By: John-Paul Boyd
Editor’s Note: John-Paul Boyd, the Executive Director of the U of C-affiliated Canadian Research Institute for Law and the Family (CRILF), started a new blog in August on Access to Justice in Canada. John-Paul will be cross-posting on ABlawg from time to time and blogging on family law decisions (see also his blog JP Boyd on Family Law). This first post is an index to five separate entries on DIY access to justice approaches originally posted on Access to Justice in Canada.
Prepare and distribute handouts with clear information about the law and dispute resolution processes. Handouts could cover topics including the substantive law on different issues, management of common litigation tasks and tips for successful mediation. Leave them in a brochure rack in your reception area; give copies to colleagues and to pro bono and community legal clinics; give them to social service providers such as abused women’s centres and immigrant settlement agencies.
Connect with a few of the social service agencies in your neighbourhood, find out where the holes are in their library of legal resources, and fill them. Think and write about the law in a way that addresses the unique legal needs and realities of each group’s target population. Work with community media and larger social service groups; these generally have a broader reach and better funding, and the work you do often goes much further.
Get in touch with the libraries, community centres and social service groups in your area and arrange to provide one or more public lectures; public talks are a rewarding, enriching and engaging way of improving access to justice. The range of topics you can address is unlimited and could include introductions to court processes, alternatives to court, landlord tenant law, wills and estates, the basics of family law, and anything else that could of interest to the people you are talking to. Providing handouts gives the community group and the people at your talk an additional resource.
Working on an unbundled basis is a great way to maintain a remunerative practice while offering legal services that are more accessible than services offered on a comprehensive, billable-hour basis, however few lawyers offer such services. Unbundling gives clients the services they select on fixed or predictable prince and within a defined time period; it gives lawyers a less stressful practice with a lower likelihood of mounting accounts receivable.
Offering services on a flat rate basis is another way to maintain a profitable practice while improving access to justice. Under this model, the client can pick and choose which and how much of a lawyer’s services he or she will buy, at a fixed rate which is determined up front. The client and the lawyer are protected from the client’s frustration if a legal issue is not resolved before his or her resources are exhausted. The lawyer gets a file with a fixed scope of required labour and a minimal potential of becoming a dog file, payment up front and a minimal likelihood of collections issues, and a file free from the tyranny of recording time.
By: Jonnette Watson Hamilton
Case commented on: Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 (CanLII)
The Supreme Court’s decision in Sattva Capital Corp v Creston Moly Corp has quite rightly received a great deal of attention. It has attracted notice in contract law circles for changing the law by holding that contractual interpretation involves questions of mixed fact and law, and not questions of law (see e.g. “Contract interpretation is no longer a question of law”, “A blockbuster decision in contractual interpretation” and “SCC issues ‘big change’ to contract law – Sattva gives last word to trial judges, arbitrators”). And, because the precedent-setting decision arose from an arbitration hearing in British Columbia, it has also attracted commentary more focused on the arbitral aspects (see e.g. “Finally, the Supreme Court of Canada puts some finality into Arbitrations” and “Supreme Court of Canada Limits the Right to Appeal Commercial Arbitral Decisions on Issues of Contractual Interpretation”). Because the British Columbia arbitration legislation that facilitated and regulated the arbitration in Sattva is unlike that in the rest of common law Canada, I will focus on the arbitration aspects of the decision and then explore the difference the Sattva decision may make in arbitrations in Alberta (and in Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Manitoba and Nova Scotia, all of which also adopted the Uniform Law Conference of Canada’s Uniform Arbitration Act (1990)).
The Supreme Court of Canada decision
The initial dispute was about a US$1.5 million finder’s fee that Creston Moly was contractually obligated to pay Sattva Capital. The finder’s fee was payable in Creston shares. The parties disagreed about which date their contract required them to use to determine the price of the Creston shares. Depending upon the date chosen, Sattva would either get 11,460,000 shares or 2,454,000 shares. The arbitrator agreed with Sattva’s interpretation of the parties’ contract and awarded Sattva 11,460,000 Creston shares. Creston wanted to appeal.
Under British Columbia’s Arbitration Act, RSBC 1996, c 55, s 31, appeals of arbitration awards are only available on questions of law and only with either the consent of all the parties to the arbitration or with leave of the court:
31 (1) A party to an arbitration … may appeal to the court on any question of law arising out of the award if
(a) all of the parties to the arbitration consent, or
(b) the court grants leave to appeal.
(2) In an application for leave under subsection (1) (b), the court may grant leave if it determines that
(a) the importance of the result of the arbitration to the parties justifies the intervention of the court and the determination of the point of law may prevent a miscarriage of justice,
(b) the point of law is of importance to some class or body of persons of which the applicant is a member, or
(c) the point of law is of general or public importance.
The British Columbia Supreme Court denied leave to appeal, holding there was no question of law. However, the British Columbia Court of Appeal held that leave should be granted and sent the dispute back to the Supreme Court for a decision on the merits of the appeal. The Supreme Court held the arbitrator’s decision was correct and dismissed the appeal. However, the Court of Appeal held the arbitrator’s decision was incorrect and allowed the appeal. The Supreme Court of Canada granted leave to appeal from both of the Court of Appeal’s decisions and, in the end, agreed with the arbitrator and the British Columbia Supreme Court.
The Supreme Court acknowledged that “[h]istorically, determining the legal rights and obligations of the parties under a written contract was considered a question of law” (para 43). However, the unanimous decision determined that this historical approach should be abandoned (para 50). Henceforth, “[c]ontractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix” (para 50). The Court acknowledged that it might be possible to extricate a question of law from the mixed fact and law context of contractual interpretation — for example, the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor (para 53) — those instances “will be rare” (para 55).
In this case, no question of law was raised. As a result, no appeal was available from the arbitrator’s award.
While that was enough to dispose of the appeal, the Supreme Court went on to consider one of the three factors in section 31(2) that have to exist before leave can be granted and whether leave to appeal should have been granted in this case, assuming the issue had been a question of law. First they looked at whether an appeal would have been necessary to prevent a miscarriage of justice, as specified by section 31(2)(a). The Court held that in order to meet that standard, “an alleged legal error must pertain to a material issue in the dispute which, if decided differently, would affect the result of the case” (para 70). In other words, the appeal had to have some possibility of succeeding (para 71); without considering the full merits of the case (para 72), it had to be clear that an argument that the arbitrator’s decision was unreasonable had merit (para 74).
Second, the Court looked at what considerations should factor into a court’s exercise of the residual discretion in section 31(2). British Columbia courts had determined that the words “may grant leave” in section 31(2) meant a court can refuse leave to appeal even when one of the three requirements listed in section 31(2) has been satisfied. The Supreme Court agreed a residual discretion existed (without discussing the point), but disagreed with the list of factors to be considered in exercising that discretion as set out in the leading case of British Columbia Institute of Technology (Student Assn.) v. British Columbia Institute of Technology, 2000 BCCA 496 (CanLII), 2000 BCCA 496. The list was overly broad, extending beyond the historical bases for refusing discretionary relief — the parties’ conduct, the existence of alternative remedies, and any undue delay (para 87) — and repeating factors already considered in the section 31(2) analysis.
The Court’s final comment on appeals from arbitration awards was about the standard of review. Here the Court noted:
Appellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations and is different from judicial review of a decision of a statutory tribunal. For example, for the most part, parties engage in arbitration by mutual choice, not by way of a statutory process. Additionally, unlike statutory tribunals, the parties to the arbitration select the number and identity of the arbitrators. These differences mean that the judicial review framework developed in Dunsmuir v. New Brunswick, 2008 SCC 9 (CanLII), 2008 SCC 9,  1 S.C.R. 190, and the cases that followed it is not entirely applicable to the commercial arbitration context (para 104, emphasis added).
It is refreshing to see the Court acknowledge that appellate review of commercial arbitration awards is different from judicial review of decisions of statutory tribunals. This point is too often forgotten; see my post “Arbitration is not Administrative Law.” However, in subsequent paragraphs, the acknowledged differences do not seem to play any role. For example, all of the precedents cited on the standard of review point are administrative law precedents: Dunsmuir v. New Brunswick, 2008 SCC 9 (CanLII), 2008 SCC 9,  1 SCR 190; Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61 (CanLII), 2011 SCC 61,  3 SCR 654, and Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62 (CanLII), 2011 SCC 62,  3 SCR 708, citing David Dyzenhaus, “The Politics of Deference: Judicial Review and Democracy”, in M. Taggart, ed., The Province of Administrative Law (1997) 279.
As for the standard of review itself, the Court held “[i]n the context of commercial arbitration, where appeals are restricted to questions of law, the standard of review will be reasonableness unless the question is one that would attract the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise” (para 106, emphasis added). And, in analyzing whether an arbitrator’s decision was reasonable, “it is permissible for reviewing courts to supplement the reasons of the original decision-maker” (para 110). Indeed, the Court relies almost entirely on the reasons offered by Justice Armstrong of the British Columbia Supreme Court (paras 107-119). This is arbitration’s version of the administrative law point about deference to “the reasons offered or which could be offered in support of a decision” (Dunsmuir at para 48), i.e., the result is correct because reasons could have been offered in support.
Application to Alberta
In Alberta, the equivalent of British Columbia’s section 31 is section 44 of the Arbitration Act, RSA 2000, c A-43:
44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.
(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that
(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and
(b) determination of the question of law at issue will significantly affect the rights of the parties.
Both the British Columbia and the Alberta legislation make appeals of arbitration awards on questions of law available if the parties consent or if the court grants leave to appeal. The Alberta statute allows parties more latitude to fashion their own agreement about appeal rights, not restricting them to questions of law.
Both the British Columbia and the Alberta legislation limit a court’s discretion to grant leave by setting out conditions that the parties must meet. However, British Columbia courts have a residual discretion because that province’s statute states that “the court may grant leave” if those conditions are met. An Alberta court, on the other hand, is told that it “shall grant [leave] only if it is satisfied” those conditions are met. The use of the word “shall” suggests an absence of residual discretion in Alberta, but the House of Lords in Pioneer Shipping Ltd. et al. v. B.T.P. Dioxide Ltd., [198013 All ER 117 (CA), aff'd  2 All ER 1030 at 1034 (HL), held that a very similar leave to appeal provision in the English legislation did not affect the general discretionary nature of the granting of leave (see also John J. Chapman, “Judicial scrutiny of domestic commercial arbitral awards”(1995) 74 Canadian Bar Review 401 at 412).
Finally, the conditions for granting leave in Alberta are narrowly focused on only the parties. It is only the importance of the dispute to the parties and whether their rights will be significantly affected by the appeal that counts. The courts are seen as dispute resolvers only, a continuation of the role of private arbitration. In British Columbia, appeals from arbitration may have a wider focus, beyond that of the parties only. The appeal can be important to the parties or to a group that the appealing party is a member of, or to the general public. Some Alberta courts have read into the Alberta appeal provisions the requirement that the appeal be in the public interest. See, for example, my 2011 post “Leave to Appeal an Arbitration Award: Is There a Public Interest Requirement?” (The Alberta Law Reform Institute has examined the public interest requirement in Arbitration Act: Stay and Appeal Issues, 2013 (Final Report 103) in the context of re-thinking appeals from arbitration awards and it has recommended that section 44(2) be repealed in its entirety and that there be no appeals without the parties’ agreement (para 138)).
So what do these similarities and differences in the British Columbia and Alberta legislation amount to when it comes to applying Sattva in this province?
Most importantly, the Court’s precedent-setting decision that contractual interpretation issues are questions of mixed fact and law will apply to restrict potential appeals from arbitration awards in Alberta. Contract interpretation questions are prominent in commercial arbitrations and, because they are no longer questions of law and leave to appeal is only available for questions of law, there should be fewer requests for leave to appeal and fewer leaves to appeal granted. It is not quite the abolishment of all appeals with leave that the Alberta Law Reform Institute recommended, but it is a big step in that direction. Members of the legal profession and the public will know less and less about arbitration as cases such as Sattva will simply be decided, privately and confidentially, by decision-makers chosen by the parties to the dispute.
The Court’s interpretation of section 32(1)(a) — the importance of the result of the arbitration to the parties justifies the intervention of the court and the determination of the point of law may prevent a miscarriage of justice — will probably be persuasive in Alberta. Section 31(1)(a) is the closest the British Columbia legislation comes to Alberta’s party-focused conditions for granting leave. Recall that section 44(2) of the Alberta legislation requires that the importance to the parties of the matters at stake in the arbitration justifies an appeal and that determination of the question of law at issue will significantly affect the rights of the parties. This is similar in substance, if not form, to the British Columbia provision. Therefore the Court’s interpretation that what was required was that “an alleged legal error must pertain to a material issue in the dispute which, if decided differently, would affect the result of the case” (para 70) is probably an accurate description of what section 44(2) requires.
The Court’s narrowing of the discretion of the court hearing the leave to appeal application is probably not relevant to Alberta. It is not clear that courts in Alberta have a residual discretion to decline to grant leave if the conditions in section 44(2) are met. Section 44(2) does not say that courts must grant leave if the conditions are met, but it does say they “shall” grant leave only if the conditions are met. Thus it appears that Alberta courts cannot take “the parties’ conduct, the existence of alternative remedies, and any undue delay” (para 87) into account in deciding leave application under section 44(2).
The Court’s final point, namely, that the standard of review will almost always be reasonableness, barring a constitutional question or a question of law of central importance to the legal system as a whole and outside the adjudicator’s expertise, will apply in Alberta. It is a general point about arbitration and the types of issues that are generally argued and determined in arbitration.
In summary, the principles of arbitration law decided by the Supreme Court in Sattva should be highly persuasive in Alberta, despite the differences in the arbitration statutes in British Columbia and Alberta.
By: Nigel Bankes
Case Considered: IFP Technologies (Canada) v Encana Midstream and Marketing, 2014 ABQB 470
What happens when A sells B a working interest in the thermal or enhanced production from an oil and gas property and A or its successors in interest continue with primary production? This was the issue at the heart of this decision. The answer is that B gets shafted; B should have taken better steps to protect itself rather than simply assuming that all future production from the property would take the form of enhanced or thermal production.
In the course of his lengthy 73 page judgement Chief Justice Neil Wittmann (acting in place of Justice Ron Stevens (deceased)) addressed a number of questions of oil and gas law which will be of interest to the energy bar including the following: (1) What property interest did IFP acquire? (2) What is the test for determining whether a working interest owner has reasonable grounds for refusing consent to an assignment of shared interest lands under the 1990 CAPL Operating Procedure? (3) What is the legal position where a working interest purports to withhold consent and the Court subsequently determines that the withholding of consent was unreasonable? (4) Did the development of the property through primary production techniques substantially nullify the benefit for which IFP (B) had bargained so as to amount to a breach of contract? (5) Assuming that there was a breach of contract how should damages be assessed? (6) Assuming liability should any claim for damages be capped by a contractual agreement between the parties?
The facts and the agreements between the parties?
IFP (a wholly owned subsidiary of IFP Energies Nouvelles of France) had expertise and technical information in relation to the drilling, placement and completion of horizontal wells. Beginning in the late 1980s IFP entered into a series of agreements with CS Resources, a pioneer in the use of horizontal wells for the development of heavy oil resources. As part of the first series of these agreements CS Resources granted IFP a 3% gross overriding royalty (GOR) on all CS lands on which IFP’s technology was applied. PanCanadian (PCR) acquired CS Resources in 1997. IFP and PCR eventually concluded that the GOR model was inappropriate and agreed to replace it with a working interest model. That agreement was recorded in an MOU of July 1998 and an Asset Exchange Agreement (AEA) of October 1998 to which were scheduled a joint operating agreement (JOA) and its appended operating procedure, which was an amended version of the CAPL 1990 Operating Procedure. This second set of agreements covered both the original CS Resources lands as well as other lands rolled in to the deal by PCR including properties referred to as the Eyehill Creek Assets. At the time of the AEA there were already 222 conventional wells on these lands.
Under the AEA IFP was to acquire a 20% working interest in the PCR lands including the Eyehill Creek Assets. The granting language of the AEA provided as follows:
 PCR hereby agrees to sell, assign, transfer, convey and set over to IFP, and IFP hereby agrees to purchase from PCR, all of the right, title, estate and interest of PCR (whether absolute or contingent, legal or beneficial) in and to the PCR assets, … all subject to an in accordance with the terms of this Agreement.
(Emphasis is CJ Wittmann’s)
The idea that IFP’s interests were actually limited to thermal and enhanced production first seems to have been introduced in the terms of the JOA which was scheduled to the AEA. Clause 4(c) provided (at para 92):
4(c) It is specifically agreed and understood by the parties that the working interests of the parties as described in Clause 5 of this Agreement relate exclusively to thermal or other enhanced recovery schemes and projects which may be applicable in respect of the petroleum substances found within or under the Joint Lands and the Title Documents. Unless specifically agreed to in writing, IFP will have no interest and will bear no cost and will derive no benefit from the recovery of petroleum substances by primary recovery methods from any of the rights otherwise described as part of the Joint Lands or the Title Documents.
(Emphasis is CJ Wittmann’s)
Other provisions of the JOA, including the definition of working interest and the nature of the parties’ participating interests, all simply referred to the interests of the respective parties in the lands without further qualification by reference to the nature of the production process.
Under the attached CAPL operating procedure the parties had elected the right of first refusal option (ROFR) under Article 24 (at para 110) and the agreement seems to have contained the standard provisions on independent operations (with some amendments) with a 400% penalty (at para 107). Another element of the JOA was a series of clauses that relieved IFP of any responsibility for the abandonment of the conventional (primary production) wells on the Eyehill Creek property (at para 33).
By the late 1990s PCR was concerned about its ability to hold on to the Eyehill Creek lands and was focusing on developing other assets such as its Christina Lake property. One of PCR’s Eyehill leases had expired and in other cases Alberta Energy had issued notices on continued leases requiring PCR to establish the productivity of the properties. Oil prices were depressed and PCR had shelved any idea of introducing a thermal recovery operation at Eyehill. Given these concerns and concerns as to the abandonment liabilities associated with its existing wells, PCR was receptive to proposals to removing itself from the property. In 2001 PCR executed a letter agreement with Wiser which was a form of farmout agreement (ultimately formalized as an Abandonment, Reclamation and Option Agreement (ARO)) pursuant to which Wiser would earn PCR’s working interest in the Eyehill Creek lands by “dealing with” the existing 222 wells by abandonment and reclamation, by re-working them or by putting them on production. It was clear that Wiser was only interested in the primary production possibilities from these lands.
PCR gave IFP the ROFR notice to which it was entitled in April 2001. At about the same time Wiser also sought (unsuccessfully) to clarify with IFP that IFP’s working interest was confined to enhanced and thermal recovery operations. IFP declined to exercise its ROFR but did withhold consent to the disposition on the grounds that Wiser “had no technical capability or intent to pursue thermal or other enhanced recovery” (at para 52; see also para 167). PCR proceeded to execute the ARO. Wiser protected itself through an indemnity agreement with PCR. Wiser was never novated into the AEA and related agreements. Wiser commenced the operations contemplated by the ARO and earned its interest. Wiser never informed or consulted IFP as to the nature of those operations. Canadian Forest acquired Wiser’s interests in 2004. All of the operations conducted by Wiser and Canadian Forest were primary production operations; none involved enhanced or thermal recovery.
On the basis of these facts IFP alleged that the Wiser farmout (the ARO) was a breach of contract and sought damages. PCP took the view that IFP had unreasonably withheld its consent to the proposed agreement.
What property interest did IFP acquire?
I think that there are two possible interpretations of what IFP acquired. One interpretation (which I will refer to as the property-limited-by-contract interpretation) is that IFP acquired an undivided interest as a tenant in common of the relevant Crown leases and other assets (subject to some contractual limitations on its precise rights in relation to those assets). A second interpretation (which I will refer to as the property interpretation) would hold that IFP acquired something in the nature of a working interest in production from the lands resulting from thermal or other enhanced recovery techniques. There are pros and cons to each of these interpretations.
The principal argument in favour of the property-limited-by-contract interpretation is that that it is the natural interpretation of the granting words used in the dominant agreement, the AEA. It also has the advantage that it accords IFP a legally coherent and cognizable interest in the property. We know what the basic rights of a tenant in common are. The contrary argument is that this classification does not seem to be consistent with the overall intentions of the parties which suggested that IFP’s rights prima facie did not extend to primary production. But the best way to respect that intention is to conclude that the property rights of IFO as a tenant in common were limited by the terms of the other contractual arrangements between them, including the key provision in the JOA referred to above.
The principal argument in favour of the property interpretation is that it delivers a result that seems to comport with the overall result intended by the parties reading all of the agreements together and the commercial context for those agreements. The principal knock against this interpretation is that it fails to respect the dominant conveyancing language of the AEA and as a result delivers an interest which is unrecognizable in terms of property law. It is one thing to have an undivided interest which is confined to a particular formation or formations; or to have an undivided interest in a particular substance; but we create a whole new layer of complexity when we admit of the possibility that ownership of an interest in land varies with the nature of production from those lands. Not only is this complex but it seems to be inconsistent with the royalty-as-interest-in-land cases culminating in Bank of Montreal v Dynex Petroleum Ltd, 2002 SCC 7. If an interest in the proceeds of production cannot give an interest in land how can a party have a tenancy in common (not just any old interest in land, but an undivided interest) in a Crown lease that is contingent on the mode of production of the leased substances?
How was this issue resolved here? Chief Justice Wittmann seems to suggest that both the plaintiff and the defendant adopted some version of the property-limited-by-contract approach but the Chief Justice himself preferred some version of the property approach:
 I find that IFP’s working interest pursuant to these agreements has always been limited to thermal and other enhanced recovery methods. I find the AEA did not grant broad rights that were subsequently reduced or modified by the JOA, as assumed by both the Plaintiff and the Defendants. The AEA does not define the term working interest. The Preamble to the AEA states, however, that the ownership of working interests is subject to and in accordance with the terms and conditions of the JOA. Furthermore, the JOA is incorporated by reference into the AEA as though it were contained in the body of the AEA. As such, the definition of working interest in the JOA is incorporated by reference into the AEA.
See also para 194 where the Chief Justice comments further on the relationship that the parties have created.
But whatever interpretation is adopted it is still necessary to work through the applicability of the operating procedure to primary production. We don’t have the complete story from the judgement and in particular we do not know the full extent to which the parties modified the CAPL 1990 form, but one would anticipate that significant changes would be required to make it work in these circumstances. Consider, however, what we do know. We know (see para 54) that Wiser carried out operations on the lands once it had acquired its interest in the property and we know that it did not inform IFP about those operations. We can infer from this that Wiser was not in the habit of sending IFP AFE (authorizations for expenditure) notices (which passes without comment in the judgement). Yet on the other hand the Court and the parties assume the applicability of the independent operations clause (modified as discussed at paras 105-107) with the result that Chief Justice Wittmann concludes that IFP might have been able to trigger the clause – although as a matter of practice it lacked both the capital and the operational expertise to be able to do so (at para 197). But even aside from this practical problem facing IFP, it would be extremely difficult legally for IFP to propose an effective independent operation where there were already licensed wells for the relevant drilling spacing units.
The complexities of determining the applicability of various clauses of the CAPL procedure (absent an express statement as to (in)applicability) seem legion. What about the applicability of the CAPL provisions dealing with access to information? Was IFP entitled to information about primary production from the lands (referred to at para 176)? What about Article XI dealing with the surrender of joint lands (referred to at para 221)?
