalta v Dominion), gas processing agreements, pooling agreements (Hunt v Shell) and agreements to construct, own and operate facilities (e.g. Talisman v Esprit). Most of the posts deal with lands in Alberta and decisions of the Alberta courts but there are also decisions from other provinces, one decision which deals with an AIPN (Association of International Petroleum Negotiators) form (BG International v Canadian Superior) and even one post which covers a decision of the High Court of Australia (EGC v Woodside).

Many of these posts deal with issues of contract interpretation, but many also shed light on particular terms and concepts used in the industry including independent operations, rights of first refusal (ROFR) (Bearspaw v Conoco, Blaze v Imperial), the operator’s lien, the obligations of the operator to non-operators, the gross negligence standard (Re Trident; Bernum v Birch Lake), fiduciary obligations, (Brookfield v Vanquish) and the removal or challenge of an operator (Diaz v Penn West).

I am not sure that I can identify common themes within these cases and perhaps it is more important that the reader be sensitive to the need to read and examine these cases in light of more general developments in contract law as well as the law on summary judgement. As for general contract law, two cases are of particular note: Bhasin v Hrynew, 2014 SCC 71 and Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53. Professor Watson Hamilton posted on the relevance of Sattva for arbitration award appeals here. Professor Girgis posted on the Alberta Court of Appeal’s arcane decision here but we have no post on the Supreme Court of Canada’s decision overturning that of the Court of Appeal.

The Bhasin decision is important because it recognizes (at para 93) that “There is a general organizing principle of good faith that underlies many facets of contract law” and recognizes as a manifestation of that general principle “a new common law duty …. of honest performance which requires the parties to be honest with each other in relation to the performance of their contractual obligations.” In light of this it will be important to consider the implications of this decision for the implementation of discretionary obligations under oil and gas contracts. The Court does refer to one oil and gas case (a pooling case Mesa Operating Limited Partnership v Amoco Canada Resources Ltd (1994), 149 AR 187) (Alta CA)) in its decision but the case also has implications for inter alia the ROFR provisions of the operating agreement: see Chase Manhattan Bank of Canada v Sunoma Energy Corp., 2002 ABCA 286. A paper prepared by Neil Finkelstein, Brandon Kain, Craig Spurn, Seán C. O’Neill and Justin H. Nasseri for the Jasper Energy Law Foundation Conference (June 2015) provides an excellent discussion of Bhasin in the oil and gas contract context: “Honour Among Businesspeople: The Duty of Good Faith and Contracts in the Energy Sector”.

The Sattva decision is principally important, as Professor Watson Hamilton notes, for changing the law on the deference to be accorded to arbitrators and trial judges in the interpretation of contracts. The Court decided that, given the importance of the commercial and factual matrix within which a contract is negotiated, the interpretation of the resulting arrangements will give rise to mixed questions of law and fact. Consequently, the standard of review to be applied to such interpretations is likely to be reasonableness rather than correctness. It remains to be seen whether this deferential standard of review will be equally applicable to both bespoke and standard form contracts.

Developments in the law on summary judgement (the principal case here is Hryniak v Mauldin, 2014 SCC 7) will have profound implications for the way in which parties litigate all manner of commercial disputes. One interesting example in this ebook is provided by the post on Justice Jo’Anne Strekaf’s recent decision in SemCAMS ULC v Blaze Energy Ltd.

This ebook is organized chronologically by date of post (oldest first) except that we have grouped together trial and appellate decisions so that any appellate decisions are printed immediately after the trial or first instance decision. Where appropriate the text also includes any commentary and response received on the individual posts. There is no index to the volume but it should be readily searchable in this electronic form using key words and the “find” function in adobe acrobat or equivalent.

I am responsible for the selection of posts for this volume. Evelyn Tang (JD 2016) has been responsible for the hard work in knitting this all together.

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Prosecutors as Ministers of Justice?

Mon, 06/29/2015 - 10:00am

By: Alice Woolley

PDF Version: Prosecutors as Ministers of Justice?

Three recent cases have brought to light bad behaviour by criminal prosecutors.

In R v Suarez-Noa, 2015 ONSC 3823 Justice Reid ordered a mistrial after the prosecutor suggested “to the jury that the accused had behaved like an animal rather than a human being,” calling the characterization “highly improper” and incapable of being “erased from the minds of the jurors” (at paras 10-11).

According to the CBC, in the Nuttall/Korody bombing trial British Columbia Supreme Court Justice Catherine Bruce said the prosecutors “took my breath away” with the “impropriety” of their decision to show a video to the jury that contained “footage of an actual pressure-cooker explosion.” She further described the prosecutor’s decision to ignore her express instruction not to refer to defences of duress and entrapment as “unspeakable” and as something she had “never experienced… before. Ever.” The CBC reported that Justice Bruce “said she would have called a mistrial had the proceedings not been so protracted and difficult”.

In R v Delchev, 2015 ONCA 381,the Ontario Court of Appeal allowed Delchev’s appeal of his convictions on 16 counts of firearms and drug related offence and ordered a new trial. It did so on the basis that the trial judge had improperly failed to consider whether the prosecutor’s conduct in plea negotiations constituted an abuse of process warranting a stay of proceedings.

The prosecutor in Delchev made a settlement offer following a Charter motion for the exclusion of evidence. In that motion Delchev testified as to threats made against him by one John Ramsay. In its settlement offer the Crown said that it would “recommend a conditional sentence” if Delchev “would admit that his evidence up to that point in the proceeding regarding duress was false, and that his counsel knew it to be false” (Delchev, at para 11). As the Court of Appeal noted, this settlement offer had the “potential to negatively affect the relationship between the appellant and his lawyers” (at para 56). It also did not reflect the legal obligation of defence counsel to “call the accused to testify even if the lawyer’s private opinion is that the client will be disbelieved”, and to only refuse to call the accused as a witness where “the lawyer knows the testimony to be false or fraudulent or believes it to be false by reason of an admission made by the accused” (at para 61). The Crown’s settlement offer created the risk that a defence counsel would not offer evidence she ought to because of fear that the Crown will use that implausible or disbelieved evidence to attack defence counsel through a plea offer to that counsel’s client.

These three examples are notable but not surprising. While in most cases prosecutors act in accordance with their legal and ethical obligations, bad behaviour by prosecutors is not hard to discover when you look at the case law. Courts and regulators rarely sanction lawyers who engage in it, but examples are easy to find.

At the same time, however, in common law and in accordance with codes of conduct, the prosecutor is said to be a “minister of justice” and “as more a ‘part of the court’ than an ordinary advocate” (Delchev, at paras 64-65).  As the Supreme Court put it in Boucher v The Queen, [1955] SCR 16, at 23-24:

It cannot be over-emphasized that the purpose of a criminal prosecution is not to obtain a conviction, it is to lay before a jury what the Crown considers to be credible evidence relevant to what is alleged to be a crime. Counsel have a duty to see that all available legal proof of the facts is presented: it should be done firmly and pressed to its legitimate strength but it must also be done fairly. The role of prosecutor excludes any notion of winning or losing; his function is a matter of public duty than which in civil life there can be none charged with greater personal responsibility. It is to be efficiently performed with an ingrained sense of the dignity, the seriousness and the justness of judicial proceedings.

Which leads to this question (which I am exploring in a broader research project): why this gap between prosecutorial aspirations and reality (at least some of the time)? How can lawyers whose legal and ethical duty is to do justice act in ways that work real injustice?

Based on my research so far, my working thesis is that the “do justice” ethic for prosecutors is at best unhelpful in creating ethical conduct, and at worst is toxic for prosecutorial ethics. It does not increase the likelihood of ethical conduct and may in fact be one of the reasons why unethical conduct occurs.

In the first place, the “do justice” ethic lacks specific content. Does it mean that a prosecutor ought to temper his advocacy in the courtroom? If so, when, how and to what extent? Does it impose positive obligations on the prosecutor to, for example, redress injustices in the courtroom (as Fred Zacharias argued)? Does it require a prosecutor not to bring forward a case that is lawfully permitted but morally troubling (e.g., where there is a harsh mandatory minimum and mitigating facts that the law does not take into account)? As a consequence, it is not clear how the exhortation to “do justice” can meaningfully guide prosecutorial decision-making.

Relatedly, the do justice ethic does not necessarily give someone a deep internal commitment to justice from which they can develop sound moral intuitions (which, as I’ve discussed elsewhere, are important for ethical behaviour). As Abbe Smith has cogently argued, it tends instead to give someone an internal commitment to her power and obligation to create justice, i.e., the belief is in the prosecutor’s justice-seeking power, not in justice itself. Being told that she has the unique role to seek and protect justice creates an internal concept for the prosecutor as someone who has a particular capacity to understand what justice requires, and makes that person less inclined to doubt her perceptions or to see the role that ordinary cognitive biases may be playing in her perceptions. When you combine that internal concept with the adversarial nature of the criminal trial, and the ordinary human desire to “win” any particular contest, which competitively inclined lawyers probably have to an above average extent, you have ideal circumstances for poor intuitions about the best answer to an ethical dilemma. The prosecutor believes she has special insight into what justice requires, her desire to win makes anti-justice decisions particularly desirable, her belief in her justice-discerning abilities makes her unaware of the corrupting effect of her desire to win, and her bad decision follows.

