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Analytical Framework for Oppression Remedy under the Business Corporations Act

Thu, 12/24/2015 - 10:00am

By: Evaristus Oshionebo

PDF Version: Analytical Framework for Oppression Remedy under the Business Corporations Act

Case Commented On: Patel v Chief Medical Supplies Ltd, 2015 ABQB 694

In Patel v Chief Medical Supplies Ltd., 2015 ABQB 694, the Court of Queen’s Bench of Alberta was confronted with the issue of oppression of the interest of minority shareholders under the Business Corporations Act, RSA 2000, c B-9 [ABCA]. The judgment raises a number of important jurisprudential questions including the analytical framework for the oppression provision in section 242 of the ABCA and the scope of the remedy for oppression under the ABCA. In the ensuing discussion, this writer offers his opinion on these issues and posits that, in determining whether there is oppression in any given instance, Alberta courts ought to adopt the analytical framework enunciated by the Supreme Court of Canada (SCC) in BCE v 1976 Debentureholders [2008] 3 SCR 560 [BCE]. Doing so would enhance the development of the oppression remedy in Alberta.

Facts

The Applicants (consisting of the Patel and Lasaleta families) and the Respondent, Paul Tulan, are shareholders in two companies, Chief Medical Supplies Ltd. (“CMS”) and 1134853 Alberta Ltd. (“113”). CMS specializes in the development and manufacture of pharmaceutical products including high quality dialysis fluids, while 113 owns a building in Calgary.

The Respondent holds sixty per cent of the shares of CMS while the remaining shares are held by the Applicants and other shareholders. Although the Applicants are minority shareholders in CMS, they contributed the majority of the capital in CMS, including the initial start-up capital.

Beginning from their incorporation both CMS and 113 have been managed primarily by the Respondent. There was a close friendship between the Applicant families and the Respondent. Given this close relationship, the Applicants were happy to have the Respondent manage the business and affairs of CMS and 113. The Applicants trusted the Respondent to carry on the business in the best interests of the companies and the shareholders.

The Applicants alleged that, in the course of managing the business and affairs of CMS and 113, the Respondent engaged in conduct that oppressed or unfairly prejudiced or unfairly disregarded the interests of the Applicants. In particular, the Applicants alleged that the Respondent encumbered the assets of CMS and 113 (including the building owned by 113 in Calgary) to obtain an $11 million loan from the Bank of Montreal to further his (Respondent’s) personal interest and to the detriment of the shareholders of CMS and 113.

Regarding the loan, the Respondent had incorporated 2427419 Ontario Ltd. (“242”) in July of 2014 in order to buy a warehouse in Mississauga, Ontario. The Respondent owns sixty percent interest in 242, while the remaining shares in 242 are owned by shareholders not specifically identified in the judgment. The Applicants do not own shares in 242. The loan was obtained by the Respondent for, and on behalf of, 242 but the assets of CMS and 113 were used to secure the loan, apparently without the knowledge or approval of the Applicants. With the aid of the loan ‘242’ acquired a building and purchased certain pharmaceutical equipment.

The Applicants alleged further that the Respondent misappropriated a number of business opportunities belonging to CMS and 113 for his personal benefit. These business opportunities include:

(1) The incorporation by the Respondent of Alberta Veterinary Laboratories Ltd. (“AVL”) and the use by ‘AVL’ of CMS’ resources, personnel and office space without payment of rent. AVL’s address is the 113 building and ‘AVL’ operates out of that building and CMS’ space.

(2) The Respondent’s acquisition of Get-Away Dialysis Ltd. (“Get-Away”), a company engaged in the provision of a high standard of dialysis treatment.

Finally, the Applicants alleged that the Respondent paid himself an unusually high and unwarranted management fees in contravention of an agreement reached by the parties that no management fees were to be paid to the Respondent until the shareholder loans were repaid.

To remedy these alleged oppressive conduct the Applicants prayed the court to appoint a Receiver or an Inspector pursuant to s. 242(3) of the ABCA.

The Respondent did not dispute the substance of the allegations but argued that he acted within the scope of his management power. More specifically, the Respondent argued that the loan was obtained with the tacit approval of the Applicants and that the business opportunities in which he participated are different from the usual business of either CMS or 113. These business opportunities, the Respondent argued further, are matters in which CMS and 113 would not normally be interested.

The Decision

The Honourable Mr. Justice G.C. Hawco of the Court of Queen’s Bench found that the Respondent managed both CMS and 113 “as if he were the only shareholder” [at para 21]. The court concluded that “the Applicants’ interests have been unfairly disregarded” by the Respondent [at para 28]. In particular, the court found that the following actions of the Respondent unfairly disregarded the interests of the Applicants:

(1) Securing the loan by encumbering 113’s primary asset, which is the 113 building [at para 21].

(2) The acquisition of Get-Away Dialysis Ltd. This is because, as is clear from CMS records and as admitted by the Respondent, CMS had earlier planned to expand their business to include the provision of dialysis treatment. Moreover, “[t]he acquisition of this company without bringing something or anything to CMS has resulted in a loss to CMS while Mr. Tulan or his company has made a profit in excess of $300,000” [at para 25].

(3) The unilateral payment of management fees (in excess of $1.8 million) to the Respondent [at paras 26 & 28]. In the words of the court,

“Notwithstanding the fact that it was agreed that no management fees were to be paid to Mr. Tulan until the shareholder loans were repaid, those loans have not been repaid and yet Mr. Tulan has awarded himself management fees in excess of $1,800,000” [at para 26].

The court appointed an Inspector to investigate the affairs of CMS, 113 and 242 with a view to determining whether the Respondent misappropriated the assets of the companies or usurped for his personal benefit any corporate opportunities belonging to CMS and 113 [at paras 28 & 29].

Analysis of the Decision

This writer agrees with the court that the actions of the Respondent unfairly disregarded and unfairly prejudiced the interests of the Applicants. The problem, however, is that in arriving at its decision the court failed to engage in a rigorous analysis of the oppression remedy provision under the ABCA. In fact, despite a plethora of decided cases on the issue the court failed to cite any case(s) in support of its decision. A more worrisome observation is that the analytical framework enjoined by the SCC in the seminal case of BCE was completely ignored by the court.

The oppression remedy provision under section 242(2) of the ABCA is to the effect that:

If, on an application under subsection (1), the Court is satisfied that in respect of a corporation or any of its affiliates

(a) any act or omission of the corporation or any of its affiliates effects a result,

(b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner, or

(c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer, the Court may make an order to rectify the matters complained of.

In BCE, the SCC enunciated a two prong approach to the oppression remedy. The SCC held that:

In our view, the best approach to the interpretation of s. 241(2) [of the Canada Business Corporations Act] is one that combines the two approaches developed in the cases. One should look first to the principles underlying the oppression remedy, and in particular the concept of reasonable expectations. If a breach of a reasonable expectation is established, one must go on to consider whether the conduct complained of amounts to “oppression”, “unfair prejudice” or “unfair disregard” as set out in s. 241(2) of the CBCA [at para 56].

Thus, in determining whether or not there is oppression in any given case, Canadian courts are required to conduct “two related inquiries” viz: “(1) Does the evidence support the reasonable expectation asserted by the claimant? and (2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms ‘oppression’, ‘unfair prejudice’ or ‘unfair disregard’” [BCE, at para 68].

In the instance case, the trial judge failed to conduct these two related inquiries. The trial judge ought to ascertain, first and foremost, the Applicants’ reasonable expectation(s) and whether the evidence supports the reasonable expectation(s) asserted by the Applicants. Reasonable expectation could arise from a numbers of factors including “general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders” [BCE, at para 72].

The reasonable expectation of the Applicants in this case is that the Respondent, as director and manager of both CMS and 113, would act honestly and in good faith with a view to the best interest of CMS and 113. As the SCC held in BCE, shareholders and other stakeholders have a reasonable expectation that directors would act in the best interest of the corporation [BCE, at para 66]. Moreover, shareholders “have a reasonable expectation of fair treatment” [BCE, at paras 64 & 70].

While in this case the court ignored the BCE analytical framework, it is worth noting that many cases in Alberta have adopted and followed the BCE framework. See, for example, Shefsky v California Gold Mining Inc., 2014 ABQB 730 (CanLII); Krulc v Krulc, 2015 ABQB 213 (CanLII); 1408418 Alberta Ltd. v Oslund, 2015 ABQB 560 (CanLII); and R. Floden Services Ltd. v Solomon, 2015 ABQB 450 (CanLII).

Is the Appointment of an Inspector Justified?

As indicated previously, the court appointed an Inspector to investigate the affairs of CMS, 113 and 242 [at paras 17, 28 & 29]. The court acknowledged that the appointment of an Inspector is not specifically provided for by the ABCA, but held that because section 242(3) of the ABCA empowers the court to “make any interim or final order it thinks fit”, the court had the power to appoint an Inspector [at para 20]. The court justified the appointment of an Inspector partly as follows:

I am also concerned that obtaining information and documents from Mr. Tulan has been fraught with difficulties. I am concerned that the Court is not in possession of sufficient information which would warrant granting the appointment of a Receiver or many of the other remedies set forth in s 242(3) of the ABCA [at para 28].

Although the ABCA does not specifically authorize the court to appoint an Inspector, the court can appoint an Inspector if the court believes that such appointment would rectify the matter(s) complained of. Besides, the appointment of an inspector is implicit in the powers vested in the court under sections 231(2) and 242(3) of the ABCA. Section 231(2)(d) provides that the court may order an investigation to be made of a corporation in order to determine whether “persons concerned with the formation, business or affairs of the corporation or any of its affiliates have in that connection acted fraudulently or dishonestly”. Investigation may also be ordered by the court in order to determine whether there is oppression, unfair prejudice or unfair disregard of the interest of a security holder [ABCA, s. 231(2)(b)]. Similarly, in an oppression remedy suit the court may make any interim or final order it thinks fit including an order directing an investigation of the management of a corporation [ABCA, s. 242(3)(o)].

The court did not cite sections 231(2) and 242(3) of the ABCA in support of the order appointing an Inspector, but it is clear that the purpose of the Inspector’s appointment coincides with the spirit of these sections. In the words of Justice Hawco:

This Court further directs the inspector to determine, inasmuch as he or she is able to do so, whether the Respondents or any of them have misappropriated corporate assets or resources and if so to what degree and whether the Respondents or any of them have usurped any corporate opportunities which ought to have been afforded to CMS or 113 [at para 29].

While the court had the power to appoint an Inspector, the question remains whether the appointment of an Inspector in this case rectifies the matters complained of by the Applicants. For the purpose of the oppression remedy, the sole objective of any remedial order is rectification of the matters complained of [ABCA, s. 242(2)]. It is unclear whether the appointment of an Inspector in this case is designed to aid the court in determining whether a more drastic remedy would rectify the complaints of the Applicants. However, the mere appointment of an Inspector in and of itself does not rectify the matters complained of. Notwithstanding the appointment of an Inspector, the Respondent retains the power to manage the business and affairs of CMS and 113 as director of both companies. Thus, the Respondent retains the ability to inflict further damage on the interests of the Applicants. Moreover, because the Respondent retains his managerial power, he could potentially frustrate the Inspector’s investigation by being uncooperative. The Respondent has already displayed his uncooperative attitude because, as the court noted at para 28, “obtaining information and documents from Mr. Tulan has been fraught with difficulties.”

It should be noted, however, that the court imposed certain restrictions on the management of CMS and 113 including an order restraining both companies “from borrowing any funds or pledging any assets in excess of $10,000.00 or outside the ordinary course of business”, as well as an order restraining both companies “from paying, transferring, pledging any funds or assets to any of the individual Respondents or for their benefit, without obtaining the prior consent of the Applicants or the approval of this Court on notice” [at para 30].

Given the magnitude and persistence of the Respondent’s oppressive conduct, a more appropriate remedy is an order that puts an end to the Respondent’s abuse of his power. In this regard, suspension or removal of the Respondent as director and manager of both CMS and 113 would have been appropriate. In R. Floden Services Ltd. v Solomon, 2015 ABQB 450, for example, the Honourable Justice W.N. Renke granted an order permanently removing a director found to be engaged in persistent acts of oppression. In addition, Justice W.N. Renke granted an injunction restraining the director from representing himself as having any ostensible or real authority from the company [Floden, at para 139].

A Derivative Action is Desirable

The evidence adduced in this case support the reasonable expectation of the Applicants; hence an oppression remedy suit is appropriate in the circumstances. However, a more appropriate cause of action is a derivative action under section 240 of the ABCA. A derivative action is an action brought by a “complainant” (that is, a shareholder, director, creditor or ‘a proper person’) in the name and on behalf of a corporation [ABCA, s. 240(1)]. A derivative action is more appropriate here because most (if not all) of the matters complained of amount to wrongs done by the Respondent to both CMS and 113. For example, the encumbering of 113’s building to obtain the loan is breach of the Respondent’s fiduciary duty to “act honestly and in good faith with a view to the best interests of the corporation” [ABCA, s. 122(1)(a)]. Likewise, the misappropriation by the Respondent of business opportunities which would normally have accrued to CMS is breach of the Respondent’s fiduciary duty owed to CMS [see Canadian Aero v O’Malley [1974] S.C.R. 592].

It may well be that the Applicants in this case did not specifically ask for leave to bring a derivative action on behalf of CMS and 113. However, under section 242(3)(q) of the ABCA, the court has power to grant leave to institute a derivative suit even in instances where the applicant applied solely for the oppression remedy. This is exactly what occurred in Floden where Justice W.N. Renke granted leave to the claimants (seeking oppression remedy) to sue derivatively [Floden, at para 139(5)].

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Alberta’s “Integrated Resource Management System”: Where Are We Now?

Wed, 12/23/2015 - 10:00am

By: Giorilyn Bruno

PDF Version: Alberta’s “Integrated Resource Management System”: Where Are We Now?

The Government of Alberta is implementing major changes in the management of natural resources. The ultimate ambitious goal of the Government is to develop an “Integrated Resource Management System” (IRMS) for the province in order to meet development objectives without sacrificing environmental sustainability. The IRMS has been on the political agenda for several years and includes significant initiatives such as the Land-Use Framework and the Regulatory Enhancement Project.

The purpose of this blog is to provide a basic understanding of the new system, the extent to which the Government has implemented it, and some of the challenges of a fully functioning IRMS.

What is the Integrated Resource Management System?

The Integrated Resource Management System is a holistic approach to natural resource management. It attempts to achieve the environmental, economic and social outcomes that Albertans expect from resource development. Traditionally, the adverse impacts of human development on the environment were considered only on a project-by-project basis. By contrast, the IRMS incorporates the management (i.e., conservation and wise use) of all resources, including energy, minerals, forestry, agriculture, land, air, water and biodiversity. This new system aims to examine the cumulative impacts of development on the environment and communities as a whole, and to proactively plan for the needs of the current and future generations.

In order to accomplish these goals, the IRMS relies on regional planning. The Land-Use Framework (LUF), subsequently implemented by the Alberta Land Stewardship Act (ALSA) (SA 2009, c A-26.8), divided the province into seven regions. Each region is to be subject to its own plan (LUF at 19, 24). The role of a regional plan is to serve as a binding guide on the Crown, local government bodies, decision-makers, and all other persons (ALSA s. 15(1)). A regional plan must describe a vision and identify objectives for the planning region (ALSA s. 8). It may also set thresholds for air, land and water to limit disturbance within ecological limits, and may identify protected areas where development is to be limited or prohibited (ALSA s. 8). Each plan must be reviewed at least once every ten years (ALSA s. 6), and public consultation is mandatory when a plan is either developed or amended (ALSA s. 5).

The IRMS relies on the contributions of seven main key players. Each of these players has an important role, but it is the interdependent relationship binding the various activities together that make the IRMS an “integrated” system.