The difficulties were also evident with respect to Article 24, the ROFR/consent provision of the procedure. Given Chief Justice Wittmann’s conclusions as to just what it was that IFP had obtained (i.e. a working interest in only thermal and enhanced production) there was a certain logic to PCR’s position (at para 140) that the transfer to Wiser should not trigger Article 24 since Wiser was only interested in primary production. The difficulty with that argument however was that whatever Wiser’s intentions with respect to what it would produce (and how), Wiser was clearly acquiring PCR’s entire interest in the property. Thus Chief Justice Wittmann is surely correct in concluding (at paras 141-145) that the Wiser transaction did trigger Article 24. The question would have been more difficult had PCP retained its rights to thermal and enhanced production.
What is the test for determining whether a working interest owner has reasonable grounds for refusing consent to an assignment of shared interest lands under the 1990 CAPL Operating Procedure?
The ROFR provision of the 1990 CAPL afford each working interest owner (WIO) two independent rights: the ROFR right itself and the right to refuse consent to the proposed transfer even where the WIO will not exercise the ROFR.
2401B(e) In the event that the working interest described in the disposition notice is not disposed of to one or more of the offerees pursuant to the preceding Subclause, the disposition to the proposed assignee shall be subject to the consent of the offerees. Such consent shall not be unreasonably withheld, and it shall be reasonable for an offeree to withhold its consent to the disposition if it reasonably believes that the disposition would be likely to have a material adverse effect on it, its working interest or operations to be conducted hereunder, including, without limiting the generality of all or any part of the foregoing, a reasonable belief that the proposed assignee does not have the financial capability to meet prospective obligations arising out of this Operating Procedure. …
(Emphasis is CJ Wittmann’s)
This gives rise to two questions. The first is really a methodological question – how should the Court go about analyzing such a question. And the second is that of how to apply the preferred approach to the facts at hand. As for the methodology, both counsel and the Court (at para 152) decided to rely on case law dealing with the unreasonable withholding of consent in the context of the landlord and tenant relationship. There might be some doubts as to the applicability of this body of law in this setting and thus it is useful to have the Court affirm its relevance. From this body of law the Chief Justice derived the following principles:
 The burden of proof is on the party asserting consent was unreasonably withheld: Sundance Investment Corporation Ltd v Richfield Properties Limited (1983), 41 AR 231 at para. 23 (CA).
 The party whose consent is required is entitled to base its decision on its own interests alone: Community Drug Marts P & S Inc, Estate of v William Schwartz, Construction Co Ltd, 31 AR 466 at para 41, (QB), aff’d  AJ No 537.
 Whether a person has acted reasonably in withholding consent depends on all the factual circumstances: Exxonmobil Canada Energy v Novagas Canada Ltd, 2002 ABQB 455 at para 49. The question is not whether a reasonable person might have given consent, but whether a reasonable person could have withheld consent in the circumstances: 1455202 Ontario Inc v Welbow Holdings Ltd,  OJ No 1785 at para 9 (ONSC) (“Welbow”). In Exxonmobil, Park J reviewed the evidence on an objective basis to determine whether in the circumstances a reasonable person would have refused to consent to the assignment.
 A party must not refuse consent where such refusal is calculated to achieve a collateral purpose, or benefit, not contemplated by the original contract: Welbow at para 9.
 Proceeding with an assignment in the face of a reasonable refusal to consent is a clear breach of a negative covenant: Exxonmobil at para 51.
 The court should not defer to the party withholding consent, but must assess the reasons for withholding consent and consider whether a reasonable person in similar circumstances would have made the same decision. The court should consider the purpose of the consent clause and the meaning and benefit it was intended to confer.
Notably absent from this list is any reference to the venerable decision of the English Court of Appeal in Houlder Brothers v Gibbs,  1 Ch 575, which stands for the proposition that a lessor will be able to withhold consent on grounds related to the personality of the proposed assignee or the use and occupation that the proposed assignee will make of the leased premises. Admittedly it is very difficult to reconcile Houlder Brothers with the majority decision of Alberta’s Court of Appeal in Sundance, but recall that in Sundance the majority was clearly of the view that a lessor had good grounds to object to any assignment that prejudiced the lessor’s financial interest. I have never been very persuaded by that approach and much prefer Justice Harradance’s dissenting judgement but in this case both Houlder and the majority judgement in Sundance seemed to offer some comfort to IFP.
Indeed, if one looks simply to the outcome of the transfer in this case it look like a case in which IFP should be able to withhold consent. After all, if IFP failed to forestall the transfer it was going to be forced into a joint venture with a party that had the announced interest of exploiting the property exclusively for its primary production potential. Not only would that exclude IFP from the opportunity to take its 20% share of production, it would also prejudice the economics and perhaps physical feasibility of future enhanced or thermal recovery operations at the site. But for Chief Justice Wittmann this was an oversimplification. He concluded that IFP’s withholding of consent was unreasonable.
Ultimately I think that the principal reason for this conclusion is that as a matter of law IFP is no worse off after the Wiser transaction than it was before the transaction. This is because PCR was under no legal obligation to develop the thermal and enhanced recovery potential of the lands. IFP had failed to contract for that obligation. One may question how consistent this is with the landlord and tenant cases which I think clearly allow the landlord to use the right to withhold consent as a means of ensuring that the property is not used for certain purposes even though the landlord had not specifically contracted against those uses in the lease: Houlder Brothers and Sundance both support that proposition.
Perhaps more convincing is Chief Justice Wittmann’s overall assessment of (un)reasonableness in light of the dire circumstances facing PCR (and therefore ultimately IFP itself). Essentially PCR was sitting on a dying property in the form of a set of leases (although PCR did hold the freehold mineral title to some of the lands) that were going to expire or be cancelled unless somebody did some work on the property (and PCR certainly had no obligation to do that). Seen in this light the transfer to Wiser was a means of saving the properties and saving IFP’s interest in those properties even if it might have prejudiced the adoption of thermal and enhanced recovery in the future. In other words, better the chance of the continuing possibility of future thermal and enhanced recovery (however remote) than the inevitable (and relatively immediate) loss of the properties. But if one takes this broad view of reasonableness then it might also be necessary to consider the extent to which the dire circumstances in which PCR found itself were inevitable or whether they were of PCR’s own making.
What is the legal position where a working interest purports to withhold consent and the Court subsequently determines that the withholding of consent was unreasonable?
If a tenant assigns a lease in breach of the covenant not to assign or sublet without the landlord’s consent (such consent not to be unreasonably withheld) the assignment or sublease is not invalid or void but the tenant is in breach of its covenant and the landlord will typically have reserved a right of re-entry for breach. Similarly, if the landlord withholds consent and the tenant believes the withholding to be unreasonable the tenant may elect to proceed knowing that if it can establish that the landlord’s behavior is unreasonable it will not be in breach of its covenant. This is a high risk course of action since in the case of a lease the penalty for being wrong may be the loss of the lease. As a result, the assignee may well, as here, demand an indemnity. High risk it may be but it is a more expeditious way of proceeding than the alternative which is to apply for a declaration as to the unreasonableness of any withholding of consent (and note that under the CAPL the arbitration provisions of Article 24 apply to valuation issues in package deals; they do not apply to the consent issue).
The issue is a bit more complicated in the context of CAPL because of the novation provisions of the agreement – modified in this case and universally by the terms of the CAPL Assignment Procedure. These provisions are designed to provide for deemed novation in certain circumstances but the provisions can only be triggered if the parties are in compliance with the consent provisions.
In this case Chief Justice Wittmann concluded that the logic of all of this was applicable to the joint operating context and thus: (1) PCR was not in breach of the covenant not to assign without consent because consent was withheld unreasonably, (2) the deemed novation provisions were not precluded from applying by the absence of consent, and (3) therefore Wiser had been novated into the relevant agreements.
The reader may be wondering where this argument was going and who was on what side of it. The issue had been raised by IFP. IFP wanted to argue that if Wiser had not been novated into the JOA the provisions in the JOA that limited IFP’s interest to an interest in thermal or enhanced recovery could not be enforced against IFP – IFP could then be taken to have an unqualified 20% undivided interest in the property. And on that basis IFP sought an accounting of its share of production relying on the Statute of Anne, 4 Anne c 16, s 27 (UK). Chief Justice Wittmann concluded (at paras 402- 403) that his earlier findings as to the limited nature of IFP’s interest and his conclusion on the novation argument just referred to were a complete answer to the claim for an accounting.
Did the development of the property through primary production techniques substantially nullify the benefit for which IFP (B) had bargained so as to amount to a breach of contract?
It seems to me that Chief Justice Wittmann dealt with this issue in two parts of his judgement, first at paras 199-212 under the heading “4. What is the relevance of the reasonable expectations of the parties?’ and then later at paras 220-270 under the heading “6. Has the opportunity to pursue a thermal or other enhanced recovery project at Eyehill Creek been destroyed or damaged?” In framing the issue in terms of substantial nullification rather than adopting the Chief Justice’s headings I am drawing on Justice Kerans’ judgement in the Court of Appeal in Mesa Operating Ltd Partnership v Amoco Resources (1994), 149 AR 187 (which the Chief Justice refers to at paras 199-201). I think that the Mesa case and the substantial nullification test referred to in that decision provide an appropriate umbrella for the consideration of these two headings in part because there is no discussion of any applicable law under heading (6) in the chief justice’s judgement. Thus it seems best to bring the “destroyed or damaged” framing of heading (6) under the Mesa umbrella.
In Mesa, Mesa held a GOR in half a section of lands and argued that Amoco breached its contractual obligations to Mesa when it carried out an administrative pooling of its lands on an acreage basis rather than on a reserves basis thereby effectively diluting Mesa’s royalty entitlement. Amoco had the power to pool under the terms of the GOR agreement and thus the question was whether it had abused its discretion in the manner in which it went about exercising that power. The Court of Appeal concluded that this was a case in which pooling should have taken place on a reserves basis largely because it was able to say, considering the traditions and practices of the industry, that it was well established that “an operator pools on a reserves basis if the geographical data clearly shows the boundaries of the reservoir, and those boundaries are significantly at variance with the size of the corresponding surface parcels …”. Given the unusual nature of the split rights in this case it was clearly going to be difficult for IFP to establish an analogous body of practice to support its contentions in this case.
Chief Justice Wittmann concluded that IFP could not make out its case under either of these two headings. IFP had not bargained for a prohibition on primary production (at para 212) (and thus that benefit was not in the contemplation of both parties and had not been nullified) and while there was much evidence that it would be more difficult and more expensive to introduce a thermal or enhanced recovery operation into a field that had been drilled out and depleted through conventional recovery measures and conventional cementing jobs, such an operation would not be impossible (at paras 267 – 268). In so concluding the Chief Justice establishes that Mesa sets a very high threshold. The application of the test does seem justified in this case because the parties clearly contemplated some continuing primary production, and, as the Court notes at para 195, given that, some level of conflict between those who own all the rights and those who only own some rights (the right to enhanced or thermal production) is inevitable.
Assuming that there was a breach of contract how should damages be assessed?
Although Chief Justice Wittmann concluded that PCR was not liable to IFP he did go on and consider whether IFP had been able to establish that it had suffered any damages. The Chief Justice posed three questions: (1) Was the claim of lost opportunity to develop the thermal and enhanced recovery potential of the property real or fanciful? (2) If real what was the value of the opportunity? (3) What was the likelihood that IFP would have been able to realize this opportunity and what discounting factor should be applied?
Chief Justice Wittmann concluded (at paras 284- 285) that the claim of lost opportunity was not merely fanciful. PCR disposed of the Eyehill Creek property for strategic reasons not because it believed that that the property had no potential for thermal development. He was less sympathetic to the plaintiff on the other two questions concluding (at para 364) that the plaintiff had been unable to establish any value for its lost opportunity and concluding further that there was zero chance that PCR would have initiated a thermal recovery operation in the absence of a farmout because of the poor economics and IFP would have been unable to initiate such an operation itself. I have not dug too deeply into these sections of the judgement but they seem very much to emphasise the economics of a thermal recovery project based upon oil prices at the time of the farmout. The rationale for focusing on the price environment at that time is that PCR would not have been able to hold on to the properties (see paras 377-378) and wait for prices to improve.
Assuming liability should any claim for damages be capped by a contractual agreement between the parties?
Article 9 of the AEA provided that in no event should PCR’s liability to IFP exceed the value of the PCR assets. The parties assigned a value of $16 million to those assets; IFP’s claim for damages was for $45 million. Chief Justice Wittmann commented as follows:
 On its face, a limitation of damages clause is legitimate and enforceable. IFP and PCR are sophisticated business entities who negotiated the AEA with the assistance of legal counsel. There is no indication of unconscionability or oppression at the time the contract was negotiated. There are also no public policy reasons to ignore the limitation clause.
…. Given the language of the contract, IFP’s claim for $45 million in damages was untenable.
Such limitation of damages clauses are common in purchase and sale agreements for oil and gas properties and confirmation of their enforceability will be welcomed.
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By: Evaristus Oshionebo
Case Commented on: Nature Conservancy of Canada v Waterton Land Trust Ltd, 2014 ABQB 303
This case raises a myriad of legal issues covering disparate areas of the law. For the purpose of this post, only those facts relevant to the issue of rectification of the conservation easement agreement will be discussed. Other aspects of the facts can be found in Jonnette Watson Hamilton’s earlier post here.
The Nature Conservancy of Canada (NCC), a private non-profit corporation, owned the Penny Ranch located in the eastern slopes of the Rocky Mountain. The ranch is strategically important for the movement of wildlife in Alberta as it is within the migratory corridors of several species of wildlife. Thus the NCC was interested in preserving the ranch as a migratory corridor for wildlife.
Once it became apparent to the NCC that it might soon be selling the Penny Ranch, the NCC decided to register a conservation easement on its title to the land. A conservation easement is a written agreement between a registered owner of land and a conservation organization or government agency designed to facilitate the protection, conservation and enhancement of the environment. See Alberta Land Stewardship Act, SA 2009, c A-26.8, s. 29. The NCC intended that the terms of the conservation easement would later be revised to suit the purchaser of the ranch, provided that any such revision did not compromise the NCC’s ability to conserve the ranch.
The NCC believed that, as owner of the Penny Ranch, it could not hold a conservation easement on the ranch in its own name. Thus, the NCC enlisted the assistance of the Alberta Conservation Association (ACA), a charitable organization dedicated to the conservation of nature. The ACA agreed to hold a placeholder conservation easement with regard to the Penny Ranch. On May 28, 2003, the NCC (as grantor) and the ACA (as grantee) entered into a conservation easement agreement regarding the Penny Ranch. The conservation easement agreement was duly registered on the NCC’s title to the ranch. The NCC and the ACA understood that should the NCC sell the ranch to a third party in the future, the ACA would transfer or assign their rights under the conservation easement agreement to the NCC.
The conservation easement agreement contained a number of restrictions on use of the Penny Ranch including restrictions on fencing of the ranch. The agreement provided in part that:
The Grantor may maintain, replace and repair the fences, roads, buildings, and other improvements (Facilities) located on the Property as of the date of this easement. The Facilities are to be maintained, replaced or repaired, each at its original size and in its same location. If any or all of such Facilities are removed or destroyed, the Grantor may replace them with similar structures of the same size in the same location.
In 2003, the NCC decided to sell the Penny Ranch subject to a conservation easement to ensure that the land is conserved in perpetuity. To this end, the NCC approached the Defendant, Thomas Olson, to purchase the ranch. Mr. Olson, an avid conservationist, operated bison ranches in Western Canada. Olson was interested in purchasing the Penny Ranch because he thought it would be suitable for his bison ranching business.
The NCC’s Director of Land Conservation, Margaret Green, negotiated the sale of the Penny Ranch on behalf of the NCC. Green had the full authority of the NCC to negotiate and close the sale of the ranch. The negotiations between Olson and Green were amicable and constructive given that both the NCC and Olson were mutually interested in the conservation of nature. In the end, Green and Olson agreed orally on the terms of sale and purchase of the ranch. They also agreed orally to amend the conservation easement agreement previously registered on the NCC’s title to the ranch. Olson testified that, in order to cater to his bison ranching business, the parties orally agreed on specific amendments to the conservation easement agreement including the fence height restrictions. This oral agreement is referred to by the court as the “Agreed Fence Height Restriction”.
Olson then instructed his solicitor to prepare a formal offer to purchase the property in accordance with the terms of his oral agreement with Green. Olson’s solicitor prepared and sent the Offer to Purchase to the NCC. Attached to and forming part of the Offer to Purchase was a document purportedly containing the amendments which Green and Olson had agreed to make to the conservation easement agreement. However, due to an error on the part of Olson’s solicitor, this document (referred to by the court as the ‘Conservation Easement Amending Agreement’) did not correctly reflect the amendments orally agreed to between Olson and Green. Rather, the document included the fencing restrictions (particularly fence height restriction) in the initial conservation easement agreement. More specifically, the document contained the following provisions:
Property Management Principles
8. Section 1.01 of Schedule B of the Agreement is hereby deleted and replaced with the following:
1.1 The Grantor may maintain, replace and repair the fences, roads, buildings, and other improvements located on the Property as of the date of this easement. The fences and roads are to be maintained, replaced or repaired, each at its original size and in its same location. If any or all of the buildings are removed or destroyed, the Grantor may replace them with structures of a similar purpose at or near the same location within the existing 5 acre home site. Any building construction shall require the prior notice to the Grantee.
(Emphasis added by the court)
The ‘Conservation Easement Amending Agreement’ was to be entered into between the NCC, as owner of the Penny Ranch and grantor of the initial conservation easement, and the ACA as grantee of the initial conservation easement. However, the terms of the ‘Conservation Easement Amending Agreement’ were determined by the NCC and Olson as part of the sale and purchase of the Penny Ranch.
The Offer to Purchase, along with the documents attached to it, was accepted by the NCC and the sale of the Penny Ranch to Olson was closed on the basis of the terms of the Offer to Purchase. Subsequently, the NCC and the ACA executed the ‘Conservation Easement Amending Agreement’.
Soon after purchasing the Penny Ranch, Olson decided to replace the fencing on the perimeter of the ranch with a new fence. In September 2004, Olson commenced construction of a new fence which he believed would be more effective in restraining and keeping his bison. The NCC received several phone calls from neighbouring landowners complaining about the new fence. As a result the NCC asked Olson to change the fence. The NCC took the view that the height of the new fence breached the terms of the Conservation Easement Amending Agreement which, the NCC alleged, is the document attached to Olson’s Offer to Purchase the ranch. The NCC also believed that the new fence would hinder wildlife migration.
The NCC brought this action against Olson seeking enforcement of the terms of the Conservation Easement Amending Agreement. The NCC sought an order compelling Olson to modify his new fence. Olson counter-claimed against the NCC for an order rectifying the Conservation Easement Amending Agreement so that it accords with the oral agreement reached by Olson and the NCC. Olson contended that, in the course of drafting the Offer to Purchase, there was a mistake in integrating the terms of the Conservation Easement Amending Agreement.
In September 2005, the NCC and the ACA signed an assignment agreement under which the ACA transferred their rights under conservation easement agreement to the NCC, as originally contemplated by the parties.
Terms of the Oral Agreement
The Court of Queen’s Bench (Justice P.R. Jeffrey) accepted Olson’s testimony regarding the oral agreement he reached with the NCC, finding in the process that “Olson’s recollection and testimony on these negotiations was both clear and credible” (para 109). The court held that Olson and the NCC orally agreed on the sort of fencing that was necessary for the adequate containment of bison on the Penny Ranch. In the words of the court,
 I find that the NCC regarded Olson’s proposed changes to the Initial ACA CE in respect of fencing acceptable. I find that Green on behalf of the NCC readily agreed with Olson that his desired changes to the Initial Fence Height Restriction would get included in the amendment to the Initial ACA CE and, thereby, become a part of the final NCC conservation easement.
The court concluded (at paras 126 & 327) that the parties had an oral agreement (characterized by the court as the “Agreed Fence Height Restriction”) as follows:
The Grantor may maintain, replace and repair the fences, roads, buildings, and other improvements located on the Property. If doing so with fences or roads, they are to be maintained, replaced or repaired at or near the existing ones. The Grantor may not build fences or roads in areas where none exists without the Grantee’s permission. The building of wildlife-proof fences is not permitted, except in localized areas as needed to control or prevent wildlife damage to haystacks, stored forage or domestic gardens. If any or all of the buildings are removed or destroyed, the Grantor may replace them with structures of a similar purpose at or near the same location within the existing 5 acre home site. Any building construction shall require the prior notice to the Grantee.
The court held further that this oral agreement, that is, the “Agreed Fence Height Restriction”, did not preclude Olson from constructing the new fence.
Although there is no documentary evidence indicating the precise terms of the oral agreement that the parties reached on fencing of the Penny Ranch, there is strong circumstantial evidence indicating that the parties did reach an oral agreement on fencing of the property. Circumstantial evidence also points to the fact that the parties agreed that the fence height restriction in the initial conservation easement agreement would not govern Olson’s purchase and use of the ranch. For example, the NCC was aware in the course of negotiations that Olson intended to use the property for his bison ranching business. They were also aware that the fence height restriction in the initial conservation easement agreement was a potential deal breaker for Olson because the restriction would render the Penny Ranch unsuitable for bison ranching (paras 111-113). As the court held (at para 111),
… (1) absent certainty on the ability to install adequate fencing for bison ranching on the Property, Olson would not have proceeded with the purchase of the Penny Ranch; and (2) if the NCC had any concerns with Olson’s wishes on perimeter fencing, Green would have raised them and remembered at trial any ensuing discussions, because of their criticality to Olson’s purpose for acquiring the Property. They would have been every bit as, if not more, memorable as their discussions on additional buildings.
Further circumstantial evidence is the fact that Olson’s solicitor, pursuant to Olson’s instructions, sent a revised and modified version of the conservation easement agreement to the NCC, wherein Olson’s solicitor deleted the phrase “each at its original size and in its same location” (para 125). This phrase formed an integral part of the initial conservation easement agreement between the NCC and the ACA. Olson’s solicitor apparently deleted the phrase from the agreement in order to ensure that it accorded with the parties’ prior oral agreement on fencing.
Moreover, the NCC’s conduct prior to and after the sale of the ranch to Olson shows that the height of the fence was not a matter of particular concern to the NCC at the time of sale of the ranch to Olson. For example, the NCC did not include the phrase “at its original size and in its same location” in either the Grazing Lease Agreements it signed with other parties prior to the sale to Olson or its grazing lease with Olson. In addition, the NCC’s Grazing Plan for the Penny Ranch was silent on fencing, while the Penny Ranch Baseline Report prepared by an independent expert on behalf of the NCC did not address the matter.
In the face of these documents, it “is simply too implausible” that the parties would have intended the fence height restriction in the initial conservation easement agreement to govern the sale of the property to Olson. According to the court (at para 330), “[t]he approaches to fencing in these contemporaneous documents are also further evidence that fence size was not on the NCC’s radar screen” at the time the property was sold to Olson.
Unfortunately, the oral agreement did not get correctly reflected in the Conservation Easement Amending Agreement that the parties signed (para 120).
Should the Conservation Easement Amending Agreement be Rectified?
Having found that the parties’ oral agreement was not correctly reflected in the written Conservation Easement Amending Agreement, the court then proceeded to determine whether the written agreement should be rectified to accord with the prior oral agreement. A mistake in integration of contract may be rectified by the court for the sole purpose of restoring the parties to their original agreement (Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd.,  1 SCR 678 at para 31). However, not all types of mistakes can support rectification of a contract. Rectification is granted only in instances involving mutual mistake and unilateral mistake.