Further, the do justice ethic does not easily connect to the prosecutor’s adversarial role in a courtroom. How can the Crown act “as a strong advocate within this adversarial process” who “vigorously pursue[s] a legitimate result to the best of its ability” (R v Cook, [1997] 1 SCR 1113 at para 21) while simultaneously excluding any idea of winning and losing from her assessments? That inconsistency may lead prosecutors simply to ignore the do justice imperative and to pursue ordinary advocacy without – at the same time – having a strong sense of the limits of that advocacy that apply to ordinary lawyers.

In addition, the do justice ethic arguably distorts the criminal justice system, providing prosecutors with a source of moral authority in the courtroom and in society – the ability to claim implicitly, as the Crown improperly did explicitly in R v Boucher, that action by a Crown is entitled to more respect because done by an actor pursuing justice. That may not create bad behaviour by prosecutors, but it may provide more opportunities for its occurrence – i.e., for prosecutors to take advantage of power differentials in an unjust way.

The do justice ethic comes from a high-minded and admirable place. It is designed to capture the indisputably unique and complex aspects of the prosecutorial function in a free and democratic society. The problem is that it does not do so with any degree of insight or sophistication, and it may have the tendency to undermine the ethical discharge of that function.

If there is anything to this argument, the next question to be considered is: how do we capture the special features of the prosecutorial function and articulate the legal and ethical duties attached to that function? Tucker Carrington, founding director of the Mississippi Innocence Project, suggested one answer to this question when he said in response to my critique that the most ethical prosecutors he deals with are those who are “really great lawyers”, advocating effectively within the bounds of the law, substantively and procedurally. My hunch is that that account of the prosecutor’s role, if coupled with consideration of unique prosecutorial challenges such as the absence of clients, provides a better and richer ethical account of the lawyer’s role than does an empty exhortation to do justice.

This post originally appeared on Slaw.

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Province of Alberta Announces a Two-step Process for Developing a New Climate Change Policy

Fri, 06/26/2015 - 10:00am

By: Nigel Bankes

PDF Version: Province of Alberta Announces a Two-step Process for Developing a New Climate Change Policy

Matter Commented On: Minister Shannon Phillips’ Press Conference on Alberta’s climate change strategy, June 25, 2015

A central element of Alberta’s climate change strategy is the Specified Gas Emitter Regulation (SGER), Alta Reg 139/2007. The SGER imposes greenhouse gas emissions intensity reduction obligations (ultimately 12%) on regulated emitters (facilities that emit in excess of 100,000 tonnes of CO2e per year). A facility may achieve compliance in one of four ways: (1) meeting its target by producing its product with lower carbon inputs, (2) Alberta based offset credits (emission reductions over a business as usual scenario achieved by a non-regulated entity in accordance with an approved protocol), (3) emission performance credits (credits achieved by a regulated facility which beats its compliance target), or, (4) contribution of $15 per tonne (for excess emissions over the compliance target) to the Climate Change and Emission Management Fund (the so-called compliance price).

The regulations came into force in 2007 and were originally set to sunset in September 2014. They were extended without change by the Progressive Conservative administration, first to December 31st and then to June 30, 2015. These last-minute extensions of this significant policy instrument were emblematic of the broken state of climate change policy under that administration. If a government is serious about changing behavior it needs to signal well in advance what its expectations are rather than waiting until the last moment. Instead, the government floated trial balloons (e.g. the double/double proposal – double the compliance price to $30/per tonne and double the intensity target to minus 24% of the baseline) but then did nothing.

And then the world moved and the NDP were elected in Alberta. As my colleague Shaun Fluker has pointed out the NDP did not have anything specific to say about the SGERs in its platform and instead put its position in the following terms:

(5.10) We will phase out coal-fired electricity generation to reduce smog and greenhouse gas emissions and expand cleaner, greener sources, including wind and solar and more industrial co-generation in the oil sands, all of which will improve both the environment and the health of Albertans.

(5.11)We will end the PCs’ costly and ineffective Carbon Capture and Storage experiment and reinvest the 2015/16 component of this project into construction of public transit, which will help reduce families’ transportation costs and reduce greenhouse gases and other air pollutants.

(5.13) We will take leadership on the issue of climate change and make sure Alberta is part of crafting solutions with stakeholders, other provinces and the federal government. First steps will include an energy efficiency strategy and a renewable energy strategy.

The election did not change the impending expiry of the regulations but it was clear that the new government was not positioned to put a new climate change strategy in place immediately —hence the two step approach announced June 25.

Step One

The province will extend the SGER but will change two of the three key variables embedded in the regulation. While the amendments to the regulation have yet to be gazetted it appears that the regulation will be extended until the end of 2017. The coverage of the regulation will not change, i.e. the regulation will continue to apply only to emitters emitting more than 100,000 tonnes CO2e. However, both the ambition (or stringency) of the regulation and the compliance price will change. Thus, regulated emitters will be required to make emission intensity improvements of 15% in 2016 and 20% in 2017, and the compliance price will change to $20 per tonne in 2016 and $30 per tonne in 2017. The Minister estimates that these initiatives will reduce emissions by 13 megatonnes per year by 2017.

Step Two

The province has appointed Professor Andrew Leach from the University of Alberta to head an advisory panel to examine Alberta’s options for developing a more ambitious climate change policy prior to the Paris meeting of the Conference of the Parties to the UN Framework Convention on Climate Change in December 2015. Leach and his colleagues have been charged with preparing a discussion paper by the early fall with the intent that the paper will “inform the development of a comprehensive new provincial strategy that demonstrates to the world Alberta’s commitment to address climate change.” It seems clear that this will be a comprehensive review and that all options will be considered, including a carbon tax and a cap and trade scheme which will be able to link with other jurisdictions. It seems unlikely that Alberta’s idiosyncratic emissions intensity scheme will survive this review.

Carbon Capture and Storage

And finally a footnote reference to the Minister’s discussion of carbon capture and storage (CCS) in her speech. This was another important part of Alberta’s 2008 Climate Change Strategy and many previous posts on ABlawg have traced the implementation of this technology in Alberta (most recently here). Shell’s Quest project is scheduled to commence injection later this year and thus the NDP’s election platform (quoted above) must have raised concerns in some quarters. But thankfully, wisdom has prevailed and Minister Phillips in the discussion that followed the announcement stated clearly and unequivocally that Quest project contracts are in place and that the project will continue. I say thankfully for a couple of reasons. First, the Quest project is one of a handful of world class industrial scale CCS projects and it is crucial in global terms that we demonstrate the feasibility of this technology. Second, the Minister is correct. Alberta’s commitments to Shell (with the possible exception of double offset credits for CCS in the SGER) are tied up in contracts and Alberta would have been on the hook if there had been any attempt to back out of those arrangements – and with no corresponding discernible benefits. They key point here is that the province is affirming current commitments to CCS projects but will also be pursuing a number of other strategies including alternative energy sources and energy efficiency strategies to achieve GHG emission reductions. About time.

We will not become world leaders in greenhouse gas mitigation policy and action by the time of the Paris meeting later this year, but there is now at least a chance that we won’t be the target of derision and contempt.

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Worldwide Delisting from Google Search Results: The Significance of Equustek Solutions Inc. v Google Inc.

Thu, 06/25/2015 - 10:00am

By: Emily Laidlaw

PDF Version: Worldwide Delisting from Google Search Results: The Significance of Equustek Solutions Inc. v Google Inc.

Case Commented On: Equustek Solutions Inc. v Google Inc., 2015 BCCA 265

Last week the British Columbia Court of Appeal issued its much anticipated decision in Equustek Solutions Inc v Google Inc, 2015 BCCA 265, concerning an interlocutory injunction against Google requiring it to delist certain websites from its search results. There is much to analyze concerning this case. For the purposes of this post I will focus my discussion on why this case is of such significance, not only to Canada, but internationally, contextualizing the case within the wider international legal debates concerning the legal and social responsibilities of intermediaries such as Google.

Facts

Google is not a party to the underlying litigation. The defendants were distributors of the plaintiffs’ product, an industrial network interface hardware, which is what facilitates communication between the different pieces of complex industrial equipment. The plaintiffs allege the defendants violated their trade secrets and trade marks by using trade secrets of the plaintiffs to design their own competing product and then passing off their product as that of the plaintiffs in third party sales. The plaintiffs sued the defendants and obtained various orders requiring the defendants to cease advertising the plaintiffs’ products on their websites and redirect customers to the plaintiffs’ website, as well as disclose their customers to the plaintiffs. The defendants failed to comply with the orders and all three statements of defence were eventually struck. The defendants also moved their operations from Vancouver to an unknown location outside of Canada and continued to sell their products online.