The first player is Alberta Environment and Parks (AEP), formerly Environment and Sustainable Resource Development. AEP is a ministry of the Government of Alberta which stewards Alberta’s land, air, water and biodiversity towards the achievement of desired outcomes and the sustainable development of natural resources. It has three main functions within the IRMS. First, it regulates non-energy activities related to public land, water, forestry and environment in accordance with regional plans. Second, it contributes to the development of regional plans with management frameworks that set environmental limits. Third, it contributes to the development of sub-regional planning activities when a detailed plan is necessary to address specific concerns within a region.

The second player of the IRMS is Alberta Energy. Similarly to AEP, Alberta Energy is also a ministry of the Government of Alberta. Alberta Energy is responsible for managing the development of Alberta’s renewable and non-renewable energy resources, including coal, minerals, natural gas, conventional oil, oil sands, electricity, wind, bioenergy, solar, hydro and geothermal. It has two main functions within the IRMS. First, it grants industry the right to explore and develop energy and mineral resources in accordance with regional plans. Second, it contributes to the development of regional plans through strategy development that ensures Alberta’s long-term economic prosperity.

The third player of the IRMS is the Alberta Energy Regulator (AER). The AER was established under the Responsible Energy Development Act (REDA) (SA 2012, c R-17.3) and is part of the Regulatory Enhancement Project. It reports to both Alberta Energy and AEP, but it operates at arm’s length to the Government (REDA s. 4; Designation and Transfer of Responsibility Regulation, Alta Reg 80/2012 s. 6(1.1)). As of April 1, 2014, the AER has full-lifecycle regulatory oversight of upstream coal, oil sands, and oil and gas development in Alberta, from projects application to abandonment and reclamation (REDA s. 2). Its role within the IRMS is twofold. First, the AER regulates the technical aspects of energy resource development in accordance with the policies developed by the Government and the limits set by regional plans (REDA s. 20, ALSA s. 13). Second, the AER oversees the enforcement of environmental legislation related to energy resources (REDA s. 2), including the Public Lands Act (RSA 2000, c P-40), the Environmental Protection and Enhancement Act (RSA 2000, c E-12) and the Water Act (RSA 2000, c W-3). The AER has broad compliance and enforcement powers, and may impose administrative penalties on companies who are not operating in accordance with environmental legislation (REDA ss. 69, 70, 75).

The fourth player of the IRMS is the Alberta Environmental Monitoring, Evaluation and Reporting Agency (AEMERA). AEMERA was established under the Protecting Alberta’s Environment Act (PAEA) (SA 2013, c P-26.8), which came into force on April 28, 2014 (for a commentary on this Act see post by Shaun Fluker, here). AEMERA reports to the Minister of AEP but operates at arm’s length to the Government (Designation and Transfer of Responsibility Regulation, s. 8(1.1); PAEA s. 2). Its key role is to improve our understanding of the current state of the environment and enhance our ability to make informed decisions. It has four main functions within the IRMS. First, it is responsible for collecting credible and relevant scientific data on the conditions of air, water, land, and biodiversity in Alberta (PAEA s. 3 and 4). Second, it is responsible for developing standards on environmental monitoring (PAEA s. 3). Third, it must advise the Government on the status and trends of the provincial environment based on the data collected (PAEA s. 3). Last, it must report to the public in an open and transparent manner on the conditions of the provincial environment (PAEA ss. 3(1)(b) and 4).

The fifth player of the IRMS is the Policy Management Office (PMO). The PMO was established in 2012 following the recommendation of the Regulatory Enhancement Task Force in its Technical Report (for a summary of these recommendations, see here). The PMO reports to both Alberta Energy and AEP but there is no statute that establishes it. Presumably, the PMO was established under s. 7(1) of the Government Organization Act (RSA 2000, c G-10) which confers on the Minister the power to “establish any boards, committees or councils that the Minister considers necessary or desirable to act in an advisory or administrative capacity in connection with any matter under the Minister’s administration”. The PMO has two main functions within the IRMS. First, it ensures the integration of policies between AEP and Alberta Energy for upstream oil and gas, oil sands and coal, and that the policies are clearly communicated to the AER (Technical Report at 11 and 55). As the IRMS evolves, the PMO’s role may extend to other natural resources (Technical Report at 55). Second, the PMO deals with policy concerns not related to the approval of a specific project (Technical Report at 54). The PMO will report these policy concerns to the Government and they will serve as a guide to review and modify regional plans. The goal is to enhance public participation at the policy-making stage and streamline regulatory approvals (Technical Report at 54, 55). Given these functions, it is often said that the PMO acts as interface between policy development and policy assurance (Technical Report at 14, 54, 55). In other words, the PMO provides the link (i) between the AER and the Government, (ii) among government departments, and (iii) between the Government and the general public.

The sixth pillar of the IRMS is the Aboriginal Consultation Office (ACO). The ACO was established under the Aboriginal Relations Department in 2013. Similarly to the PMO there is no statute that establishes it, and the establishment of the ACO is merely referenced in the recent Government of Alberta’s Policy on Consultation with First Nations on Land and Natural Resource Management, 2013. Presumably, also the ACO was established under s. 7(1) of the Government Organization Act. The ACO has two main functions within the IRMS. First, it develops policies on Aboriginal consultation in Alberta and guides the Government, Aboriginal communities and industry. Second, it is responsible for all aspects of Aboriginal consultation in regulatory approval processes concerning resource development. In particular, it is responsible for pre-consultation assessment, management and execution of the consultation process, and assessment of consultation adequacy (Policy on Consultation with First Nations at 5; see ACO website, here). Since the AER does not have the jurisdiction to assess the adequacy of Crown consultation when reviewing energy applications (REDA s. 21), the ACO is also required to collaborate with the AER in accordance with the procedure set out in the Aboriginal Consultation Direction (for a commentary on this Direction see post by Giorilyn Bruno & Nigel Bankes, here).

The last player of the IRMS is the Land Use Secretariat (LUS). The LUS was established under ALSA as part of the public service of Alberta but not as part of a government department (ALSA, s. 57). It reports to and is subject to the directives of a Stewardship Commissioner (ALSA ss. 57, 57.1). The LUS has three main functions within the IRMS. First, it is responsible for leading the preparation of regional plans and reviewing them at least every ten years (ALSA s. 58). However, the plans are an expression of the public policy of the Government; thus, the Lieutenant Governor in Council has exclusive and final jurisdiction over their contents (ALSA s. 13). Second, the LUS supports the implementation of regional plans by communicating with planning bodies to clarify and interpret plans, and supports policy reconciliation among government departments (ALSA s. 59). Last, the LUS monitors progress and the effectiveness of the existing policies to achieve or maintain the objectives set by the regional plans. It may also make recommendations to local bodies and government departments (ALSA s. 61).

How Should the Integrated Resource Management System Work?

The IRMS is based on the recognition that natural resources are the drivers of Alberta’s economy, but that these resources are finite and need to be preserved for future generations. In this system, development is to be occurred in accordance with regional plans or the environmental, economic, and social outcomes contained in the plans. The purpose of the plans is to establish triggers and limits for air, land, water and biodiversity. The triggers are supposed to provoke a proactive response when exceeded. The limits are supposed to set clear boundaries to development that are not to be exceeded by the AER, Alberta Energy or any other decision-maker. The LUS and AEMERA are responsible for monitoring the system and advising the Government on how the environment is performing. Based on this feedback, ideally regional plans will be revised to ensure that development is sustainable and represents the full range of existing public opinions and interests. This system is by design highly inclusive. The opinions of the public, stakeholders and Aboriginal people should all influence the vision for the planning regions in two ways: (a) through formal public consultation when regional plans are either developed or amended, and (b) through the ACO for Aboriginal people or the PMO for the other stakeholders.

Status Quo

The IRMS is a work in progress and only its basic structure is presently in place. In the last months I have attended several information sessions and a key message I picked up is to moderate our expectations. The transition phase is now complete, but a real transformation in the province is a long-term project.

The LUS is currently leading the planning process under ALSA. The Lower Athabasca Regional Plan for the oil sands region was approved in 2012 and the South Saskatchewan Regional Plan for southern Alberta was approved in 2014. The planning process for the North Saskatchewan Region is underway and the first phase of public consultation is now complete (see here). The planning process for the remaining four regions has not started yet (for further information on the status of regional plans, see here).

AEP has recently transferred three main functions, namely (i) regulatory functions related to upstream oil and gas, oil sands, coal and other minerals to the AER, (ii) Aboriginal consultation functions associated with regulatory approvals to the ACO, and (iii) environmental monitoring programs related to infrastructures and funding to AEMERA. At the same time, AEP has now an enhanced role within the IRMS in the management of cumulative effects and overall stewardship of air, land, water and biodiversity. This stewardship role involves bringing together all players within the IRMS and combining relevant data and information to inform management responses. It will take time to reorganize and refine these new functions.

The AER is fully established but several representatives have emphasized the magnitude of combining the work of the previous regulators, i.e. Alberta Environment, Sustainable Resource Development and the Energy Resources Conservation Board (see for e.g. introductory presentation to AER-phase 3 of Tristan Goodman, AER’s Vice President, Corporate Planning and Enterprise Projects, here). Part of the challenge is trying to retain the best practices of the previous regulators and combine them into new enhanced practices for the AER (such as integrating the ERCB’s Directive 019: Compliance Assurance and ESRD’s Compliance Assurance Program and Principles Document). There are also other inefficiencies that still need to be tackled, including capacity building and upgrading their information technology. Similar issues concern the ACO, which has assumed responsibility over Aboriginal consultation functions previously managed by both the Stewardship Branch of ESRD and the Consultation and Land Claims Division of Aboriginal Relations.

As to the PMO, there is not much public information available on their activities as they do not have a website yet. In the last year, the PMO has created the Alberta Responsible Energy Policy System, an online portal that provides access to documents used by the Alberta Government and the AER when making decisions related to the development of Alberta’s energy resources. In particular, the portal includes legislation, regulations, rules, strategies, plans, directives, information letters and manuals. My understanding is that the PMO is not involved in integrating or coordinating the existing policies, but only in the new policies to be developed. I haven’t heard any discussion on how the PMO is acting to enhance stakeholder engagement or how in practice public input will inform policy development.

Last, AEMERA is leading the province’s involvement in the Joint Oil Sands Monitoring Project. In particular, it is working with the federal government and stakeholders in the oils sands region to coordinate and enhance environmental monitoring activities in the area. Since it is the first time that Alberta has a comprehensive province-wide environmental monitoring system, AEMERA is reorganizing and coordinating a range of existing programs that were set up independently to meet specific needs (including Air Stations, Surface Water Monitoring Network, Hydromet Monitoring Network, Meteorological Monitoring Network, Land Foundation Program, and Alberta Biodiversity Monitoring Institute). AEMERA is also developing new projects and research activities to fulfill its reporting commitments on the frameworks established under the Lower Athabasca Regional Plan and South Saskatchewan Regional Plan (for a summary of the current projects, see here). Once additional regional plans are developed, AEMERA will need to expand its focus to the other regions of the province.

Challenges

The initial reactions to the regional plans currently developed are not entirely positive. In particular, critics note that the Lower Athabasca Regional Plan is far from being comprehensive and only includes partial and unreliable data (for a review of some these criticisms, see Nigel Bankes, Sharon Mascher and Martin Olszynski, here). The Government has committed to the development of frameworks for tailings management, biodiversity, and surface water quantity (see here) for the Lower Athabasca Region. In addition, the Government has committed to engage and work with aboriginal communities on initiatives to incorporate traditional knowledge into environmental planning (see here). A revised Surface Water Quantity Management Framework for the Lower Athabasca River and Tailings Management Framework were recently released. However, the only progress report on the Lower Athabasca Regional Plan was issued in 2013 (see here), which makes it difficult to assess the actual progress made in the last 3 years. It seems that there are still no frameworks for many water bodies in the region, and that the existing ones need to be revised and coordinated. In addition, it seems that there are still no frameworks for biodiversity, caribou habitat needs, or measures to protect Aboriginal peoples’ ability to exercise their treaty and constitutional rights.

Why is the Lower Athabasca Regional Plan currently not comprehensive or sufficient to address cumulative impacts? The short answer is because the IRMS is not fully functioning yet. When the Lower Athabasca Regional Plan was approved in 2012, the basic structure of the IRMS was not even in place yet, and science capacity within the previous system was scarce. Even though AEMERA is currently recruiting additional science resources to address those inefficiencies, it has been running only for the last year. It will take time to have comprehensive and reliable science-based data, especially since environmental monitoring typically requires measuring variables over decades (for a commentary on some of these challenges, see post by Martin Olszynski, here). The lack of adequate scientific information is just one of the causes that is delaying proper management strategies and frameworks. Additional difficulties are caused by (i) lack of a federated database system, (ii) lack of clear processes or mechanisms to identify and address policy gaps, and (iii) lack of clear processes to undertake policy analysis that considers social, economic and environmental realities in a timely fashion.

As Alberta keeps working towards the implementation of the IRMS, the challenges of this approach to resource management are becoming apparent. We are moving from a system based on specific agencies and ministries fulfilling their individual mandates to an interdependent system that relies on players working together to carry out their functions. No organization within the IRMS can operate independently of one other. By design, each is highly dependent on the functions of others to achieve its mandate. Any unilateral action by one can significantly impact the success of others, and for the IRMS to be successful each individual player must be successful. The IRMS requires clarity of roles and governance structure to ensure common understanding of the intent and core functionality of the IRMS. In addition, each organization needs to be capable of fulfilling its own mandate and collaborate with the other key players of the IRMS. Thus, each organization must have adequate capacity and sufficient overlapping expertise to effectively communicate with the other players and understand the value that each organization brings to the system.

As the system continues to evolve, the necessity of integration becomes even more pronounced to prevent development from occurring in areas that have already reached their ecological limits. Regional plans and frameworks are supposed to address broad-scale land use decisions and guide decision-makers. However, until they are fully finalized and implemented, decision-makers cannot speculate on what these plans and frameworks will contain (for a discussion on this point, see Prosper Petroleum Ltd., 2014 ABAER 013). Rather, they are required to act in accordance with the regional plans as they exist today (s. 20 REDA, s. 7(3) Regulatory Details Plan of the Lower Athabasca Regional Plan, and s. 4(2) Regulatory Details Plan of the South Saskatchewan Regional Plan).

The relationship existing among the players of the IRMS does not in itself sustain integration. Similarly, it has been noted that “the creation of regional plans does not, in and of itself, mean that the environmental goals of ALSA will be delivered” (see here), as the Lower Athabasca Regional Plan indeed confirms. The IRMS has the potential to achieve sustainable development and address cumulative impacts, but it is a very complex approach to resource management. While the province is moving in the right direction, considerable effort is still required to fully implement this new system.

This blog was supported in part by a grant from the Alberta Law Foundation to the Canadian Institute of Resources Law.

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Habitat Protection for the Westslope Cutthroat Trout in Alberta

Tue, 12/22/2015 - 10:00am

By: Shaun Fluker

PDF Version: Habitat Protection for the Westslope Cutthroat Trout in Alberta

Matter Commented On: Critical Habitat of the Westslope Cutthroat Trout (Oncorhynchus clarkii lewisi) Alberta Population Order, SOR/2014-241 (November 20, 2015)

On December 2, 2015, the Minister of Fisheries and Oceans Canada published a critical habitat protection order issued under sections 58(4) and (5) of the Species at Risk Act, SC 2002, c 29 (SARA) covering identified critical habitat for the westslope cutthroat trout located on Alberta public lands. Over the last 12 months the Faculty’s Environmental Law Clinic assisted the Alberta Wilderness Association and the Timberwolf Wilderness Society in their efforts to see this Order issued by the Minister. This comment revisits the process that ultimately led to this Order and describes the Order itself. At the outset it is worth noting this is only the second critical habitat protection order issued to date under sections 58(4) and (5) of SARA, and the first such order to be applied on provincial lands.