Even then, a party seeking rectification of a contract on the basis of mutual mistake or unilateral mistake must provide “convincing proof” of their case (Performance Industries at para 41). The requirement of ‘convincing proof’ imposes a burden of proof higher than the burden required in civil cases which is proof on balance of probabilities. While the ‘convincing proof’ standard falls short of the criminal standard (that is, proof beyond a reasonable doubt), it “goes beyond the sort of proof that only reluctantly and with hesitation scrapes over the low end of the civil ‘more probable than not’ standard” (Performance Industries at para 41).
On the issue of mutual mistake, the court held (at para 345) that “there was a mutual mistake between the parties on the fencing provision”. A mutual mistake occurs where both parties share a mistaken assumption regarding some important matter underlying their contract. In such instances, “the parties reach agreement on the terms of their contract but share an error with respect to some important contextual circumstance that has motivated one or both of the parties to enter the agreement” (John D. McCamus, The Law of Contracts, 2nd ed (Irwin Law, 2012) at 556).
In the instant case, it appears that both parties had a mistaken assumption that the Conservation Easement Amending Agreement correctly reflected their prior oral agreement. As the court observed (at para 352), “The mistake here was not in the bargain struck between the parties on fencing but in the failure to include correctly in the written agreement that bargain they reached”.
The court articulated (at para 334) the requirements for rectification of a contract on the basis of mutual mistake as follows:
The party seeking rectification must establish on a standard of convincing proof:
(i) the existence and nature of a common intention by the parties prior to the making of the document or instrument alleged to be deficient; (ii) that this common intention remained unchanged at the date that the document or instrument was made; and (iii) that the challenged document or instrument, by mistake, does not conform to the parties’ prior common intention.
The court held (at para 346) that Olson “established the necessary elements to a standard of ‘convincing proof’ for rectification of the contract in a case of mutual mistake.” More specifically, the court held (at para 336) that the parties had a common intention that “the Agreed Fence Height Restriction be the fencing provision due to Olson’s requirements for containing bison on the Property”; that this common intention was unchanged at the date the agreement was executed; and that the challenged document, that is, the Conservation Easement Amending Agreement “contains a mistake and does not conform to the parties’ intentions and prior oral agreement that the applicable fencing provision be the Agreed Fence Height Restriction” (paras 338-339).
The subsequent conduct of the parties corroborates and supports the conclusion that all three elements required to rectify a contract on the basis of mutual mistake are established in this case. Such conduct includes the fact that subsequent leases did not contain fence height restrictions, as well as the fact that, soon after purchasing the property and prior to discovering the mistake in integration of the oral agreement, Olson began the construction of a new fence “as permitted by the Agreed Fence Height Restriction”, that is, the oral agreement (at para 342).
Moreover, the parties had a common understanding of Olson’s purpose for acquiring the ranch (para 345). As the court observed (at para 340), Olson would never have agreed to the inclusion of the fence height restriction in the Conservation Easement Amending Agreement because “it would have precluded their running wild bison on the Property.” Thus the fence height restriction urged by the NCC is not only “contrary to the evidence”, but it also “defies logic for a wild bison ranch”.
Ultimately, the court granted an order rectifying the Conservation Easement Amending Agreement on the basis of mutual mistake.
In the alternative, the court considered whether the agreement should be rectified on the basis of unilateral mistake. A unilateral mistake occurs where one party is mistaken as to a fundamental matter underlying a contract and the non-mistaken party is aware of the mistake made by the mistaken party. (See, for example, Glasner v. Royal Lepage Real Estate Services Ltd., 1992 CanLII 975 (BCSC)).
Numerous “high hurdles” stand in the way of a party seeking rectification of a contract on the basis of unilateral mistake (Performance Industries at paras 35-41). A contract induced by unilateral mistake may be rectified by the court if the party seeking rectification proves:
1. the existence of a prior oral agreement with definite and ascertainable terms;
2. that the written document does not correspond with the prior oral agreement (that is, that the terms agreed to orally were not written down properly);
3. that at the time of execution of the contract the defendant either knew or ought to have known of the mistake in reducing the oral terms to writing and the plaintiff did not. That is, that the defendant’s attempt to rely on the erroneous written document amounts to “fraud or the equivalent of fraud”;
4. their case on the basis of ‘convincing proof’
(Performance Industries at paras 31, 35-41).
Flowing from these ‘high hurdles’, a party seeking rectification of a contract on the basis of unilateral mistake bears the obligation to show the ‘precise form’ in which the written agreement can be made to conform to the parties’ prior oral agreement (Performance Industries at para 40).
Applying these principles to the facts, the court held (at para 349) that Olson convincingly established “the existence and content of a prior oral agreement between the parties on the Agreed Fence Height Restriction, which is inconsistent with the Replacement Fence Height Restriction actually contained in the written agreement”. Furthermore, the court held (at para 354) that the NCC either knew or ought to have known of the mistake in reducing the oral terms to writing. This is so because the NCC knew that Olson’s intended uses for the Property “depended on his ability to contain wild bison within its boundaries” (para 354). Thus, had the NCC reviewed the Conservation Easement Amending Agreement they “would have recognized the mistake in it” (para 354). Finally, the court held (at para 355) that, the NCC’s attempt to rely on the erroneous written document amounts to ‘fraud or the equivalent of fraud’. Thus, while this transaction fell short of deceit, “it would be unconscionable for the NCC to avail itself of the advantage obtained” through the erroneous Conservation Easement Amending Agreement. In the end, the court held that the Conservation Easement Amending Agreement should be rectified on the basis of unilateral mistake.
The order of rectification granted by the court would appear generous but it is supportable on the facts. There is no doubt that the parties agreed orally to amend or modify the fence height restriction in the initial conservation easement agreement. This conclusion is supported by the subsequent conduct of the parties, particularly the post-sale grazing lease which did not contain fence height restrictions. Moreover, Olson would not have purchased the property if the NCC had insisted on the terms of the initial conservation easement agreement as the basis for the sale and purchase of the property.
The problem, however, is that the court’s description of the precise terms of the oral agreement appears to be more elaborate than the terms urged by Olson at trial. Olson argued in his closing brief that the parties agreed orally on fencing as follows:
 The Grantor may maintain, replace and repair the fences, roads, buildings and other improvements located on the Property as of the date of this easement. The fences and roads are to be maintained, replaced or repaired.
Yet the court found the oral agreement to be more elaborate than Olson urged in his pleading (paras 126 & 327). By making a determination which apparently goes beyond Olson’s specific pleading, the court opens itself to the criticism that it drafted the terms of the ‘Agreed Fence Height Restriction’ for the parties. It also makes the court susceptible to a charge of overreaching its jurisdiction. As the Supreme Court of Canada noted in Performance Industries (at para 40), the court’s equitable jurisdiction to rectify a contract “is limited to putting into words that – and only that – which the parties had already orally agreed to.”
It should also be said that the court gave very little consideration to the issue of negligence in this case. In fact, the court alluded fleetingly to the issue of negligence by observing (at para 361) that “Rectification here is not a belated substitute for due diligence; it would not unjustly impose liability on the NCC that ought more properly to be attributed to Olson’s negligence.” Although “due diligence on the part of the plaintiff is not a condition precedent to rectification”, negligence is a factor to be considered by the court in determining whether to rectify a contract (Performance Industries at para 66). In the instant case, the court ought to have considered whether Olson’s negligence was of such a nature as to deny him the equitable remedy of rectification.
That being said, Olson’s negligence appears to be extenuated by several factors including the peculiar circumstances surrounding his execution of the purchase agreement. First, Olson’s mistaken assumption was directly attributable to his solicitor to whom he had given clear instructions to ensure that the written agreement accords with the prior oral agreement he reached with the NCC. Second, Olson signed the purchase documents in hurried circumstances primarily because the NCC wanted the documents “right away to convenience its internal needs” (para 121). As the court found,
 On August 28, 2003, Olson was departing with his family on vacation, but delayed his departure to get his offer in on the Property to accommodate the NCC. The NCC wanted it right away to convenience its internal needs. Olson came into his office to sign the [Offer to Purchase], with his large family waiting outside in their vehicle. Although the [Offer to Purchase] did not yet accurately reflect the agreement Olson reached with Green on the various remaining amendments they negotiated to the Initial ACA CE, he entrusted the remaining corrections to be made by passing on his comments to his commercial lawyer, …. Olson signed the [Offer to Purchase] in blank and rejoined his family.
In these circumstances, it would be harsh to deny Olson the equitable remedy of rectification simply because Olson and his solicitor were negligent. Moreover, as the court observed (at para 361), despite Olson’s negligence, an order of rectification “would not unjustly impose liability on the NCC”.
Finally, it should be observed that the court also dealt with the question of whether the title to the Penny Ranch should be rectified pursuant to section 190(1) of the Land Titles Act (paras 405-431). However, this aspect of the decision is not the focus of this post.
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By: Iwan Saunders
As a result of Steinkrauss v Afridi in the Court of Appeal, punitive damages are now possible in Alberta in fatal accident actions. This post looks at three things: the background to Steinkrauss,what the case means for this and future claimants, and why the Alberta Legislature should fall in line with Steinkrauss and change the law regarding survival actions.
Background to Fatal Accident Actions and Claims for Punitive Damages
At common law survivors had no right of action whatsoever for their own losses through another’s wrongful death, a rule originally established in England in Baker v Bolton in 1808, 170 ER 1033 (KB), where a husband failed to recover anything for the death of his wife in a stagecoach accident. Eventually the rule was reformed, by a statute colloquially known after its sponsor as Lord Campbell’s Act: An Act for Compensating the Families of Persons Killed by Accidents, 1846, 9 & 10 Vict, c 93. This Act was immediately imported by the then province of Canada, 10 & 11 Vict, c 6 (1847), and now, in one form or another, all Canadian provinces and territories have similar legislation of their own. [For analysis of this legislation and of fatal accident actions generally, see my chapters in Ken Cooper-Stephenson, Personal Injury Damages in Canada (2d edition, Carswell 1996), chapters 10 and 11 (631-49, and 651-720).]
In Alberta, by virtue of the Fatal Accidents Act, RSA 2000, c. F-8 (as amended), an action is now possible on behalf of survivors (sometimes called beneficiaries or dependents) where, to quote from section 2, “the death of a person has been caused by a wrongful act, neglect or default”. But the right to sue is limited. First, by virtue of other language in section 2, survivors can only sue if the deceased herself could have sued, and sued successfully, were it not for her death; to this extent the survivors’ action is derivative. Secondly, only authorized survivors can sue (see in particular sections 3(1) and 8(1)), and thirdly, they can only sue for authorized damages. The basic damages section is section 3(1), which provides that “the court may give to the persons respectively for whose benefit the action has been brought those damages that the court considers appropriate to the injury resulting from the death”, though, in addition, section 7 allows recovery of some specified “expenses and fees”, while section 8 provides fixed sums for “grief and loss of the guidance, care and companionship of the deceased person”.
With respect to punitive damages, sometimes called exemplary damages, they are of course quite different from compensatory damages. Whereas compensatory damages focus on plaintiffs and their actual and potential losses, punitive damages focus on defendants and their extremely bad behavior. They are tantamount to a civil fine, their goal being to punish, deter and denounce wrongdoers rather than to compensate victims. At common law, in England they go back to 1763 (Huckle v Money, 2 Wils KB 205, 95 ER 768 (1763); Wilkes v Wood, Lofft 1, 98 ER 489 (KB 1763)), while in Canada the Supreme Court has regularly approved of them, the dominant authority today being Whiten v Pilot Insurance Co., 2002 SCC 18.
As for punitive damages in fatal accident actions, in New Brunswick they are expressly recoverable “in appropriate cases”, though, if awarded, “they shall be for the benefit of the deceased’s estate”: Fatal Accidents Act, SNB 2012, c 104, s 17. Elsewhere in Canada, including Alberta, none of the applicable statutes explicitly mentions them, though they have been decisively rejected by courts in British Columbia, Ontario and Nova Scotia: Allan Estate (Executors of) v. Co-Operators Life Insurance Co., 1999 BCCA 35; Campbell v Read, 1987 BCCA 2402; Lord v Downer, 1999 ONCA 1875; Latimer v Canadian National Ry. Co., 2007 ONSC 5689; Rowe v Brown, 2008 NSSC 13. On the other hand, two trial judgments in Saskatchewan and Prince Edward Island contain inconclusive dicta arguably approving them: Anderson v Board of Education (1986), 50 Sask R 4 at 5 (QB), and Blacquiere’s Estate v Canadian Motor Sales Corp. (1975), 10 Nfld & PEI R 178 at 210 (PEI SC).
This brings us to Steinkrauss v Afridi.
Facts and Decisions in Steinkrauss
Deirdre Steinkrauss was a cancer patient who sued her doctor for medical malpractice, alleging that he had negligently failed to diagnose her cancer as early as he should have, having omitted to carry out certain genetic and other testing. When Deirdre died shortly after commencing her action, her husband sought to prosecute it in his own name, on behalf of himself and their children, essentially under the Fatal Accidents Act (the FAA). Among proposed amendments to the original Statement of Claim, he included a prayer for punitive damages, asserting that, sometime after Deirdre’s diagnosis but before her death, the defendant tried to shift responsibility from himself to Deirdre by altering her medical charts to indicate that he had suggested the testing to her and that she had declined. A Master in Chambers found for the plaintiff and allowed his amendments. But on appeal a chambers judge (Gates, J.) struck out the prayer for punitive damages, holding that the language of the FAA did not permit them: Steinkrauss v Afridi, 2013 ABQB 179. The plaintiff then appealed to the Court of Appeal and won. In a Memorandum of Judgment (2013 ABCA 417, written by Berger, Slatter and Veldhuis, JJA), the Court decided that punitive damages are indeed possible under the FAA and that in this case, on the facts pled, the plaintiff was duly entitled to pursue his claim at trial.
The plaintiff in Steinkrauss can clearly sue under the FAA for compensatory damages, assuming of course he proves that the defendant negligently caused the deceased’s death, or perhaps more accurately her premature death. Assuming the defendant’s negligence, the deceased herself could have sued for her own losses, had she not died, and so now the plaintiff can sue under the statute for his and his children’s losses. That said, the ruling that he could also sue for punitive damages came as something of a surprise, at least to me.
As mentioned, the governing language in the FAA is in section 3(1), which authorizes judges to give “those damages that the court considers appropriate to the injury resulting from the death” (emphasis mine). While this is evidently poor drafting, I had always taken it to mean that fatal accident actions were exclusively about compensating dependent loss and not at all about punishing, deterring or denouncing defendant misbehavior; in other words, that the statutory provision as given could never sustain punitive awards. And beyond me, the ruling may well have surprised some personal injury lawyers too. In one case for example, plaintiff counsel felt obliged to concede, even during an interlocutory application, that punitive claims under the FAA were simply impossible: Clapperton Estate v Davey, 2009 ABQB 63, at para 2. But obviously those of us who thought this way were mistaken all along. For the Court of Appeal in Steinkrauss has plainly held that section 3(1) is in fact “open-ended” (2013 ABCA 417 at para 12), that punitive damages are indeed allowable, and that in every case the basic question is whether they are “appropriate to the injury resulting from the death” (para 19). “While it is arguable this test will be difficult to meet,” said the Court, “there is no reason to foreclose recovery in every case as a matter of law” (again, para 19).
Leaving aside the dispute over statutory wording and legislative intention, as a matter of policy Steinkrauss makes sense. The argument is neither difficult nor new. [See originally Ken Cooper-Stephenson and Iwan Saunders, Personal Injury Damages in Canada (Carswell 1981) at 640]. If punitive damages are socially useful in common law actions, as the Supreme Court consistently says they are, as a supplement to the criminal law, prima facie they are socially useful in statutory actions too. Given misconduct deserving a penalty, the cause of action per se ought not to matter. Thus in the context of Steinkrauss, if fines can be levied inter vivos for wrongfully injuring people, they should also be levied via the statute for wrongfully killing them. This is what the Court of Appeal is presumably saying.
Anyway, granted the reality of punitive claims under the FAA, the question for judges now is how best to regulate them. The statute being essentially silent on this, the natural place to get some guidance is the common law, particularly Whiten v Pilot Insurance (above) and its extensive progeny. Basically the key starting points at common law are these. First of all defendants are never subject to civil fines simply for committing civil wrongs. Punitive damages are only awarded in exceptional cases, where the defendant’s conduct was sufficiently egregious (flagrant or blameworthy) to warrant a fine: see Whiten, cited in Steinkrauss (2013 ABCA 417 at paras 14 and 20). Furthermore, as Lord Devlin wisely cautioned in the famous case of Rookes v Barnard, the plaintiff can only recover punitive damages if he is “the victim of the punishable behavior”. Otherwise, “[t]he anomaly inherent in exemplary damages would become an absurdity if the plaintiff totally unaffected by some oppressive conduct … obtained a windfall in consequence”:  AC 1129 at 1227 (HL). Or as Lord Diplock put it rather more vividly in a later case, the plaintiff “can only profit from the windfall if the wind was blowing his way”: Cassell & Co. Ltd. v Broome,  AC 1027 at 1126 (HL). According to the cases, what this latter point means in practice is this. Plaintiffs must show that defendants violated their rights, by egregiously committing an actionable wrong against them, whether in tort, contract or equity. On the other hand plaintiffs need not show (a) that defendants aimed their conduct specifically at them, nor (b) in the case of wrongs actionable per se, that they suffered actual loss. So long as there was egregious misconduct in the course of committing a wrong to the plaintiff, punitive damages can follow.
In Steinkrauss the Court gave some direction on judging punitive claims under the FAA and in doing so drew on the common law, though not always in so many words. The Court explicitly cited Whiten (2013 ABCA 417 at paras 14 and 20), particularly on the matter of egregious misconduct, and also, as I read the judgment, implicitly required that plaintiffs be victims of the punishable behaviour. According to the Court, whether claimants can get punitive damages under the FAA “depends on the source of the claim”, and in that regard “the key question will be whether [the] egregious conduct was sufficiently connected to the claim of the dependants arising from the death, such that it can be said to be ‘appropriate to the injury resulting from the death’” (again, para 14). And then some months later, on an application for clarification of these dicta, the Court essentially affirmed what it had originally said: see 2014 ABCA 14 at para 4. As the Court saw it, the plaintiff’s position at trial would come down to this: the defendant’s conduct in falsifying the records had impeded his ability to prove the defendant’s negligence, thus making the conduct sufficiently connected to his own action to justify his claim for an exemplary sum. That position, held the Court, was at least arguable, even if the fraud occurred sometime after the negligence and before the deceased’s death, rather than before the negligence or after the death. Even on that version of the facts, the plaintiff was still entitled to his day in court.
If Steinkrauss does go to trial and the plaintiff does prove evidence tampering as alleged, this could help him prove some of the facts necessary for negligence. Besides its effect on the defendant’s general credibility, the tampering may qualify as spoliation, thus giving rise to a rebuttable presumption of fact that the original medical records would have told against the defendant: on spoliation, see McDougall v Black & Decker Canada Inc., 2008 ABCA 353. And if the plaintiff goes on to succeed in his action, by duly establishing negligence, he will presumably ask for solicitor-client costs as an indirect sanction for the tampering. But whether the plaintiff can get punitive damages for that tampering seems questionable, even if the tampering is considered egregious.
The reason seems fundamental, whether the action is at common law or, as here, via a statute. Civil fines should only be levied for civil wrongdoing and nothing less, in much the same way that criminal fines can only be levied for criminal wrongdoing and nothing less. However reprehensible the defendant’s misconduct, he should only be fined for it in a civil court if it formed part of the actionable wrong on which the litigation is founded. [See for example Eli Lilly and Company v Apotex Inc., 2009 FC 991 at paras 657-64, citing Whiten.] In Steinkrauss, while his wife’s death, if wrongful, was also a wrong to the plaintiff, there was no flagrant misconduct surrounding the negligence, so far as we know. As for the evidence tampering, it apparently occurred after the negligence and was quite distinct from it, therefore falling outside the wrong on which this plaintiff necessarily bases his action. Of course, a trial judge under the FAA might ignore the common law and give punitive damages anyway, simply on the ground that the tampering was egregious and, to quote from the Court of Appeal, “sufficiently connected to the claim of the dependants arising from the death, such that that it can be said to be ‘appropriate to the injury resulting from the death’”. But if so, is this what the Court of Appeal really had in mind?
Subject to his pleadings and limitation periods, the plaintiff could alternatively assert the tampering (and punitive damages) in a separate cause of action. But what separate cause of action does he have? The tort of deceit (fraudulent misrepresentation) comes to mind but seems highly unlikely here, since deceit traditionally requires actual plaintiff reliance; a mere attempt to deceive the plaintiff is not enough. One possibility is a new tort of spoliation of evidence. Some American courts have already adopted it and some Canadian courts already seem at least open to it: see for example, McDougall, above; Holland v Marshall, 2008 BCCA 468; Spasic Estate v Imperial Tobacco Ltd., 2000 CanLII 17170 (ON CA). But so far there is no such tort in Alberta or in any other Canadian jurisdiction for that matter. So the plaintiff in Steinkrauss would have to pioneer it. [The British Columbia Law Institute has proposed such a tort: Report on Spoliation of Evidence (BCLI Report No. 34, 2004).]
Punitive Damages in Survival Actions
As a result of Steinkrauss, there is now an inconsistency between the FAA and its relative, the Survival of Actions Act, RSA 2000, c S-27 (as amended) (the SAA). The solution lies in amending the SAA.
By virtue of legislation in all provinces and territories, reversing the common law, civil actions now survive the death of plaintiffs for the benefit of their estates. [For analysis of this legislation and of survival actions generally, see my chapter in Ken Cooper-Stephenson, Personal Injury Damages in Canada (2d edition, Carswell 1996), c. 12 (721-46).] And in principle, I suggest, claims for punitive damages should survive too. Once again the argument is familiar. Punitive damages are about the defendant’s conduct, not the plaintiff’s injury and loss. If the defendant’s misconduct while committing the wrong was sufficiently egregious to warrant a fine inter vivos, the plaintiff’s death should make no difference and the fine should still be imposed. While admittedly punitive damages would be a windfall to the estate, they are something of a windfall to all successful plaintiffs. Nevertheless we allow them because they are socially useful and plaintiffs perform a socially useful service by claiming them: see Binnie J in Whiten, above, at para 37.
However in Alberta the law is otherwise. Section 5(2)(a) of the SAA explicitly precludes “punitive or exemplary damages” in all circumstances. So in Steinkrauss, while the deceased’s survivors could claim punitive damages under the FAA, the deceased’s estate could not have done so under the SAA. Thus the defendant relied on section 5(2)(a) of the SAA as a reason for prohibiting awards under the FAA, an argument rightly rejected by the Court of Appeal.
As I see it, the Alberta Legislature should now amend the SAA to allow punitive claims, in actions both by and against estates.
[For a Quebec case in the Supreme Court approving punitive damages against a deceased wrongdoer’s estate, see de Montigny v Brossard (Succession), 2010 SCC 51. And for a comment supporting the decision in Brossard, see Nicholas Rafferty and Iwan Saunders, “Developments in Contract and Tort Law: The 2010-11 Term” (2011), 55 Sup Ct L Rev (2d) 163 at 196-202.]