Google’s Involvement

Google is embroiled in this lawsuit because the defendants’ websites were appearing in Google search results. While the plaintiffs had tried to track down the defendants and eliminate the websites on their own, they were unsuccessful. Google voluntarily removed 345 specific URLs from its search results. However, it declined to remove any further URLs, and to delist entire domains. Google also restricted the delisting to google.ca. These two decisions are key. The desire of Google to avoid delisting entire domains (such as www.ucalgary.ca), preferring instead to delist specific web pages or URLs (such as http://law.ucalgary.ca/law_unitis/profiles/emily-laidlaw), is widely seen, for internet matters, as a more narrowly tailored solution that better balances free speech concerns. This is because delisting from a search engine raises concerns over censorship, although note this simply removes the link from search results, it does not block access to the website itself.

While I generally agree that the most narrowly tailored solution is preferable, this does not mean delisting of an entire domain is always inappropriate. This was the case of Equustek. The plaintiffs rightly contended they faced a game of “whack-a-mole” – the defendants have effectively abandoned defence of their claim, but they continue to sell the allegedly counterfeit product on their websites, and every time that Google blocked access to a specific webpage, the defendants would move the content to a new webpage within their site. The defendants also sell their product to buyers outside of Canada and therefore delisting the URLs from google.ca alone is ineffective. The chambers judge ordered Google Inc. to cease indexing or referencing a list of websites in its search results worldwide (2014 BCSC 1063). This order is what was appealed to the BC Court of Appeal.

Court of Appeal Reasoning

The analysis here, for ABlawg purposes, will be necessarily focused on a few key issues, although I would encourage readers to read the entire judgment for more detail. The Court of Appeal addressed three issues to be discussed here: first, the territorial competence of the Supreme Court of BC over the injunction. The Court of Appeal disposed of this issue quickly, noting that since the underlying action is within the territorial competence of the Supreme Court, the injunction application was as well (at paras 29-45). Second, the Court examined whether Google is substantially connected with BC in a way that is sufficient for the Court to assume in personam jurisdiction over it. On this issue I will dwell.

Normally courts can assume in personam jurisdiction over a company by looking at the location of the behavior in dispute within a geographic area. This is more difficult, in some cases impossible, concerning online activities. Let us consider how we use Google. Is my search on Google from my office in Calgary the use of a passive website created by someone in another country? The Court of Appeal noted, in quoting from the lower court judgment (at para 52), that a passive website does not in itself give the court jurisdiction over the website creator. Nor does advertising by Google in Canada. It is understood that something more is needed, but how much more? The Court rightly notes the struggle in the global digital economy in addressing that line.

The Court pointed out three things that led it to conclude the BC Supreme Court had in personam jurisdiction (at para 52). First, Google’s site isn’t entirely passive. The auto-complete function (where you type in a search term and Google suggests completions) means Google is making suggestions to you based on your previous searches or those most commonly queried by other users. In other countries, such as Germany, Google has been held liable for defamation for auto-complete terms. Second, Google sold advertising to BC clients. While this was negotiated through Google Canada, the contract was with Google Inc. Additionally, the Court rightly noted that there is a difference between Google advertising its business in BC (no jurisdiction) and Google selling advertising space to BC companies, which was the situation here. The argument by Google that its advertising and search services were distinct was rejected by the Court. Indeed, the search results returned to us are determined by a bundle of factors, including advertising, our prior searches and other habits, our location, and searches of others. The Court of Appeal added a third, compelling reason (the first two points were made by the chambers judge) concerning our data, in effect making a property argument over personal data:

In my view, it can also be said that the gathering of information through proprietary web crawler software (“Googlebot”) takes place in British Columbia. This active process of obtaining data that resides in the Province or is the property of individuals in British Columbia is a key part of Google’s business (at para 54).

In its analysis, the Court noted that this collection of data was key to providing search results, and therefore the business conducted in BC was the same as was targeted in the injunction (at para 55). The Court also considered the extraterritorial effect of such an injunction, but rejected it was a bar to making the order. I comment more on this below.

The third issue was the power of the Court to grant injunctions against a non-party. The Court noted orders are routinely made against non-parties concerning, for example, garnishing orders or witness subpoenas (at para 64). The Court was particularly compelled by the analysis of a recent United Kingdom High Court decision, Cartier International AG v British Sky Broadcasting Limited, [2014] EWHC 3354 (Ch), wherein Justice Arnold issued an injunction against major internet service providers (ISPs) requiring blocking of access to sites that sold counterfeit goods. What is not mentioned in Equustek is that Justice Arnold has controversially issued an injunction against ISPs before in the context of illegal file sharing (concerning Newzbin2 and Pirate Bay). Applying Cartier to this case, the Court concluded that where there is a justiciable issue, the granting of injunctions against third parties is a well-established practice of the courts in preserving the rights of the parties (at paras 69-75, 80).

International Context

I have read commentaries about Equustek citing it as a disastrous overreach by a Canadian court seeking to impose its will across the world, and expressing fear that this will invite other, perhaps more socially repressive, countries to do the same (see e.g. here and here). The reality is that these courts can do this, have done it, and cases on this date back to the 1990s, which is generations ago in internet years. This can be seen in cases like LICRA et UEJF v Yahoo! Inc, Ordonnance Refere, TGI Paris, 20 November 2000, where Yahoo! was held liable for its French auction site selling Nazi memorabilia, something that is illegal in France but not in the USA (the case was also relevant as the attempt to enforce the judgment was in the USA). More recently, it can be seen in Google Spain SL, Google Inc v Agencia Espanola de Proteccion de Datos, Marios Costeja Gonzalez (2014) Case C?131/12, known inaccurately as “the right to be forgotten” case, where the European Court of Justice held, based on data protection principles, that Google must delist links upon request that are inadequate, irrelevant, no longer relevant or excessive. Google has been delisting the links in Europe only, although the Article 29 Working Party, the expert advisor on European data protection matters, recommended worldwide delisting much as has been ordered in Equustek. As I write this post, the French Data Protection authority, tasked with effecting Google Spain for France, has ordered Google to delist certain sites worldwide, otherwise face a sanction. Court orders with extra-territorial reach are, for practical purposes, the new reality for regulating abuse and other illegality online, particularly as against companies with global reach such as Google. The final hurdle of enforcement of an order or judgment in a US court remains unresolved.

More generally, Equustek reflects Google’s anxiety over the growing attention it is receiving from governments, NGOs and courts concerning its central function in the digital economy. We are all googlefied to an extent. Anyone who has watched Hawaii 5.0 is amused at the alternate universe in which Steve McGarrett and his team try to solve their many vexing questions by declaring “let’s Bing it”. Google holds approximately 72% of the search market in Canada, almost 65% in the US and 90% in the United Kingdom. The fear in a case like Equustek is that it opens the door to a court ordering Google to delist entire domains from its search results for other reasons that rub closer to the constitutional anxiety at issue: free speech. The American First Amendment offers greater free speech protections than other countries, including other western countries such as Canada, with narrower limits concerning hate speech, defamation and offensive speech.

This carries over to intermediaries, such as hosts of blogs and websites, or search engines such as Google, which are immune from liability for the content posted by others under s 230 of the Communications Decency Act of 1996, 47 USC § 230. The host of a site such as www.thedirty.com was held not liable for unlawful content posted on its site (see here), but in Canada, the UK or continental Europe, it might face liability once it becomes aware of the unlawfulness of the content and refuses to remove it. A case such as Equustek goes to the core of questions concerning how to regulate illegality on the internet in a global setting with conflicting domestic laws. The intellectual property laws in this case were aligned, but the message of arguments by counsel for Google was that this might not be the situation in the next case. The next case might be about hate speech. Or revenge porn. Or threatening speech. In all of these areas, Canadian and American laws are different. These issues are complicated and beyond the scope of a blog post, but it is important to understand these wider legal debates underlie the narrow decision in this case.

I suggest this case does not need to be read that widely, although there is some truth to the fears. As the Court noted,

In the case before us, there is no realistic assertion that the judge’s order will offend the sensibilities of any other nation. It has not been suggested that the order prohibiting the defendants from advertising wares that violate the intellectual property rights of the plaintiffs offends the core values of any nation. The order made against Google is a very limited ancillary order designed to ensure that the plaintiffs’ core rights are respected (at para 93).

Indeed, the order is interlocutory in nature and can be varied by the Court. Therefore if the defendants suddenly re-purpose the site for non-infringing uses they can seek a court order removing the injunction from the prohibited list. The Court also noted the need in this area for judicial self-restraint (at paras 56, 60, 85-92). There is a rightful concern of extra territorial effect, but this can be addressed through judicial self-restraint rather than hiving off from judicial consideration any business with worldwide reach.