The Alberta population of westslope cutthroat trout was listed under SARA as a threatened species in 2013. This listing placed an obligation on the Minister under sections 37 to 46 of SARA to produce a recovery strategy that, among other things, identifies critical habitat for the species. On March 28, 2014, the Minister published the Westslope Cutthroat Trout Recovery Strategy (WCT Recovery Strategy) on the SARA public registry. The WCT Recovery Strategy is a combined effort of both the federal Minister and Alberta Environment.

There is no doubt the westslope cutthroat trout is teetering on the brink of extinction in Alberta – a rapid decline in population numbers due to both human ignorance and decades of the multiple use philosophy that has governed public land management along the eastern slopes in Alberta. The fish species was once abundant throughout the rivers and streams of the mountains and foothills in Alberta. The recovery strategy itself paints a bleak reality now, noting that out of approximately 274 waterbodies historically occupied by westslope cutthroat trout, there are approximately about 51 genetically pure populations of the trout remaining in the upper Bow and Oldman watersheds of the South Saskatchewan River basin. However, biologists who work closely with the species say the reality for the fish is indeed much more dire than the recovery strategy suggests, holding there are only about 15 to 20 genetically pure populations left in the province. Lorne Fitch provides the following introduction to the WCT Recovery Strategy:

Westslope cutthroat trout now exist on the edges, fringes and margins of their former range. Populations are disconnected from one another and are small enough some are at significant risk of winking out of existence. A combination of things has led to this state: changes in habitat caused by various developments; stocking of non-native trout species, some of which hybridize with cutthroat trout, others that compete with them for space and resources; and, the additive feature of multiple, synergistic cumulative effects. Most of these impacts on cutthroat trout continue to influence the status of the Alberta population, plus climate change is an added concern.

Although cutthroat trout survived and thrived for about 10,000 years the recent, rapid pace of change in as short a period as a human life span has been beyond their ability to cope and evolve. A recovery strategy is a life boat of sorts, in the face of these perils. It is a mechanism to delay the negative trajectory of the population and, over time, allow a modest recovery so the species is not so imperiled and in danger of disappearing from Alberta watersheds (WCT Recovery Strategy, at iv).

Under provincial laws the WCT Recovery Strategy is more of leaky dingy than a life boat (see here for why that is), but under SARA the WCT Recovery Strategy can produce real legal protection for the critical habitat of the westslope cutthroat trout.

The federal legislation acknowledges the protection of critical habitat is essential to the recovery of a threatened species. This is reflected in the preamble to SARA which states “habitat of species at risk is key to their conservation”. Section 2(1) of SARA defines critical habitat as “habitat that is necessary for the survival or recovery of a listed wildlife species and that is identified as the species’ critical habitat in the recovery strategy or in an action plan for the species”. Section 2(1) of SARA also defines habitat for aquatic species as “spawning grounds and nursery, rearing, food supply, migration and any other areas on which aquatic species depend directly or indirectly in order to carry out their life processes, or areas where aquatic species formerly occurred and have the potential to be reintroduced”. These definitions received some judicial consideration in Environmental Defence Canada v Canada (Fisheries and Oceans), 2009 FC 878 where the Federal Court ruled that the term ‘habitat’ in SARA includes both an identified geographic location and the biological attributes of that location that allows a species to use it for the function of carrying out its life processes. The Court also stated that the geographic area of critical habitat is inextricably linked to its biological attributes which allow a species to carry out its life processes.

The WCT Recovery Strategy identifies critical habitat for the westslope cutthroat trout in following named waterbodies:

Critical habitat in Banff National Park: Sawback Lake, Spray River, Elk Lake, Babel Creek, Little Fish Lake, Big Fish Lake, Helen Creek, Cuthead Creek, Outlet Creek, Upper Bow River; and,

Critical habitat in Alberta (outside of National Parks): Corral Creek, Livingstone River and tributaries, Beaver Creek, Speers Creek, White Creek, Hidden Creek and tributaries, Oldman River and tributaries, Racehorse Creek and tributaries, Sharples Creek, Unnamed tributary to Blairmore Creek, Star Creek, Allison Creek, Girardi Creek, O’Haggen Creek, Syncline Brook, South Castle River and tributaries, West Castle River and tributaries, Gold Creek and tributaries, Gorge Creek and tributary, Unnamed tributary to Flat Creek, Deep Creek, Zephyr Creek, Unnamed ‘Cutthroat’ Creek, Picklejar Lakes (#4 Lake), Picklejar Lake (#2 Lake), Picklejar Creek, Prairie Creek, Trail Creek, Silvester Creek, Evan-Thomas Creek, Waiparous Creek and tributaries, Unnamed tributary to Jumpingpound Creek.

The recovery team used an area of occupancy approach to identify habitat, which means that all areas currently occupied by genetically pure native westslope cutthroat trout within their historic range of distribution are identified as critical habitat. The exact coordinates within the above-named waterbodies are set out in the WCT Recovery Strategy (see pages 29 – 34). The WCT Recovery Strategy also identifies the biophysical functions, features and attributes of critical habitat for each life stage of the westslope cutthroat trout. These functions, features and attributes include riffles, pools, food availability, cold water temperature, adequate water depth and velocity, riparian vegetation, undercut banks, and sediment/silt free substrate.

If there is going to be actual recovery for the westslope cutthroat trout populations in Alberta, the activities which have led to the destruction of the functions, features and attributes of habitat for the species must be halted. The WCT Recovery Strategy identifies timber extraction, mining, hydroelectric power development, off road vehicle use, roads and other linear disturbances as activities likely to result in the destruction of critical habitat for westslope cutthroat trout. Many of such activities are ongoing and/or proposed in locations identified in the WCT Recovery Strategy as critical habitat. For example, there is watershed-wide degradation in Silvester Creek from off road vehicle trails, logging and other access roads, and grazing. Recent clear-cut logging continues to produce long-duration fine-sediment loading, in a range likely to be causing substantial egg and larvae death, as well as reduced condition of juveniles. And Riversdale Resources proposes to construct an open-pit coal mine in the watershed of upper Gold Creek and its tributaries.

Halting these activities is where the Critical Habitat Order serves its purpose. The Order itself amounts to one paragraph, and states that section 58(1) applies to the critical habitat identified in the WCT Recovery Strategy (other than those locations within Banff National Park protected by section 58(2):

Subsection 58(1) of the Species at Risk Act applies to the critical habitat of the Westslope Cutthroat Trout (Oncorhynchus clarkii lewisi) Alberta population — which is identified in the recovery strategy for that species that is included in the Species at Risk Public Registry — other than the portion of that critical habitat that is already protected under that subsection because it is in a place referred to in subsection 58(2) of that Act, more specifically, in Banff National Park of Canada as described in Part 2 of Schedule 1 to the Canada National Parks Act.

Simply put, the Order engages section 58(1) of SARA and thus prohibits a person from destroying the functions, features and attributes of westslope cutthroat critical habitat identified in the Order. A person who contravenes section 58(1) is liable to a fine of up to $1,000,000 or imprisonment up to 5 years. Section 73 of SARA does provide the Minister with authority to permit a person to engage in an activity that affects westslope cutthroat trout critical habitat, but such authority is subject to strict conditions including that the activity not jeopardize the survival or recovery of the species. It seems unlikely and contrary to the purpose of SARA for any of the activities identified in the WCT Recovery Strategy to be allowable under section 73. That being said, it remains to be seen what the larger effect of this prohibition will be along the eastern slopes of the Rocky Mountains in Alberta and how sharp of an arrow it will be in the quiver of conservationists.

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Unpaid AFE Amounts Constitute Liquidated Demands With No Right of Set-Off Under the 1990 CAPL Operating Procedure

Mon, 12/21/2015 - 10:00am

By: Nigel Bankes

PDF Version: Unpaid AFE Amounts Constitute Liquidated Demands With No Right of Set-Off Under the 1990 CAPL Operating Procedure

Case Commented On: Talisman Energy Inc v Questerre Energy Corporation, 2015 ABQB 775 (MC)

This decision of Master Prowse offers an interesting example of careful parsing of the pleadings, and the agreed and contested facts, with a view to identifying possible issues for which summary judgment may be granted – while leaving the factually contested issues for a later trial. As in SemCAMS ULC v Blaze Energy Ltd. 2015 ABQB 218, (and see my post on that decision here) contractual language deeming billings to be liquidated demands and the “no set-off” provisions commonly found in oil and gas and other commercial agreements were important elements in the decision.

The precise legal relationship between Talisman (T) and Questerre (Q) as it emerges from Master Prowse’s judgment is less than clear. There is, for example, reference to a farmout agreement as well as joint operations, and perhaps the arrangement is therefore some form of farmout and participation agreement or alternatively the operations in questions are occurring on joint lands post-earning. But either way, the terms of the farmout seem irrelevant because, whether described as an earning operation under a farmout agreement, or as something else, the drilling operations in question here were joint operations within the meaning of the 1990 version of the CAPL (Canadian Association of Petroleum Landmen) operating procedure, and the parties seem to have been in agreement that their rights and obligations were covered by the terms of this agreement (hereafter 1990 CAPL).

Under the terms of the 1990 CAPL, T provided Q with an Independent Operations Notice (ION) and an attached Authorization for Expenditure (AFE) to drill the Fortierville well on the basis that Q would be responsible for 25% of the cost. Consistent with CAPL 1990 (see CAPL 1990, Article IX, Casing Point Election) the AFE did not cover completion. Q indicated that it would only participate in the operation if the operation included completion and a number of other add-ons including microseismic monitoring and a comprehensive evaluation program. While T indicated that it did intend to complete the well (and might need to issue a supplemental AFE), at no point did T actually issue a revised AFE. Q subsequently executed the unmodified AFE. T drilled the Fortierville well and a second well, the Ste Gertrude well, on the same conditions (i.e. an AFE that referred only to drilling but with T’s assurance that T would proceed to completion). Having drilled the wells in 2010, T decided to defer completion until 2011. In May 2011 T sent Q IONs and AFEs for the completion operations on both wells. T subsequently withdrew them and proceeded to carry out the completion operation with unexecuted AFEs and IONs.

In its action T sought to recover from Q 25% of the costs of the drilling and completion operations for the two wells. Q resisted and in response filed a counterclaim apparently to the effect that T’s promise to complete the two wells amounted to a misrepresentation and perhaps also sought some sort of equitable set-off although, as Master Prowse notes (at para 37), “Questerre neither pleads nor argues equitable set-off”.

In this application T, relying on the terms of cl. 505(b)(iv) of the CAPL 1990 sought summary judgement for Q’s 25% share of the costs. That clause (with Master Prowse’s underlining added) provides as follows:

[The Operator may] maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable, but not paid by such defaulting Joint-Operator, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant dates such amounts were due to be paid, without any resort of such Joint-Operator to set-off or counterclaim (emphasis added by Master Prowse).

On this basis Master Prowse was prepared to conclude that Q was liable for 25% of the AFE drilling costs (i.e. up to casing point election). He concluded that there was a dispute as to liability for completion costs since T did not follow the CAPL procedure on this point. Liability for those costs would require a trial (at paras 8 & 11).

As for Q’s counterclaim (which was perhaps (at para 28) a basis for “the remedy of rescission, which will sweep away the farmout agreement and the ‘no set-off’ clause contained in that agreement”), Master Prowse concluded that it was doomed to failure because the representation relied on (the promise of intention to complete) did not fit the elements of a pre-contractual misrepresentation which might have justified rescission. And if there could be no rescission, then Q must be bound by the “no counterclaim as a defence to the operator’s demand” language of the CAPL agreement. Master Prowse did acknowledge, however, that Q might in fact have a counterclaim (at para 35) for breach of an obligation to complete (although quaere whether even this is true since elsewhere the judgment (at para 10) suggests that T did in fact complete the wells), but this would be determined by trial; but until then it could not, as I understand Master Prowse, be used to resist the liquidated demand claim for 25% of the drilling costs of the two wells.

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The “Historic” Paris Climate Agreement: What It Means “At Home” for Canada and the Alberta Oil Sands

Fri, 12/18/2015 - 10:00am

By: Sharon Mascher

PDF Version: The “Historic” Paris Climate Agreement: What It Means “At Home” for Canada and the Alberta Oil Sands

Matter Commented On: The Paris Agreement under the United Nations Framework Convention on Climate Change

On Saturday December 12, 2015, French Foreign Minister Laurent Fabius declared consensus and gavelled the Paris Agreement. While far from perfect, the Agreement is being hailed by many around the world as historic (see for example here, here and here). Canadian Prime Minister Justin Trudeau is no exception, labeling the agreement “historic, ambitious and balanced” in a Statement issued following the conclusion of the Paris climate conference. The Statement goes on to say “[t]ogether with our international partners, we agreed to strengthen the global response to limit global average temperature rise to well below 2 degrees Celsius as well as pursue efforts to limit the increase to 1.5 degrees”. This is indeed historic as, in so doing, the international community agreed for the first time to increase the level of ambition beyond the 2°C maximum that has prevailed to date (see COP 16 Decision 1/CP.16). There is now a clear commitment within the Paris Agreement to hold temperatures to well below 2°C, and a more aspirational target to pursue a limit of 1.5 °C.

Canada played its part in pushing towards this position, joining a negotiating bloc called the High Ambition Coalition, made up of the Marshall Islands, the European Union, the United States, Brazil, Australia and dozens of African, Latin American, Caribbean and Pacific countries, to support the position that global temperature increase should be held to 1.5 °C. As Prime Minister Justin Trudeau’s Statement says, “Canadians can be proud of the strong and positive role we played during these very important international negotiations to address one of the biggest challenges of our generation.” However, as the Statement rightly goes on to say “[t]here is much tough work that still needs to be accomplished both at home and around the world to implement the agreement.” As Canadian Environment Minister reportedly said at a closed plenary session in Paris, “If we want to achieve this temperature goal, everyone needs to be part of this. We need maximum participation where everyone puts their best efforts forward.” The purpose of this blog is to consider what those best efforts mean domestically for Canada and Alberta’s oil sands.

Key Mitigation Provisions in the Paris Agreement

The Paris Agreement aims to strengthen the global response to climate change by, amongst other things, holding the increase in the global average temperature to well below 2° C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5° C above pre-industrial levels. (Article 2.2)

In order to achieve this long-term temperature goal, Article 4.1 provides:

Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognizing that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty [emphasis added].

However rather than specifying binding emission reductions as did the Kyoto Protocol (at least for Annex I Parties), the Paris Agreement states that each Party “shall” prepare, communicate and maintain successive nationally determined contributions (NDCs) that it intends to achieve and “shall” then pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions (Article 4.2). So, all Parties – rich and poor, developed and developing – are required to prepare NDCs and pursue domestic mitigation measures to achieve them. This does not mean, however, that all Parties will be held to the same standard. The Paris Agreement is explicit that NDCs will reflect common but differentiated responsibilities and respective capabilities. It also continues to assign developed country Parties a leadership role – with Article 4.4 providing that Developed country Parties “should continue taking the lead by undertaking economy-wide absolute emission reduction targets” [emphasis added]. Developing country Parties, on the other hand, “should continue enhancing their mitigation efforts, and are encouraged to move over time towards economy-wide emission reduction or limitation targets in the light of different national circumstances” [emphasis added].

It is interesting to note that Article 4.4 of the draft final agreement circulated on the afternoon of December 12, 2015 provided that Developed country Parties “shall continue to taking the lead”(emphasis added). However, the United States reportedly (see here and here) objected to the use of the word “shall” on the basis that the word placed greater obligations on developed countries than developing countries and the word was changed to “should” as a part of myriad of technical changes only moments before the final agreement was gavelled (see here at 6:56). However, given that the Paris Agreement is designed to enhance the implementation of the 1992 United Nation Framework on Climate Change (UNFCCC), to which 196 countries including the United States are Parties, and given that Article 4.2(a) of the UNFCCC provides that all developed country Parties “shall adopt national policies and take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs” [emphasis added] in order to take the lead, arguably ,developed country Parties, including the United States and Canada, are already subject to this obligation, and will continue to be subject to this obligation.