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By: Nigel Bankes
Case commented on: Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48
This post discusses two issues arising from the Supreme Court’s decision in Grassy Narrows. The post first considers the implications of the Court’s conclusion that the doctrine of interjurisdictional immunity does not apply in a case where a province infringes the treaty right to hunt leaving the treaty party with no meaningful right to hunt. Second the post argues that the Court’s conclusion that a provincial government may be able to justify an infringement of hunting rights of this nature is inconsistent with Canada’s obligations under international law.
The division of powers issue
Prior to this decision and the Court’s decision in Tsilhqot’in Nation v British Columbia, 2014 SCC 44 I think that it was broadly understood that a province could not impair an Indian treaty right. A province could not do so directly because such a law would be a law in relation to Indians or lands reserved for Indians. Perhaps the best discussion of this issue is Justice Davey’s decision in the British Columbia Court of Appeal in R v White and Bob (1964), 50 DLR (2d) 613 (BCCA), aff’d  SCR vi, which dealt with a charge of being in possession of game out of season and without a permit under the BC Wildlife Act. The accused defended the charge principally on the basis of one of the Douglas Treaties to which their ancestors were a party. The Douglas Treaties contained the following clause:
The condition of, or understanding of this sale, is this, that our village sites and enclosed fields, are to be kept for our own use, for the use of our children, and for those who may follow after us, and the lands shall be properly surveyed hereafter; it is understood however, that the land itself with these small exceptions, becomes the entire property of the white people forever, it is also understood that we are at liberty to hunt over the unoccupied lands, and to carry on our fisheries as formerly.
While it is arguable that Justice Davey’s judgement principally turns on the opening language of what is now s.88 of the Indian Act, RSC 1985, c I-5, he also went on to state as follows:
Sections 8 … and 15 … of the Game Act specifically exempt Indians from the operation of certain provisions of the Act, and from that I think it clear that the other provisions are intended to be of general application and to include Indians. If these general sections are sufficiently clear to show an intention to abrogate or qualify the contractual rights of hunting notoriously reserved to Indians by agreements such [this Treaty] they would, in my opinion, fail in that purpose because that would be legislation in relation to Indians that falls within Parliament’s exclusive legislative authority under s. 91 (24) of the B.N.A. Act, and also because that would conflict with s. 87 [now s.88] of the Indian Act passed under that authority. Legislation that abrogates or abridges the hunting rights reserved to Indians under the treaties and agreements by which they sold their ancient territories to the Crown and to the Hudson’s Bay Company for white settlement is, in my respectful opinion, legislation in relation to Indians because it deals with rights peculiar to them. Lord Watson’s judgment in St. Catherine’s Milling & Lumber Co. v. The Queen (1888), 58 L.J.P.C. 54, if any authority is needed, makes that clear. At p. 60 he observed that the plain policy of the B.N.A. Act is to vest legislative control over Indian affairs generally in one central authority. On the same page he spoke of Parliament’s exclusive power to regulate the Indians’ privilege of hunting and fishing. In my opinion, their peculiar rights of hunting and fishing over their ancient hunting grounds arising under agreements by which they collectively sold their ancient lands are Indian affairs over which Parliament has exclusive legislative authority, and only Parliament can derogate from those rights.
There was also room for thinking that the province could not impair an Indian treaty right even indirectly; such a law would be inapplicable because of the doctrine of interjurisdictional immunity. The premise of the argument is that treaty rights are part of the core content of one or other head of s.91(24) and that any non-trivial interference with a treaty right would make a valid law not invalid but inapplicable. Authority for this proposition prior to Tsilhqot’in would have included R. v Morris,  2 SCR 915.
But in Tsilhqot’in (handed down the week before Grassy Narrows), the Supreme Court of Canada in an obiter statement apparently made the doctrine of interjurisdictional immunity inapplicable to head 24 of section 91 of the Constitution Act, 1867 at least in relation to aboriginal title (at para 140 et seq). It also expressed doubt about the authority of Morris on interjurisdictional immunity (at para 150). My colleague Jennifer Koshan and I have criticized that aspect of Tsilhqot’in in an earlier post here. In Grassy Narrows (in another obiter statement at para 53) the Court, again unanimously, extended the non-applicability of the doctrine of interjursidictional immunity to provincial laws and actions that infringe a treaty right. The Court did so with the bald statement (at para 33) that “Tsilhqot’in Nation v British Columbia is a full answer” to any claim as to the inapplicability of provincial laws. Thus, there is no longer a protected core to head 24 of s.91. Provincial laws and provincial alienations that are so extensive as to render an Indian treaty right (i.e. a right arising from an agreement, i.e. consent) to hunt meaningless will not be inapplicable. That however is not the end of the matter; while there is no bright line inapplicability rule the provincial government will still have to justify takings up of land that have this result.
The relevance of international law
This brings us to the second topic of this post, the relevance of international law. The argument I want to present here is that if the relevant government has used (taken up) or authorized the use of lands within the traditional territory of a First Nation to such an extent that a treaty right to hunt is no longer meaningful then, as a matter of international law, there is no opportunity to justify the infringement because the government action amounts to an impermissible denial of a minority’s right to culture within the meaning of Article 27 of the International Covenant on Civil and Political Rights (ICCPR). I have hinted at various forms of this argument in previous posts (here, here and here) but I will now present a more elaborate form of the argument.
Article 27 provides as follows.
In those States in which ethnic, religious or linguistic minorities exist, persons belonging to such minorities shall not be denied the right, in community with the other members of their group, to enjoy their own culture, to profess and practise their own religion, or to use their own language.
While the Article does not refer specifically to indigenous peoples it is clear that in most if not all cases indigenous peoples will qualify as minorities within the meaning of the Article. The Article protects the minority’s right to culture. In its interpretive note on Article 27 (General Comment No. 23) the Human Rights Committee (HRC) (the expert supervisory body for the ICCPR) has emphasized that in the case of indigenous communities the right to culture may have a material element that is closely connected to traditional territories:
7. With regard to the exercise of the cultural rights protected under article 27, the Committee observes that culture manifests itself in many forms, including a particular way of life associated with the use of land resources, especially in the case of indigenous peoples. That right may include such traditional activities as fishing or hunting and the right to live in reserves protected by law. The enjoyment of those rights may require positive legal measures of protection and measures to ensure the effective participation of members of minority communities in decisions which affect them. (references omitted)
In its decisions the HRC has also emphasized that not every state authorized activity in a community’s traditional territory will violate Article 27. However, the HRC does contemplate that the cumulative effect of state authorized activities may amount to a denial of the right to culture. For example, in a case involving water transfers in Peru that affected the traditional activities of an indigenous community (Angela Poma Poma v Peru (2009)), the HRC discussed the threshold question as follows (at paras 7.2 – 7.7):
… the exercise of the cultural rights protected under article 27 … manifests itself in many forms, including a particular way of life associated with the use of land resources, especially in the case of indigenous peoples. That right may include such traditional activities as fishing or hunting and the right to live in reserves protected by law. The enjoyment of those rights may require positive legal measures of protection and measures to ensure the effective participation of members of minority communities in decisions which affect them. The protection of these rights is directed to ensure the survival and continued development of cultural identity, thus enriching the fabric of society as a whole.
The Committee recognizes that a State may legitimately take steps to promote its economic development. Nevertheless, it recalls that economic development may not undermine the rights protected by article 27. Thus the leeway the State has in this area should be commensurate with the obligations it must assume under article 27. [M]easures whose impact amounts to a denial of the right of a community to enjoy its own culture are incompatible with article 27, whereas measures with only a limited impact on the way of life and livelihood of persons belonging to that community would not necessarily amount to a denial of the rights under article 2.
… The Committee also observes that the author has been unable to continue benefiting from her traditional economic activity owing to the drying out of the land and loss of her livestock. The Committee therefore considers that the State’s action has substantively compromised the way of life and culture of the author, as a member of her community. The Committee concludes that the activities carried out by the State party violate the right of the author to enjoy her own culture together with the other members of her group, in accordance with article 27 of the Covenant.
Thus, if an indigenous community can show that the right to hunt in traditional territory (perhaps following a season round, see Dick v R,  2 SCR 309) is core to their right to culture; and if the state (provincial or federal government) has authorized activities within a community’s traditional territory that are so extensive that the community no longer has a meaningful right to hunt and has therefore been denied its right to culture, then the state has no option but to curtail those activities that interfere with the right to culture. In other words, in this case international law supports a bright line rule and would not support the argument that a provincial government should have the opportunity to further justify its infringement of a treaty right (or indeed an aboriginal harvesting right) where state licensed activities rendered the right to hunt meaningless. In sum, the approach sanctioned by the Supreme Court of Canada in Grassy Narrows is inconsistent with Canada’s international obligations under Article 27 of ICCPR. Another and softer way to put the argument is that when a province seeks to justify an infringement of the right to hunt, the indigenous community should plead that Canada’s obligations under international law should inform that justificatory exercise: Baker v Canada,  2 SCR 917.
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By: Nigel Bankes
Documents commented on: Agreement on the Equivalency of Federal and Nova Scotia Regulations for the Control of Greenhouse Gas Emissions from Electricity Producers in Nova Scotia;Proposed Order in Council Declaring that the Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations do not apply in Nova Scotia, Canada Gazette vol 148 (2014), June 28, 2014 and the accompanying Regulatory Impact Analysis Statement
This Agreement is the first greenhouse gas (GHG) equivalency agreement to be finalized between Canada and a province. The Agreement and the accompanying draft Order in Council will serve to suspend the application of Canada’s Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations, SOR/2012-167 (the federal Coal Regulations or the CFGRs) made under s.93 of the Canadian Environmental Protection Act, 1999, SC 1999, c 33 (CEPA, 1999) in the province of Nova Scotia. For comment on the CFGRs see the post by Astrid Kalkbrenner here. The Agreement will be of considerable interest to other jurisdictions (including Alberta) which are negotiating equivalency agreements with Canada to avoid the application of federal GHG regulations. While a draft of the Agreement has been available for a couple of years (see here, and for a very short summary of the two supportive comments received see here), and there are very few changes between the draft and the final version, what is new is the release of the Regulatory Impact Analysis Statement (RIAS) which casts some light on the methodology that the federal government will apply in assessing equivalency.
Interested parties have 60 days to provide comments and/or file a notice of objection requesting establishment of a board of review under s.333 of CEPA, 1999.
Federal Greenhouse Gas Regulations
As is well known, the federal government proposes to reach its Copenhagen commitment to reduce greenhouse gas emissions by implementing a sector by sector regulatory approach. This has proven to be painfully slow. The federal government adopted the CFGRs in 2012 but promised regulations for other sectors, including the oil and gas sector, have been repeatedly delayed. The CFGRs establish a performance standard of 420 tonnes of carbon dioxide per gigawatt-hour (tCO2/GWh) for new coal-fired electricity generation units and those that have reached the end of their useful life. According to the RIAS, the application of the CFGRs would require the province (Nova Scotia Power) to retire its coal fired units totalling 952 MW of capacity between 2020 and 2030. Nova Scotia sought to avoid this result (with the implication that it would need to build new natural gas capacity) and therefore entered into negotiations for an equivalency agreement.
The CFGRs are enacted pursuant to the Canadian Environmental Protection Act, 1999. Section 10 of CEPA, 1999 allows the Governor in Council to make an order declaring that specific regulations “do not apply” to a particular jurisdiction where the Minister of Environment and the government of the other jurisdiction “agree in writing” that there are laws in force in the other jurisdiction, the provisions of which “are equivalent to” the regulations. The premise of the Nova Scotia Agreement is that an “outcome-based” equivalency agreement is adequate to meet the terms of s.10 thereby justifying an order making the federal regulations inapplicable. Thus, the purpose of the Nova Scotia Agreement is to allow existing coal fired facilities to continue generating even though they will not be able to meet the standards prescribed by the federal regulations. A finding of equivalency is justified on the basis that Nova Scotia will achieve reductions equivalent to those that will be achieved through the federal regulations by reduced generation at coal facilities and by other measures that have nothing to do with the coal sector. These other measures include a commitment to increase the share of renewable energy in the province’s energy mix through a number of initiatives including a feed in tariff program, and support for the Muskrat Falls hydro project, as well as various energy efficiency programs including smart metering. In addition, Nova Scotia was also required to amend its regulations to ensure that electricity producers must meet certain caps prescribed in the Agreement. This is perhaps the crucial element here – the adoption of a hard cap for the sector rather than the technology based target – because it provides some certainty as to reduced emissions in the sector.
If we assume that the outcomes based approach to equivalency is appropriate (and it is not entirely clear that it is, since s.10 of CEPA 1999 focuses on the provisions of the laws of the other jurisdiction, not on the effect or outcome of the measures taken in the other jurisdiction) it is of course necessary to show that the provincial measures will reduce GHG emissions by at least as much as the reductions that would be achieved by application of the CFGRs. It is evident that this assessment requires the construction of two scenarios. The first is a business as usual (BAU) scenario in which emissions are assessed on the basis that the equivalency agreement is not concluded and thus that the CFGRs will apply as well as any applicable provincial rules (other than incremental commitments made as part of the equivalency agreement – see s.8.2.3 of the RIAS and the “caps” that the province undertook to impose). The second scenario, the regulatory scenario, establishes what the electricity generation sector is expected to look like with the implementation of the proposed Order in Council (i.e. the federal regulations are backed out and the incremental provincial commitments apply).
The RIAS summarizes the comparison between the two scenarios (here I focus on the reduced emission rather than the more general cost-benefit analysis, which, for example, assumes avoided decommissioning costs at coal generation facilities by pushing them out beyond the period of review, 2021 – 2030) as follows (RIAS, s.8.2.3):
Standing down the federal coal-fired electricity regulations would allow the electricity producer to continue to operate coal-fired units reaching the end of their useful life that would otherwise have been closed in the BAU scenario at the end of their useful life. This flexibility is expected to result in avoided natural gas capacity investments. ……
Also, prior to 2030, the electricity producer is expected to generate, relative to the BAU scenario, less electricity from coal-fired units and natural gas units in order to comply with provincial GHG emission caps for 2021–2030. Therefore, the electricity sector is expected to show a cumulative reduction in generation in Nova Scotia and correspondingly in Canada. It is also expected that Nova Scotia would need to rely more on importing renewable energy from the Muskrat Falls project in order to meet demand and the provincial renewable energy standards. This reduces, relative to the BAU scenario, the generation available for export to the United States from Muskrat Falls through New Brunswick, leading to an overall reduction in electricity exports. The reduction in generation from coal-fired units and natural gas units also leads to additional benefits from GHG emissions reduction, additional changes in air pollutant emissions, avoided fuel costs, avoided variable O&M costs associated with less reliance on coal-fired units and natural gas units.
The RIAS also provides an analysis of changes in demand (RIAS s.8.4.1) (a small reduction in demand in the regulatory scenario presumably because of the emphasis on demand side management (DSM) measures), and changes in the generation mix to meet that demand (RIAS, s.8.4.3) (projects less investment in new natural gas capacity in the regulatory scenario). The overall analysis is that over the 2015–2020 period, the regulatory scenario is “expected to result in an incremental reduction of 0.3 Mt CO2e of GHG emissions” and over the 2021–2030 period “incremental GHG reductions are estimated to be about 3 Mt CO2e of GHG emissions”.
The principal difficulty with any scenario analysis such as this is the same difficulty that faces any offsets analysis and that is the challenge of showing additionality (especially over such a long time frame). For example, one might expect that a utility would take DSM measures in any event to avoid or defer building new capacity and so it is not clear why any reductions associated with DSM should be credited to the regulatory scenario. Similarly, the BAU analysis assumes that natural gas generation would be added to replace retired coal generation but at this stage we do not know what any sector specific regulations might look like for the natural gas sector. This might of course influence what is business as usual and what is therefore additional – that which is required by law is not additional.
I think that this points to the general difficulty of negotiating equivalency agreements on a sector by sector basis where the potential equivalent commitments that provinces may offer involve activities in other yet-to-be-regulated industrial sectors; it would be perverse if a province were offering equivalency commitments from activities undertaken in another sector which then falls to be covered by new federal regulations for that sector.
One paragraph was added to the final version of the Equivalency Agreement which goes some way to addressing this issue:
4.3 The Parties agree that, should they develop further regulations relating to greenhouse gases or air pollutants affecting the electricity sector in Nova Scotia, they will in good faith use their best efforts to conclude an equivalency agreement in respect of those regulations. If the regulation pertains to greenhouse gases, the Parties may choose to amend the present agreement and determine equivalency on the basis of a comparison of the aggregate impact of both the Reduction of Carbon Dioxide from Coal-Fired Generation of Electricity Regulations and any new federal regulation on electricity sector emissions in Nova Scotia with the impact of the Greenhouse Gas Emissions Regulations on electricity sector emissions in Nova Scotia.
All of this of course is connected to the duration of the proposed arrangements and here the RIAS attempts to choreograph a merry dance between the competing needs of regime certainty (to obtain the needed investments and to avoid stranded assets) and flexibility (to respond to the sort of complexity referred to above as well as to provide the opportunity for adjustments should equivalency prove to be unattainable). The RIAS attempts to offer certainty by analysing emissions projections over a sixteen year period from 2015 – 2030 (the first year coinciding with the entry into force of the CFGRs and the Agreement and Order in Council and the second, more subjectively, based on “the time frame of the amendments made to Nova Scotia’s regulations to enter into the equivalency agreement for the control of GHG emissions from the electricity sector in Nova Scotia.” (RIAS, s.8.2.2)) The Agreement itself however tells a different story since it provides that it terminates on December 31, 2019 – or by either Party giving at least three months’ notice. The latter provision flies in the face of the need for certainty and that concern is only partially met by Canada’s commitment that if the Agreement is terminated before the end of 2019 Canada will “start applying” the CFGRs in the province “with as little disruption as possible in the circumstances, in a manner that takes into consideration the importance of a reliable supply of electricity that does not place an undue economic burden on Nova Scotia.” (s.5.4). That might be enough comfort in a province where the only coal fired generator is a Crown corporation; it might not be enough in a province like Alberta where all of the generation is privately owned. However, the challenge is built in to the Act; both the five year term and the three months notice to terminate are prescribed by s.10(8) of CEPA, 1999.
The Agreement addresses its possible extension or renewal as follows:
Should both Parties be in compliance with the Agreement on June 1, 2019, the Parties commit to initiate its renewal, provided that the effect on greenhouse gas emissions levels in the electricity sector in Nova Scotia of the limits to be imposed pursuant to the [provincial equivalent measures] is still considered equivalent to the effect on greenhouse gas emissions levels that would result from the application of the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations in Nova Scotia during this period.
It will be interesting to see if the finalization of this Agreement triggers the finalization of additional equivalency agreements. It will also be interesting to see if any party attempts to trigger the review procedure contemplated by s.10 and s.333 of the Act.
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By: Nigel Bankes
PDF Version: Competition for Underground Disposal Space
Decision commented on: Alberta Energy Regulator, Canadian Natural Resources Limited, Application for Disposal, Lloydminster Field, 2014 ABAER 008
Previous posts on ABlawg have commented on sub-surface resource conflicts especially as between gas storage operations and oil and gas production: see Kallisto # 1 here and Kallisto # 2 here. This decision involving Canadian Natural Resources Limited (CNRL) illustrates that there may also be competition for good disposal sites and that the disposal operations of one party may affect the disposal operations of another party. While this decision involves the use of pore space for water disposal operations we can also anticipate competition for the use of pore space for carbon dioxide disposal purposes (i.e. carbon capture and storage, CCS) if that technology rolls out as anticipated to mitigate Alberta’s greenhouse gas emissions.
CNRL produces oil in the Lloydminster area which is associated with high volumes of produced water that it must dispose of. CNRL already has significant infrastructure in place for waste water transport and injection but its increased production in the area means that it also needs to expand its disposal capacity in order to avoid needing to shut in wells. Accordingly, CNRL identified a new disposal target in the form of the 3-17 well which was the subject of this contentious hearing and decision. CNRL first proposed to drill and complete this well for injection into the sandstone Dina formation but amended that application upon receipt of objections from Ener T (which owned the offsetting 16-7 injection well) so as to provide for completion in the Moberly and Cooking Lake Formations instead. The Alberta Energy Regulator (AER) licensed the well for these two formations but as a result of the poor injectivity that it encountered CNRL renewed its initial application asking for approval to abandon the 3-17 well in those two formations and recomplete it for injection purposes in the Dina Formation. Ener T renewed its objections resulting in the AER scheduling a hearing in which Ener T, having filed a statement of concern, was granted full participation rights.
The AER hearing panel identified four issues (at para 13):
On the question of need the Panel ruled as follows:
 The panel acknowledges that CNRL has productive oil wells that are shut in due to insufficient produced water disposal capacity. It accepts that CNRL’s ability to fully exploit and maximize the recovery of oil reserves from its land holdings in the area will be constrained if additional water disposal capacity is not obtained. The panel therefore finds there is sufficient evidence to support CNRL’s need for additional disposal capacity in the area.
On the question of alternatives the Panel noted that CNRL had explored a number of different options including the recompletion of abandoned wells but the Panel agreed with CNRL (at para 31) that “the existing wells reviewed may have wellbore integrity issues and that injecting into a new well, such as 3-17, will minimize risk with regards to containment.” The Panel also noted (at para 28) that CNRL’s proposal would tend to “minimize the effects on the landowner by eliminating the need for additional surface impacts of a new well or additional facilities.”
The Panel also examined the alternative formations that might be proposed for disposal. CNRL preferred the Dina formation because it was a proven disposal zone (with more than 300 wells in the region disposing into that zone). The Panel agreed with that assessment and noted (at para 40) that alternative formations proposed by Ener T would not typically be approved for disposal since they were potentially oil bearing.
The most interesting discussion in the decision relates to the potential for CNRL’s activities to harm Ener T’s injection operations at its offsetting 16-7 well. Here Ener T argued that CNRL’s operations would prejudice its own disposal activities and it therefore asked the AER to establish a protective set back or buffer zone to recognize its priority in point of time in identifying and developing this (disposal) resource:
 Ener T argued that it is not in the public interest to allow a large operator such as CNRL to effectively “wash out” a small operator’s operation. It also argued that it is not in the public interest to allow large operators like CNRL to select disposal locations that have been established by small operators to be effective disposal zones and drill its well in the same zone and vicinity as the small operator with no consideration of the effects. Instead, Ener T submitted that it is in the public interest to reward people that “get somewhere first” and “incur the risk and the cost of drilling into a certain area.”
To protect its interest Enert T asked the AER to impose a 1.6 km buffer on “competing” (my term) injection operations. In effect Ener T was seeking some sort of exclusive or at least prior entitlement to the disposal capacity of the Dina reservoir – which from the map included in Figure 1 of the decision would seem to go beyond the geography of its lease (although we actually learn nothing in this decision about Ener T’s production or its disposal rights).
The Panel rejected Enert T’s claim for relief. As for the specific request that the AER establish a buffer:
 The panel notes that the AER’s regulations do not restrict the distance between disposal wells. The AER’s Directive 065 does provide that notification of a disposal application is to be given to unit operators, approval holders, well licensees, mineral lessees and lessors, and landowners within a 1.6 km radius of a proposed disposal well where the disposal zone is known to be present.