Certainly each case must be assessed in terms of the narrowness of the blocking measure. The initial position should be that any prior restraint of speech, or of being delisted from search results, offends free speech principles. Further, a minimally explored issue in this case was whether blocking the entire domain would even be effective. The defendants can simply register a new domain name and start selling the goods there. The Court noted this, and resolved it by noting the slower pace at which this would happen compared to moving content to a new webpage (at para 27). However, the pace is slowed by days, perhaps even hours, only. The game of whack-a-mole, therefore, continues.

For a longer discussion of the significance of Google concerning freedom of expression and other concerns, see chapter 5 of my book Regulating Speech in Cyberspace: Gatekeepers, Human Rights and Corporate Responsibility.

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The Social Licence to Operate: Mind the Gap

Wed, 06/24/2015 - 10:00am

By: Nigel Bankes

PDF Version: The Social Licence to Operate: Mind the Gap

This post is based on an invited presentation that I gave at the Canadian Energy Law Forum on May 14, 2015 in Lake Louise. I began my remarks by looking at the three elements of the social licence to operate and then offered a summary of a lecture given by Rowland Harrison at the University of Alberta on March 10, 2015 from his position as the TransCanada Chair in Administrative and Regulatory Law, entitled “Social Licence to Operate: The Good, the Bad and the Ominous.” Mr. Harrison is a former member of the National Energy Board. I concluded my remarks by reflecting on four issues: (1) the normative context for thinking about the social licence to operate, (2) why it is that industry itself uses the term “social licence to operate”, (3) the need to narrow the gap between the legal licence and the idea of the social licence, and (4) the implications of allowing the social licence to operate as a veto.

Elements of a Definition: Social Licence to Operate (SLO)

Let’s start with the word “social”, the adjective that qualifies the noun, which tells us that the source of the licence that we are referring to is not government or a regulator but society, or some subset of society, or some community or subset of that community (begging of course questions like which society, what community, but, typically in the literature, some local or affected community).

And as for the noun, the word “licence” to us as lawyers means consent or permission; the permission to do that which without the licence would be a trespass; carrying the connotation that the permission originates from some entity whose authorization is in some sense required. The holder or applicant for the licence is typically industry – a resource company, a pipeline company or perhaps equally a party seeking to develop a new aquaculture operation, a wind farm, or even a school board wanting to open a special needs school in suburban Calgary. And the licence that we are taking about is additive; it is in addition to any legal licences or permits that may be required from a formal governmental authority.

And as for the verb “to operate”, this signifies that the concept is concerned not just with the commencement of the project, but implies that the project should continue to have the support of the community throughout its life.

The concept then is a highly normative concept; you ought not to proceed or continue with this operation without the permission of the affected community. But it is an extra-legal norm.

Rowland Harrison on the Social Licence to Operate

Let me turn now to Rowland’s excellent paper. Rowland started with some general observations before using the headings of his title and I will follow that same order; I am paraphrasing and parsing throughout, so don’t lumber Rowland with my choice of words and terminology.

First, the preliminary observations.

The concept of SLO is generally attributed to Jim Cooney of Placer Dome who used the term in the late 1990s in the context of social and political risk assessment by mining companies operating in developing countries which lacked a commitment to the rule of law. It is now commonly used in a broader range of social and political contexts, including linear projects (pipelines and transmission lines) in western liberal democracies strongly committed to the rule of law and with sophisticated and well-resourced regulatory schemes.

While one would expect the concept to be enthusiastically endorsed by elements of civil society it is perhaps more surprising to see industry broadly endorsing the concept, including pipeline companies, industry associations (e.g. the Canadian Association of Petroleum Producers (CAPP) and Canadian Energy Pipeline Association (CEPA)) and even some regulators.

Rowland suggests that to the extent that we are thinking about social licence and resource development projects it is useful to place this in the context of the more formal decision making procedures which, crucially in Rowland’s thinking, involve a public interest determination by a regulatory body, or even by cabinet, following a process that involves significant citizen engagement, typically through industry led consultation programs and perhaps supplemented by full public hearings. Such a public interest determination will always be contingent and contested but this is the mechanism, or some form of it, which western liberal democracies have chosen to make decisions about these types of projects.

Rowland deliberately distinguishes between the concept of social licence and the rights and obligations associated with the Crown’s duty to consult and accommodate aboriginal peoples — principally on the grounds that the duty to consult and accommodate is a legal and indeed a constitutional doctrine; the social licence to operate (SLO) is, by definition, extra-legal. I also note, parenthetically, that other commentators have also distinguished between social licence to operate and the concept of free, prior informed consent (FPIC). Prno and Slocombe for example note the following: (1) FPIC is a duty of the state whereas a proponent may acquire SLO without state involvement; (2) FPIC focuses on obtaining consent before a project proceeds, SLO emphasizes maintaining community support; (3) FPIC focuses on the rights of indigenous communities, SLO applies more broadly. See “Exploring the origins of ‘social licence to operate’ in the mining sector: Perspectives from governance and sustainability theories” (2012), 37 Resources Policy 346 at 349.

We can now turn to the three headings of Rowland’s title.

The Good

The “good” for Rowland is that the concept of SLO serves as a reminder to us all and, perhaps especially to regulators, that any legitimate project approval process needs to consider affected interests, and especially local and community interests.

The Bad

The bad for Rowland largely turns on all of the uncertainties associated with the concept of SLO. Who must the licence be obtained from? How can we tell when the licence has been earned or obtained? When is it lost? If one thinks, for example, of the events on Burnaby Mountain in the fall of 2014 where protestors disrupted the efforts of TransMountain Pipelines to carry out surveying activities associated with the proposed expansion of the Kinder Morgan pipeline, who was the potential social licensor? Was it the City of Burnaby? Was it the protestors? (For a judicial account of those activities see Trans Mountain Pipeline ULC v Gold, 2014 BCSC 2133, 2014 BCSC 2403, 2015 BCSC 242).

The Ominous

Following on from the bad, Rowland’s argument on the ominous (and one sees similar arguments in the writings of Dwight Newman and Brian Crowley) is that the very uncertainties associated with the content of the concept of social licence make it inconsistent with the ideals of the rule of law. Rowland recognizes that that is in some sense an unfair criticism precisely because SLO exists outside the law and the formal legal system. His response is that to the extent that the SLO concept makes normative claims then it should play by the normative rules of the formal legal system, including the rule of law.

Equally ominous for Rowland are the signs that SLO is being used by some to justify the non-application of the formal rules of the legal system by actors within the legal system. Thus, it is one thing for protesters to exercise what in the 1960s we might have termed civil disobedience, but it is altogether different if the police, for example, fail to enforce the terms of a properly obtained court order because the protesters have clothed themselves in the rhetoric of social licence to operate. This again undermines the rule of law. Here Rowland refers to Justice Brown’s experiences in getting an injunction enforced in Canadian National Railway Company v John Doe, 2013 ONSC 115.

What Then Does the Future Hold?

Rowland concludes with three observations. First, we can retain the good underlying the SLO concept and reduce the bad and the ominous if we ditch the language of licence which is too redolent of the formal normative order. Other possible terms that are less freighted include acceptance or support. Second, industry and government need to be more careful in their choice of words and what they endorse. And third, perhaps one response to the social licence debate is, in my words, to build a bigger tent. Thus, if we recognize that there is some legitimacy to the concerns that underlie the development of the SLO, that is to say, if we recognize that in some ways and in some respects there is a gap between the formal licence of the law and acceptance of a project by an affected community or communities, then we might try to develop techniques within the formal legal system to help reduce or eliminate that gap or deficit. Sometimes that gap will be unbridgeable but in other cases perhaps we need to try to bridge it.

That concludes my summary of Rowland’s paper and I now turn to my own remarks.

SLO in its Normative Context

I said earlier that SLO is a highly normative concept. What do I mean by that? A norm for me is simply an expectation about behavior. It is a claim that in X circumstances Y ought to act in a particular way. We are all (as lawyers, family and community members, and citizens in society) familiar with different types of norms and normative orders. We frequently recognize a hierarchy of norms but we also recognize norms of different qualities and specificity.

A lawyer’s hierarchy will start with the constitution and move down through senior levels of government to the local level. We saw some of the interplay between these rules operating in the TransMountain Burnaby Mountain standoff and we have sophisticated techniques for resolving normative conflict within the legal system including the doctrines of applicability or interjurisdictional immunity (IJI) and paramountcy, all as nicely illustrated by the NEB’s very well-reasoned Ruling No. 40 in the TransMountain proceedings.