While leaving Parties to determine their NDCs the Paris Agreement, unlike the Copenhagen Accord, creates a process to ensure Parties ratchet up their ambition over time to achieve the long-term temperature goals. Thus, all Parties “shall” communicate an NDC every five years (Article 4.9). This obligation takes effect in 2020 when the Paris Agreement is due to come into force (Article 21). Significantly, the national ambition in each Party’s successive NDC “will” represent “a progression” beyond the Party’s then current NDC and “reflect its highest possible ambition” (Article 4.3). Commencing in 2018, a five-yearly “global stocktake” will be undertaken to assess the collective progress towards achieving the purpose of the Agreement and its long-term goals (decision 1/CP.21 at paragraph 20 and Article 14) and the outcome of the global stocktake “shall” inform Parties in updating and enhancing their NDCs (Article 14.3 and Article 4.9).

Parties are also required to account for anthropogenic emissions and removals corresponding to their NDC in a manner that promotes “environmental integrity, transparency, accuracy, completeness, comparability and consistency, and ensure the avoidance of double counting”. To ensure transparency and methodological consistency between the communication and implementation of NDCs, this accounting must be carried out in accordance with methodologies and common metrics assessed by the Intergovernmental Panel on Climate Change and adopted by the Parties to the Paris Agreement at their first session (Article 4.13 and UNFCCC/decision 1/CP.21, cl 31).

Implementation Gaps in Achieving the Long-Term Temperature Goals

Despite this “historic” Paris Agreement, the Conference of the Parties acknowledges that implementation gaps in both the pre-2020 period (see decision 1/CP.21, preamble and paragraphs 106-122) and the post-2020 regime stand between meeting the long-term temperature goals. Perhaps most significantly, the decision adopting the Paris Agreement “[n]otes with concern that the estimated aggregate greenhouse gas emission levels in 2025 and 2030 resulting from the intended nationally determined contributions [communicated by Parties to the UNFCCC Secretariat in the lead up to Paris COP21] do not fall within least-cost 2 ? C scenarios but rather lead to a projected level of 55 gigatonnes in 2030.” Assuming the intended nationally determined contribution are fully implemented, this translates to warming in the range of 2.7-3.7°C by 2100. Necessarily, therefore, a much greater global emission reduction effort is required to hold the increase in the global average temperature to well below a 2 °C temperature rise, let alone the 1.5 °C that Canada supported.

For many, a serious shortcoming of the Paris Agreement is its failure to create legally binding reduction commitments or to include sanctions or penalties for non-compliance with those portions of the Agreement that are legally binding. Rather, an “expert-based and facilitative” committee will be formed under the Agreement to “facilitate implementation and promote compliance in a “transparent, non-adversarial and non-punitive” manner (Article 15). With transparency mechanisms in place to communicate non-compliance, any failure to comply with commitments under the Agreement does leave Parties open to the political stick of naming and shaming. While it hasn’t been a deterrent to major emitters such as Canada and the United States in the past, the “historic” gains of the Paris Agreement may have changed this. As a former Clinton advisor is quoted as saying, “Meeting national emissions pledges will emerge as a key measure of international moral and diplomatic standing after a Paris agreement, with countries reluctant to flout their targets and risk being treated as pariahs.”

What the Paris Agreement Means for Canada and Alberta

In Canada’s National Statement at COP21, Prime Minister Justin Trudeau promised that “Canada can and will do more to address the global challenge of climate change.” Given its bottom-up NDC based approach, the Federal government’s pre-2020 and post-2020 commitment to addressing climate change will play a large role in determining what the Paris Agreement means “at home”.

At present, Canada’s formal commitments are reflected in the Intended Nationally Determined Commitment (INDC) submitted to the UNFCCC Secretariat by the former Harper government in the lead-up Paris. This INDC puts forward “an economy-wide target to reduce our greenhouse gas emissions by 30% below 2005 levels by 2030.” Excluding forestry, this target translates to an emission reduction of 2% below 1990 levels.

Not surprisingly, even before the more ambitious long-term temperature goals were agreed to in Paris, Canada’s INDC was rated “inadequate”. This problem is compounded by the fact that Canada has yet to formulate a credible climate change plan to meet its less than ambitious 2020 targets (see here and here) or the 2030 targets put forward in Canada’s current INDC.

The Canadian government must do more, indeed much more, if it is to meet the Paris Agreement commitments. This means putting forward emission reduction targets consistent with holding global temperatures to well below 2 °C, or more (in)credibly the 1.5 °C goal the Canadian government supported in Paris backed by a comprehensive implementation plan. It means putting forward a plan that aims for a peaking of emissions as soon as possible and undertaking rapid reductions thereafter so as to balance anthropogenic emission by sources and removals by sinks of greenhouse gases in the second half of this century. Prime Minister Trudeau has promised that his government will do just this. He proposes to meet with the provinces within the next 90 days to formulate national emissions reduction targets, with Canada’s current INDC the “floor” for Canada’s ambition, and to develop a concrete “pan-Canadian climate change framework”. And while the specifics of the at plan are, of course, yet to be determined, Prime Minister Trudeau and Environment Minister Catherine McKenna, have made two significant commitments – the Canadian government will eliminate fossil fuel subsidies (estimated by the International Monetary Fund to be $34 billion) and will put a price on carbon.

These commitments, in turn, will impact Alberta’s oil and gas sector – and particularly the emissions intensive oil sands – something that any credible pan-Canadian climate plan must necessarily do. Indeed, when Canada’s emissions are broken down into major economic sub-sectors, the fastest growing source of emissions, and the most significant, is the oil sands. This is despite the efficiency gains have been realized for in situ oil sands operations and bitumen upgrading facilities, driven in part by Alberta’s Specified Gas Emitters Regulation. In fact, absent new measures Environment Canada’s 2014 emissions trends report projected that oil sands emissions would drive increased emissions from the oil and gas sector of 45 Mt CO2e (to a total of 204 MtCO2e) between 2005 and 2020, offsetting the emission reductions made in other sectors. Environment Canada’s projections do not, of course, consider the measures in Alberta’s new “Climate Leadership Plan”, announced in the lead up to Paris. While the details of the Plan have still not been worked up, it seems clear that despite its strides forward, it does not go far enough to meet the ambition of the Paris Agreement. In relation to the oil sands sector, Alberta’s Climate Leadership Plan promises to do two things. First, Alberta will adopt an oil sands specific emission performance standard with a $30/tonne carbon price applied to any additional emissions. While the details of how this standard will operate have not been released, it appears that Alberta is proposing some form of baseline and credit system, with only the portion of emissions from any given facility above the performance standard exposed to the $30/tonne carbon price. It remains to be seen, therefore, what sort of carbon price signal an individual oil sands operation would be exposed to under the Alberta Plan and whether it will be sufficient to drive technological innovation in the sector. The second oil sands specific aspect of the Alberta Plan is the promise to legislate a maximum emissions limit of 100 Mt/year on Alberta’s oil sands. With oil sands operations currently emitting roughly 70 Mt/year, the Alberta Climate Leadership Plan leaves “room” for emissions from the oil sands to grow by 30 Mt /year. The Canadian government has stated that any new federal plan will be “flexible to the circumstances and policy approaches of the provinces and territories”. However, absent rapid deployment of carbon capture and storage, it is difficult to see how there is room for this level of emissions growth in pan-Canadian climate plan designed to meet the commitments in the Paris Agreement.

Ultimately, it may not be Canada, alone, that decides what effect the Paris Agreement will have on oil sands operations, or indeed the fossil fuel sector as a whole. As the Alberta government recognized in the Climate Leadership Discussion Document released back in August, tools such as California’s Low-Carbon Fuel Standard mean that emissions-intensive production methods “will be disadvantaged in one of North America’s largest transportation markets”. As countries around the world strive to meet their Paris Agreement commitments – aiming to peak emissions as soon as possible and undertaking rapid reductions thereafter so as to achieve carbon neutrality by the second half of this century – one would expect that this will increasingly be the case.

Conclusion

As Prime Minister Trudeau said in his Statement following the conclusion of the Paris Conference, “[t]here is much tough work that still needs to be accomplished both at home and around the world to implement the agreement. He went on to say that “years from now, today may very well be the day our children look back to as the beginning of an ambitious global effort to finally fight climate change. I am proud of the role Canada is playing in reaching this historic and balanced agreement, and I am confident that the world will rise to the challenge of addressing climate change.”

Well, the post-Paris celebrations are now over and it is time for Canada to get down to the tough work of implementing the Paris Agreement. I, for one, hope that my children will be able to look back on this day as the beginning of Canada’s ambitious efforts to give effect to this historic international agreement.

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BC Court Confirms That a Municipality Has No Authority With Respect to the Routing of an Interprovincial Pipeline

Thu, 12/17/2015 - 10:00am

By: Nigel Bankes

PDF Version: BC Court Confirms That a Municipality Has No Authority With Respect to the Routing of an Interprovincial Pipeline

Case Commented On: Burnaby (City) v Trans Mountain Pipeline ULC, 2015 BCSC 2140

The Trans Mountain Expansion Project is still before the National Energy Board (NEB) (see the comment by Kirk Lambrecht QC here) and all the while spawning lots of litigation, some in the Federal Court of Appeal and some in the provincial superior courts. I have commented on most of that litigation in “Pipelines, the National Energy Board and the Federal Court” (2015), 3 Energy Regulation Quarterly 59 – 73.

In this most recent case the City of Burnaby was trying to get the support of the Supreme Court of British Columbia for an issue that it had already lost before the NEB and which, to put it in neutral terms, had failed to attract the interest of the Federal Court of Appeal. To review the facts briefly, TM as part of its expansion proposals, was considering alternative routing for its pipeline through Burnaby Mountain. In order to assess that route it required access to the relevant lands to carry out geotechnical and other studies. The City of Burnaby actively opposed the expansion project and served notices on TM’s contractors alleging violation of various Burnaby by-laws. That led TM to seek a ruling from the NEB confirming that the Board had the jurisdiction to authorize TM’s activities, and, to the extent that Burnaby’s by-laws were making it impossible for TM to carry out the necessary tests, a ruling that the by-laws were constitutionally inapplicable, or if not inapplicable, were in conflict with the provisions of the National Energy Board Act and therefore inoperative on the basis of the paramountcy doctrine. The Board provided that ruling in its well-reasoned Ruling No. 40. The Federal Court of Appeal denied leave without giving reasons, a practice that I have criticized in earlier posts here and here.

One might have thought that that would be the end of the matter, but instead Burnaby commenced this action in the Supreme Court of British Columbia seeking a declaration (at para 13) “that the National Energy Board does not have the constitutional jurisdiction to issue an order to the City of Burnaby that directs or limits the City of Burnaby in the enforcement of its bylaws.” The parties also stated various constitutional questions. In the end, Justice Macintosh concluded that while he had the jurisdiction to rule on the questions before him he would decline to do so on the grounds that it would be an abuse of process. In particular, Justice Macintosh observed (at para 44) that:

If this Court addresses the constitutional questions, and comes to the opposite result of that reached by the NEB on essentially the same questions, what is the result? Does Trans Mountain brandish the NEB ruling and Burnaby pull this Court’s ruling out of its pocket when they confront one another on Burnaby Mountain? The result would be unworkable and likely chaotic.

He reinforced this comment at para 49:

Presumably, if Burnaby had obtained leave in the Federal Court of Appeal to appeal NEB Ruling 40, and then had succeeded on the merits of the appeal, it would not have proceeded in this Court on this application. It would not have wanted to risk receiving a contrary and inconsistent result from this Court. Burnaby is here because it was unsuccessful elsewhere. In my view, it is an abuse of process, as that phrase is used in this setting, for Burnaby to be seeking here the relief it failed to obtain at the NEB and in the Federal Court of Appeal.

But for good measure, and given the risk of appeal, Justice Macintosh went on to give his reasons denying Burnaby’s application and for supporting the NEB’s reasoning in its Ruling No. 40 concluding (at para 80) that “under both … paramountcy and interjurisdictional immunity … Burnaby is precluded from seeking to apply its bylaws so as to impede or block any steps Trans Mountain must take in order to safely prepare and locate the Expansion Project.” Justice Macintosh offers concise and non-technical reasons for this conclusion at paras 62 – 65:

[62] [In cases dealing with federal works and undertakings such as] pipelines, railways and airports, it is not the case that validly-enacted provincial laws, in this case municipal bylaws, somehow cease to be valid enactments when they come up against the federal undertaking. Indeed, courts seek to give effect to validly?enacted provincial laws in those situations when they can. However, a test has emerged over many years that says, in essence, provincial laws must give way and be rendered inoperative when they interfere with the core functioning of the federal undertaking. The test of intrusiveness on the federal undertaking has been expressed many different ways in the cases. Phrases such as “sterilizing the undertaking” or “interfering with its core operation” have been employed. It must always come down to an assessment, case by case, of what the impact would be of the provincial law on the federal undertaking.

[63] In this case, Trans Mountain was trying to perform engineering work on Burnaby Mountain to determine if a pipeline could go there. It would be impossible for Trans Mountain to apply to the NEB for approval of the Burnaby Mountain route, and impossible for the NEB to approve it, without Trans Mountain first obtaining the engineering data. Obtaining the data was centrally linked to positioning the Pipeline.

[64] Burnaby’s two bylaws, one addressing traffic and the other parks, purported to give Burnaby the power to effectively stop both excavation work on the existing Trans Mountain right of way and engineering feasibility work for the Trans Mountain proposed Burnaby Mountain route.

[65] At the core of federal power over pipelines is determining where pipelines are located. The Trans Mountain work in issue here was vitally important for locating the Pipeline safely. It would be unworkable to take away from the NEB the power to order the engineering feasibility work by giving to a provincial entity a veto power over whether and how such work could take place. Burnaby must forego the application of its bylaws when they impede or block the work, integral as it is to positioning the Pipeline.

Commentary

Interprovincial pipeline construction projects are proving to be hugely controversial, whether those projects are greenfield projects (such as Northern Gateway), expansion projects (such as the TM project), line reversal projects (such as Enbridge’s Line 9) or re-purposing projects (such as TransCanada’s Energy East). Those controversies are inevitably being played out in the courts as well as on the ground. For the most part, those disputes belong in the Federal Court of Appeal when the NEB’s procedures are exhausted. But if that Court fails to grant leave on important questions of law (and nobody can say that these question did not raise important questions of law), and fails to provide reasoned judgments for its conclusions, then the door is cracked open for parties to seek relief in the provincial superior courts. Those courts may still decline to assume jurisdiction (as here), but the only reason that ethical counsel could countenance undertaking this second round of litigation was precisely because the Federal Court of Appeal had declined to address the matter. We would all (certainly the City and citizens of Burnaby and Trans Mountain as the project proponent) have been better served had the Federal Court of Appeal dealt with the matter in a transparent and reasoned way, befitting the importance of the legal issues at stake, when it was asked to do so.

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Adieu à la Langue Française

Wed, 12/16/2015 - 10:00am

By: Theresa Yurkewich

PDF Version: Adieu à la Langue Française

Case Commented On: Caron v Alberta, 2015 SCC 56

Introduction

Gilles Caron and Pierre Boutet, the appellants, were charged with traffic offences under section 34(2) of the Use of Highway and Rules of the Road Regulation, Alta. Reg. 304/2002 and sections 160(1) and 115(2) of the Traffic Safety Act, R.S.A. 2000, c. T-6. Both pieces of legislation were written and published solely in English, as permitted by Alberta’s Languages Act, R.S.A. 2000, c. L-6. Mr. Caron and Mr. Boutet, however, argued that by enacting legislation solely in English, the Alberta legislature was acting contrary to the constitutional obligation of legislative bilingualism (i.e. the duty to enact in both English and French). Mr. Caron and Mr. Boutet, therefore, argued that both pieces of legislation should be held inoperative to the extent they violate this principle.