More generally however it would seem that Ener T’s claim failed on the basis that it had not convinced the Panel of the likelihood of prejudice. The Panel thought that the evidence supported the idea that the target was “open and regionally extensive” rather than characterized by local barriers (at paras 62 and 76) and accordingly was likely a situation in which the reservoir should be able to accept disposal fluids from both wells. The Panel also thought that if there were any impacts on Ener T’s operations they would be limited because of the standard maximum wellhead injection pressure that would be imposed on CNRL’s operations. Given that the risk of adverse impact was low but with the positive benefits of increased production and royalties flowing to the province, the Panel approved the application. The Panel did not discuss what would happen if it was wrong and the Dina formation in this location turns out to have a limited capacity for taking injected water. Presumably it will be open to Ener T to apply to the AER to have it review its decision but it is not clear that the AER believes that Ener T has any entitlement that the AER believes that it should protect. This seems quite different from the two Kallisto decisions where the regulator was at pains to develop conditions to protect the prior natural gas storage operation from interference.
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By: Nigel Bankes and Jonnette Watson Hamilton
Case commented on: Tsilhqot’in Nation v British Columbia, 2014 SCC 44
The Crown’s radical title plays a larger role in the Supreme Court of Canada decision in Tsilhqot’in than it has in the Court’s previous Aboriginal rights decisions. However, it is unclear what the Court means by radical title in Tsilhqot’in or what work the concept is performing. One way to try to figure this out is to reflect on our understanding of the relationship between Aboriginal title and the Crown’s radical title before the Tsilhqot’in decision, describe Tsilhqot’in’s discussion of radical title, and then consider whether it adds anything to the concept of sovereignty.
Radical Title Pre-Tsilhqot’in
Pre-Tsilhqot’in it was generally understood that the Crown acquired radical title when it asserted sovereignty. The Crown’s radical title was burdened by Aboriginal title. (“Radical title” is also referred to as the “ultimate” or “underlying” or “final” title.). See, for example, the Privy Council decision in St. Catherine’s Milling and Lumber Co v The Queen (1888), 14 AC 46,  JCJ No 1 at para 6: “[T]here has been all along vested in the Crown a substantial and paramount estate, underlying the Indian title, which became a plenum dominium whenever that title was surrendered or otherwise extinguished.” See also Delgamuukw v British Columbia,  3 SCR 1010, 1997 CanLII 302 at para 145: “Aboriginal title is a burden on the Crown’s underlying title. However, the Crown did not gain this title until it asserted sovereignty over the land in question.”
Just what Aboriginal title is, how large an interest it is, and therefore how much of a burden it is on the Crown’s radical title has been described in various ways. Those ways range from the dismissive “personal and usufructuary right, dependent upon the good will of the Sovereign” in St. Catherine’s (at para 6) to that same case’s expansive identification of Aboriginal title as an “Interest other than that of the Province” (at paras 10 and 12) and therefore an interest to which the Provincial Crowns’ ownership of the “Lands, Mines, Minerals, and Royalties” within their boundaries is subject, pursuant to section 109 of the Constitution Act, 1867, 30 & 31 Vict, c 3. The Judicial Committee of the Privy Council’s decision in Amodu Tijani v. Secretary, Southern Nigeria,  2 AC 399 at 402-404 and 409-410 (quoted in Calder v Attorney General of British Columbia,  SCR 313, 1973 CanLII 4 at 354-355 and 401-402) reinforced the latter expansive understanding of Aboriginal title within the British Empire: “[T]itle to land occupied by a native community … is prima facie based … on a communal usufructuary occupation, which may be so complete as to reduce any radical right in the Sovereign to one which only extends to comparatively limited rights of administrative interference.” What is also clear in the pre-Tsilhqot’in jurisprudence is that the Crown’s pre-surrender radical title is not a beneficial interest. The Crown only acquires the beneficial interest once the land is “disencumbered” of Aboriginal title: St. Catherine’s at 59; AG Canada v AG Quebec,  AC 199 at 205, 206; Smith v R,  1 SCR 554 at 562. Aboriginal title is therefore a very large interest.
Another way to approach the question of the content of the Crown’s radical title pre-Tsilhqot’in is to ask what duties the Crown owed as a result of acquiring radical title and what rights or powers it gained when it acquired radical title.
On the question of the Crown’s duties, our pre-Tsilhqot’in understanding was that there were none arising from radical title. Guerin v The Queen,  2 SCR 335, 1984 CanLII 25 is most instructive. The only reason the Court in Guerin discusses the Crown’s radical title is that Aboriginal peoples have always had to deal with the Crown because Aboriginal title is only alienable to the Crown, i.e., they are vulnerable. In Guerin (at 376), Dickson J (as he then was) addressed the source of the Crown’s fiduciary duty, stating “[t]he conclusion that the Crown is a fiduciary depends upon the further proposition that the Indian interest in the land is inalienable except upon surrender to the Crown.” It is the inalienable-except-to-the-Crown nature of Aboriginal title that gave rise to the fiduciary duty owed by the Crown to Aboriginal people. The source of the fiduciary duty was not the Crown’s radical title.
On the question of the rights or powers associated with radical title pre-Tsilhqot’in, the only entitlement was the Crown’s exclusive entitlement to acquire the burden on its radical title by consent, i.e. by treaty in conformity with the terms of the Royal Proclamation, 1763. Any power to diminish Aboriginal title was not a power associated with radical title, but rather with sovereignty. The Crown as sovereign had the power to diminish Aboriginal title if it did so constitutionally — and just what it took to do so constitutionally changed over time. The Crown lost the ability to make laws by prerogative authority that impinged on Aboriginal title once it established a representative legislature; the representative legislature lost the power to extinguish Aboriginal title unilaterally with the coming into force of section 35 of the Constitution Act, 1982.
The content of the Crown’s radical title pre-Tsilhqot’in was therefore very limited. That limited nature may be why radical title was so little discussed by the Supreme Court pre-Tsilhqot’in. In addition to the decision in St. Catherine’s Milling rendered by the Privy Council as Canada’s final court of appeal, and the (unnecessary) discussion in Guerin already referenced, only three other decisions touch on radical title: Calder v Attorney General of British Columbia,  SCR 313, 1973 CanLII 4 at 354-355, quoting Amodu Tijani v. Secretary, Southern Nigeria,  2 AC 399 at 402-404; R v Van der Peet,  2 SCR 507, 1996 CanLII 216 at para 39, relying on Mabo v Queensland (No 2) (1992) 175 CLR 1,  HCA 23 at 58; and Delgamuukw v British Columbia,  3 SCR 1010, 1997 CanLII 302 at para 145 (using radical title to set a date for proof of Aboriginal title). In most of these instances the Supreme Court merely quotes the words of others rather than developing the concept itself.
Radical Title in Tsilhqot’in: The Supreme Court’s Exposition
In Tsilhqot’in, however, the Court develops the concept of radical title in its own words. The Court begins (at para 12) by attributing the invocation of radical title as the theory underlying Aboriginal title to Dickson J in Guerin. His judgment is said to be the “starting point” for characterizing the legal nature of Aboriginal title (at para 69). (St. Catherine’s Milling is not cited in Tsilhqot’in.) Dickson J is said to have held that the Crown acquired radical title to all the land in British Columbia at the time of assertion of European sovereignty, but this Crown title was burdened by the pre-existing and independent legal interests in land of the Aboriginal peoples who occupied and used the land prior to the arrival of Europeans (at paras 12 and 69, citing Guerin at 379-382). The idea of Aboriginal title attaching “as a burden on the underlying title asserted by the Crown at sovereignty” is reiterated in Tsilhqot’in (at para 75), as is the characterization of Aboriginal title as “an independent legal interest” (at paras 12, 69).
The Court then comments on the content of the Crown’s title. Radical title is apparently “what is left when Aboriginal title is subtracted from it” (at para 70). And because Dickson J said in Guerin (at 382) that Aboriginal title is a beneficial interest in land, the Court concludes that the Crown “does not retain a beneficial interest in Aboriginal title land” (at para 70, emphasis added). They later add that “[t]he Crown’s underlying title in the land is held for the benefit of the Aboriginal group and constrained by the Crown’s fiduciary or trust obligation to the group” (at para 85).
Continuing with the “subtraction” idea, the Court next asks: “What remains of the Crown’s radical or underlying title to land held under Aboriginal title?” (at para 71). The answer, according to the Court’s interpretation of the authorities, is two things: (1) the fiduciary duty the Crown owes Aboriginal people when the Crown deals with Aboriginal lands, and (2) the right to encroach on Aboriginal title if the government can justify its encroachment (para 71).
Radical Title Post-Tsilhqot’in: Implications and Questions
What are we to make of the Court’s explication of the Crown’s radical title in Tsilhqot’in? Importantly, the general understanding that the Crown acquired radical title at the time of assertion of sovereignty, but burdened by Aboriginal title, remains the same. On this fundamental idea, there is no change.
What does the Court’s emphasis on Aboriginal title as “an independent legal interest” add to that basic idea? It appears to be an acknowledgment of two things: first, that the Crown is not the source of Aboriginal title, and, second, that Aboriginal title is capable of being vindicated in a competition with the Crown, i.e., it is enforceable against the Crown. Again, these are important ideas although they have been around since St. Catherine’s.
But what are we to make of the idea that radical title is “what is left when Aboriginal title is subtracted from it” or that the appropriate question is what “remains of the Crown’s radical or underlying title to land held under Aboriginal title?” This way of conceptualizing radical title is attributed to section 109 of the Constitution Act, 1867 which makes Provincial ownership “subject to any Trusts existing in respect thereof, and to any Interest other than that of the Province in the same” and to Delgamuukw (presumably a reference to para 175 where Lamer CJ holds that, while section 109 vests underlying title in provincial Crowns, it qualifies provincial ownership by making it subject to the “any Interest other than that of the Province in the same” and noting that in St. Catherine’s Milling, the Privy Council held that Aboriginal title was such an interest). The subtraction and remainder language is a new and metaphorical way to talk about the concept of the Crown’s radical title being burdened by or subject to Aboriginal title but it is not obvious that the new language adds anything of value.
The Court’s conclusion that the Crown “does not retain a beneficial interest in Aboriginal title land” is perhaps the most troubling specific passage. It suggests that, at least before an actual declaration of Aboriginal title, the Crown’s radical title is a beneficial interest. It may be wrong to rely too heavily on one word, but “retain” means “to keep or to hold, to continue to have.” The Court could have said that, because Aboriginal title is a beneficial interest in the land, the Crown’s radical title cannot be a beneficial interest, but it did not. Instead it implies that Aboriginal title takes away the Crown’s beneficial title. At best, this seems like a confusing way to frame the issue but it also seems to contradict the idea that the Aboriginal title is independent of the Crown’s interest and came first.
It is difficult to know what to make of the later idea (at para 85) that the Crown’s radical title “is held for the benefit of the Aboriginal group.” Is the Court really suggesting that the Crown holds its radical title in trust for the Aboriginal group? If so then the Aboriginal group should be able to collapse the trust and take a full legal and beneficial title – an idea the Privy Council scuttled a long time ago in St. Catherine’s.
Lastly we come to the Court’s idea that what remains of the Crown’s radical title once Aboriginal title is subtracted are two related elements: (1) the fiduciary duty the Crown owes Aboriginal people when the Crown deals with Aboriginal lands, and (2) the right to encroach on Aboriginal title if the government can justify its encroachment.
As for the fiduciary duty (and as we have already noted above) it seems to us that the foundation for the duty is not the Crown’s radical title but rather its inalienable-but-to-the Crown quality. It is not helpful to ascribe such a duty to the Crown’s title. The Court has spent a lot of time and effort in narrowing the ambit of the Crown’s fiduciary duty to Aboriginal peoples in cases like Wewaykum Indian Band v Canada,  4 SCR 245 at paras 72 et seq and Manitoba Metis Federation Inc. v. Canada (Attorney General),  1 SCR 623, 2013 SCC 14 (CanLII). It seems cavalier to suggest that radical title is the source of fiduciary obligations rather than ideas such as vulnerability or (better still) reasonable expectations of a duty of undivided loyalty: Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 (CanLII),  2 SCR 261.
And what of the Court’s enumeration of a “right to encroach” as part of the Crown’s radical title? Surely the Crown’s power to encroach, constitutionally exercised, is an aspect of sovereignty, or imperium. Whether the encroachment was an exercise of raw political and military power in the early days of European exploration and settlement, or unilateral extinguishment by federal legislation pre-1982, or a post-1982 justifiable infringement, radical title cannot justify a power to encroach. Encroachments are the acts of a sovereign exercised in lawful ways. Sanctioning this power as an element of the Crown’s radical title does not legitimize or add the patina of respectability to what is occurring.
It appears that there is more to the Crown’s radical title than we thought pre-Tsilhqot’in. If the subtraction/retaining framing is not a mis-framing, then Aboriginal title is now conceived of as something that takes away from the Crown’s radical title. The Court’s conceptualization of radical title now includes what was formerly thought of as the sovereign’s power (executive or the legislature) to encroach upon Aboriginal title.
None of the Court’s new ideas about the Crown’s radical title seem particularly helpful or explanatory. Some of them obscure the exercise of political power by wrapping that exercise in the concept of title rather than sovereignty. In the end, we conclude that the notion of the Crown’s radical title does not add anything valuable to the concept of sovereignty; instead it is mere obfuscation of the sort that the Court decried in Delgamuukw (at para 122) in relation to the much misunderstood decision in St Catherine’s.
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By: Kirk Lambrecht Q.C.
Case commented on: Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48
This post discusses the future application of the decision of the Supreme Court in Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48, to the Prairie Provinces of Canada. The proposition advanced here is that Treaty rights in Manitoba, Saskatchewan and Alberta are constitutionally protected under the Natural Resource Transfer Agreements of 1930, all of which are schedules to the Constitution Act, 1930, as well as being constitutionally protected by s. 35 of the Constitution Act, 1982 and the doctrine of the Honour of the Crown. The scope and extent of Treaty harvesting rights in the Prairie Provinces, and how the constitutional protection afforded by the Natural Resource Transfer Agreements within the Constitution Act, 1930, may affect the exercise of provincial proprietary and legislative powers, is anticipated by, but not specifically addressed in, the Grassy Narrows decision. This will require future judicial analysis when Grassy Narrows is applied in the region west of the Ontario/Manitoba border.
In constitutional law cases the courts are careful to address the issues arising in the specific factual context of a particular case. The factual context of the Grassy Narrows case involved the taking up of land under Treaty 3 in Ontario, but did not involve the Natural Resource Transfer Agreements within the Constitution Act, 1930. Treaty 3, like the other historical numbered treaties, included a clause authorizing the taking up of land within the Treaty area. The Treaty 3 clause provided that the Government of the Dominion of Canada could take up the land:
Her Majesty further agrees with Her said Indians that they, the said Indians, shall have right to pursue their avocations of hunting and fishing throughout the tract surrendered as hereinbefore described, subject to such regulations as may from time to time be made by Her Government of Her Dominion of Canada, and saving and excepting such tracts as may, from time to time, be required or taken up for settlement, mining, lumbering or other purposes by Her said Government of the Dominion of Canada, or by any of the subjects thereof duly authorized therefor by the said Government.
The ratio decidendi of Grassy Narrows is:
The implication of this, for Ontario, in the context of the Ojibway, was stated as follows:
 Here, Ontario must exercise its powers in conformity with the honour of the Crown, and the exercise of those powers is subject to the fiduciary duties that lie on the Crown in dealing with Aboriginal interests. For Treaty 3 land to be taken up, the harvesting rights of the Ojibway over the land must be respected. Any taking up of land in the Keewatin area for forestry or other purposes must meet the conditions set out by this Court in Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage),  3 SCR 388, 2005 SCC 69.
Read carefully, the Court appears to say that burdens on the exercise of provincial power apply to, but are not necessarily limited to, the taking up of land. This would be consistent with the Court’s earlier jurisprudence on the nature and application of the honour of the Crown, summarized in Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14,  1 SCR 623 at paragraphs 65 to 83; and, further, in the Court’s jurisprudence on consultation and accommodation, which repeatedly affirms that consultation and accommodation may extend to strategic, higher level decisions that may have an impact on Treaty rights, and is not limited to decisions which constitute taking up Crown land.
The Court’s decision in Grassy Narrows has been the subject of a variety of case comments: see e.g. here, here, here, and here. These comments all recognize some constitutional protection of Treaty rights. They necessarily focus on the constitutional protections afforded Treaty 3 rights in Ontario, and make reference to the duty to consult specifically. The focus of these comments is the constitutional protection of Treaty 3 given by s. 35 of the Constitution Act, 1982 and the doctrine of the honour of the Crown, and the implications of this for the exercise of provincial powers under ss. 109, 92A and 92(5) of the Constitution Act, 1867.
The application of Grassy Narrows to the Prairie Provinces will necessarily involve a consideration not before the Court, i.e. the scope and extent of Treaty harvesting rights in the Prairie Provinces, and how the constitutional protection afforded by the Natural Resource Transfer Agreements within the Constitution Act, 1930, may affect the exercise of provincial proprietary and legislative powers.
Canada retained administration and control of Crown lands when the provinces of Manitoba, Saskatchewan and Alberta were created; and it assumed this responsibility in the Railway Belt and Peace River Block of British Columbia. In 1930, through the Schedules in the Constitution Act, 1930, these Provinces assumed administration and control over these Crown lands. The purpose of the Constitution Act, 1930, was to put the Prairie Provinces in the same position as Ontario (and the other original Provinces of Confederation).
Since Grassy Narrows confirms that the exercise of proprietary and legislative powers of Ontario as regards Crown lands and resources are subject to Treaty rights, it follows necessarily that when administration and control of Crown lands and resources was transferred through the Constitution Act, 1930 to the provinces of Manitoba, Saskatchewan and Alberta, each therefore also took proprietary and legislative powers subject to Treaty rights.
The Grassy Narrows decision therefore necessarily means that the powers of the Prairie Provinces under ss. 109, 92A and 92(5) of the Constitution Act, 1867are also burdened by obligations to Aboriginal peoples. To track the language of the Court, provincial powers must be exercised in conformity with the honour of the Crown, and the exercise of those powers is subject to the fiduciary duties that lie on the Crown in dealing with Aboriginal interests. For Treaty land to be taken up, the harvesting rights of First Nations over the land must be respected. Any taking up of land in the Prairie Provinces must meet the conditions set out in Mikisew Cree. None of this is a surprise. Alberta’s Policy on Consultation with First Nations on Land and Natural Resource Management, 2013, recognizes that “Alberta’s management and development of provincial Crown lands and natural resources is subject to its legal and constitutional duty to consult First Nations and, where appropriate, accommodate their interests when Crown decisions may adversely affect their continued exercise of constitutionally protected Treaty rights.”
But the duty to consult is derived from the honour of the Crown and the constitutional protection afforded Treaty rights by s. 35 of the Constitution Act, 1982. Beyond this, the Constitution Act, 1930, provides additional constitutional protections for Treaty rights west of the Ontario/Manitoba border. These additional constitutional protections are anticipated, but not explicitly discussed, by the constitutional framework affirmed by the Grassy Narrows decision.
Important contextual factors exist in the Prairie Provinces. By section 1 of the Constitution Act, 1930, provincial jurisdiction over lands and resources was expressly made subject to existing trusts or other interests; and the exercise of provincial powers was further limited by the Natural Resource Transfer Agreement provisions applicable to each Province. Moreover, the Treaty rights were altered by the Constitution Act, 1930, through merger and consolidation.
There is a considerable body of jurisprudence respecting the Natural Resource Transfer Agreements. This jurisprudence recognizes that the Treaties and the Natural Resource Transfer Agreements both involve solemn assurances of continuity of practices, traditions and customs integral to First Nation societies. In these respects, location is important to First Nations. Treaty harvesting rights of hunting, fishing and/or trapping are more than privileges of hunting, fishing or trapping somewhere. The Court recognizes this reality in Mikisew Cree, where Binnie J. for the Court writes that “for aboriginal people, as for non-aboriginal people, location is important” (2005 SCC 69 at para 47). The late Gerard V. LaForest made the same point in his book Natural Resources and Public Property under the Canadian Constitution (University of Toronto Press, 1969) at page 120: “It does, of course, matter to them where they hunt and fish….”.
The Natural Resource Transfer Agreements
In conclusion, it is proposed here that the future application of the Grassy Narrows decision to the Prairie Provinces of Canada will necessarily involve a consideration of how the exercise of provincial proprietary and legislative powers are burdened by Crown obligations to First Nations which arise from the Natural Resource Transfer Agreements in the Constitution Act, 1930.
Kirk Lambrecht, Q.C. represented the intervener the Fort McKay First Nation in the Grassy Narrows case before the Supreme Court of Canada.
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By: Jennifer Hocking
PDF Version: The Keewatin Case: “Taking up” Lands under Treaty 3
Case commented on: Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48
On July 11, 2014, the Supreme Court of Canada issued its decision in the Grassy Narrows case (also known as Keewatin). The Court held that the province of Ontario has the power to “take up” lands surrendered under Treaty 3 so as to limit the Ojibway First Nation’s hunting and fishing rights within the Keewatin area of Treaty 3 in Northwestern Ontario. Based on the Court’s decision in Mikisew, this power is subject to the duty to consult, and, if appropriate, accommodate, First Nations interests (Mikisew Cree First Nation v Canada (Minister of Canadian Heritage), 2005 SCC 69). This duty is grounded in the honour of the Crown and binds the Province of Ontario in the exercise of the Crown’s powers (Keewatin at paras 50-51). A potential action for treaty infringement will arise if the taking up leaves the First Nation with no meaningful right to hunt, fish or trap in the territories over which they traditionally hunted, fished, and trapped (Keewatin at para 52). In cases where the taking up of lands by Ontario constitutes an infringement of treaty rights, an analysis based on section 35 of the Constitution Act, 1982 and the Sparrow and Badger decisions will determine whether the infringement is justified (R. v Sparrow,  1 SCR 1075; R. v. Badger,  1 SCR 771.) The doctrine of interjurisdictional immunity does not preclude the Province from justifiably infringing treaty rights (Tsilhqot’in First Nation v British Columbia, 2014 SCC 44, and for an earlier post on the Court’s handling of interjurisdictional immunity in Tsilhqot’in see here).
The Court’s analysis in Keewatin is based in part on sections 109, 92(5) and 92A of the Constitution Act, 1867. Pursuant to section 109, the Province of Ontario holds the beneficial interests in all lands in the province. Section 92(5) gives the provinces exclusive power over the “Management and Sale of the Public Lands belonging to the Province and of the Timber and Wood thereon” and section 92A gives the provinces exclusive power to make laws in relation to non-renewable natural resources, forestry resources, and electrical energy (Keewatin at para 31). Based in part on these sections, Ontario effectively replaced the federal government as the government that could take up lands pursuant to the terms of Treaty 3.
The Keewatin decision follows logically from the Horseman decision, in which the SCC held that the Alberta government could regulate hunting rights under Treaty 8, even though the treaty was signed by the federal government (R v Horseman, 1990 1 SCR 901). In Horseman, the operation of section 12 of the 1930 Natural Resources Transfer Agreement resulted in the Alberta government in effect replacing the federal government as the “Government of the country” with the right to regulate the treaty rights to hunt, fish and trap.
The Keewatin decision leaves an important question unanswered. The Court makes it clear that a taking up of lands that leaves a signatory First Nation with no meaningful right to hunt, fish or trap may constitute a potential infringement, and it would appear to be very difficult for the Crown to justify the taking up under those circumstances. However, the Court does not comment on whether taking up a significant portion of lands (but not the entire lands) over which a signatory First Nation traditionally hunted, fished or trapped would prima facie constitute an infringement of treaty rights. Future cases may address this issue as more and more lands become subject to forestry and mining tenures and to settlement.