As for the quality of our norms, consider for example the distinction between constitutional law and constitutional conventions, or in international law the distinction between soft norms and hard norms. A norm may be hard if it is (a) law, (b) expressed with precision, and (c) enforceable. A norm may be soft if: (a) its status as law is contested, (b) it is drafted in hortatory or excessively general terms, or (c) there is no enforcement mechanism. A prescriptive treaty might establish a set of hard norms whereas the Rio Declaration on Environment and Development is generally considered to establish a softer set of norms; and some instruments such as United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) may encode both hard and soft norms. See generally Alan Boyle, “Some reflections on the relationship of treaties and soft law” (1990), 48 ICLQ 901.

And as for the specificity of our norms, consider the distinction between rules and principles. Ronald Dworkin famously said that law is more than a system of rules but includes principles as well as rules. Both are norms but they operate in different ways. Norms like the neighbor principle, the precautionary principle, the polluter pays principle, or even something like the “regulatory compact” have weight, they push us in particular directions without requiring a particular outcome. They do not apply in an all-or-nothing way and the status of such principles may be highly contested. For example, there is a famous and ongoing debate in international law as to whether the precautionary principle is actually just “an approach” or whether it represents customary international law or is a general principle of law. Examples from Canadian case law of the application of normative principles include the Baker case (‘best interests of the child’) and the Spraytech Case (precaution). Rules on the other hand apply in an all-or-nothing way and demand a particular outcome.

My point thus far is that we live in a normatively complex world where there is constant interaction between different normative claims and different normative orders. Part of that complexity is attributable to the globalized world in which we live. If we reflect on that picture we as lawyers are actually very familiar with normative complexity; sorting through that complexity is part of what we do both as academics and practitioners. But how does this relate to the topic of SLO? I think it prompts two contradictory observations. The first is that this discussion suggests that there is nothing particularly unusual about SLO; it is simply part of, or another example of, this normative complexity and that we should not be too worried about it. A second observation is that this extended reflection on the different types of norms suggests that there is something really quite unusual about SLO which is that while it is a soft norm in the sense that it is clearly not law (it is a social licence and not a legal licence) the fact that it is presented in the form of a rule rather than that of a principle causes it to appear harder and more demanding than it actually is. Indeed on its face it is more demanding than the constitutional concept of the duty to consult and accommodate which, as the Supreme Court reminds us, does not amount to a veto. These reflections also suggest that the concept might be more useful to us, and indeed less threatening, if we could (re)frame it as a principle. As an aspirational goal or principle it is far more attractive than as a rule.

Why Might Industry Embrace the Social Licence to Operate?

Rowland suggests that the alacrity with which industry has latched on to the concept of social licence is perhaps surprising. I think that this enthusiasm can perhaps best be explained by recognizing the different ways in which we use the term, and appreciate that it is in fact used descriptively as well as normatively. To this point I have been emphasizing the normative usage i.e. you cannot operate unless you have a social licence. A more descriptive use is simply the claim “I have a social licence to operate”. (And we might observe as well that one usage is ex ante, while this second is ex post). Of course, as soon as I make the ex post claim that I have a SLO the attractiveness of the term to industry is obvious. It may help industry fast track the legal approval process (as where an oil sands proponent reaches an impact and benefit agreement with an affected First Nation community with the result that a scheduled hearing is cancelled because there is no party left with standing who can insist on a hearing); it may enhance the reputation of that industry player and meet its corporate social responsibility policies; and it may help that party improve or maintain market access for its products. All of these qualities make the endorsement of a social licence very valuable in managing project risks and timelines.

Narrowing the Gap

If we accept that in some cases there may be a gap between the legal licence and community expectations what measures can we take to help us narrow that gap? The first step of course is that government, and in particular responsible ministers, should be cautious not to widen the gap by undermining the credibility of the regulatory system. In my view (see my post here), Minister Oliver’s open letter to Canadians attacking “environmental activities” on the eve of the opening of the Northern Gateway hearings was one such misstep. Other more positive measures to be taken might include: broader adoption of strategic environmental assessments; landscape level planning approaches (e.g. Alberta’s planning process under the Alberta Land Stewardship Act (although clearly there has to be full implementation of plans as well, and here, for example we have yet to see the development and implementation of the biodiversity framework called for by the Lower Athabasca Regional Plan); and broader adoption of public interest standing rules (while also exercising some control over process) rather than limiting standing to recognized private interests. I also think that the public needs a forum in which to address broad public policy issues such as climate change and greenhouse gas emissions. Thus while it might be reasonable to conclude that a pipeline application before the National Energy Board is not the best place to assess upstream and downstream greenhouse gas emissions (see Forest Ethics Advocacy Association and Donna Sinclair v National Energy Board, 2014 FCA 245 and discussion here) these are legitimate concerns, as is the absence of a coherent federal climate change policy, and it is important to provide some forum within which these issues can be discussed. And finally, we should not underestimate the importance of reasons as a means of supporting the legitimacy of the legal licensing process. In this respect, I think that the NEB has been doing a good job in providing reasons for its decisions (see the reference above to its Ruling No. 40) whereas with the single exception of its decision in Forest Ethics (above), the Federal Court of Appeal’s habit of not providing reasons to support denial of applications for leave when serious legal issues are at stake does nothing to enhance the legitimacy of the regulatory scheme.

The Implications of Social Licence as a Veto

One of the concerns that I have with the concept of social licence is that it has the potential to undermine what we mean by living in a society or community. We live in societies because we are more than just individuals and we crave the benefits that living in a society offers including cultural benefits as well as material benefits such as schools, airports, hospitals, roads and energy services and infrastructure. While the market may help us make decisions about some of these projects, holdout problems and settlement and transaction costs cause us to acknowledge that contract and consent alone will not get those projects built. We need a regulatory system that allows us to assess that societally we are better off with these projects than without, we need to ensure that environmental values are properly protected at both the landscape level and the project level, we need to ensure full protection of indigenous rights (including in some cases the right to withhold consent), and we need a compensation mechanism to ensure that those who are inordinately affected are appropriately compensated. But if we also grant all of those who are detrimentally affected by such projects the power to act as a social licensor (or the power to withhold such licence), then we can pretty much guarantee that these projects will not be built, to the ultimate impoverishment of what we mean by living in a society.

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Keep It To Yourself: The Private Use Exception for Child Pornography Offences

Tue, 06/23/2015 - 10:00am

By: Joshua Sealy-Harrington and Ashton Menuz

PDF Version: Keep It To Yourself: The Private Use Exception for Child Pornography Offences

Case Commented On: R v Barabash, 2015 SCC 29

Last month, the Supreme Court of Canada revisited the Private Use Exception – a defence to the possession and creation of child pornography – in R v Barabash, 2015 SCC 29. The unanimous judgment, authored by Karakatsanis J, clarified the analytical framework relating to the Private Use Exception and elaborated on how courts should assess exploitative relationships in which child pornography may be made. This post explains the Private Use Exception, describes its evolution in the jurisprudence, and explores questions left unanswered by the Court’s decision in Barabash.

The Facts in Barabash

In 2008, two 14 year-old girls, K and D, ran away from an adolescent treatment centre in High Prairie, Alberta to stay with 60 year-old Donald Barabash. Both girls had “difficult pasts”, including drug addiction, criminal history, family issues, and in K’s case, a history of sex work (at para 4). During their stay with Barabash, K and D engaged in sexual activities with each other and 41 year-old Shane Rollison. These activities were generally recorded by Barabash, though K and D operated the camera at times as well.

The police began investigating Barabash and Rollison after receiving complaints about a photo posted to Nexopia, a Canadian social networking site. The photo depicted K and D, with one of them topless. As a result, the police searched the Barabash residence, where they found a number of materials they identified as child pornography.

Following the investigation, Barabash and Rollison were both charged with offences under the Criminal Code, RSC 1985, c C-46. Specifically, both were charged with making child pornography (Criminal Code, s 163.1(2)) while Barabash alone was charged with possessing child pornography (Criminal Code, s 163.1(4)). In response, both Barabash and Rollison argued that their making and possession of child pornography was legal because it fell within the scope of the Private Use Exception. The “core issue” at trial (and on appeal) was the availability of the Private Use Exception as a defence to the charges above (at paras 1, 9, and 11).

Explaining the Private Use Exception

It may come as a surprise to some that it is legal to create and possess child pornography as long as it is held for private use (an oversimplification, to be fair). But the Private Use Exception is a logical extension of the legal framework surrounding sexual activity involving minors.

Child pornography is media that depicts sexual activity with, or that displays the sexual regions of, a person under the age of 18 (Criminal Code, s 163.1(1)). But there is no blanket prohibition on persons under the age of 18 engaging in sexual activity. Indeed, the Criminal Code permits certain minors to engage in sexual activities subject to numerous protections seeking to protect them from harm.