As framed by the Court, the issue presented was “whether the Languages Act is ultra vires or inoperative insofar as it abrogates a constitutional duty owed by Alberta to enact, print, and publish its laws in English and in French.” The trial judge at the Provincial Court of Alberta answered this question in the affirmative (2008 ABPC 232), but this decision was reversed by the Court of Queen’s Bench (2009 ABQB 745), and the Court of Appeal dismissed the appeal by the appellants (2014 ABCA 71).

This case illustrates the competition between minority language rights and provincial legislative powers. Meant to reflect the fundamental principles of constitutionalism, linguistic duality has typically been in place to protect the minority French speaking population and with it, one of Canada’s official languages. The concept of federalism, however, provides a large amount of autonomy to provincial governments, allowing them to develop their jurisdictions as they fit. Unfortunately for some, this provincial autonomy includes the power to determine the language – or languages – in which legislation is enacted.

In short, the Supreme Court reviewed the historic circumstances surrounding the introduction of Alberta into Canada, or what was at the time known as Rupert’s Land and the North-Western Territory. The Supreme Court ultimately ruled that the term “legal rights” does not include linguistic rights, and that to infer such would be inconsistent with the text, context, and purpose of the legislation which ultimately inducted these territories into Canada, being the 1867 Address and the Rupert’s Land and North-Western Territory Order (1807) (U.K.) (the “1870 Order”). In justification, the Court stated it was inconceivable that linguistic rights would not be explicitly entrenched if they were, in fact, meant to be provided.

Legislative History

Prior to joining Canada, the lands of present-date Alberta, Saskatchewan, Nunavut, Yukon, and Northwestern Territories, were encompassed within two areas: Rupert’s Land and the North-Western Territory, all of which was controlled by the Hudson’s Bay Company.

In December 1867, the Parliament of Canada delivered the 1867 Address to the Queen, in which it asked that Rupert’s Land and the North-Western Territory be united into one province within Canada, with the authority to legislate granted to the Canadian Parliament. As part of the transfer, Canada promised to respect the “legal rights of any corporation, company, or individual” within the two territories.

Canada’s request for annexation was initially refused, and instead it was encouraged to enter into negotiations with the two territories in order to reach favorable terms of admission. Almost a year and a half later, upon reaching an agreement with the Hudsons’ Bay Company, Parliament made the 1869 Address, in which it asked the Queen to incorporate Rupert’s Land into Canada, upon whatever mutual conditions were reached. During this Address, Parliament authorized the Governor in Council to “arrange any details that [would] be necessary to carry out the terms and conditions of the above agreement.”

Following the 1869 Address, representatives from both Rupert’s Land and the North-Western Territory issued a list of demands under which they would accept Canadian control. Contained within this list, was the demand that “the English and French languages be common in the Legislature and Courts, and that all public documents and Acts of the Legislature be published in both languages.” This demand reflected both the common use of the French language within the territories, and the common practice to issue legislation in both languages.

In response, the Governor General issued the 1869 Royal Proclamation, in which it assured residents of the territories that upon union, all their “civil and religious rights and privileges [would] be respected…” Although negotiations continued, Canada was ultimately unable to secure an agreement that the entirety of both territories would enter as one province. Instead, a small portion of the Red River Settlement, within Rupert’s Land, would join Canada as the province of Manitoba, while the rest of the remaining land would be annexed to Canada as a territory under federal administration. This agreement was codified in the Manitoba Act, 1870, S.C. 1870, c.3 (the “Manitoba Act”) and the 1870 Order. The issue in this case, however, is that the Manitoba Act expressly provided for legislative bilingualism, while the 1870 Order did not.

Analysis

The Supreme Court began its analysis by stating that interpretation of constitutional documents must be done in a large and liberal manner. In doing so, language rights must be considered in a purposive and remedial manner, consistent with the preservation and development of the official languages of Canada. At the same time, however, the Supreme Court reminded us that the Constitution is not an empty vessel to fill time to time, and that its interpretation must not undermine the primacy of the written text.

Upon review of the legislation published near the time of annexation of the North-Western Territory, the Constitution Act, 1867 and the Manitoba Act are prime examples of the manner in which Parliament dealt with linguistic rights. Both pieces of legislation used similar and clear terms to reference legislative bilingualism as an explicit guarantee. In the Supreme Court’s mind, the absence of similar wording within the 1870 Order weighed heavily against the contention that the terms “legal rights” or “civil rights”, as used in the 1867 Address and the 1869 Royal Proclamation, were meant to include language rights.

In review of the parliamentary debates and letters which surrounded the time of the 1870 Order, it appeared to the Supreme Court that any debate over the term “legal rights” were limited solely to inquiries about territory, and the rights stemming from property ownership. As such, the Supreme Court concluded that it was never the objective of the 1870 Order to mandate that legislation be dictated in French and English.

It was no doubt that the representatives of the North-Western Territory sought to entrench legislative bilingualism, but the Supreme Court interpreted the lack of specific inclusion of this right within the 1870 Order as a concession required to enter as a territory, rather than one province with Rupert’s Land. As such, the right to legislative bilingualism did not become a constitutional guarantee upon entering Canada. In fact, the Supreme Court pointed out a number of other condition-precedents the representatives demanded prior to joining, which were not obtained, basically implying that the representatives were poor negotiators. Further, and in any event, upon review of a telegram discussing the negotiations, the Supreme Court was of the impression that the majority of land within the North-Western Territory was unsettled and unpeopled.

Although the Manitoba Act established a Joint Administration, which merged the executive and legislative branches of Manitoba and the North-Western Territory, the Supreme Court was unable to find evidence that this was the result of a constitutional guarantee, noting that this Joint Administration was subsequently terminated in 1875 by the creation of the The North-West Territories Act, 1875, S.C. 1875, c. 49. It was not until 1877, that an amendment was created which provided for legislative bilingualism within the North-Western Territory. This guarantee was then adapted and amended into what is now the North West Territories Act, R.S.C. 1886, c. 50 (the “North West Territories Act”).

After determining that legislative bilingualism was not a constitutional guarantee provided to the inhabitants of the North-Western Territory upon entering Canada, it applied this contextual analysis to the province of Alberta. In doing so, it reviewed and heavily weighed the decision of R v Mercure, [1988] 1 S.C.R. 234 (“Mercure”), which dealt with the issue of legislative bilingualism within the province of Saskatchewan. For background, in 1905, the province of Saskatchewan was created from the North West Territories Act through the enactment of the Saskatchewan Act, S.C. 1905, c. 42 (the “Saskatchewan Act”). The Saskatchewan Act, however, contained a provision which stated that all laws existing before it were subject to the power of the legislature to repeal or amend such laws. As a result, although the North West Territories Act entrenched the promise of legislative bilingualism, the legislature of Saskatchewan now had the authority to amend or repeal such promise. It was in Mercure, that the Court reviewed this provision, ruling that its purpose was to provide the provincial legislature with the ability to deal with language on its own accord. In support of its decision, the Court stated that if Parliament had wished to provide for guaranteed language rights at this time, it knew how to entrench such provisions so that they would remain constitutionally protected and outside the provincial legislature’s purview.

Similarly, in 1905, Alberta became a province under the Alberta Act, S.C. 1905, c. 3 (the “Alberta Act”). The Alberta Act contained a similar provision which enabled the provincial legislature to amend or repeal all prior laws. In this case, therefore, the Supreme Court was of the opinion that the decision in Mercure could be extrapolated, so as to infer that linguistic rights were meant to remain within the realm of provincial jurisdiction. As a result, legislative bilingualism was not a constitutional guarantee as guarantees cannot be amended or revoked.

Dissent

It is important to note the dissent by Justices Abella, Wagner, and Cote. These justices were of the opposing opinion, concluding that Alberta was required to enact, print, and publish its laws in both French and English.

Accepting the Appellants’ arguments, the dissenting justices agreed that legislative bilingualism was in fact entrenched through the language in the 1867 Address. In their discussion of constitutional interpretation, the justices emphasized that the 1867 Address must be interpreted in light of the historical, philosophical, and linguistic context, that constitutional rights must be interpreted broadly and purposively, and that the Constitution itself must be interpreted to express the will of the people.

The justices distinguished Mercure, arguing that it did not deal with the effects of the 1869 Royal Proclamation, the 1870 Order, or the 1867 or 1869 Addresses. These documents are central to the Appellants case, and as such, the justices stated that Mercure was of limited relevance.

As stated above, the 1867 Address promised to respect the “legal rights” of Rupert’s Land and the North-Western Territory. This address was delivered in both English and French. The dissent was of the opinion that this promise was a “forward-looking undertaking meant to be shaped by subsequent negotiations.” The representatives consistently demanded legislative bilingualism as a condition-precedent to admission into Canada, and there was no evidence to show that such demand was met with much opposition. From review of the historical context, the dissent believed that by the time of the 1870 Order, Canada was aware that legislative bilingualism was in effect within the North-Western Territory, and had come to accept it.

In fact, the dissenting justices insisted that linguistic rights were of paramount importance to the inhabitants of the territories, such that it would have been a non-negotiable condition. Prior to joining Canada, legislative bilingualism was within use throughout the North-Western Territory and Rupert’s Land, and the French language was a fact of everyday life in the social and judicial contexts. The representatives consistently and resolutely demanded legislative bilingualism, including this term in their list of demands in 1869 and 1870.

In examining the socio-political context of the time, the dissent noted that Canada was unwilling to annex the territories while resistance was present. As a result, the representatives had a powerful influence during negotiations. Given the importance of legislative bilingualism to these representatives, if it had been denied as a condition for entry, the dissenting justices expected there would have been a serious discussion or explanation on record. The fact that there was no documented opposition bolstered the argument that legislative bilingualism was accepted by Canada and was effectively a non-issue for admission.

Post-annexation, the North-Western Territory was governed pursuant to the Manitoba Act and bilingualism continued within the legislative, judicial, and social spheres. The inhabitants were administered by many of the same Manitoban officials, many of whom were bilingual, and as such, a de facto joint administration was in effect. This practice was later codified in The North-West Territories Act, 1877, S.C. 1877, c. 7, when an amendment was passed through without debate, on the premise that the French people of the North-Western Territory had as much right to have their language acknowledged as those in Quebec and Manitoba. In response, at paragraph 205 of their reasons, the dissent stated that “the fact that a constitutional promise has been ignored for over a century takes nothing away from it. The passage of time does not remedy this injustice – it remains an injustice today.”

In conclusion, upon examination of the historical textual and contextual evidence, the dissent found that the promise to protect legal and civil rights included a linguistic guarantee. The 1870 Order was meant to ensure the annexation would occur peacefully, and its French translation referred to legal rights as vested rights. Further, the dissent believed that term “all civil and religious rights” was sufficiently broad to support an interpretation which included linguistic rights, especially in the absence of any documentary evidence that the term was too narrow. Therefore, in embracing a general and liberal interpretation of the Constitution, the dissent believed that legislative bilingualism was a guarantee made to the residents of the North-Western Territory upon entering Canada, and as such, cannot be revoked or amended by Alberta’s provincial legislature.

Conclusion

In the reasons of the majority decision, the loss of legislative bilingualism was chalked up to a necessary compromise and poor negotiation skills. A constitutional guarantee of language would have limited provincial power to legislate within a province’s own area of competence, and would have far-reaching consequences for today’s Saskatchewan, Ontario, Quebec, Yukon, Nunavut, and Northwest Territories. As a result, the Supreme Court was worried that constitutionally entrenching legislative bilingualism would open the floodgates for further inferences of guarantees within the terms “legal rights” or “civil and religious rights”, and feared that a broad interpretation of these terms could lead to great uncertainty.

In this case, the provincial right to autonomy won the battle against versus protection. Without clear textual and contextual evidence to support a guarantee, the Court was reluctant to interfere with the exclusive areas of provincial jurisdiction. In essence, absent an entrenched guarantee, the Supreme Court ruled that provinces have the authority to decide the languages to be used in their legislative process, even if it means the continued deterioration of a fading official language.

The difficulty with this case, and the previous decision in Mercure, is that if we refuse to broadly interpret language rights and to entrench the value of the French language within our society, we are effectively ensuring its demise in the years to come. It we cannot, at a minimum, ensure the French language will be used in our legislatures and among our judiciary and lawmakers, it will become increasingly difficult to protect or encourage its use within the general population, and we will effectively be bidding it adieu within Canada.

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ABlawg: The Year in Review, 2015

Mon, 12/14/2015 - 10:00am

PDF Version: ABlawg: The Year in Review, 2015

It is that time of year again – time for ABlawg to put together a compilation of our highlights from the past year. It is also the 10th anniversary of the Clawbies, and we have included a list of some of our favourite Canadian Law Blogs here as well.

Milestones and Numbers

ABlawg hit the milestone of 1000 all-time posts this fall, with Nigel Bankes achieving a personal milestone of 200 all-time posts this year. One hundred and fifty-two (152) posts have been published on ABlawg so far in 2015, written by 48 different authors. We welcomed a number of new bloggers this year: new faculty and sessional colleagues Anna-Maria Hubert, Michael Nesbitt, Erin Sheley and Lisa Silver; students Scott Allen, Hannah Buckley, Jennifer Cox, Alex Grigg, Elysa Hogg, Elliot Holzman, Caroline Law, Ashton Menuz, Ian Pillai, and Heather White; and guest bloggers Meinhard Doelle, Glen Luther, Mansfield Mela, Avnish Nanda, and Seamus Ryder.

The posts that generated the most traffic to ABlawg were Jennifer Koshan and Alice Woolley’s contributions on R v Wagar, 2015 ABCA 327, a sexual assault decision that led to a complaint to the Canadian Judicial Council. The post that gathered the most comments was Saul Templeton’s Trinity Western University: Your Tax Dollars at Work (and see Prof Templeton’s other posts on Trinity Western here and here).

New Look

On June 1 2015, ABlawg unveiled a new look, incorporating the University of Calgary crest and colours into our new header of the iconic Lake Louise, and making it easier for readers to tweet ABlawg posts.

Ebooks

On June 30 2015, we launched the first in a series of ebooks, gathering together posts in particular areas of law as a service to our readers. Our first ebook, compiled by Nigel Bankes, concerns oil and gas contracts. Our second ebook, compiled by Jonnette Watson Hamilton and Jennifer Koshan, was on equality rights. A third ebook, being compiled by Jennifer Koshan, deals with the rights of farm workers in Alberta and will be released before ABlawg goes on hiatus for the holidays. Other ebooks that are currently planned will cover oil and gas leases, the Alberta Energy Regulator, and carbon law and policy.

ABlawg and the New Provincial and Federal Governments

Alberta’s new NDP government made some important policy decisions soon after its election in spring 2015 and introduced several Bills in the fall, leading to the following ABlawg posts:

  • Shaun Fluker posted commentary on the long-awaited decision of Alberta Environment and Parks to protect the Castle Wilderness area.
  • Jennifer Koshan posted her analysis of Bill 6, the Enhanced Protection for Farm and Ranch Workers Act, and provided links to previous ABlawg commentary on the issue of farm workers’ rights. In spite of the controversy over Bill 6, this post received the most Facebook likes of any ABlawg posts in 2015.