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By: Dylan Finlay
PDF Version: “Putting” Browne v Dunn into Perspective
Case commented on: R v KWG, 2014 ABCA 124
The century old rule in Browne v Dunn (hereinafter “the rule”) holds that if counsel intends to present evidence contradictory to a witness’s testimony as part of his or her argument, he or she must put this version of events to the witness during cross-examination. But just how far must counsel go to satisfy this requirement? The Alberta Court of Appeal has recently shed some light on this question.
The rule is summarized in R v Pasqua,  AJ No 702, 2009 ABCA 247: “there is a general duty on counsel to put a matter directly to a witness if counsel is going to later adduce evidence to impeach the witness’ credibility or present contradictory evidence.” The purpose of the rule is well-grounded; witnesses should be given an opportunity to respond to competing versions of events. Applying a rigid interpretation to R v Pasqua, it would appear as if during cross-examination, counsel would have to say the words “I put to you …” before presenting the witness with contradictory evidence. This formal and rigid interpretation of the rule has now been clarified, and a more flexible approach adopted.
In the British Columbia Court of Appeal decision R v Drydgen, 2013 BCCA 253 the court was unanimous in its interpretation of the rule. The case involved a home invasion. Despite allegations that the accused had pointed a silver handgun at the resident of the home, the police did not find a handgun on or near the accused. This fact became a central issue at trial. The victim was cross-examined extensively on the reliability of his evidence; however defence counsel did not suggest to him that he was mistaken about the existence of the handgun. On appeal, Justices Ian Donald, Mary Newbury, and Harvey Groberman ruled that the trial judge had erred in applying Browne v Dunn to the case. The relevant paragraphs from the British Columbia Court of Appeal decision are reproduced below:
17 While a problem of fairness could theoretically arise from a failure to cross examine on a point later advanced in argument, the concern will almost always be considerably attenuated. This is especially so when the argument flows naturally from the direction taken in cross-examination, rendering any suggestion of ambush illusory: see R v Ali, 2009 BCCA 464 at para. 39. The confrontation must be a meaningful exercise rather than merely the performance of a ritual where the witness is invited to agree with a proposition later to be argued to the effect that his testimony is unreliable. I refer in this regard to the remarks of Chief Justice McEachern in R v Khuc, 2000 BCCA 20, 142 CCC (3d) 276:
 Crown counsel’s point is well taken. There can be no doubt that the general rule is that counsel must confront a witness with any new material he or she intends to adduce or rely on after the witness has left the box. However, the rule does not go so far as to require counsel to ask contradicting questions about straightforward matters of fact on which the witness has already given evidence that he or she is very unlikely to change.
The position taken by the British Columbia Court of Appeal was adopted unanimously by the Alberta Court of Appeal in R v KWG. This case involved allegations that the accused had sexually-touched his step-daughter when she was 10-11 years old. On appeal, the appellant argued that the crown prosecutor did not expressly put allegations of collusion, perjury, and witness-coaching to him and his wife. It was argued that by not expressly putting these allegations to the appellant, the crown prosecutor had violated Browne v Dunn. In response, the Alberta Court of Appeal cited R v Drydgen and concluded that “[n]ot every matter of contradicting evidence or comment needs to be put to a witness. Therefore, the prosecutor was not required to expressly put allegations of collusion to the defence of other witnesses.” (at para 45) Rather, witnesses must be “appropriately confronted” (at para 46) in order to avoid a scenario where the opposing party is surprised by allegations.
These rulings make it clear that at times the rule can be overzealously applied. Browne v Dunn persists as a precedent, however the rule can be easily satisfied. During cross-examination, counsel must appropriately confront the witness with the competing theory or story. He or she need not explicitly put all contradicting evidence to a witness. If a question is truly redundant, it need not be asked. Finally, the magic words “I put it to you …”, need not be said.
In the situation that the rule is broken, the question turns to the appropriate remedy. R v McNeill,  OJ No 1357, 144 CCC (3d) 551 provides two potential remedies. The primary remedy, and the one to be considered first, is to recall the witness. The aggrieved party can then either accept or decline the recall of their witness. Should they decline it, the secondary option need not be considered. In situations where it is impossible or highly impracticable to recall the witness, the secondary remedy is for the trial judge to consider giving the jury special instructions. If special instructions are warranted, the jury should be told that in assessing the weight to be given to the uncontradicted evidence, they may properly take into account the fact that the opposing witness was not questioned about it. The jury should also be told that they may take this into account in assessing the credibility of the opposing witness.
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By: Sarah Burton
Case commented on: Alberta v AUPE, 2014 ABCA 197
In Alberta v AUPE the Alberta Court of Appeal reviewed the validity of a civil contempt order issued against the Alberta Union of Public Employees (“AUPE”). While ultimately upholding the order for civil contempt, the unanimous Court of Appeal sizably narrowed its provisions to protect AUPE’s freedom of expression. The decision turned on two issues: the admissibility of televised news reports as evidence, and the constitutionality of court orders that restrict free speech. Of these two issues, the Charter discussion is particularly interesting. The Court of Appeal presented and applied an alternative to the Oakes test, holding that Oakes is ill-suited to challenges that do not involve laws of general application. In addition, the Court curiously failed to consider a critical threshold issue – namely, whether the Charter applied to court orders at all. Thus, Alberta v AUPE not only widens a narrow exception to the Oakes test, it imposes Charter restrictions on contempt orders without discussing its authority to do so.
In April of 2013, a “wildcat” strike (one without union leadership’s authorization or support) arose at the Edmonton Remand Centre. It quickly expanded to several correctional facilities across the province. The striking employees were governed by the Public Service Employee Relations Act, RSA 2000, c P-43 [PSERA], which prohibits strikes (PSERA at s. 70). As such, the government of Alberta filed a complaint with the Alberta Labour Relations Board (the “Board”).
The Board issued a series of directives that (a) ordered the striking AUPE members to return to work, (b) directed AUPE to “immediately” notify the striking members of the directives, and (c) ordered AUPE to make reasonable efforts to bring the strike to an end (the “Directives”). The Directives were filed with the Court of Queen’s Bench, wherein they became court orders. When the strike continued, the Government of Alberta brought an application against AUPE for civil contempt of the court orders.
The Honourable Associate Chief Justice Rooke in chambers granted the government’s application. In reaching this decision, Justice Rooke relied on televised video clips in which various AUPE officials made contemptuous statements about the court orders (para 11). Justice Rooke also reviewed material on the AUPE website, finding its effort to comply with the Directives “wholly inadequate” and “an insult” (para 11).
The resulting Order (the “Contempt Order”) emphasized purging the contempt. It created escalating fines in case the strike continued, and further directed AUPE to (at para 13):
AUPE appealed the ruling of civil contempt, and the content of the Impugned Provisions. AUPE argued that Justice Rooke erred by (at para 14):
AUPE’s Civil Contempt
The Court of Appeal upheld the ruling of civil contempt.
AUPE had attempted to exclude evidence of its contempt. It argued that Justice Rooke identified AUPE representatives through video news clips, and that this identification amounted to inadmissible hearsay (paras 20 – 22). It also argued that the prejudicial value of these clips outweighed their probative effect (para 27).
These arguments were largely unsuccessful. On the hearsay issue, AUPE had posted many of the clips on its own website, and added its own clips as AUPE “news reports”. AUPE thus identified many of its own representatives, and held them out with the authority to speak on its behalf. The Court of Appeal ruled Justice Rooke was entitled to rely on this evidence (paras 24, 25). Some clips featured speakers who were not identifiable as AUPE representatives by government affiants or AUPE’s website. This evidence was inadmissible, but since Justice Rooke did not rely on these statements, the error was not fatal (para 26).
As to the prejudicial effect of the evidence, AUPE argued that the video clips contained considerable (prejudicial) commentary about the strike, while they had little probative value. While the Court of Appeal agreed with this characterization for some videos, the Court of Appeal observed that Justice Rooke did not focus on the overtly prejudicial clips (para 32). Given the degree of discretion owed, and the substantial evidence supporting contempt, the Court of Appeal held there was no palpable and overriding error issuing the Contempt Order.
The Constitutionality of the Impugned Provisions
While the decision on civil contempt stood, the Impugned Provisions did not survive Charter scrutiny. The Province of Alberta argued that AUPE’s Charter challenge was nothing more than a collateral attack on s. 70 of PSERA, and refused to make submissions on the issue. The Court of Appeal rejected the government’s collateral attack argument, and held that the Impugned Provisions unjustifiably infringed AUPE’s freedom of expression.
Section 2(b) Infringement
The Court of Appeal reviewed a history of case law to demonstrate the importance of freedom of expression in the context of labour disputes. It held that AUPE had a constitutionally protected right to make and post video clips about the strike, and that the Impugned Provisions clearly limited AUPE’s ability to meaningfully express itself (para 45). Thus, the Court of Appeal held that the Impugned Provisions (which contained both positive and negative directions) directly impacted AUPE’s freedom of expression. The Court of Appeal drew strength from the Supreme Court of Canada decision in Slaight Communications Inc v Davidson,  1 SCR 1038 [Slaight], where a “similar direction” was made in the context of an arbitrator’s order (para 46).
Section 1 Analysis
Turning to the s. 1 justification, the Court of Appeal considered two options: applying the Oakes test, or adopting the Dagenais/Mentauk framework. The Court of Appeal described these tests as “alternative[s]” (para 51), with the latter being developed in the context of publication bans to balance freedom of expression with other important interests. The Court drew on statements in R v NS, 2012 SCC 72 [NS] (dealing with a witness’ right to where a niqab while testifying), that the Dagenais/Mentauk framework now has a broader application (para 49, quoting NS at para 7).
The Court remarked that the Oakes analysis is “difficult to apply” in cases that do not review the constitutionality of a general law (para 52). The Supreme Court of Canada has made similar comments when faced with Charter challenges to discretionary decisions (See for example Doré v Barreau du Québec, 2012 SCC 12 [Dore] at para 37). Thus, while the Dagenais/Mentauk framework was developed in a different context, the Court of Appeal opted to apply a balancing framework guided by its principles.
The Dagenais/Mentauk framework has two stages once it is clear competing interests are engaged (at para 53, see also Re: Vancouver Sun, 2004 SCC 43at para 32). First, it considers whether the infringement (and extent thereof) is necessary to protect the administration of justice. If so, the second stage considers whether the salutary effects of the infringement outweigh its deleterious effects.
Justice Rooke did not consider the necessity and effects of the Impugned Provisions. Indeed, given that the constitutional challenge arose out of the Contempt Order, Justice Rooke did not consider a Charter issue at all. The Court of Appeal held that, despite valid arguments regarding the necessity of the Impugned Provisions to protect the administration of justice, they were not properly balanced with AUPE’s freedom of expression. As such, the Impugned Provisions were struck for unjustifiably breaching AUPE’s s. 2(b) Charter rights.
The Charter’s Application
Alberta v AUPE is a peculiar decision – but the peculiarity stems more from what is not said, rather than what is. The Court of Appeal plainly assumes that the Charter applies to the Contempt Order. The closest they come to discussing this issue comes by way of reference to the Slaight decision. In discussing the s. 2(b) breach, the Court states:
 [P]aragraph 11 of the Contempt Order imposes positive obligations on AUPE by directing it to make specific statements encouraging AUPE members to comply with the Board Directives and to publish the Board Directives to its website. The Supreme Court found that a similar direction infringed freedom of expression by putting words in the mouth of the speaker: see Slaight. There, an adjudicator required the employer to write a reference letter for an employee with specified positive content. The Supreme Court held that forcing a person to make specific statements is a clear infringement of the s 2(b) right to freedom of expression. Similarly in this case, the Contempt Order requires AUPE to make statements it may not agree with and imposes the same kind of action that infringes s 2(b) in Slaight.
Slaight dealt with an order from an administrative adjudicator. Unlike the present case, in Slaight the Supreme Court of Canada questioned whether the Charter could apply to an adjudicator’s decision. They answered in the affirmative, because the adjudicator was a creature of statute. His entire authority was statutorily derived, and therefore, the exercise of that authority was limited by the Charter. Justice Lamer (dissenting in part, but whose reasoning was accepted on this point) explained (at pp 1077-1078):
The fact that the Charter applies to the order made by the adjudicator in the case at bar is not, in my opinion, open to question. The adjudicator is a statutory creature: he is appointed pursuant to a legislative provision and derives all his powers from the statute. As the Constitution is the supreme law of Canada and any law that is inconsistent with its provisions is, to the extent of the inconsistency, of no force or effect, it is impossible to interpret legislation conferring discretion as conferring a power to infringe the Charter, unless, of course, that power is expressly conferred or necessarily implied …. Accordingly, an adjudicator exercising delegated powers does not have the power to make an order that would result in an infringement of the Charter, and he exceeds his jurisdiction if he does so.
In the present case, Justice Rooke in chambers is not a statutory creature – his authority as a superior court justice is not granted by statute, and his jurisdiction is inherent. The Slaight reasoning does not assist the Court of Appeal in establishing that the Charter applies to the Contempt Order.
Peter Hogg has weighed in on this issue, and attempted to reconcile a collection of inconsistent case law on the Charter’s application to court orders (Peter W. Hogg, Constitutional Law of Canada: 2013 Student Edition, (Toronto: Carswell, 2013) at 37-21 [Hogg]). Perhaps unsurprisingly, these contradictory cases often arise in the context of labour disputes. In Retail, Wholesale and Department Store Union v Dolphin Delivery,  2 SCR 573 [Dolphin Delivery], the Supreme Court of Canada held that the Charter did not apply to a court order that restricted a union’s secondary picketing activity. Later, in British Columbia Government Employees’ Union v. British Columbia,  2 SCR 214 [BCGEU]the same Court ruled that an injunction restricting picketing in front of the British Columbia Court House infringed s. 2(b), but was saved by s. 1.
Hogg has attempted to reconcile (or at least accommodate) the apparent contradiction by drawing two points of distinction: (1) labour disputes that involve purely private parties, and (2) the application of a statute to the dispute. Hogg explains (at 37-21):
[In Dolphin Delivery] [n]o government was involved in the dispute, and no statute was applied to the dispute …The ratio decidendi of Dolphin Delivery must be that a court order, when issued as a resolution of a dispute between private parties, and when based on the common law, is not governmental action to which the Charter applies … Where, however, a court order is issued on the court’s own motion for a public purpose (as in BCGEU), or a proceeding to which government is a party … than the Charter will apply to the court order.
Hogg’s reasoning, applied to the present case, would conclude that the Charter does apply to the Contempt Order as the government of Alberta was a party to the proceeding (and perhaps also, that the PSERA was involved in the decision). But despite the fact that the Court of Appeal (may have) reached the correct decision, this does not excuse its failure to engage with this foundational, complicated and unsettled issue.
It is possible that this failure stemmed from Alberta’s refusal to make submissions on the Charter argument (other than that it was a collateral attack on PSERA). The Court of Appeal, therefore, did not argue points that were not put to them. Nonetheless, failing to flag the issue of application leaves a significant gap in the Court’s reasoning. By refusing to engage this issue, one is left with the impression that all court orders are subject to the Charter, regardless of the situation. This is plainly not true, and casts an uneasy shadow over the judicial authority to issue contempt orders.
The Expansion of Dagenais/Mentauk
The second point of interest flows from the Court’s choice to apply the Dagenais/Mentauk framework over the Oakes test. Typically, the Dagenais/Mentauk approach is seen as a complement rather than an alternative to Oakes. However, two 2012 Supreme Court of Canada decisions (NS and Dore) provided support for expanding the Dagenais/Mentauk test as an independent alternative when dealing with challenges to discretionary or common law decisions
In Alberta v AUPE, the Court of Appeal clearly endorses this development. This decision, therefore, may be viewed as part of a larger trend ending the Oakes monopoly on s. 1 analysis.
The Dagenais/Mentauk analysis arises incases that do not challenge a law of general application. It’s growth has roots in logistical difficulties. According to various judges, when a Charter challenge focuses on discretion rather than a law, Oakes is a difficult fit. For example, is a discretionary decision “prescribed by law” or does it pursue a “pressing and substantial objective”? Dagenais/Mentauk attempts to preserve the proportionality, necessity and (to some extent) the minimal impairment components of Oakes, while de-emphasizing the aspects that are geared to legislative challenges. In the Court of Appeal’s view at least, the Dagenais/Mentauk framework asks similar questions to Oakes, but in a more relevant way.
Notably, however, the Dagenais/Mentauk framework appears to import more deference than Oakes (Dore at paras 36 – 45). The focus is on balancing competing rights such that the greater good is advanced. While minimal impairment analysis may be integrated into the “necessity” stage of Dagenais/Mentauk, this issue is wrapped into broader concerns.
It will be interesting see where the Dagenais/Mentauk framework will go next. While the Oakes analysis is currently alive and well in the criminal sphere, the rationale advanced by the Alberta Court of Appeal and the Supreme Court in NS would, on its face, apply to a broad variety of criminal Charter challenges. Whatever happens next, it appears we are witnessing a significant evolution in s. 1 analysis. It remains to be seen if this development weakens individual Charter protections when challenging a discretionary decision.
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By: Linda McKay-Panos
PDF Version: Private Health Insurance and Charter Section 7
Case discussed: Allen v Alberta, 2014 ABQB 184
Over the past few years, various courts across Canada have addressed the ambit of the Charter right to life, liberty and security of the person in the context of access to private health insurance. Allen v Alberta, 2014 ABQB 184 (“Allen”) is Alberta’s recent case on this issue.
Dr. Allen, a dentist, experienced a back and knee injury in 2007, and required a Magnetic Resonance Imaging (“MRI”) test. He was told it would take six to eight months for the MRI because of Alberta’s waiting list. Dr. Allen paid for the MRI himself in order to avoid the wait. The MRI revealed bulging and degeneration of his lumbar spinal discs (paras 2 to 5).
Dr. Allen was treated for the pain by medication and injections, but his work as a dentist was affected. In 2009, a specialist recommended back surgery (para 8). He was told he would have to wait one year for a special test (“discogram”) and a further year for surgery (to June 2011). In June 2009, a new MRI test revealed further degeneration and herniation of the lumbar discs (para 10).
A specialist in Montana took a further MRI and recommended surgery (para 11). Dr. Allen ceased his dental practice due to the pain.
Dr. Allen contacted the Alberta Health Minister’s office and was able to expedite the discogram to September 2009. He arranged to have surgery in Montana in December 2009, but later cancelled this because surgery became available in Alberta in December 2009 (para 15). However, the Alberta date was later cancelled and re-set for June 2011 (para 14). Dr. Allen contacted the surgeon in Montana and was able to revive the December 2009 date in Montana and paid for the surgery himself.
Following surgery the pain decreased gradually but Dr. Allen claimed (without proof) that the delay in obtaining surgery left him with permanent nerve damage. He sold his dental practice in 2010 (para 17). Dr. Allen had not been able to purchase private health insurance.
Justice P. Jeffrey was unable to conclude that Dr. Allen was delayed in receiving “any other medical service beyond a time either convenient to him or that was first medically advisable” (para 20).
Justice Jeffrey discussed Alberta’s implementation of the recommendations in the Final Report of the Federal Advisor Wait Times (Ottawa: Health Canada, 2006) (“Postl Report” available here) , including wait times initiatives and primary care networks (para 22). While Alberta had tracked specific medical conditions in order to ascertain whether their treatment was delivered within target timeframes, it did not specifically track disc replacement surgery (para 26). Alberta testified that it did not know how many Albertans were on waiting lists for surgeries and suffering through severe pain or unable to function on a daily basis because of their conditions (para 28).
Section 3 of the Canada Health Act, RSC 1985 c C-6 provides:
3. It is hereby declared that the primary objective of Canadian health care policy is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers.
The relevant subsection of the Alberta Health Care Insurance Act, RSA 2000, c A-20 (“AHCIA”) provides:
26(2) An insurer shall not enter into, issue, maintain in force or renew a contract or initiate or renew a self-insurance plan under which any resident or group of residents is provided with any prepaid basic health services or extended health services or indemnification for all or part of the cost of any basic health services or extended health services.
Dr. Allen applied to the court for a declaration that AHCIA subsection 26(2) violated his rights under section 7 of the Canadian Charter of Rights and Freedoms (the Charter), which provides:
7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
As a preliminary issue, Alberta argued that Charter section 7 did not apply here because AHCIA subsection 26(2) was neither part of the adjudicative context nor the administration of justice (para 34). Justice Jeffrey relied on Canada (Attorney General) v PHS Community Services Society, 2011 SCC 44 (“PHS”), which provides that “when a policy is translated into law or state actions, those laws and actions are subject to scrutiny under the Charter.” He concluded that AHCIA section 26(2) (“the Prohibition”) was therefore subject to Charter review (paras 34, 36).
Justice Jeffrey noted that in determining whether section 7 of the Charter is violated, R v Beare,  2 SCR 317, provides for a two-step inquiry. First, the court looks at whether there has been a deprivation of the right to life, liberty and security of the person, and, second, whether the law (AHCIA, section 26(2)) is contrary to the principles of fundamental justice (para 32).
Dr. Allen argued that his security of the person was violated in this case. He relied on Chaouilli v Quebec (Attorney) General, 2005 SCC 35 (“Chaouilli”) for the proposition that “any statutory prohibition on private health care violates the right to security of the person” (para 39). Justice Jeffrey disagreed with this position. He noted that breaches of section 7 must be demonstrated with evidence: PHS, Chaouilli, Blencoe v British Columbia (Human Rights Commission), 2000 SCC 44,  2 SCR 307, Canada (Attorney General) v Bedford, 2013 SCC 72, 366 DLR (4th) 237” (para 40). Justice Jeffrey held that the authorities require an applicant to demonstrate that the law in question prevents access to health care. Dr. Allen had not so demonstrated (para 41).
Dr. Allen also argued that the conclusion of Justice Deschamps in Chaouilli— that the policies with respect to private health insurance in Quebec and Alberta are the same—supported his lack of evidence (para 43). Justice Jeffrey said that that was the decision of one Justice, not the majority of seven. Further, Alberta’s policy may have changed since Chaouilli was heard. Justice Deschamps’ statement was made when summarizing expert evidence that was accepted by the Trial Judge in Chaouilli, not when determining that AHCIA section 26(2) violated Charter section 7 (para 44).
Justice Jeffrey noted that the majority judgment of the Supreme Court in Chaouilli relied on conclusions based on the specific record that was before the court. He held:
 I am bound by the Supreme Court of Canada’s majority decision legal pronouncements. I am bound to apply its ratio decidendi to similar causes of action arising from similar fact situations.But I am not bound to apply a conclusion of mixed fact and law from a Supreme Court of Canada case to another case that merely shares a similar allegation but offers no evidence to establish the allegation in fact.
 Dr. Allen’s injury and its ensuing effects were most unfortunate, but no evidence causally connected his wait time experience in the Alberta health care system with the Prohibition. Nothing was presented showing, for example, his wait time to be longer than it otherwise would have been because of the Prohibition or to show that absent the Prohibition his wait time would have been shorter.
Justice Jeffrey also noted that there are a number of alternate possibilities for the added wait times in Alberta that may have nothing to do with AHCIA section 26(2), such as underfunding, mismanagement, shortage of qualified practitioners, increased incidence of the particular condition, and unexpected population increases, among others (para 50).