First, the Criminal Code incrementally increases the capacity for a minor to consent to sexual activity as they increase in age. A minor under 12 years old is incapable of giving consent to sexual activity (Criminal Code, ss 150.1(1)-(2.1); Barabash at para 20). In contrast, a minor that is 12-15 years old can consent to sexual activity with a partner that is close in age or, if the minor is 14 or 15, with a partner who is their spouse (Criminal Code, ss 150.1(2)-(2.1); Barabash at para 22). While there is no upper age limit on the person a 16 year old minor can consent to sexual activity with (Criminal Code, s 150.1(1)), all minors benefit from the limits placed on legal consent that adults benefit from. For example, at any age, consent is vitiated if it is obtained by force, threats, fraud, or the exercise of authority (Criminal Code, s 265(3)) or if it is obtained in other problematic circumstances, such as where the complainant is incapacitated (Criminal Code, s 273.1(2); Barabash at para 21).

Second, the Criminal Code‘s provisions relating to sexual exploitation provide further protection to minors. Specifically, a person who is sexually active with a minor (even with the minor’s consent) will still be convicted of an offense if their relationship with the minor is exploitative (Criminal Code, ss 150.1(2)-(2.1) and 153; Barabash at para 34). This provides residual protection to minors from ages 16 to 17 who are too old to benefit from the limits on consent described above.

In sum, minors can, in certain circumstances, legally engage in sexual activity, even with adults – but can they record it? Minors aged 13-17 can engage in legal sexual activity, but the Criminal Code ostensibly criminalizes making recordings of such sexual activity. This is where the Private Use Exception steps in. There would be some contradiction in letting minors engage in sexual activity while criminalizing the recording of it for private use. In consequence, the Private Use Exception acts as a defence to various child pornography-related offences to permit the making and creation of child pornography that meets certain criteria (Barabash at para 16). For example, the Private Use Exception could apply to prevent the conviction of two 17 year old partners who innocently take nude photographs of each other. However, the Private Use Exception could also apply to prevent convictions in less benign circumstances, as the cases discussed below demonstrate.

To avoid confusion, we note that there were material amendments made to the Criminal Code between the time when the facts in Barabash occurred and when the Court’s decision in Barabash was released. In particular, during this intervening time the age of consent was raised from 14 to 16 (Criminal Code, s 150.1(1), Barabash at para 7). As a consequence, the current legal framework governing a minor’s consent described above did not apply to Barabash or Rollison whose impugned acts predated the amendments resulting in the current legal framework. Indeed, if the facts in Barabash were to occur in the present day, Barabash and Rollison would be precluded from arguing the Private Use Exception as a defence because 14 year old minors (like K and D) can now only consent to sexual activity with partners who are close in age or who are their spouse.

Evolution of the Private Use Exception in the Jurisprudence

A preliminary overview of how the Private Use Exception has evolved in the jurisprudence facilitates an analysis of the Court’s reasoning in Barabash.

The evolution of the Private Use Exception, in respect of Alberta courts, can be distilled to three key stages, namely:

  1. the origin of the Private Use Exception in R v Sharpe, 2001 SCC 2;
  2. the extension of the Private Use Exception in R v Cockell, 2013 ABCA 112; and
  3. the return to the original Private Use Exception in Barabash.

In Sharpe (2001), a majority of the Supreme Court held that the offences of possessing and making child pornography, while largely justified under section 1 of the Charter, captured two categories of privately held material which did not strike the proper balance between preventing harm to children and protecting freedom of expression (at paras 103-105). In respect of one of those categories – private recordings – the Supreme Court created the Private Use Exception, which is a defence to child-pornography offences if three criteria are satisfied:

  1. lawfulness e. any sexual activities depicted in the recording must be lawful;
  2. consent to recording e. all parties must consent to the recording; and
  3. privacy e. the recordings must be kept in strict privacy and intended for private use exclusively by:
    1. the creator; and/or
    2. those depicted in the recordings.

(Sharpe at paras 116 and 128; the “Original Private Use Exception”).

Next, in Cockell (2013), the Alberta Court of Appeal extended the Original Private Use Exception by reading in two additional “standalone” criteria, namely:

  1. absence of factual exploitation e. the circumstances must show that the minor’s consent was not obtained through exploitation or abuse in fact, regardless of whether any exploitation offences are made out in law; and
  2. mutuality of benefit e. the parties must intend for the recordings to be used by all those involved in its creation.

(Cockell at paras 36-41; the “Extended Private Use Exception”).

Sharpe and Cockell set the stage for Barabash (2015). At the Alberta Court of Queen’s Bench (2012 ABQB 99) both Barabash and Rollison were acquitted because the court held that the Original Private Use Exception was the governing law and that both men satisfied its criteria (at paras 275-78). However, both men were convicted at the Alberta Court of Appeal (2014 ABCA 126) which held that the Extended Private Use Exception was the governing law and that both men failed to meet its additional criterion of lack of factual exploitation (at paras 28 and 35-37). Reconciling these differing approaches was at the heart of the Supreme Court’s decision in Barabash.

The Supreme Court’s Decision in Barabash

In Barabash, the Court was asked to clarify the elements of the Private Use Exception, and in particular where the concept of exploitation fits into the Private Use Exception’s analytical framework (at para 2).

The Court situates the concept of exploitation under the lawfulness criterion from Sharpe, and in consequence, rejects “absence of factual exploitation” as an additional standalone criterion for the Private Use Exception (at para 31). The Court also rejects the standalone criterion of “mutuality of benefit” (at para 52). As a result, the Court reaffirms the analytical framework of the Original Private Use Exception provided in Sharpe (at para 18). Specifically, the Court reaffirms that when a person possesses a visual recording created by or depicting that person (see para 16), the three part conjunctive test for the Original Private Use Exception – lawfulness, consent to recording, and privacy – still applies (at paras 18 and 53).

A summary of the Court’s observations in respect of each of the three criteria follows.

Criterion 1: Lawfulness

First, the Court holds that the Private Use Exception can only apply to private recordings if the sexual activity recorded is itself lawful (at para 20). It follows that a minor:

  1. must consent to sexual activity, if any, depicted in the recording (Criminal Code, ss 150.1(2)-(2.1), 265(3), and 1); and
  2. cannot be sexually exploited (Criminal Code, ss 150.1(1)-(2.1) and 153).

(Barabash at paras 20-24).

As discussed above, Criminal Code provisions relating to consent and sexual exploitation operate to protect minors from harm. The consent of minors aged 12-15 is subject to various limits (Criminal Code, ss 150.1(2)-(2.1)), while minors aged 12-17 are protected from sexual exploitation (Criminal Code, ss 150.1(1)-(2.1) and 153).

Specifically in respect of sexual exploitation of a minor aged 16-17 (a “young person”; Criminal Code, s 153(2)), sexual activity, or an invitation of sexual activity, can only be lawful if the relationship with the young person does not involve:

  1. a position of trust or authority;
  2. dependency; or
  3. exploitation.

(Criminal Code, s 153(1); Barabash at para 34).

Moreover, in assessing exploitation, the Court looks at “the nature and circumstances of the relationship”, including the following “non-exhaustive list of indicia”:

  1. the age of the young person;
  2. the age difference between the accused and young person;
  3. the evolution of the relationship; and
  4. the degree of control or influence that the accused has over the child.

(Criminal Code, s 153(1.2); Barabash at para 36).

The legislative limits above restrict the circumstances in which sexual activity with a minor is lawful, and in turn narrow the scope of the Private Use Exception (Barabash at para 23). In particular, the Criminal Code offences relating to exploitation of minors restrict the availability of the Private Use Exception, even in circumstances where a minor legally consents to the sexual activity depicted (Barabash at para 35).

Given the above, the Court rejects the Extended Private Use Exception’s additional “absence of factual exploitation” criterion because it is largely “redundant” with the lawfulness criterion, which takes sexual exploitation into account (at para 43). In effect, the Court subsumes the “absence of factual exploitation” criterion from the Extended Private Use Exception into the lawfulness criterion of the Original Private Use Exception.

In our view, the Court’s rejection of a standalone “absence of factual exploitation” criterion is sound. If such a criterion were to exist, it would result in the absurd consequence of it being legal to ‘factually exploit’ a minor for sexual activity, but illegal to factually exploit a minor for sexual recordings. There are already multiple provisions in the Criminal Code devoted to preventing the sexual exploitation of minors (Criminal Code, ss 150.1(1)-(2.1) and 153) and if any of those provisions are violated, recordings relating to that exploitation will not be protected by the Private Use Exception – an already “robust analysis” (Barabash at para 43). Further, as Professor Peter Sankoff observes, tying lawfulness under the Private Use Exception to an established body of jurisprudence addressing sexual exploitation is a “richer”, “broader”, and “clearer” approach to applying the Private Use Exception than the creation of a new absence of factual exploitation criterion (see Ten Minutes on R v Barabash, Child Pornography and the Private Use Exception, at 8:40 (“Ten Minutes on Barabash”)).

Criterion 2: Consent to Recording

Second, in addition to consenting to the sexual activity, the minor must also consent to that activity being recorded (Barabash at para 25).