We also published commentary relevant to some of the most contentious issues in the federal election campaign:

  • Hannah Buckley posted commentary on Bill 24, the Strengthening Canadian Citizenship Act, SC 2014 c 22, in which the Conservatives expanded the government’s ability to revoke Canadian citizenship.
  • Martin Olszynski and Alex Grigg published their research on the impact of Bill C-38, the omnibus budget bill, on fisheries habitat protection, concluding that the former Conservative government had “all but abdicated its role in protecting fish habitat in Canada”.
  • Maureen Duffy posted on the Conservatives’ handling of the Omar Khadr file, and we also posted an open letter to members of Parliament on Bill C-51, which was signed by several faculty members.

ABlawg Impact

A number of ABlawg posts were cited, excerpted and reprinted in judicial decisions, the Alberta legislature, professional publications, and the blogosphere, a sampling of which follows:

Our Favourite Canadian Law Blogs

ABlawg organized a roundtable on Blogging and Legal Education at the Canadian Association of Law Teachers conference in May 2015. We would like to recognize the other bloggers who participated in that roundtable as worthy candidates for the Clawbies in the category of Best Law School / Law Teacher blog:

We encourage our readers to participate in the Clawbies by nominating your favourite Canadian law blogs. Instructions for how to do so are here.

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The Next Shot in the Constitutional Debate Over Mandatory Minimum Sentences for Firearms Offences

Thu, 12/10/2015 - 10:00am

By: Erin Sheley

PDF Version: The Next Shot in the Constitutional Debate Over Mandatory Minimum Sentences for Firearms Offences

Case Commented On: R v Friesen, 2015 ABQB 717

The Court of Queen’s Bench has found a new constitutional limitation on Parliament’s attempt to impose mandatory minimum sentences for firearms offences. Just on the heels of R v Nur, 2015 SCC 15, where the Supreme Court struck down three- and five-year mandatory minimums for possession offences under section 95 of the Criminal Code, Mr. Justice Vital O. Ouellette has, in R v Friesen, 2015 ABQB 717, held an identical sentencing provision to be likewise unconstitutional for trafficking offences under section 99. This case suggests that Nur could have marked the beginning of widespread dismantling of the Criminal Code’s policy of gun-related mandatory minimums. In both Friesen and Nur the courts’ concerns are the same: the risk of discrepancy between the prototypical violent offenders targeted by the minimums and the potentially far less culpable parties who might be swept along by them.

The underlying facts of the case are uniquely personal and quite sad. The accused Jacob Friesen, owner of a general store in rural Blumenort, Alberta, sold two .22 caliber single-shot rifles to his childhood friend Jacob Froese (at para 5). Mr. Froese subsequently used one to kill himself (at para 10). While such rifles are classified as non-restricted firearms, Friesen did not have a license to sell them (at para 11), and was reckless as to Froese’s lack of license to own one. The Crown thus charged Friesen with weapons trafficking under section 99. The deceased’s brother submitted a letter to the sentencing judge stating that his family did not hold Mr. Friesen accountable for the suicide and urging that “to blame it on John Friesen is not right” (at para 49). The letter went on to observe that “if Jacob would not have had that gun, he could have broken into somebody’s building and taken a gun or used a knife or rope or any other way…John Friesen is a harmless, happy guy. He will always greet you with a smile” (at para 49). Nonetheless, section 99(2) of the Criminal Code requires the Court to sentence Friesen to at least three years imprisonment.

The issues for Justice Ouellette were as follows:

  1. Does the three-year mandatory minimum term of imprisonment, set out in section 99(2), violate section 12 of the Charter?
  2. If it does, should the section be declared null and void under section 52 of the Constitution Act 1982?
  3. What is the appropriate sentence for Mr. Friesen?

The Court ruled the mandatory minimum imposed by section 99(2) violates the Charter and declared the applicable provisions of the Criminal Code null and void under section 52. Having struck the mandatory minimum provisions, it remained for Justice Oellette to determine the appropriate sentence for Mr. Friesen and he was thus sentenced to six months imprisonment.

In determining whether to impose the mandatory minimum sentence, the Court takes up the question of whether section 99(2) violates the prohibition against cruel and unusual punishment in section 12 of the Charter. The lodestars for a section 12 analysis are section 718 of the Criminal Code, which lists the purposes of imposing criminal punishment, and section 718.1, which mandates that a sentence “must be proportionate to the gravity of the offence and the degree of responsibility of the offender.” Punishments that are either unmoored from section 718 values such as denunciation, deterrence, incapacitation and rehabilitation, or which violate the section 718.1 proportionality requirement, run afoul of section 12.

To begin its analysis under these sections, the Court takes up the question of what public decency standards would hold to be disproportionate (at para 17). It states that this standard can only be determined through Parliamentary intent (at para 18). The Court’s reasons quote at length from the remarks of the Minister of Justice to the House of Commons’ Standing Committee on Justice and Human Rights. Then-Minister Toews declared that Parliament intends for the mandatory minimums for firearms crimes to “target the supply of handguns and restricted weapons to the criminals on our streets” (at para 21). The Court therefore finds that Parliament had created the mandatory minimums to address handguns, drug traffickers, and gangs (at para 22), which are a class of accused far removed from Mr. Friesen, who sold a long gun to an individual who had no intention of committing an illegal act with it (at para 29). As a result, the Court holds that section 99(2) would impose a grossly disproportionate punishment on Mr. Friesen (at para 30). The Court likewise remarks that, even if it were not disproportionate as applied to Mr. Friesen, the provision would nonetheless violate section 12 as it would apply in even less culpable cases, such as the transmission of a family heirloom to an unlicensed relative (at para 34). Finally, the Court adopts wholescale the reasoning of the Supreme Court in Nur, which held that the identical punitive goals motivating section 95 could not justify it under section 1 of the Charter (at para 37). Thus, the Court declares the three-year mandatory minimum imposed by section 99(2) to be unconstitutional and null and void under section 52 of the Constitution Act.

With the mandatory minimum struck down, the Court moves on to sentence Mr. Friesen with full discretion. The Court finds Mr. Friesen to possess a relatively low level of blameworthiness, given his lack of knowledge of Mr. Froese’s intentions and the deceased’s actual lack of criminal intent (at paras 50-52). The reasons also note Mr. Friesen’s lack of criminal record and his family and professional responsibilities in the community (at para 43). However, the Court finds it to be an aggravating factor that “Mr. Friesen was negligent and should have taken the steps to simply follow the law and acquire a license to carry on his business” (at para 53). Finally, and perhaps most significantly, the Court declares that the transfer of an unrestricted firearm should be treated differently from that of a restricted or prohibited firearm (at para 56). After weighing these factors the Court sentences the accused to six months in prison.

Most of the analysis in Friesen grows out of Nur, which dealt with two defendants who had received three- and five-year sentences under section 95(2) for possession of loaded firearms. In that case the Supreme Court found that the sentences were not grossly disproportionate for the accused themselves. However, the Court struck down section 95(2) based on the reasonably foreseeable parties who might be unfairly captured by it. Like the Court in Friesen, in Nur the Supreme Court envisions the disparity between the most innocent offender and the typical offender targeted by the provision: “Most cases within the range may well merit a sentence of three years or more,” the Court concedes, but at the “far end” of the range of offenders “stands, for example, the licensed and responsible gun owner who stores his unloaded firearm safely with ammunition nearby, but makes a mistake as to where it can be stored” (at para 82). These cases seem to state firmly that Parliament must, if it wants to preserve the crime-fighting benefits of the mandatory minimum, be more precise in its definition of the offences to which it applies.

A critique of Nur and Friesen might observe that if the goal of Parliament, broadly stated, is to reduce the number of firearms circulating in society, it might justifiably intend to impose three-year sentences on the Mr. Friesens of the world. Once a gun is released into the world its trajectory, it is true, is out of the hands of the seller. But licensing requirements, even of unrestricted weapons such as long guns, may exert some sort of cabining effect on this stream of weapons. If this is true, perhaps Parliament’s mandatory minimums appropriately deter comparatively well-intentioned parties from nonetheless creating violent harm by ignoring such requirements. After all, the Friesen case did result in a violent, if not criminal, death.

These cases implicitly reject such a deterrence argument by subordinating it to two other important values. The first is retribution. By focusing on the relative blameworthiness of both the real and hypothetical accused, both courts signify that the most important relevant inquiry is about the subjective morality of the wrongdoer, viewed retrospectively. The second is the relationship between discretionary sentencing and substantive justice. In the background of these mandatory minimum cases lies the broader debate over whether, in the interests of administrability and equality, courts should be given stricter guidelines for calculating sentences. (The argument in favor of such limitations was championed by Justice Wakeling at the Alberta Court of Appeal in his concurring reasons in R v Ryan, 2015 ABCA 286). In their choice of language and reasoning rejecting mandatory minimums, the Nur and Friesen courts seem to affirm the importance of trial courts retaining the freedom to make case-by-case, fact-specific sentencing determinations. Time will tell how broadly the reach of this analysis will spread across the various firearms provisions of the Criminal Code.

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Setting Aside Residential Tenancy Dispute Resolution Service Orders for Problems with Service: It Can’t Be Done

Mon, 12/07/2015 - 10:00am

By: Jonnette Watson Hamilton

PDF Version: Setting Aside Residential Tenancy Dispute Resolution Service Orders for Problems with Service: It Can’t Be Done

Case Commented On: Abougouche v Miller, 2015 ABQB 724 (CanLII)

As the recently-appointed Master in Chambers, James R. Farrington, clearly and concisely sets out in Abougouche v Miller, there is no way for a tenant to have an order made by the Residential Tenancy Dispute Resolution Service (RTDRS) set aside if a tenant fails to appear at the hearing before a Tenancy Dispute Officer because the tenant did not receive actual notice of that hearing. The tenant cannot go back to the Tenancy Dispute Officer; that person only has the power to correct typographic, grammatical, arithmetic or other similar errors in their orders, clarify their orders, and deal with obvious errors or inadvertent omissions in their orders (Residential Tenancy Dispute Resolution Service Regulation (RTDRS Reg), Alta Reg 98/2006, section 19(1)). The tenant cannot apply to the only body with the power to cancel or vary an RTDRS order — the Court of Queen’s Bench (sections 23(1) and 25(1)(b) RTDRS Reg) — because new evidence is not permitted on appeals (section 25(1) RTDRS Reg) and evidence about service in technical compliance with the regulations but inappropriate nonetheless would be evidence that was not before the Tenancy Dispute Office, i.e., new evidence. So a tenant — even a tenant as apparently well-prepared with legal arguments as the self-represented tenant was in this case — has no opportunity to be heard on the merits. Worse, a tenant like Ms. Miller, who appears to have vacated the rented premises because of significant deficiencies, including internal flooding, seems to be set up by the Residential Tenancies Act (RTA), SA 2004, c R-17.1. That Act allows her landlord to serve notice of a RTDRS hearing on her by posting it on the rented premises that she vacated, even if the landlord knows the tenant has vacated those premises, even if she vacated for good reasons, and even if the landlord is still in regular communication with the tenant by email and text messages about the deficiencies in the rented premises (section 57(3) RTA).

Ms. Miller rented premises from Mr. Abougouche on or about March 1, 2015. Various concerns about the condition of the premises and the payment of rent arose during the short tenancy. When the premises were damaged by internal flooding on September 7, 2015, the tenant left. Master Farrington found that it was clear that rent was not paid for at least one month (at para 6), although he does not indicate if this was before or after the flooding.

The landlord applied to the RTDRS. He served the tenant with notice of the RTDRS hearing by posting the required documents on the rented premises on October 5, 2015. This is allowed by section 57 RTA if the tenant has vacated the premises:

57 (3) If a landlord is unable to effect service on a tenant by reason of the tenant’s absence from the premises or by reason of the tenant’s evading service, service may be effected

(a) on any adult person who apparently resides with the tenant, or

(b) by posting the notice, order or document in a conspicuous place on some part of the premises (emphasis added).

Because the tenant in this case had vacated the premises on which the documents were posted, she did not receive notice of the hearing scheduled for October 9, 2015. She was in frequent contact with the landlord by text message and e-mail about the premises and their flooding. As Master Farrington notes, given this “significant communication” (at para 12) between the landlord and tenant, “a courtesy ‘heads up’ with a text or an email message indicating that there would be a proceeding, or indicating where materials could be obtained likely would have avoided much of what has transpired since the hearing” (at para 13). Not only did the landlord stay silent about the documents posted on the vacated premises, but the landlord also applied for an order allowing substitutional service by email of the order granted by the Tenancy Dispute Officer after the hearing on October 9, 2015. The landlord’s evidence in support of substitutional service by email referred to “using email as a way to communicate with the tenant over the previous 30 days” (at para 14). As Master Farrington concluded, “the landlord appears to have been much more concerned about providing effective notice of the RTDRS order after it was granted, rather than ensuring effective notice of the application itself” (at para 14). These facts illustrate that there is, as Master Farrington put it, “a difference between what is permissible, and what is appropriate in a given situation” (at para 10).

These facts also illustrate how people with lawyers can “game” the system to ensure their clients can benefit from technicalities. This may be why the Master was careful to note that the lawyer for the landlord who appeared before him was not the same lawyer who appeared before the Tenancy Dispute Officer or who asked for substitutional service by email (at paras 4 and 14).

The Order granted by the Tenancy Dispute Officer on October 9, 2015 terminated the tenancy effective that date and gave the landlord judgment for $725 for one month of unpaid rent, plus $75 in costs. It is not known what the landlord told the Tenancy Dispute Officer at the hearing or what the landlord told the Master who granted the order for substitutional service.

The tenant did not appear at that October 9th hearing because she had no actual notice of the hearing. Had she been notified, it is unlikely she would have opposed the termination of her tenancy; after all, she vacated the premises. However, given the evidence before Master Farrington, it is likely she would have had something to say to the Tenancy Dispute Officer about whether one month’s rent was owed or whether her rent should be abated due to the condition of the premises.

Once the tenant received the Tenancy Dispute Officer’s order and found out about the hearing held in her absence, what could she do to try to be heard on the merits? As already mentioned in the introductory paragraph, she could not go to the Tenancy Dispute Officer to set aside his or her order because that person does not have that kind of power (section 19(1) RTDRS Reg). And as already explained, she could not appeal to the Court of Queen’s Bench to set aside or vary the RTDRS order (under sections 23(1) and 25(1)(b) RTDRS Reg) because new evidence is not permitted on appeals (section 25(1) RTDRS Reg). The tenant knew this; she even ensured that her “Emergency Application to Set Aside Order” explicitly stated “I am not appealing this order” (at para 8-9).

If not an appeal, what was the tenant’s application? The tenant put forward two possible sources of jurisdiction for the Master to set aside the Tenancy Dispute Officer’s Order. The first was Rule 9.15(1) of the Alberta Rules of Court, Alta Reg 124/2010), which provides:

9.15(1) On application, the Court may set aside, vary or discharge a judgment or an order, whether final or interlocutory, that was made

(a) without notice to one or more affected persons, or

(b) following a trial or hearing at which an affected person did not appear because of an accident or mistake or because of insufficient notice of the trial or hearing (emphasis added).

That seems to cover the tenant’s situation, but the following rule, Rule 9.16, says otherwise:

9.16   An application under rule … 9.15 must be decided by the judge or master who granted the original judgment or order unless the Court otherwise orders. (emphasis added)

As Master Farrington notes:

The wording of Rule 9.16 appears to contemplate that orders that are subject to a Rule 9.15 application are orders that were originally granted by a master or a judge. . . . Of course, the RTDRS order in question was not granted by a master or a judge. That is a significant problem for this application (at para 18, emphasis added).

So, Rule 9.16 is inapplicable. Instead, because Ms. Miller was asking the Master to revise a decision of another body, he concluded “that is a function in the nature of an appeal” (at para 24). A Master of the Court of Queen’s Bench has no appellate jurisdiction (at para 24; section 9(1)(1) Court of Queen’s Bench Act, RSA 2000, c C-31).

The second possible source of jurisdiction that the tenant put forward was section 21 RTDRS Reg:

21 An order of a tenancy dispute officer is binding on the parties to the dispute unless it is set aside or varied on appeal (emphasis added).