Because Dr. Allen had failed to show that AHCIA section 26(2) deprived him of life, liberty or security of the person, his application failed at the first step in the section 7 analysis; the court therefore did not need to address the second, fundamental justice, step (paras 55-56).
Chaouilli involved a patient who had to wait several months for hip replacement surgery. The patient and his physician (Dr. Chaouilli) challenged the Quebec law that prohibited private health care insurance for publicly insured health services. They argued that this provision offended both the Canadian Charter of Rights and Freedoms and the Quebec Charter of Human Rights and Freedoms. On June 9, 2005, a 4-3 majority of the Supreme Court ruled that Quebec’s ban on private insurance violated the Quebec Charter of Human Rights and Freedoms. Three of the majority concluded that the ban also violated the Canadian Charter of Rights and Freedoms, while three judges held that it did not, and the seventh judge was silent on the matter. The majority therefore only ruled that there was a violation of the Quebec Charter.
This decision has been interpreted in different ways, depending on whom you ask. Advocates of privatization and two-tiered healthcare see this case as a victory. However, advocates for Medicare indicate that the direct consequences of the ruling are limited to the application of the Quebec Charter and the province of Quebec (See the Canadian Doctors for Medicare, The Chaouilli Decision here). These advocates note that the majority decision concluded that the Quebec Charter guarantees a right to private insurance where the public system is inadequate.
They note that the case did not rule that a parallel private insurance system is guaranteed by the Constitution, or that a single-tier publicly insured system is unlawful. Advocates of Medicare also point out that the Chaouilli case arose from circumstances that existed in 1997 in Quebec, before that government and others across Canada had initiated strategies to address waiting times. Finally, the Supreme Court’s reliance on comparisons to European health care systems has been widely criticized because the court failed to recognize that wait times are actually longer in those countries that have parallel private insurance. Further, the majority of European countries that permit private insurance do not allow people who can afford it to obtain preferential treatment by queue jumping (see the Canadian Doctors for Medicare, The Chaouilli Decision, above).
The Allen case seems to be an attempt to distinguish Chaouilli, or at least the interpretation it has been given by some two-tiered healthcare advocates. Dr. Allen was not arguing that he had a right to parallel private insurance, merely that the inadequacies of the public system had violated his Charter section 7 rights. Justice Jeffrey focused on the lack of evidence that the Prohibition was to blame for Dr. Allen’s increased wait time. Arguably, it would be almost impossible for a person to demonstrate the causes of wait times without data; the Alberta government acknowledged that it did not collect information about patients on wait lists who are suffering through severe pain or who are unable to carry out their day-to-day activities because of their medical conditions (Allen, para 28). Thus, any individual would have a great deal of difficulty providing the required evidence. Justice Jeffrey’s mixed findings of fact and law will also make the case difficult to appeal, as the appeal courts will defer to his findings of fact.
Perhaps this case also demonstrates the reluctance of courts to enter into the sphere of government policy, especially in an area that is very dear to many Canadians—our public health care system.
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By: Shaun Fluker
Decision commented on: Petroglobe v Lemke, 2014 ABSRB 401
The law in Alberta provides an energy company with the right of surface access on private lands to drill for oil and gas. This access allows the company, among other things, to construct an access road and clear lands for the well site. In most cases, the company and the landowner enter into a surface lease whereby the company agrees to pay rent in exchange for this access. In other cases, surface access is governed by a Right of Entry Order issued by the Alberta Surface Rights Board (website) whereby the company obtains access in exchange for the payment of rent. This case is about what happens when an insolvent company fails to pay its rent.
Surface access and the compensation payable by an energy company to a landowner is governed by the Surface Rights Act, RSA 2000, c S-24 (the text of the Act can be viewed here). Section 36 deals with situations where the company fails to pay its rent. Where a landowner provides the Surface Rights Board with satisfactory evidence of non-payment, section 36 obligates the Surface Rights Board to demand payment from the company:
36(3) Where any money payable by an operator under a compensation order or surface lease has not been paid and the due date for its payment has passed, the person entitled to receive the money may submit to the Board written evidence of the non?payment.
36(4) On receiving the evidence, if the Board considers that it satisfactorily proves the non?payment, the Board shall send a written notice to the operator demanding full payment.
Where the company fails to comply with this demand for payment, the Surface Rights Board has the power to extinguish the company’s surface access rights and direct the Minister to pay the landowner (sections 36(5) and (6)).
We might then summarize these provisions simply as holding that Albertans collectively guarantee that a landowner will receive their rent as compensation for having to endure the disruptions to their quiet enjoyment brought by the oil and gas industry. The applicable provisions in the Surface Rights Act include a mix of obligatory and discretionary language and thus do not literally suggest this is a guarantee, however section 36 has been judicially interpreted as some form of guarantee for landowners. In Provident Energy v Alberta (Surface Rights Board), 2004 ABQB 650 Justice Erb stated:
 In my opinion, the purpose of Section 36 of the Act is obvious. It is to provide a mechanism by which the surface owner is guaranteed payment of the compensation to which he is entitled whether the compensation has been fixed by an agreement or not. In order to carry out its duties in some sensible fashion, the Board would have to determine whether the lease was valid and whether compensation was payable to any party and by whom. As Sirrs J. held in the Devon case, the application of Section 36 is discretionary and even if a land owner shows sufficient evidence that a lease exists, the Board is not bound to order compensation. If the Board was bound to do so, this would amount to a fettering of its discretion.
Which brings us to the Lemke decision at hand. In 2006 Doug and Marg Lemke entered into a surface lease with Petroglobe in relation to a well operated by the company. The Lemkes filed evidence with the Surface Rights Board to demonstrate: (1) they are the registered landowner of the subject lands; (2) there is a valid surface lease between the parties; and (3) that Petroglobe failed to pay its 2013 rent under the lease. This documentation satisfied the Lemkes’ obligation under section 36(3) to demonstrate non-payment of rent.
The twist in this case is that Petroglobe was insolvent and, according to the Surface Rights Board decision, was assigned into bankruptcy in October 2013 pursuant to section 50.4 of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the BIA) (the text of the BIA can be found here). The Surface Rights Board held that the BIA precludes it from proceeding with a section 36 application for payment of rent. The decision itself has very little reasoning to support this ruling other than citing provisions of the BIA which, generally speaking, state no proceedings outside of the BIA process may be commenced against an insolvent person who has made a proposal to its creditors or has been assigned into bankruptcy, and the Supreme Court of Canada’s Canadian Western Bank v Alberta, 2007 SCC 22 decision for the principle that a federal statutory provision trumps a provincial provision in cases of incompatibility.
The Surface Rights Board essentially ruled the doctrine of federal paramountcy means section 36 of the Surface Rights Act is inoperable in this case because a section 36(4) claim for non-payment of rent is not allowable under the BIA. The Surface Rights Board has applied similar reasoning in other recent cases as well (See eg Pahl v Magnus One, 2013 ABSRB 331 here ).
There are a number of problems with this decision which are magnified by the fact the Surface Rights Board appears to have taken this position generally. The reasoning provided by the Surface Rights Board for such a complex suite of legal issues including statutory interpretation and constitutional matters is unsatisfactorily brief. The result here seems absurd and defeats the purpose of the Surface Rights Act to ensure that a landowner is compensated. And finally, it isn’t clear to me that there is incompatibility between the Surface Rights Act and the BIA in these cases. Section 36(4) requires the Surface Rights Board to issue a demand notice to the insolvent company for payment of rent. In a case like this where the company does not pay, it is Alberta taxpayers who are potentially on the hook for the bill not the insolvent company.
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By: Nigel Bankes
Case commented on: Stewart Estate (Re), 2014 ABCA 222
The Freehold Petroleum and Natural Gas Owners Association (FHOA) applied for leave to intervene in the appeal of the Calder or Stewart Estate litigation (for my post on the trial decision see here). Justice Patricia Rowbotham dismissed the application commenting at the end of her reasons that if FHOA had jurisprudence that it wished to bring to the attention of the Court it could always do so by passing relevant authorities on to the appellants’ counsel.
Justice Rowbotham summarized both the purposes of permitting interventions and the factors to be considered as follows:
“[t]he purpose of an intervention is to present the court with submissions which are useful and different from the perspective of a non-party who has a special interest or particular expertise in the subject matter of the appeal.” The case authorities have considered the following factors in determining whether to grant intervener status:
1. Will the intervener be directly affected by the appeal;
2. Is the presence of the intervener necessary for the court to properly decide the matter;
3. Might the intervener’s interest in the proceedings not be fully protected by the parties;
4. Will the intervener’s submission be useful and different or bring particular expertise to the subject matter of the appeal;
5. Will the intervention unduly delay the proceedings;
6. Will there possibly be prejudice to the parties if intervention is granted;
7. Will intervention widen the lis between the parties; and
8. Will the intervention transform the court into a political arena?
See Pedersen v Alberta, 2008 ABCA 192 at para 3, (sub nom. Pedersen v Thournout), 432 AR 219 (panel)
In her judgment Justice Rowbotham addressed two principal factors: the alleged special interest of FHOA and the possibility that FHOA might bring a fresh perspective. As to the first, Justice Rowbotham concluded that (at para. 6): “there is nothing about the association that sets it apart from any other member of the public who might be interested in the development of the jurisprudence in a particular area of the law.”
And as to the second factor (which is really a version of the “will it be useful” test), FHOA had indicated that its submission, if granted leave, would deal with the following matters:
1. The doctrine of stare decisis;
2. The interpretation of the provisions of the lease;
3. The nature of a petroleum and natural gas lease generally, the form of lease at issue in this appeal, the historical intent and purpose of parties that have entered into such leases and the fiduciary nature of the relationship between the mineral lessor and lessee therein created; and
4. The nature of a continuing course of conduct or series of related acts or omissions necessary to postpone the running of the ultimate limitation period as set forth in section 3(3)(a) of the Limitations Act, RSA 2000, c L-12.
FHOA’s arguments with respect to items 1, 2 and 4 were not persuasive since (at para. 9) “These are issues of law to which the applicant brings no special expertise” and which were already well covered in the appellants’ factum. Item 4 was problematic since an intervenor must take the case as she finds it and in this case there was no evidentiary basis on which to ground a fiduciary argument. And given counsel’s disavowal of any intention to bring an application to introduce fresh evidence it was not clear, absent that, how FHOA could, as they suggested, deal with the intent of the parties in entering into oil and gas leases. That left FHOA to indicate that it would, if given the chance, bring additional case law to the attention of the Court. Justice Rowbotham’s somewhat tart response to that contention is referred to above.
Item # 3 (contained in Mr. Speir’s affidavit for FHOA) was clearly problematic since it seemed to go beyond the record at trial; but more generally, Justice Rowbotham’s approach suggests that it will be very hard to gain the right to intervene even when the matter engages the interpretation of industry standard forms – appellate rulings on which will affect the interests of many similarly situated parties. I am struck by this having just finished posting on the Tsilhqot’in case, 20014 SCC 44 – a case in which there were no less than 13 interventions in addition to the Attorneys General. Treaty litigation, such as the Keewatin case due down shortly from the Supreme Court, draws similar numbers of interventions and for the very good reason that an appellate court’s decision on Treaty 3 will be significant for all of the numbered treaties. Given that there is little chance these days that an oil and gas case will ever make it to the Supreme Court of Canada perhaps the Court of Appeal should take a more liberal approach on the “will it be useful” question in intervention applications in litigation dealing with industry standard forms. While there is no standard form lease in the same way as there is a standard from operating agreement we know that there at least common forms and common clauses.
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By: Martin Olszynski
Case commented on: Tsilhqot’in Nation v British Columbia, 2014 SCC 44
The focus of this post, the fourth in a series of ABlawg posts on the Supreme Court of Canada’s Tsilhqot’in decision (see here, here,and here), is the concept of the “inherent limit” pursuant to which Aboriginal title lands “cannot be used in a manner that is irreconcilable with the nature of the claimants’ attachment to those lands” (Delgamuukw v. British Columbia,  3 SCR 1010, at para 125). From conversations with my colleagues here at the law school, there appear to be at least three concerns about this aspect of Aboriginal title law: that it is paternalistic, that it has never been satisfactorily sourced or rooted in indigenous laws (a complaint going back to Delgamuukw), and that it creates uncertainty for development. In this post, I propose an approach to what the Chief Justice in Tsilhqot’in described as the “negative proposition” (at para 15) that addresses each of these concerns (perhaps especially the latter two), while also addressing a more general concern with respect to Canadian Aboriginal law, which is to say the absence of any role for indigenous laws.
For the purposes of this post, the most relevant passages from Tsilhqot’in are the following:
Aboriginal title, however, comes with an important restriction — it is collective title held not only for the present generation but for all succeeding generations. This means it cannot be alienated except to the Crown or encumbered in ways that would prevent future generations of the group from using and enjoying it. Nor can the land be developed or misused in a way that would substantially deprive future generations of the benefit of the land. Some changes — even permanent changes – to the land may be possible. Whether a particular use is irreconcilable with the ability of succeeding generations to benefit from the land will be a matter to be determined when the issue arises.
 The rights and restrictions on Aboriginal title flow from the legal interest Aboriginal title confers, which in turn flows from the fact of Aboriginal occupancy at the time of European sovereignty which attached as a burden on the underlying title asserted by the Crown at sovereignty. Aboriginal title post-sovereignty reflects the fact of Aboriginal occupancy pre-sovereignty, with all the pre-sovereignty incidents of use and enjoyment that were part of the collective title enjoyed by the ancestors of the claimant group — most notably the right to control how the land is used. However, these uses are not confined to the uses and customs of pre-sovereignty times; like other land-owners, Aboriginal title holders of modern times can use their land in modern ways, if that is their choice.
To the extent that the “inherent limit” is now an entrenched fixture of Aboriginal title law, I suggest that title holding groups may wish to make it work for them. By this I mean they could use their own laws respecting the natural world and resource use, which generally speaking “saw and understood the checks and balances that were exhibited by the cycle [of life],” to prescribe how their traditional territories should be used (M. Wilson, “Wings of the Eagle,” in J. Plant and C. Plant, eds., Turtle Talk (Philadelphia: New Society Publishers, 1990). See also Report of the Royal Commission on Aboriginal Peoples(Ottawa: Minister of Supply Services, 1996), vol. 2, c. 4, s. 1; John Borrows, Recovering Canada: The Resurgence of Indigenous Law (University of Toronto Press: Toronto, 2002)). Doing so could represent a small first step towards creating, as Nigel Bankes and Jennifer Koshan have described it, “a space within which indigenous laws can operate.”
How would such laws operate in “modern times”? In my view, the Tsilhqot’in (and future title holders) might consider creating and implementing a land-use plan for their title lands that would allow for some development while at the same time preserving the land’s benefits for future generations. By doing so at the outset, title-holding groups would reduce the uncertainty associated with the “inherent limit,” as any reviewing court would be loathe to interfere with land-use decisions properly based on such a scheme. Such an approach, if properly carried out, should also reduce the potential for conflict over development within the title-holding group (see e.g. Behn v.Moulton Contracting Ltd., 2013 SCC 26).
Finally, land-use planning is actually something that Canada’s Aboriginal peoples have considerable experience and expertise in (see e.g. CIRL Occasional Paper #38). Indeed, the controversies surrounding the more recent Lower Athabasca Regional Plan (LARP) in Alberta and the Peel Watershed Land Use Plan in the Yukon suggest that First Nations better understand the principles and processes behind land use planning than provincial and territorial governments do. Without minimizing the time, effort, and money that such an endeavor would require, the Tsilhqot’in decision offers Aboriginal peoples the opportunity to engage in land-use management on their own terms. Should they choose to accept it, my sense is that all Canadians would benefit.
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By: Sarah Burton
Case commented on: Martin v. Sievers, 2014 ABQB 357 (CanLII)
In Martin v. Sievers, 2014 ABQB 357 (Martin), Master Smart confirmed that lawyers control the flow of relevant documents in an Independent Medical Examination (IME). This persists despite a more efficient mechanism for hired experts to access a party’s full medical record. Martin stands for the proposition that the “cultural shift” towards efficiency in the courtroom cannot sacrifice long-standing quality protections for the justice system (at paras 10, 12). Viewed from an access to justice perspective, Martin held that increasing access should not sacrifice justice in the process.
Martin was an application to compel the Plaintiff to attend an IME and execute a consent form without modification (at para 5). In September 2013, the Plaintiff attended an IME organized by defence counsel, but did not proceed with the examination after a dispute arose regarding the doctor’s consent form (at para 2). The consent form permitted the medical examiner to “collect” the Plaintiff’s entire medical record, not just the documents produced in the action (at para 4).
In attempting to reschedule the examination, the medical expert refused to proceed if his ability to access the Plaintiff’s full medical record was restricted. The doctor explained his rationale: after conducting a medical history during the IME, he would access the Plaintiff’s medical records using the online source Alberta NetCare. Using Alberta NetCare, he could review “all relevant medical documents” immediately while the Plaintiff was still in the room (at para 4). This would save considerable time because it removed the need to formally request additional documents through lawyers, and then conduct a re-examination. In addition, it saved time and money because the medical expert did not have to re-familiarize himself with the file on several occasions. In short, it was a much more efficient way of proceeding. The medical examiner added that he had “no interest or time” to review medical records that were not relevant or pertinent to the action (at para 4).
Defence counsel argued that the arrangement was “logical, reasonable and practical” (at para 6). This method of proceeding advanced the efficiency of the legal system and could promote more timely resolution of disputes. Any complaints the Plaintiff may raise regarding prejudice could be adequately addressed by the trial judge (at para 9).
Counsel for the Plaintiff disagreed. They argued that lawyers determine what is relevant and material in an action, not defence-hired medical experts (at para 8). Medical professionals have no training to determine what documents are relevant and producible in a court action. The medical examiner’s consent form provided defence counsel with backdoor access to the Plaintiff’s entire medical record. This circumvented the clear provisions in the Alberta Rules of Court, Alta Reg 124/2010 (the Rules) on document production.
Master Smart found that the Rules do not mandate what documents are provided to experts (at para 7). However, the Rules should always be interpreted with a view to enhancing efficiency and the timely resolution of disputes (at para 10). The Supreme Court of Canada echoes this view, recently declaring the need for a “cultural shift” in civil litigation to promote “timely and affordable access to a civil justice system” (at para 10, quoting Hryniak v. Mauldin, 2014 SCC 7 (CanLII) at para 2 (Hryniak)).
These overriding concerns made defence counsel’s argument “compelling” (at para 11). However, despite these pressures, Master Smart did not approve of the consent form. The Plaintiff should not have to open her entire medical record to an independent medical examiner.
The Rules on document production are well-established and based on sound principles (at para 12). While the legal system is moving towards efficiency, this cannot come at the expense of the justice system’s established practices and procedures. Therefore, despite the fact that inefficiencies may arise, the Court should not sacrifice its core tenets for the sake of expediency. In Master Smart’s words, “[q]uicker access to justice must not mean accepting less stringent practices which diminish the quality of a judicial process such that fair and proper adjudication is, or is seen to be, compromised” (at para 12).
Moreover, Master Smart was not persuaded that a trial judge could remedy any prejudice. Just as there needs to be a cultural shift in favour of efficiency, Courts need to cast aside the “legal fiction” that most cases proceed to trial (at para 11). Trials are a rarity, not the rule. Therefore, any theory that a trial judge can fix the problems caused by circumventing the Rules is not persuasive.
In this decision, Master Smart was asked to balance the competing objectives of an evolving justice system. On the one hand, judges and rule-makers have declared that efficiency is a priority in civil litigation. This extends to the time and money spent by all actors — including litigants, lawyers, judges, and (presumably) the experts and witnesses called in an action. On the other hand, while the rules on document production may be inefficient, they are fundamental to trial fairness. Irrelevant and/or privileged documents are rightfully protected from the prying eyes of opposing counsel and their agents.
Martin outlines a limit on efficiency as a priority. The pursuit of expediency and economy cannot compromise the integrity of the justice system. Giving medical experts access to complete medical records may make things quicker, but only because it disregards a collection of fundamental safeguards. It promoted efficiency, but sacrificed too much fairness in the process.
Master Smart also grappled with the “shifting culture” argument that has been advanced in the wake of the Hryniak decision. The culture of civil litigation is attempting to shift towards efficiency and away from technical and procedural impenetrability. Defence counsel was persuasive in arguing this point, but it was undercut by their proposed solution to the Plaintiff’s concerns. By invoking the outdated notion that a trial judge can handle any prejudice, an air of artificiality was implanted into an otherwise practical argument. Given that most civil actions settle, it is unlikely that the parties would ever see a trial judge. Indeed, the prospect of settlement would only increase after a defence-hired expert was given unfettered access to the Plaintiff’s medical records. Moreover, Hryniak’s efficiency-driven legal system advocates for early resolution and settlement of disputes, not trial. In his decision, Master Smart held that one cannot cherry-pick aspects of the new efficiency-driven legal culture.
Advancing access to justice is a critical issue facing the justice system, and increased efficiency is a crucial component of this movement. Notwithstanding this pressing concern, it is difficult to disagree with Master Smart’s decision. Document production is almost always a hotly contested issue in civil actions. This is especially so when dealing with medical records. Allowing a defence-hired expert unlimited access to the Plaintiff’s entire medical records effectively undermines the well-established (and well litigated) rules regarding document production. In essence, it allows a fishing-expedition by proxy. Any significant change to the rules of document production should be set out in formal amendments to the Rules.
If there is any critique to be made, this decision does undoubtedly emphasize the view that lawyers own and control the justice system, and that anyone else who interacts with it has little to independently offer. The Plaintiff’s argument was premised on the notion that only lawyers know what is relevant, and that medical experts cannot be trusted to have the knowledge, training (or possibly the integrity) not to draw on irrelevant documents to form their opinions (at para 11). While Master Smart doesn’t expressly make this point, his decision implicitly supports this view.
Relevance is a legal question that lawyers are practiced in determining. It is understood, however, that lawyers regularly make these determinations by relying on their experts. This reliance increases with the complexity of a file. To take the present case as an example, in all likelihood the medical expert will now conduct his restricted IME, and then inform defence counsel which “relevant” medical documents should be requested from opposing counsel. Legal relevance will then be screened through the adversarial system. More likely than not, the outstanding documents deemed relevant by the expert will end up in a supplementary affidavit.
In this case the adversarial system’s role was missing. Master Smart rightfully held that this vital step cannot be circumvented in the name of efficiency. While this conclusion is sound, the attitude underlying the Plaintiff’s argument requires re-examination as the justice system evolves to facilitate access.
The notion that lawyers know best (and everyone else’s opinions are deficient) is repeatedly identified as a significant barrier to accessing justice (see, for example, The Canadian Bar Association, Access to Justice Committee, Reaching Equal Justice: An Invitation to Envision and Act(Ottawa: The Canadian Bar Association, November 2013) at 129; Action Committee on Access to Justice in Civil and Family Matters, Access to Civil & Family Justice: A Roadmap for Change (Ottawa: Action Committee on Access to Justice in Civil and Family Matters, October 2013) at 7)). This view cannot continue unabated if meaningful reform of the justice system is to occur. Thus, while the decision in Martin may be the right one, there may be a case for formally identifying the role of experts and other actors in determining relevance. This would not diminish the role of lawyers in reaching these determinations, but would acknowledge that the justice system is owned and operated by the public, not a small group of legal professionals.