As “exploitation” is addressed under the lawfulness criterion of the Original Private Use Exception, the Court holds that there is no consideration of exploitation in respect of the minor’s consent to the recording (at paras 48-49). However, the Court concedes that there may be instances in which consent to the recording is itself acquired through exploitation (at paras 45-47); a potential blind spot in the Original Private Use Exception (the first point discussed below under “Commentary”).

Criterion 3: Privacy

Third, the Original Private Use Exception will only apply if the recording is kept in strict privacy and intended for private use only by the creator and/or persons depicted in the recording (Barabash at para 26). Interestingly, by restricting access to those who either (1) created the recording or (2) are depicted in the recording, the Court seemingly prohibits a minor from taking a sexually explicit photo of themselves and sharing it with a partner (the second point discussed below under “Commentary”).

While the Court restricted legal disclosure of child pornography to those involved in its recording, the Court did not go as far as the Alberta Court of Appeal in Cockell and insist on the minor using the recordings – the “mutuality of benefit” criterion. Rather, the Court held that the element of privacy requires only that the benefits derived from the recording are restricted to the individuals involved (Barabash at para 52). What these benefits consist of and which of the parties involved receive these benefits is for the determination of the individuals themselves (at para 52). In consequence, the Original Private Use Exception dismisses the added mutuality of benefit criterion found in the Extended Private Use Exception.

In our view, the Court’s rejection of the mutuality of benefit criterion is, like its rejection of the absence of factual exploitation criterion, sound. While the Court held that such a criterion would “unnecessarily complicate the private use exception test while providing little benefit” (at para 52) we would add that such a criterion would contradict the principles in Sharpe seeking to promote sexual exploration by minors (see Sharpe at para 109). Dictating to a minor that they can only meaningfully explore their sexuality by jointly possessing and viewing explicit photos with their partner is unnecessarily restrictive. Indeed, Joshua addressed, in a previous article, how ostensibly one-sided sexual activities can nonetheless reflect the meaningful sexual autonomy of both partners involved (see Tied Hands? A Doctrinal and Policy Argument for the Validity of Advance Consent at 145-46).

We note that the Court, in obiter, suggests that the element of privacy imports continued control over the recording in question such that the minor may be able to demand the destruction of the recording at a later date (at paras 27-30; the third topic discussed below under “Commentary”).

Application

Applying the three part Original Private Use Exception test above, the Court allowed the appeals and ordered a new trial (at para 63).

The Court found that the trial judge erred in law in his analysis of lawfulness, and in particular, in his analysis of whether or not the relationships in question were sexually exploitative. Specifically, in respect of sexual exploitation, the trial judge’s analysis improperly focussed on “the voluntariness of the particular activities, instead of on the nature of the relationship between the parties” as required by the Criminal Code (Barabash at para 56; emphasis in original). While the trial judge did consider factors relevant to exploitation (such as age disparity), he erroneously considered those factors “one at a time” rather than assessing “whether they cumulatively resulted in an exploitative relationship” (at para 55; emphasis added).

The Court ordered a new trial (rather than making its own ruling on the evidence) because the trial judge’s error had a material bearing on the acquittals (see para 62). Specifically, the Court held that the trial judge’s factual findings did not inevitably lead to a lack of exploitation in this case because the evidence was equivocal in respect of exploitation (at paras 58-61). On one hand, multiple factors raised the risk of sexual exploitation, including K and D’s homelessness, addictions, and need for shelter from Barabash and Rollison (see para 60). On the other hand, K and D were lucid enough to consent, initiated and directed many of the sexual activities, and willingly consented to the making of the recordings (see para 59). As a consequence, a new trial, at which a judge can properly address whether the sexual activity was lawful under the Private Use Exception (i.e. non-exploitative), was necessary (see para 62).

Commentary: Unanswered Questions from Barabash

Barabash brings significant analytical clarity to the Private Use Exception. Still, it leaves some questions unanswered, including:

  1. Can a minor be lawfully exploited for sexually explicit photographs?
  2. Can a minor share sexually explicit “selfies” with their partner? And
  3. Can a party later retract consent to recording?

1. Can a Minor be Lawfully Exploited for Sexually Explicit Photographs?

First, how should courts deal with child pornography lawfully obtained through exploitation? As described above, the Original Private Use Exception rejects the additional “absence of factual exploitation” criterion included in the Extended Private Use Exception. It follows that the second criterion under the Original Private Use Exception – consent to recording – does not take exploitation into account (Barabash at para 49). But what if child pornography is obtained through “lawful” exploitation (i.e. exploitation that falls short of sexual exploitation under the Criminal Code, s 153)?

For example, if an adult, in an exploitative relationship, takes nude photographs of a minor, but never touches the minor or invites the minor to touch them, then the offence of sexual exploitation is arguably not made out. As a consequence, such an adult could benefit from the Private Use Exception despite exploiting a minor to obtain child pornography – an apparent loophole (albeit narrow) around the Court’s primary objective in Barabash of preventing the exploitation of minors. On this point, the Court observes that consent to recording is typically intertwined with consent to sexual activity, which would leave the minor with protection under the Criminal Code. But the Court also concedes that this may not always be the case (at paras 46-47). Indeed, the Crown’s factum in Barabash (at para 124) makes this very point, referring to R v Hewlett, 2002 ABCA 179, where three teenagers responded to a modeling advertisement in which they were offered drugs and alcohol in exchange for their consent to taking explicit pictures. Without analyzing exploitation in such a case, “a predator need only manipulate his or her victim to the point of obtaining consent to be free from criminal sanction” (Cockell at para 37).

In the end, the Court refrains from opining on this issue, stating that it will be dealt with when such facts are brought before it (at para 48). At that time, it will be interesting to see how the Court responds. While permitting the exploitation of children to obtain child pornography appears to be something that ought to be criminalized, such a view runs contrary to the offence of sexual exploitation under the Criminal Code (which would not apply to procuring photographs through exploitation without touching or an invitation thereof). It likewise runs contrary to the Court’s exclusion of exploitation from the consent to recording criterion under the Original Private Use Exception. In consequence, to criminalize possession of child pornography lawfully obtained through exploitation would either require a revision to the Original Private Use Exception or the expanding of sexual exploitation beyond its prescribed requirements under the Criminal Code. As the Court has just recently reaffirmed the Original Private Use Exception and as it is well-established that Criminal Code offences should be interpreted in favour of the accused when multiple interpretations are available (R v CD, 2005 SCC 78 at para 50) it is unclear how a court could convict someone merely for obtaining nude photographs of a minor through exploitation.

In any event, we tend to support the Court’s decision to remain silent on this issue. The Court correctly observes that it may be misguided to opine on the issue of consent to recording when it was not an issue in the facts of Barabash (at para 32), when the common law of consent was “not fully argued” before it or the courts below (at para 32), and when the implications of altering the common law of consent “may be far reaching” (at para 48).

2. Can A Minor Share Sexually Explicit “Selfies” With Their Partner?

Second, it is unclear how the courts will deal with a minor taking a sexually explicit photo or video of themselves (a “Selfie”) and sending it to a partner (which, if sent by text message, is known as “Sexting”). While the concept of Sexting a Selfie is not addressed in either the reasoning or facts in Barabash, it is an example worthy of discussion, particularly given the increasing use by minors of technology that involves the private sharing of photographs and videos, such as Instagram and Snapchat. Indeed, the police were tipped off about Barabash in this very case because of photos posted to a social media platform, Nexopia (see para 7).

The discussion above addressed only private recordings because that is the type of child pornography at issue in Barabash. But Sharpe actually read in two exceptions to child-pornography offences under the Criminal Code, namely, exceptions applying to:

  1. self-created expressive material (the “Personal Use Exception”); and
  2. private recordings of lawful sexual activity (the Private Use Exception, discussed above).

(Collectively, the “Sharpe Exceptions”; Sharpe¸ at para 128).

Despite the documented frequency of minors Sexting Selfies, it appears as though such recordings would not qualify under either of the Sharpe Exceptions.

The inapplicability of the Personal Use Exception to Sexting Selfies is clear. The Court’s summary of the Personal Use Exception in Sharpe (at para 128), which was not at issue in Barabash (see para 16)¸ states that the Personal Use Exception applies only to “expressive material created through the efforts of a single person and held by that person alone, exclusively for his or her own personal use.” It follows that when a minor sends a sexually explicit Selfie to their partner, neither can benefit from the Personal Use Exception because it would apply, at most, to Selfies that are held exclusively by the minor who took the Selfie.

Indeed, the Court’s elaboration on the Sharpe Exceptions suggests that the Personal Use Exception does not apply to Selfies in any circumstance, even those held privately by the person who took the Selfie. Admittedly, the Court states that the Personal Use Exception applies to “visual expressions […] created through the efforts of a single individual and held by that person for his or her eyes alone” (at para 115). This passage suggests that the Personal Use Exception applies to Selfies held exclusively by the person who took the Selfie. But the Court later states that the Private Use Exception applies to “auto-depictions, such as photographs taken by a child or adolescent of him- or herself alone, kept in strict privacy and intended for personal use only” (at para 116). As this passage expressly deals with Selfies, it appears that the Court intended the Personal Use Exception to be limited to “visual expressions” like drawings, not actual recordings, like photographs.