Master Farrington illustrated how those emphasized words can be read two ways (at para 26):

“…unless it is (set aside or varied) on appeal”

or

“unless it is set aside (or varied on appeal).”

Master Farrington convincingly justifies the first interpretation as the correct one, offering a four complimentary reasons:

An appeal court can clearly do both things. It can set aside or vary an order. The tenant’s interpretation would only allow the appeal court to vary an order rather than set it aside. The interpretation treating setting aside and varying as both applying to the appeal court is a much more natural grammatical interpretation and it fits the overall structure of the appeal process better in any event. In addition, even if setting aside the order was to be treated separately under s. 21 of the Regulation, the set aside process would still need to be defined somewhere for me to have jurisdiction and I have concluded that it is not (at para 27).

In the end, therefore, Master Farrington held that there appeared to be a gap in the law but that “it is not something that I can address simply by assuming jurisdiction in an area where I do not otherwise have jurisdiction” (at para 30).

So is that it? There is a gap in the law and a tenant who did not actually receive notice of an RTDRS hearing cannot apply to set aside a Tenancy Dispute Officer’s order due to problems with service of the notice of the hearing? Even if the landlord’s minimal compliance with the service requirements left much to be desired in terms of appropriateness in the circumstances (at para 10)? It hardly seems fair.

Master Farrington does note that the tenant did not apply for an abatement of rent (at para 6). It is true that, with 20/20 hindsight and good legal advice or information, the best thing for the tenant to have done when the premises flooded was to apply to the RTDRS for an order terminating the tenancy and abating the rent because the premises were in poor condition or uninhabitable: see “The Abatement of Rent Remedy under Alberta’s Residential Tenancies Act.” It may have been the smart thing to do, but I am not sure how realistic it is to expect tenants in these types of situations to take these steps. Tenants in frequent communication with their landlord after moving out, as was the case here, probably expect to reach an agreement that results in the tenant moving out and rent payments stopping. Unfortunately, and perhaps counter-intuitively, that is not the law in Alberta. No matter how uninhabitable premises are, rent is an independent obligation (sections 1(1)(p), 21(a), 26(1) and 29(1) RTA); it is not conditional on inhabitable premises (section 28(1) RTA).

Nonetheless, Master Farrington hints at potential partial relief for this tenant even at this point in time (at para 28). If, despite the criticism of his actions in this decision, the landlord proceeds to make the Tenancy Dispute Officer’s order a judgment of the Court of Queen’s Bench and then ask a Master or Justice of that court to enforce it, the order could be stayed, i.e., its enforcement postponed. Master Farrington even points to a precedent the tenant could use: Boardwalk General Partnership v Montour, 2015 ABQB 242 (CanLII). A postponement is a little something that might be helpful.

Another possible remedy here for Ms. Miller would be to apply to the Court of Queen’s Bench for judicial review of the Tenancy Dispute Officer’s decision pursuant to Part 3 of the Alberta Rules of Court on the ground that it was unlawful to proceed without giving her adequate prior notice. There is authority in Alberta that holds judicial review is also available in the face of a statutory appeal process where the latter does not provide for an adequate remedy for unlawful procedure (See e.g. Foster v Alberta (Transportation and Safety Board), 2006 ABCA 282 at paras 14, 15). But this potential remedy also seems beyond the reach of most tenants in these types of situations.

The better remedy would be a thorough legislative review of the RTA and its regulations. There is much that is wrong with this Act and the gap in the law illustrated by this case is just one of its many problems. It is failing in its purpose of protecting tenants and balancing the power between tenants and landlords.

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The Residential Tenancies Act and Domestic Violence: Facilitating Flight?

Fri, 12/04/2015 - 10:00am

By: Jennifer Koshan and Jonnette Watson Hamilton

PDF Version: The Residential Tenancies Act and Domestic Violence: Facilitating Flight?

Legislation Commented On: Bill 204: Residential Tenancies (Safer Spaces for Victims of Domestic Violence) Amendment Act, 2015

Bill 204, the Residential Tenancies (Safer Spaces for Victims of Domestic Violence) Amendment Act, 2015, was introduced by Deborah Drever, Independent MLA for Calgary-Bow, to mark Family Violence Prevention Month on November 15, 2015. At that time, MLA Drever stated that “This bill seeks to empower and support survivors of violence by removing some of the barriers to leaving an unsafe home environment.” (Hansard, November 15, 2015). At Second Reading on November 16, 2015, MLAs from all parties expressed support for the Bill, which passed unanimously. Perhaps most powerful was the statement of the MLA for Lethbridge-East, Maria Fitzpatrick, who told her own story of domestic violence and the barriers to leaving her former spouse (Hansard, November 16, 2015). Amendments to the Bill were agreed to and introduced by the Committee of the Whole on November 30, 2015. This post will describe the ways in which Bill 204, as amended, proposes to revise the Residential Tenancies Act, SA 2004 cR-17.1, and will raise a number of issues that the Legislature may wish to consider before it passes the Bill in final form.

The Details of Bill 204

Essentially, Bill 204 allows tenants to end their residential tenancies early without the usual financial penalties. It does so by adding “Part 4.1 Victims of Domestic Violence” to the current Residential Tenancies Act. The key aspects of Bill 204 are as follows:

  • The threshold requirement is that the tenant (the “victim”) believes their safety or that of their dependent child(ren) is at risk because of “domestic violence” (defined in section 47.2) if the tenancy continues (section 47.3(1)). The Committee of the Whole broadened this threshold requirement to include the victim’s fear for the safety of a protected adult who lives with them, with “protected adult” including assisted adults, represented adults, or supported adults as defined in the Adult Guardianship and Trustee Act, SA 2008, c A-4.2.
  • If the threshold requirement is met, the victim may terminate their tenancy by giving the landlord 28 days’ notice and a certificate confirming there are grounds for the termination no later than 90 days after the certificate is issued by the designated authority (section 47.3(2)). This 28 day notice period would apply to all types of tenancies, including monthly periodic tenancies, yearly periodic tenancies and fixed term tenancies. Under the current Residential Tenancies Act, one calendar month’s notice is required for a tenant to terminate a monthly periodic tenancy (section 8(1)(a)) — the most common type of periodic tenancy. A yearly periodic tenancy can only be terminated at the end of the year by notice served at least 60 days before the end of the tenancy year (section 9). Notice does not terminate a fixed term tenancy such as a typical one year lease (section 15); it cannot be terminated prior to the day specified as the end of the term as the law now stands.
  • When notice is given pursuant to the provisions of Bill 204, the victim is responsible for the rent only for the 28 day notice period, without penalty for early termination, and can ask the landlord to use their security deposit towards this payment (section 47.3(4)). Under the current Residential Tenancies Act, terminating a monthly periodic tenancy without the required calendar month’s notice results in a delay in the notice becoming effective to the last day of the first complete tenancy month following the date on which the notice is served, with more rent — up to 33 days more rent — being payable. Termination of a yearly periodic tenancy late might result in 60 days of rent being payable, 29-32 days more (section 10(2)(c). The current consequences for leaving premises rented under a fixed term agreement before the end date are potentially much more serious, depending on how early in the fixed term the tenant leaves. If the tenant abandons the rented premises, the landlord can continue the tenancy and sue for rent to the end of the term, or the landlord can choose to accept the tenant’s repudiation and sue the tenant for damages for the loss of the benefit of the residential tenancy agreement up to the date it would have expired (section 27). If a tenant abandons rented premises one month into a one-year fixed term lease, the tenant may be on the hook for the remaining 11 months’ of rent, although the landlord has a duty to try to find a new tenant. Security deposits can be used to pay the rent if the landlord and tenant so agree (section 46(2)).
  • Under Bill 204, the termination of tenancy applies to all the tenants in the same residential premises, and they are entitled to notice of the termination. The termination therefore potentially binds the perpetrator of domestic violence; however, that person and the landlord are free to enter into a new tenancy relationship, as are any other tenants affected by the termination (sections 47.3(5),(6)). Quite often people living in the rented premises are not, strictly speaking, “tenants” but instead people whose name is not on the residential tenancy agreement. They might be spouses, children, relatives, friends or roommates. They would not be entitled to notice and, as is already the case under the current law, they are vulnerable to being evicted on 48 hours’ notice (section 33(2)).
  • The only apparent basis upon which the landlord can challenge the victim’s termination notice is where the notice and certificate were not properly served on the landlord. Section 43.3(7) appears to indicate that the landlord cannot challenge the notice or the certificate substantively. However, the consequences of a tenant not complying with the mandatory form of notice (section 47.3(3)), the mandatory 28 day notice period (section 47.3(2)), or the mandatory certificate in a prescribed form (section 47.2)) are not clear. It may be that the tenant loses their right to pay only 28 days rent (section 47.3(4)), because that right accrues only “[i]f a notice to terminate a tenancy is given under this section”.
  • The termination notice must be supported by a certificate, confirming that domestic violence grounds for early termination of the tenancy do exist, issued by a designated authority. The application for a certificate may be made by either the victim or by someone acting on their behalf with their consent (section 47.4(1)).
  • The grounds for the issuance of the certificate include an order under the Protection Against Family Violence Act, RSA 2000, c P-27, a restraining order, a peace bond or similar court order restraining the perpetrator from contacting the victim, or an opinion provided by a professional authorized to provide their opinion that that the victim has been the subject of domestic violence (section 47.4(2)). The list of professionals includes physicians, nurses, social workers, psychologists, police officers, shelter workers, and victim support workers (sections 47.4(3)).
  • The designated authority is to be appointed by the Minister responsible for the Residential Tenancies Act. Designated authorities’ decisions on whether or not to issue certificates are final unless there is a change in circumstances, and they are protected from being compelled to disclose information they received related to the victim. (sections 47.5, 47.6).
  • Landlords are required to keep the information they receive from or about the victim confidential (section 47.7). Failure to do so is made an offence, with the landlord liable to a fine of up to $5,000 (section 7 of Bill 204, amending section 60(1)(a) of the Residential Tenancies Act).
  • Domestic violence is defined broadly in Bill 204 to include physical, sexual, psychological, and emotional abuse, forced confinement, stalking, and threats that create a reasonable fear of property damage or personal injury. The definition encompasses violence within a range of relationships, including spousal, cohabiting, dating, parental, family, and caregiving relationships (section 47.2).

At the Second Reading of Bill 204, MLA Drever advised that Bill 204 was drafted in consultation with “stakeholders such as police services, women’s shelters, market and nonmarket landlords, housing organizations, and advocacy groups.” It was also noted during debate that similar legislation exists in Manitoba (see The Residential Tenancies Act, CCSM c R119, ss. 92.2-92.4), Quebec (see Civil Code of Quebec, SQ 1991, c 64, article 1974.1) and Nova Scotia (see Residential Tenancies Act, RSNS 1989, c 401, section 10F), and that a Bill (which is more encompassing) has been introduced in Ontario (Bill 132, Sexual Violence and Harassment Action Plan Act (Supporting Survivors and Challenging Sexual Violence and Harassment), 2015). (Hansard, November 16, 2015)

Commentary

As indicated during Second Reading, Bill 204 does not itself provide housing options for victims fleeing domestic violence. Although the government is providing increased funding for shelters, shelters only offer limited term stays. A longer term housing strategy and other measures to deal with social and economic inequality are also needed to respond to the many barriers facing victims of domestic violence. The Bill should be seen as a very limited, but welcome, response to one particular set of barriers associated with leaving situations of domestic violence.

We do have some questions and concerns about the Bill, however.

First, it is potentially confusing that Bill 204 uses the terminology of domestic violence, when other government legislation uses the terminology of family violence. It is the Protection Against Family Violence Act, RSA 2000, c P-27 (PAFVA) that allows victims to obtain emergency and longer term protection orders that can be the basis for a certificate under Bill 204. Will this difference in terminology create confusion amongst those who seek access to or are applying the proposed amendments to the Residential Tenancies Act?

Second, the definitions of family violence in the PAFVA and of domestic violence in Bill 204 are different. Dating relationships are included in Bill 204 but not in the PAFVA (see PAFVA section 1(1)(d)). Bill 204 includes emotional and psychological abuse in the definition of domestic violence, but these are not included in the definition of family violence in the PAFVA (see section 1(1)(e)). To the extent that Bill 204 is broader, that is to be commended, and indeed recommendations have been made to broaden the PAFVA in similar ways (see Leslie Tutty, Jennifer Koshan, Deborah Jesso, & Kendra Nixon, Alberta’s Protection Against Family Violence Act: A summative evaluation (Calgary: RESOLVE Alberta, 2005) at 93-94). But again, will this cause confusion?

Third, Bill 204 uses a mix of subjective and objective standards in assessing the presence of domestic violence. In section 47.3(1), cited above, the victim may terminate where they believe their safety or that of their children or a protected adult who resides with them is at risk, which appears to be a subjective standard. In contrast, section 47.2(2) defines some domestic violence using an objective standard of reasonableness (emphasis added):

47.2(2) The following acts and omissions constitute domestic violence for the purposes of this Part:

(a) any intentional or reckless act or omission that causes injury or property damage and that intimidates or harms a person;

(b) any act or threatened act that intimidates a person by creating a reasonable fear of property damage or injury to a person;

(c) conduct that reasonably, in all circumstances, constitutes psychological or emotional abuse;

(d) forced confinement;

(e) sexual contact of any kind that is coerced by force or threat of force;

(f) stalking (defined in section 1(1)(n.1) to mean “repeated conduct by a person, without lawful excuse or authority, that the person knows or reasonably ought to know constitutes harassment of another person and causes that other person to fear for his or her personal safety.”)

Again, will this mix of subjective and objective standards cause confusion?

Fourth, the definition of sexual contact that constitutes domestic violence in Bill 204 — which is identical to that in the PAFVA — is narrower than the definition of sexual assault in the Criminal Code, RSC 1985, c C-46. Sexual assault is the intentional application of force in circumstances of a sexual nature without consent, with consent defined as the voluntary agreement of the complainant to the sexual activity in question (Criminal Code section 271, 273.1). To define domestic violence as including “sexual contact of any kind that is coerced by force or threat of force” is considerably narrower and should be at least as broad as the definition in the Criminal Code.

Fifth, the limitation on the availability of appeals of the decisions of the designated authority raises issues regarding procedural fairness (see section 47.5(5)). Presumably judicial review would be available, but that would require an application to the Court of Queen’s Bench with considerable costs and delay, making such an application unfeasible for most victims of domestic violence. This limitation on the review of decisions regarding certificates should be reconsidered. And in any event, the designated authority who is appointed by the Minister must be someone who is well versed with the complexities of domestic violence and its broader socio-legal context, in light of the powers the authority will have under the amended Residential Tenancies Act.

Sixth, and relatedly, are the procedures in Bill 204 too complex? For example, we have already noted that there is a mandatory form of notice, a mandatory 28 day notice period, and a mandatory certificate in a prescribed form (sections 47.2, 47.3), and that the consequences of not complying with these requirements are unclear. Professor Lois Gander, QC of the University of Alberta and Rochelle Johannson of the Centre for Public Legal Education Alberta prepared a June 2014 Report entitled “The Hidden Homeless: Residential Tenancies Issues of Victims of Domestic Violence” (which includes as Appendix B an annotated bibliography on the topic of “Residential Tenancies Issues of Victims of Domestic Violence” organized by jurisdiction). Their research into the rental housing legal context for victims of domestic violence included interviews with five key informants and three focus groups. The authors note that victims of domestic violence have to appear before a variety of courts and tribunals; confront an array of laws, regulations, policies, and procedures that require them to play a range of roles; have to frame their lives and tell their stories in different ways to access the services and remedies to which they may be entitled — and all at a time when their lives are in upheaval and their ability to cope is limited (at 4). They conclude that “the law is likely the last thing on her mind as she tries to find a safe place to live and some way to meet her basic needs” (at 5, 31). The current complexity of the law appears to be added to rather substantially with Bill 204.