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By: Sharon Mascher
Case commented on: Tsilhqot’in Nation v British Columbia, 2014 SCC 44
On June 26, 2014, the Supreme Court of Canada (SCC) granted the Tsilhqot’in Nation a declaration of Aboriginal title over 1,750 square kilometres of its territory. That the SCC has granted the first ever declaration of Aboriginal title in Canada, in and of itself, makes this a decision of great significance (see Jonnette Watson Hamilton’s post on that issue here). However, through its unanimous decision, the SCC has done much more than this – it has refocused the discussion around the infringement of Aboriginal title away from its current pre-occupation with consultation towards consent. In this respect the decision is momentous – not only for Aboriginal title holders but for all Canadians. For this reason, this decision may indeed mark, in the words of Tsilhqot’in Nation Tribal Chair Joe Alphonse, the beginning of a “new Canada” (see here).
Consent – as a Starting Point
Of course, in Tsilhqot’in the SCC has not gone so far as to endorse the concept of free, prior and informed consent, as articulated in the 2007 United Nations Declaration on the Rights of Indigenous Peoples (see: Articles 10, 28, 29, 32). It has not said that the consent of Aboriginal title holders is always required before their land can be used by others. However, in its decision, the SCC has emphasized consent as the starting point:
 The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders. If the Aboriginal group does not consent to the use, the government’s only recourse is to establish that the proposed incursion on the land is justified under s. 35 of the Constitution Act, 1982.
The SCC goes on to emphasize the importance of consent repeatedly in the discussion that follows (see paras 88, 90, 92, 97 and 124).
This emphasis on consent stands in contrast to the approach of earlier SCC decisions. Most notably, in Delgamuukw v British Columbia,  3 SCR 1010, Lamer CJ’s leading judgment commences the discussion of infringement of Aboriginal title by pointing to the vulnerability of Aboriginal title, as follows:
 The aboriginal rights recognized and affirmed by s. 35(1), including aboriginal title, are not absolute. Those rights may be infringed, both by the federal (e.g., Sparrow) and provincial (e.g., Côté) governments. However, s. 35(1) requires that those infringements satisfy the test of justification.
Indeed, Lamer CJ only refers to “consent” once in his analysis. The reference comes in the context of satisfying the fiduciary relationship between the Crown and Aboriginal peoples by involving Aboriginal peoples in decisions taken with respect to their lands (at para 168). Lamer CJ first states that there is “always a duty of consultation” and explains that the “nature and scope of the duty of consultation will vary with the circumstances” before going on to state that “[s]ome cases may even require the full consent of an aboriginal nation, particularly when provinces enact hunting and fishing regulations in relation to aboriginal lands.” (at para 168).
What’s in a Word? Are We Really Talking about Consent post -Tsilhqot’in?
Tsilhqot’in does, however, recognize that in the absence of consent the government could justify its incursion on Aboriginal title land under s. 35 of the Constitution Act, 1982. At first blush, the end result appears, therefore, to be not unlike that in Delgamuukw. Given this, is it really accurate to suggest that Tsilhqot’in moves the justification process towards consent?
In my view, the answer is yes. Why is this? Well, absent consent from Aboriginal title holders, the SCC tells us in Tsilhqot’in that the Crown must show three things to justify overriding the Aboriginal title-holding group’s wishes on the basis of the broader public good (at para 77):
(1) that it discharged its procedural duty to consult and accommodate;
(2) that its actions were backed by a compelling and substantial objective; and
(3) that the government action is consistent with the Crown’s fiduciary obligations to the group.
With consultation and accommodation identified as a separate procedural duty, numbers two and three on this list appear to mirror the two-step infringement test articulated by Lamer CJ in Delgamuukw (and earlier established in R v Sparrow,  1 SCR 1075). But look a little closer at each of these requirements and it becomes clear that in Tsilhqot’in the SCC has left much less room for the Crown to justify its incursion on Aboriginal title land in the absence of consent.
(1) that it discharged its procedural duty to consult and accommodate
In Tsilhqot’in, the SCC characterizes the duty to consult as “a procedural right that arises from the honour of the Crown prior to confirmation of title” (at para 78). The SCC confirms that the degree of consultation and accommodation lies on a spectrum – with the required level of consultation and accommodation greatest where title has been established. McLachlin CJ makes no mention of the passage from Delgamuukw referred to above where Lamer CJ states that the duty to consult in “[s]ome cases may even require the full consent of an aboriginal nation, particularly when provinces enact hunting and fishing regulations in relation to aboriginal lands.” Perhaps this is because in his judgment Lamer CJ articulated the duty to consult in the context of discharging the fiduciary duty, rather than as a separate procedural step? Regardless, it is clear that a very high level of consultation and accommodation is required once Aboriginal title is proven – particularly when the government contemplates action that would have a serious adverse impact on the claimed right. And, meeting that high level and ensuring adequate consultation or accommodation is of course crucial – as where it is found to be inadequate, the SCC confirms that “the government decision can be suspended or quashed” (at para 79).
(2) that its actions were backed by a compelling and substantial objective;
When Aboriginal title is proven, in addition to the procedural duty imposed on the Crown to consult, and where appropriate accommodate, the Crown must also demonstrate that the proposed government action is consistent with its duties under s. 35 of the Constitution Act, 1982. This requires first that the Crown show that the government action has a compelling and substantial objective. This is, of course, not new and Tsilhqot’in draws from R v Gladstone,  2 SCR 723 to explain that the objectives which can be said to be compelling and substantive (Gladstone at para 72, cited in Tsilhqot’in at para 81):
… will be those directed at either the recognition of the prior occupation of North America by [A]boriginal peoples or — and at the level of justification it is this purpose which may well be most relevant — at the reconciliation of [A]boriginal prior occupation with the assertion of the sovereignty of the Crown.
Also not new is the list of interests potentially capable of justifying an incursion on Aboriginal title – with McLachlin CJ restating Lamer CJ’s now familiar passage in Delgamuukw suggesting that the range of legislative objectives that can justify infringement of Aboriginal title “is fairly broad” and could include, in Lamer CJ’s opinion (Delgamuukw at para 165, cited in Tsilhqot’in at para 83):
… the development of agriculture, forestry, mining, and hydroelectric power, the general economic development of the interior of British Columbia, protection of the environment or endangered species, the building of infrastructure and the settlement of foreign populations to support those aims …
However, there is a subtle difference in the reasoning. Lamer CJ in Delgamuukw framed the objective of reconciling Aboriginal peoples’ interests with the broader community from the perspective of the broader community, of which Aboriginal societies are a part. Quoting from his judgment in Gladstone, Lamer CJ said:
 Because . . . distinctive aboriginal societies exist within, and are a part of, a broader social, political and economic community, over which the Crown is sovereign, there are circumstances in which, in order to pursue objectives of compelling and substantial importance to that community as a whole (taking into account the fact that aboriginal societies are a part of that community), some limitation of those rights will be justifiable. Aboriginal rights are a necessary part of the reconciliation of aboriginal societies with the broader political community of which they are part; limits placed on those rights are, where the objectives furthered by those limits are of sufficient importance to the broader community as a whole, equally a necessary part of that reconciliation.
(Emphasis added in Delgamuukw; “equally” emphasized in Gladstone)
In Tsilhqot’in, McLachlin CJ instead accepts that the compelling and substantial objective of the government “must be considered from the Aboriginal perspective as well as from the perspective of the broader public” (at para 81). This means that “[t]o constitute a compelling and substantial objective, the broader public goal asserted by the government must further the goal of reconciliation, having regard to both the Aboriginal interest and the broader public objective” (at para 82). Following Tsilhqot’in, it would seem that the reconciling of Aboriginal title holders’ s. 35 rights with the broader community, in order to justify infringement, is no longer a one way street.
(3) that the government action is consistent with the Crown’s fiduciary obligations to the group.
Even if a substantial and compelling objective is established, the government must also show that a proposed incursion is consistent with the Crowns’ fiduciary duty. And, it is in McLachlin CJ’s articulation in Tsilhqot’in of what this demands that the limitations on government actions on Aboriginal title land, absent consent, become most obvious.
In Delgamuukw Lamer CJ suggested, in obiter,that the fiduciary duty might be satisfied through priority in the allocation of resources; involvement of Aboriginal peoples in decisions taken with respect to their lands, most commonly through consultation and accommodation; and, compensation (at para 169). In Tsilhqot’in the SCC makes clear that acting in a manner consistent with the Crown’s fiduciary duty towards Aboriginal title holders demands much more. This is so in relation to title because “the Crown’s underlying title in the land is held for the benefit of the Aboriginal group and constrained by the Crown’s fiduciary or trust obligation to the group” (at para 85). This impacts the justification process in the following two ways:
 First, the Crown’s fiduciary duty means that the government must act in a way that respects the fact that Aboriginal title is a group interest that inheres in present and future generations [...] This means that incursions on Aboriginal title cannot be justified if they would substantially deprive future generations of the benefit of the land.
 Second, the Crown’s fiduciary duty infuses an obligation of proportionality into the justification process. Implicit in the Crown’s fiduciary duty to the Aboriginal group is the requirement that the incursion is necessary to achieve the government’s goal (rational connection); that the government go no further than necessary to achieve it (minimal impairment); and that the benefits that may be expected to flow from that goal are not outweighed by adverse effects on the Aboriginal interest (proportionality of impact). The requirement of proportionality is inherent in the Delgamuukw process of reconciliation and was echoed in Haida’s insistence that the Crown’s duty to consult and accommodate at the claims stage “is proportionate to a preliminary assessment of the strength of the case supporting the existence of the right or title, and to the seriousness of the potentially adverse effect upon the right or title claimed” (at para 39).
Both of these points suggest very substantial limitations on the type of acts that might be undertaken on Aboriginal title lands without consent and each deserves comment.
First, Tsilhqot’in makes clear that going forward the government cannot justify incursions on Aboriginal title if the result would be to substantially deprive the Aboriginal title holders’ future generations the benefit of the land. The SCC leaves no room for exceptions: no matter the economic case or the political desire, the government cannot justify an interference with Aboriginal title that deprives future generations of their s. 35 rights to the land. What will this look like going forward? That, of course, remains to be seen. In the immediate future, it certainly seems to call into question government approvals of projects, such as Northern Gateway, where uncertainties remain regarding the socio-ecological effects on the land, at least as that approval relates to Aboriginal title land (for a recent blog on this issue by Shaun Fluker see here).
Second, even if an incursion on Aboriginal land will not substantially impact the land into the future, Tsilhqot’in tells us that the Crown’s fiduciary duty infuses an obligation of proportionality into the justification process. This means that the incursion must be necessary to achieve the government’s goal; the government can go no further than necessary to achieve it; and the benefits that may be expected to flow from that goal are not outweighed by adverse effects on the Aboriginal interest. Again, it isn’t possible to say how this will look going forward. When will an incursion be “necessary” to achieve the government’s goals? Arguably never when there is another alternative. What does the principle of minimal impairment – that the government go no further than is necessary – require? Perhaps that all available measures are required to be taken to minimize the potential impact of an incursion on the land, no matter the economic implications? And finally, in what circumstances will an incursion that is being forced on otherwise unwilling Aboriginal title holders have benefits that do not outweigh the adverse impact on the Aboriginal interest? While difficult to say in the abstract, what is clear is that asking Aboriginal title holders to bear a disproportionate adverse impact on their land for the benefit of the greater Canadian public will not meet this test.
Interestingly, the test for justification of incursions on Aboriginal title set out at para 87 is very similar to the test used to justify infringements of Charter rights under s 1. While the SCC introduced the justification test for s. 35 violations in Sparrow (and see the post by Bankes and Koshan on the problems with that reading of s 35 here), some of the elements articulated in Tsilhqot’in are new to s. 35, in particular the rational connection and proportionality of impact considerations. These elements are part of the test for s 1 Charter justifications, and in fact the proportionality of impact consideration gained new significance only recently under the Charter in Alberta v. Hutterian Brethren of Wilson Colony,  2 SCR 567, 2009 SCC 37. Again, however, there are some subtle differences here. Most importantly, the rational connection test under the Charter only requires a logical link between the government’s goal and the incursion, while Tsilhqot’in appears to set the bar higher by requiring a necessary link. And will this newly articulated justification test apply to violations of Aboriginal and treaty rights more broadly? What will become of the other factors mentioned in Sparrow as relevant to justifying the violation of Aboriginal rights, including the priority to be accorded to Aboriginal interests?
Returning to the focus of this post, are we really talking about requiring the consent of Aboriginal title holders for incursions on their land post-Tsilhqot’in? The answer is yes, unless of course the Crown: engages in the high level of consultation and accommodation required for proven Aboriginal title; demonstrates a substantial and compelling legislative objective that furthers the goals of reconciliation from both the Aboriginal and broader public perspective; demonstrates that future generations of the community holding Aboriginal title will not be substantially deprived of the benefit of the land; and, shows that the incursion is necessary to achieve the government goals, has a minimal impairment and does not ask the Aboriginal title holders to bear disproportionate adverse impact. Or, put another away, the answer is yes, except in what appears to be quite exceptional circumstances.
Do We Really Need to Think About Consent Now?
At present, only the Tsilhqot’in Nation has been granted a declaration of Aboriginal title, with a handful of other Nations having agreements recognizing their Aboriginal title. A much more substantial amount of land is the subject of claimed, but as yet unproven, Aboriginal title. Tsilhqot’in confirms that prior to the establishment of title by either court declaration or agreement, the Crown is required to consult and, where appropriate accommodate, Aboriginal groups asserting title to land in accordance with the principles established by cases such as Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council,  2 SCR 650 (at para 89). It is only after Aboriginal title is established that, absent consent, the Crown must ensure that its actions are substantially consistent with the requirements of s. 35 of the Constitution Act, 1982 (at para 80).
So, what does this mean in the immediate future when dealing with Aboriginal groups that claim, but have not yet established, Aboriginal title over land? Is there any role for consent at this stage? As McLachlin CJ, herself, said in Haida Nation v. British Columbia (Minister of Forests),  3 SCR 511 in the context of the duty to consult:
 This process does not give Aboriginal groups a veto over what can be done with land pending final proof of the claim. The Aboriginal “consent” spoken of in Delgamuukw is appropriate only in cases of established rights, and then by no means in every case. Rather, what is required is a process of balancing interests, of give and take.
However, Tsilhqot’in casts this statement in a new light:
 Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward. For example, if the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing. Similarly, if legislation was validly enacted before title was established, such legislation may be rendered inapplicable going forward to the extent that it unjustifiably infringes Aboriginal title.
Given this paragraph, in my opinion, it is no longer enough to simply discharge the procedural duty to consult pending final proof of a claim. To begin a project without the consent of Aboriginal title holders, or ensuring that the incursion is not unjustifiably infringing, risks its long term viability.
So, in light of what the SCC has said in Tsilhqot’in, today’s word on the street – consent.
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By: Nigel Bankes and Jennifer Koshan
Case commented on: Tsilhqot’in Nation v British Columbia, 2014 SCC 44
The Delgamuukw decision of the Supreme Court of Canada,  3 SCR 1010 was an important decision both on aboriginal title and also on the division of powers under the Constitution Act, 1867- in particular for its robust reading of the “lands reserved” head of s.91(24) and the companion language of s.109 (provincial title subject to “any interest other than that of the province in the same”): see Bankes, “Delgamuukw, Division of Powers and Provincial Land and Resource Law: Some Implications for Provincial Resource Rights” (1998), 32 UBC L Rev 317-351 and Kent McNeil “Aboriginal Title and the Division of Powers: Rethinking Federal and Provincial Jurisdiction” (1998) 61 Sask L Rev 431-465. The Tsilhqot’in decision is also an important decision on both issues; but it will be remembered (if it too does not go the way of Marshall and Bernard,  SCC 43 – read into nothingness as our colleague Jonnette Watson Hamilton points out here) on the division of powers issues as the decision that, in extended obiter dictum (see paras 98 and 126), eviscerated the lands reserved head of s.91(24).
The Court mentions the term “lands reserved” only twice in its entire judgement – both times as part of quoting the entire head of power “Indians and lands reserved for Indians” and never alone; most of the time the Court simply refers to the application of provincial laws to Indians (see paras 104, 140). The compelling logic of Delgamuukw on division of powers is now dismissed as leading to a number of “difficulties” (at para 133) and the startling conclusion that the doctrine of interjurisdictional immunity is not just out of fashion (we know that from cases like Canadian Western Bank v Alberta, 2007 SCC 22, although see paras 60 – 61 of that case on the application of the doctrine to the “Indian Cases”), but it has no role whatsoever to play in relation to aboriginal title lands (at para 151) and perhaps even more generally in relation to the entire head of power (see paras 140, 150). Instead, the constitutionality of provincial laws is to be resolved pursuant to the aboriginal rights framework under s 35 of the Constitution Act 1982 and R v Sparrow,  1 SCR 1075 (Tsilhqot’in at paras 139, 151).
What are the implications of this part of the Tsilhqot’in decision?
1. It dramatically limits the availability of one traditional source of constitutional protection and constitutional space for aboriginal communities. It does not completely abolish that source of protection since a provincial law in relation to lands reserved will presumably still be considered ultra vires. Thus, a provincial law that provides that a province may dispose of standing timber on aboriginal title lands will be of no force or effect (because it singles out those lands for special treatment): R. v Sutherland,  2 SCR 451. There may be some doubt about that now, since the Court states that a province could amend its forestry legislation “to cover lands held under Aboriginal title” (Tsilhqot’in at para 116, see also para 117); would not such an amendment have to be aimed at aboriginal title lands? But in any event a law providing that the province can dispose of standing timber on any lands in the province would under Tsilhqot’in be both valid and applicable (para 102) to aboriginal title lands because the Supreme Court no longer seems to care whether the power to dispose of resources on title lands is part of the core content of “lands reserved” within the exclusive jurisdiction of the federal government.
2. It casts doubt on the line of cases (even modern cases) which suggest that provincial land laws and related residential tenancy laws do not apply on Indian reserves and other First Nation lands: see e.g. Sechelt Indian Band v. British Columbia (Manufactured Home Park Tenancy Act, Dispute Resolution Officer), 2013 BCCA 262. The Supreme Court reached this conclusion itself in Derrickson v. Derrickson,  1 SCR 285 and Paul v. Paul,  1 SCR 306 (finding that matrimonial property laws do not apply to Indian reserve lands).
3. It makes unnecessary the two step analysis of the applicability of provincial laws suggested by s.88 of the Indian Act, RSC 1985, c I-5 (at least so far as provincial laws are claimed to apply to “Indians” rather than “lands reserved”) and the Court’s decision in Dick,  2 SCR 309 – in fact we don’t need s.88 any longer since there are no longer any inapplicable provincial laws that need to be made applicable by operation of a federal statute. Presumably however until s.88 withers away the statutory protection offered to treaties by the opening words of s.88 of the Indian Act will continue (see R. v Sioui,  1 SCR 1025) – leading to the anomalous situation that statutory protection of the Indian Act is more complete and hard edged than that offered by the Constitution.
4. By focusing on the judicially created justifiable infringement test rather than inapplicability, Tsilhqot’in will allow a province to argue the justifiability of the application of its provincial resource laws (e.g. forest, mining, and oil and gas legislation) to title lands in each and every case rather than dealing with applicability at a more principled level. The result is likely to be continuing uncertainty and lengthy and expensive litigation if provincial governments decide to push the envelope. Clearly the Court preferred the subjective and discretionary justifiable infringement test over the brighter line of inapplicability – but at what cost in providing certainty to all parties? And recall as well that the judicial creation of this test (to parallel the express provision in section 1 of the Charter) has been critiqued for being inconsistent with the structure of the Constitution Act 1982 as well as ignoring aboriginal sovereignty and the limitations already placed on aboriginal rights by indigenous laws and traditions (see e.g. John Borrows, “Frozen Rights in Canada: Constitutional Interpretation and the Trickster” (1997/98) 22 American Indian L Rev 37 at 59).
5. The Court does acknowledge that provincial powers will continue to be subject to the doctrine of paramountcy, such that federal legislation will prevail in the case of a conflict with provincial legislation (para 130). It then confuses things by suggesting that “interjurisdictional immunity is designed to deal with conflicts between provincial powers and federal powers” (para 144). Conflicts have not traditionally been required for the interjurisdictional immunity doctrine to apply; in fact the Court acknowledged this as one of the problems with the doctrine in Canadian Western Bank. The Court’s reference (Tsilhqot’in at para 136) to R v Marshall,  3 SCR 533 as support for the proposition that interjurisdictional immunity does not apply where provincial legislation conflicts with treaty rights is also puzzling, as the applicability of provincial law was not at issue in that case –Marshall involved a prosecution under federal legislation, the Fisheries Act. All the Court said in Marshall – and it is actually the rehearing decision in Marshall that is referenced in Tsilhqot’in – is that in Marshall #1 it had been “most explicit in confirming the regulatory authority of the federal and provincial governments within their respective legislative fields to regulate the exercise of the treaty right subject to the constitutional requirement that restraints on the exercise of the treaty right have to be justified on the basis of conservation or other compelling and substantial public objectives.” (Marshall #2 at para 24, citing R v Marshall,  3 SCR 456 (Marshall #1) at para 64). This re-reading of Marshall is similar to the Court’s re-reading of Marshall and Bernard.
6. Notwithstanding several references to the customary laws of indigenous communities (see e.g. paras 31 and 35), Tsilhqot’in presents a view of aboriginal title as simply “Aboriginal land law” (at para 10) rather than as part of a more comprehensive normative order. We say this because the division of powers part of the judgement (commencing at para 98) is full of all sorts of references to two levels of government (see e.g. para 141) and similar comments about “interlocking federal and provincial schemes” that make it abundantly clear that this Court has given no thought to the space within which indigenous laws may operate within the modern constitutional order (for recognition that the law making authority of aboriginal peoples pre-dated the Crown’s acquisition of sovereignty, was not extinguished by that acquisition of sovereignty and was not impaired by the division of legislative powers between the federal and provincial governments in 1982 see Campbell v British Columbia (2000), 189 DLR (4th) 333 (BCSC) and Justice Deschamps in Beckman v Little Salmon/Carmacks First Nation,  3 SCR 103 at para 97). The Court’s argument (at para 114) that “no one would have been in charge” of the forests unless the BC government intended the words “vested in the Crown” to apply to lands with pending claims of aboriginal title is further evidence of the Court’s lack of acknowledgment of the possibility of indigenous laws. Thus the Court is very adept at inventing inherent limits (allegedly grounded in the indigenous laws of all communities) to aboriginal rights but less imaginative when it comes to creating a space within which indigenous laws can operate.
In sum, Tsilhqot’in is undoubtedly a welcome decision on aboriginal title. It is considerably less helpful on traditional division of powers issues. There is more talk than usual in this decision about what is ratio and what is obiter dictum – likely as a way of avoiding the logic of Delgamuukw (at para 135). Perhaps a later Court will dismiss Tsilhqot’in on the federalism issues as mere obiter and return us to constitutional orthodoxy – but not, one surmises, without a lot of pain and uncertainty; the sort of pain and uncertainty engendered by Marshall and Bernard for close to a decade. We cannot help wondering if the Court’s discussion of federalism issues in this case was the price that had to be paid to get a unanimous judgement. To answer that question we will have to await a biography of Chief Justice McLachlin that draws on a set of sources that is just as rich as the marvellous biography of Brian Dickson by Robert Sharpe and Kent Roach (Brian Dickson: A Judge’s Journey). That biography contains an insightful discussion of the story behind the Court’s unanimous judgement in Sparrow which was co-authored by Chief Justice Dickson and Justice Laforest.