In contrast, the Private Use Exception appears to apply to Selfies, but arguably not when they are shared with a partner. The Court’s summary of the Private Use Exception in Sharpe (at para 128) which it reaffirms in Barabash (at para 16) states that the Private Use Exception applies only to “a person’s possession of visual recordings created by or depicting that person.” In consequence, when a minor sends a sexually explicit Selfie to their partner, arguably neither can benefit from the Private Use Exception because the recipient neither participated in the creation of, nor is depicted in, the recording.

The Court’s elaboration on the Private Use Exception provides further support to the inapplicability of the Private Use Exception to Sexting Selfies. As stated above, the Court appears to limit the application of the Private Use Exception to Selfies “intended for personal use only” (at para 115). Similarly, the Court, in elaborating on the Private Use Exception, reiterates that “the person possessing the recording must have personally recorded or participated in the sexual activity in question” (at para 39) and that the recording must be “intended exclusively for private use by the creator and the persons depicted therein” (at para 26). Indeed, the Court specifically discusses the example of minors exchanging sexually explicit photos, and that discussion seems to suggest that Selfies would not fall within the Private Use Exception:

[F]or example, a teenage couple would not fall within the law’s purview for creating and keeping sexually explicit pictures featuring each other alone, or together engaged in lawful sexual activity, provided these pictures were created together and shared only with one another (at para 116; emphasis added).

Similarly, the Court in Barabash states that “private use is limited to use by the creator and the persons depicted, and nobody else” (at para 52).

In sum, the Court in Sharpe and in Barabash appears to hold that if a minor takes a sexually explicit Selfie and sends it to their partner, both partners will be criminally liable.

That said, neither Sharpe nor Barabash, in respect of their facts, dealt specifically with minors exchanging sexually explicit Selfies. Further, the broader principles described in Sharpe arguably apply to minors exchanging sexually explicit Selfies. The majority in Sharpe read in the Private Use Exception because of the significance of private recordings to “adolescent self-fulfilment, self-actualization and sexual exploration and identity” (at para 109). Surely a partner need not press the button on the camera for the exchange of sexually explicit photos to engage with adolescent sexual exploration.

In our view, whether the exchange of Selfies should be protected by the Sharpe Exceptions is legitimately controversial. On one hand, we would guess that most sexually explicit photos exchanged by minors are Selfies (though Canada seems to lack studies in this regard). As a consequence, excluding what could be the most common way minors choose to explore their sexuality with their partners through photographs from protection intended to preserve that exploration seems misguided. Insisting that a minor’s partner literally take the photo, when that minor may only be comfortable with sending an explicit photo which they have taken (and retaken, and possibly edited) themselves, significantly depreciates the sexual autonomy of minors which the Private Use Exception seeks to preserve. Indeed, requiring that the photo be taken by a minor’s partner may pressure minors to be in sexually compromising positions earlier than they are comfortable with since some minors may be comfortable with sharing nude photos but uncomfortable with being nude in the presence of their partner (where the pressure for sexual activity may be more intimidating). On the other hand, permitting a minor to take sexually explicit Selfies and send them to others may raise concerns about proliferating child pornography and facilitating the manipulation of minors by sexual predators. In particular, if Sexting Selfies can qualify under the Private Use Exception, then adults will be able to convince minors through online exchanges to send them sexually explicit photos that could be protected by the Private Use Exception. While insisting that the adult take the photo may seem misplaced, a minor may very well be comfortable sending a photo of themselves, but uncomfortable being physically present with the adult when the photo is taken, which could indirectly result in fewer minors being manipulated by adults since there will be no legal means (that they are comfortable with) of sharing sexually explicit photos with those adults.

Regardless of whether Sexting Selfies should be included within the scope of the Sharpe Exceptions, greater clarity in respect of how the law should address such materials will be a welcome addition to the Supreme Court’s next foray into child pornography laws.

We note, parenthetically, that Cockell involved sexually explicit Selfies (see para 42). Interestingly, the Court of Appeal did not reason that the accused could not benefit from the Private Use Exception in respect of those Selfies because he was neither depicted in them nor created them (pursuant to para 116 of Sharpe). Instead, the Court of Appeal merely mentioned that some of the recordings at issue were Selfies in passing while discussing the (now defunct) mutuality of benefit criterion (at para 42).

3. Can A Party Later Retract Consent To Recording?

Third, how should courts deal with the situation when a party to a recording later retracts their consent to the recording (either by demanding its return or destruction)? While this issue is clearly in obiter as retracting consent was not at issue in Barabash (at para 27) it nonetheless raises interesting questions to explore.

According to the Court, a party’s right to later retract consent to recording follows from how applying the Private Use Exception depends on the “ongoing nature of the possession” (at para 29). For example, privately-held recordings that are protected by the Private Use Exception are no longer protected by the Private Use Exception the moment they are shared with third parties, even if that sharing occurs decades later. And that sharing may not only make the current possession of that child pornography illegal; it may reach back in time to make its creation illegal as well (see Sharpe at para 118). In this way, the Private Use Exception is a ‘living defense’ that must be tested against the entire history of the recording, not just the moment the recording is created. As a consequence, the Court reasons that the minor’s ongoing consent to the recording could, likewise, be a ‘living’ requirement of the Private Use Exception which, if retracted, may vitiate the protection of the Private Use Exception (Barabash at para 29).

To be clear, the Court, even after acknowledging that this issue is in obiter, uses equivocal language regarding the right for a minor to retract consent to recording and vitiate the Private Use Exception (e.g. “[i]t may well be” and “Sharpe suggests” that a minor has such a right; at para 30). Indeed, the Court expressly states that it “would not make any final pronouncement” on this issue (at para 30).

Still, the Court outlines persuasive obiter commentary in favour of minors retaining the right to retract consent to recording. Specifically, the Court describes how providing such a right would further the principles underlying the Court’s decision in Sharpe and balance the right to freedom of expression with protecting children from harm, such as the anxiety or stress they may feel about having such a recording in the possession of another person (at para 30). But as the Court provides only limited obiter commentary on this issue, the Court provides no guidance as to the process or implications of a child requesting that the recording be destroyed. How long would the person possessing the recording have to delete it before being subject to criminal liability? If the person refrained from deleting it, under what offence would they be charged? Can the adult demand that the recording be destroyed even if the minor wishes to preserve it? What if the recording contains two minors, one who later demands that it be destroyed, and another who insists on its preservation? All of these questions will require further clarification from the Court when facts engaging those questions ultimately arise.

In particular, it is relatively unique for a private citizen to have the power to transform legal conduct into criminal conduct at their sole discretion and possibly years after the initially non-criminal activity took place. However, in Ten Minutes on Barabash, Professor Sankoff notes (at 11:07) that this unconventional application of the criminal law follows from the unique ongoing operation of the Private Use Exception. Any material showing a minor engaged in sexual activity is “frozen in time” (at 12:19) and would be child pornography, even many years later, but for the presence of the Private Use Exception (which requires the consent of all parties to the recording). As a consequence, according to Professor Sankoff, the Private Use Exception no longer applies when a minor retracts their consent to the recording. While we agree with Professor Sankoff that a recording will likely transform into illegal child pornography “at [the] very moment” a party later retracts their consent (at 12:35), clearer guidelines in respect of how that retraction must be communicated to the individual possessing the recording and reasonable parameters for destroying the recording (e.g. how it should be destroyed, how much time you have to destroy it) are important to ensure that such an offence does not cast too broad a net of criminal liability.

Conclusion  

Barabash brings greater clarity to the analytical framework for the Private Use Exception. At a minimum, this clarity should result in courts applying the Private Use Exception with greater precision and consistency. At best, with effective outreach to minors, this clarity may help provide young people with clearer parameters in respect of exploring their sexuality while being secure from abuse and exploitation. Still, even with the greater clarity brought by Barabash, many questions remain unanswered. Hopefully, with the clear foundation provided in Barabash, courts will be better-equipped to grapple with these new questions as they arise.

It is understandable for the Court to refrain from providing specific legal guidance on the unanswered questions discussed above given that none were present on the facts in Barabash. Indeed, the many nuances described above demonstrate how factually complex these issues can be and how attempting to address them without the benefit of specific facts and arguments may be premature. That said, clarity in the criminal law is fundamental to a just society (R v Levkovic, 2013 SCC 25 at paras 33-34). With these questions left unanswered, there is significant ambiguity in what conduct is legal and how courts should treat it, particularly the conduct of minors exchanging sexually explicit Selfies. Only time will tell how these issues will be addressed in future cases. For now, it may be best for minors to keep things to themselves.

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