Nonetheless, Gander and Johannson’s work suggests that financial obligations are the biggest problems facing most victims of violence when they try to obtain or maintain rental accommodation. They note that “it is often the victim that the landlord pursues for overdue rent and damages” (at 5, 34, 38). To the extent that Bill 204 alleviates this or similar problems, it is a positive step. However, the reforms to the Residential Tenancies Act proposed by Bill 204 are not among the recommendations made by Gander and Johannson (at 55-56).

Seventh, Bill 204 will have its most significant monetary impact when the victim is in a yearly periodic tenancy or in a long fixed term tenancy. For those in month-to-month periodic tenancies the relaxation of notice requirements may only amount to two or three days of rent saved. However, the current one month’s notice to terminate a monthly periodic tenancy must be given before the start of a new calendar month in order to be effective on the last day of that month (e.g., on or before December 1 to be effective on December 31). The new 28-day notice period is not affected by calendar months, so that notice could be given, for example, on December 15 to be effective on January 12, rather than January 31, a saving of 20 days’ rent. The 28-day period is thus more flexible, but its impact may be limited.

Eighth, do we know if the provisions in Bill 204 will work and whether anyone will use them? Are victims of domestic violence often the tenants or is their name usually not on the lease? Will victims apply for certificates? Bill 204 is very similar to the legislation in Nova Scotia, Quebec and Manitoba. The revisions to residential tenancy law in those provinces are helpfully summarized and compared in Appendix C of Gander and Johannson’s Final Report. The authors note that additional research needs to be undertaken to find out “whether the revisions made to residential tenancy law in other jurisdictions has been helpful for victims of domestic violence” (at 10, 56). Unfortunately, there do not appear to be any publicly available evaluations of the measures already implemented in these three other provinces.

Ninth, Bill 204 — like the revisions enacted in Nova Scotia, Quebec and Manitoba, as well as those proposed for Ontario — does not take a proactive approach to the landlord and tenant relationship in the context of domestic violence. The legislation does not protect victims of domestic violence from eviction based on acts of violence against them or allow a landlord to remove a perpetrator of the violence from the tenancy agreement upon the request of the victim (although the landlord can terminate the lease of their own accord in circumstances involving physical violence; see our tenth point below). As Gander and Johannson note, the American federal Violence Against Women Reauthorization Act of 2013 appears to be more protective about such matters (at 85).

Tenth, not being believed is a frequent experience of victims of domestic violence. The requirement in Bill 204 (as in the legislation elsewhere in Canada) for a certificate that confirms domestic violence grounds exist is a corroboration requirement, suggesting that victims of domestic violence cannot be trusted to tell the truth. In Bill 204, the victim can only choose between two types of certificates: an already acquired court order or an opinion from an authorized professional. In the United States, the victim can choose among three types of evidence to prove domestic violence, including simply filling out an approved form and certifying that the information given is true. A police report, a criminal complaint or a conviction will also do (Gander and Johannson at 85-86).

Why require a victim of domestic violence to produce a certificate at all? Section 30 of the Residential Tenancies Act allows a landlord to terminate a tenant’s lease on 24 hours’ notice if the tenant has “done or permitted significant damage to the residential premises, the common areas or the property of which they form a part, or (b) physically assaulted or threatened to physically assault the landlord or another tenant”. The landlord does not need a certificate from a third party to confirm the violence that they witnessed or heard about, so it is puzzling that Bill 204 requires corroboration of the victim’s account.

Eleventh, Bill 204 is very limited in its scope. Nova Scotia also allows early termination of leases without financial penalties in a wider variety of cases, some of which seem as compelling as do the situations covered by Bill 204. For example, Nova Scotia also allows early termination for income reduction due to a significant deterioration in the tenant’s health (section 10B); early termination for health reasons (section 10C); early termination upon acceptance into a long-term care facility (section 10D) and early termination on death (section 10E). Some seniors on fixed incomes and some newly disabled persons may have a similarly great need for early termination of their leases without financial penalties. This is not to say that Bill 204 is wrong or that quick movement is not needed for victims of domestic violence, but it is to say that piecemeal revisions of a statute may not be the best way to proceed in the long run. There is much that is wrong with the Residential Tenancies Act. It is one of the weakest pieces of consumer protection legislation in Canada, if not the weakest, and piecemeal reform is therefore problematic.

This point leads us to ask whether the Residential Tenancies Act is the best place for these provisions. It may be better to include them in the existing statute relevant to domestic violence, the Protection Against Family Violence Act, where — as noted above — there are definitions of family violence already in place. The Residential Tenancies Act already incorporates the Public Health Act into reasons to terminate a lease; so it could incorporate another act that deals with domestic violence in a more comprehensive fashion, and which victims and those providing services to victims would be more likely to turn to first.

Twelfth, Bill 204 would make landlords, who are private parties — and usually innocent bystanders — bear all of the costs of early termination. Some landlords are low-income individuals renting out a portion of their house to make ends meet and they may be counting on the income from a one-year lease. Re-leasing the premises to another renter may be difficult to do, especially in a falling market such as the one that Alberta is now experiencing. If landlords do experience financial hardship as a result of bearing this new burden, is it not appropriate to ask if they should bear the entire burden, without compensation from the public? Domestic violence is a public issue and responsibility, which for too long was relegated to the private realm and ignored by the law. We no longer dismiss domestic violence as a matter between private parties, and our collective responsibility should extend to the financial costs of dealing with domestic violence in tenancy situations.

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Court of Appeal Assesses Damages for Production on a Dead Oil and Gas Lease: An Important but Ultimately Disappointing Decision

Thu, 12/03/2015 - 10:00am

By: Nigel Bankes

PDF Version: Court of Appeal Assesses Damages for Production on a Dead Oil and Gas Lease: An Important but Ultimately Disappointing Decision

Case Commented On: Stewart Estate v TAQA North Ltd, 2015 ABCA 357

Courts of Appeal have at least two important functions. The first is a corrective function – the power and the authority to take a second look at a problem and to reach a decision which more properly accords with the law. For a recent example which demonstrates the crucial importance of this role see the Court of Appeal’s review of Judge Camp’s infamous decision in R v Wagar, 2015 ABCA 327, which was the subject of important commentary by my colleagues, Professors Koshan and Woolley here and here. In many cases, the scope of that corrective function turns on the applicable standard of review: correctness, unreasonableness or overriding and palpable error. One of the important issues in Stewart Estate v TAQA North Ltd was the application of the Supreme Court of Canada’s decision in Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 (CanLII), [2014] 2 SCR 633 (Sattva) to the interpretation of oil and gas leases. Sattva is generally cited as authority for the proposition that unless there is an “extricable question of law”, a trial judge’s interpretation of a contract should generally be accorded deference. Thus, an appellate court should only intervene if it is of the view that the trial judge has made an overriding and palpable error – the traditional test for an appellate court’s assessment of a trial judge’s findings of fact. The principal rationale for applying the same test to contract interpretation issues as well as to findings of fact is that the rules on contractual interpretation allow a trial judge to take into account the factual and commercial matrix when assessing the intentions of the parties as revealed in the language used in the contract.

A Court of Appeal’s second function is to clarify the law and resolve competing interpretations of the law by lower level courts. For a comment on this role of the Court which also happens to involve the issues of lease validity and assessment of damages see my comment on the Court of Appeal’s decision in Canpar Holdings Ltd. v Petrobank Energy and Resources Ltd., 2011 ABCA 62 here. It is obvious that a multi-person appellate court is best able to deliver on this clarification function where it speaks with a single voice and a clearly discernible ratio decidendi and through a “reserved” judgment i.e. a judgment that has been circulated beyond the panel deciding the case to the full court. When combined with the doctrine of stare decisis such a judgment should perform an important clarifying role for lower courts. An appellate court offers less guidance when there are multiple judgments, even where those judgments concur in the ultimate result. This is such a case and it is why, as the title to this post suggests, that while Stewart Estate is certainly a significant decision (which grapples with important issues including, the standard of review applicable to lease interpretation questions, the rules surrounding the termination of oil and gas leases and the question of remedies for wrongful production), it is ultimately a disappointing decision because, in the end, with three separate judgments, this three person panel of the Court agrees on very little.

All three members of the Court agree that most of the leases in question expired in accordance with their terms, and all three agree that in this particular case, damages for unlawful production on a dead lease should not be assessed on the basis of the so-called royalty approach. In terms of result therefore, the Court unanimously reverses Justice Romaine’s judgment at trial which I commented on here. But the individual members of the Court disagree on just about everything else including the reasons why the leases had expired and the approach for assessing damages in this case. As a result, this decision has done little to clarify the law on lease expiration and remedies and is therefore sure to invite further litigation exploiting the points of disagreement. This may be in the interests of the oil and gas litigation bar, but it is certainly not in the interests of lessors or lessees; neither does it serve to enhance the reputation of the appellate courts. For these reasons I hope that the lessees seek leave to appeal and that the Supreme Court gives that leave on the grounds that there are issues of national importance that need to be resolved. Not least of these is the clear difference in approach to remedies and the assessment of damages exhibited by the Alberta Court of Appeal in this case and the Saskatchewan Court of Appeal in Montreal Trust Co v Williston Wildcatters Co, 2001 SKQB 360 (CanLII), aff’d 2002 SKCA 91 (CanLII), 223 SaskR 276 and followed in Alberta at the Queen’s Bench level in Freyberg v Fletcher Challenge Oil & Gas Inc, 2007 ABQB 353 (CanLII), 428 AR 102 but arguably not by the Court in Canpar Holdings Ltd v Petrobank Energy and Resources Ltd and Gentry Resources Ltd, unreported transcript of reasons for judgment October 9, 2009 and December 11, 2000 (rev’d on appeal, see above) and the subject of an earlier ABlawg post here.

This post cannot review all of the issues that arise in this nearly 100 page judgment but it does touch on the following issues: (1) standard of review issues: the application of Sattva, (2) the construction of the third proviso and the expiration of the leases, (3) the date of expiration, the date production became unlawful, the doctrine of leave and licence and the role of limitations rules, (4) the legal status of production operations on a dead lease, the remedy, and the assessment of damages, and (5) the liability of the gross overriding royalty owner (Esprit).

First, however a summary (and readers should note that there is also a useful Executive Summary in the first two pages of Justice Rowbotham’s judgment).

Summary

Standard of review of the trial judge’s conclusions on the interpretation of the leases: Sattva. The majority (McDonald JA, O’Ferrall JA concurring)) would review for correctness; Justice Rowbotham (dissenting on this point) would review on the standard of palpable and overriding error.

The construction of the third proviso and expiration of the leases. A majority (O’Ferrall JA, McDonald JA concurring) concluded that the lessees were not in a position to rely on the ameliorative language of the proviso permitting non-production for lack of an economic market. A lessee can only rely on these exceptional provisions if the lessee has a well on the lands that is otherwise capable of production. The majority concluded that that was not the case here since the lessees had successively abandoned both of the producing formations in the only well on the leased lands. Justice Rowbotham, concurring in the result, concluded that the leases expired since market conditions had improved such as to permit economic production from the well some time before it was in fact recompleted and produced. The majority appears to support this conclusion in the alternative. The majority’s findings applied to all of the leases covering the pooled lands.

Date of expiration, the date production became unlawful, the doctrine of leave and licence and the role of limitations rules. The majority (O’Ferrall JA, McDonald JA concurring) held that the leases expired (1995) when the well was abandoned in both of its producing formations. Justice Rowbotham concluded that the leases expired in January 2000 by which time the lessees could have produced the well into an economic market.

A different majority (Rowbotham JA, McDonald JA concurring) held that production was prima facie tortious as of lease expiry (for Rowbotham JA this is clearly January 2000) but that the lessors, for limitations reasons, could only recover for the two years immediately prior to filing of the statement of claim such that there could be no recovery for wrongful production prior to August 9, 2003. Justice O’Ferrall (dissenting on this point) concluded that the lessees’ continuing presence on the lands did not become unlawful until after the statement of claim had been filed and the lessees served with a notice to vacate (September 2005). Thus, in his view, there could be no recovery for production prior to September 2005.

The legal status of production operations on a dead lease, the remedy, and the assessment of damages. All three members of the panel concluded that the lessees’ actions fitted the elements of the causes of action in both trespass and in conversion. The majority (Justice Rowbotham, O’Ferrall JA concurring) assessed damages on the basis of proceeds of production minus operating costs: i.e. a disgorgement remedy. Justice McDonald (dissenting on this point) would also have ordered disgorgement but without any allowance to the lessees for their operating costs.

The liability of the gross overriding royalty owner (Esprit). All three members of the panel concluded that Esprit was not jointly and severally liable for the wrongful production as a whole. However, the majority (O’Ferrall JA, McDonald JA concurring) held that Esprit was liable to account for the monies it received for its royalty share of production. Justice Rowbotham (dissenting on this point) concluded that Esprit was not liable to the lessors either directly for its own behavior (which was not tortious), or on the basis of agency.

Standard of Review Issues: The Application of Sattva

While the Court of Appeal has already had several opportunities to comment on the implications of Sattva, this was the Court’s first opportunity to consider the application of Sattva to a trial judge’s interpretation of the terms of a petroleum and natural gas lease. There is a useful list of Alberta Sattva-application cases at para 269 (per Justice McDonald). The Court split on this important issue. Justice McDonald (with Justice O’Ferrall concurring) for the majority adopted a standard of correctness. Justice Rowbotham (dissenting on this point) concluded that there was no reason not to apply the main holding in Sattva and accordingly proceeded to assess Justice Romaine’s lease interpretation conclusions against the palpable and overriding error standard.

Justice McDonald for the majority gives two main reasons for preferring the correctness standard. The first (at paras 271 – 279) is that if the rationale for Sattva is that the interpretation of a contract will frequently involve mixed questions of fact and law because of the admissibility of evidence relating to the surrounding circumstances (and the application of the terms of the contract to the facts) this rationale cannot be an important consideration with respect to a standard form oil and gas lease. Such a lease is effectively a contract of adhesion with negotiations limited to two variables: the amount of the bonus payment and the amount of the delay rental. Second, given that the oil and gas industry has developed a standard form lease (albeit with variations, at paras 276 and 283), it would be intolerable were different trial judges to reach different (and unreviewable) conclusions with respect to the interpretation of the same lease form and language (at para 283). In reaching this conclusion Justice McDonald was clearly heavily influenced by the Court of Appeal’s decision in Vallieres v Vozniak, 2014 ABCA 290 in which the Court held that a trial judge’s interpretation of a standard form real estate purchase and sale contract should be reviewed by an appellate court on the basis of correctness.

Justice Rowbotham (dissenting on this point) reasoned (at para 62) that the admissibility of evidence as to contextual issues surrounding matters such as the expectations of the parties and concerns as to drainage militated in favour of the palpable and overriding error approach (at para 63):

Given … Sattva’s reliance on cases that appear to have interpreted standard form contracts to reach the conclusion that the correctness approach to appellate review of trial decisions is no longer appropriate except in the most exceptional cases, I am persuaded that the trial judge’s interpretation of these leases is reviewable on the palpable and overriding error standard unless the decision reveals an extricable error of law or principle.

My own view is that while the differences in lease forms are more significant than suggested by Justice McDonald, it is still important that courts take the same approach to the interpretation of these different lease forms. A more pluralistic approach will undoubtedly encourage more litigation, especially given the economic stakes at issue. For that reason, the correctness approach to the interpretation of these lease forms does seem preferable and can be reconciled with Sattva given that the findings in one case will have implications for other similarly worded leases.

The Expiration of the Leases

There were five leases at issue in this case. All were essential in the sense that all of the leases related to a portion of a single drilling spacing unit and all the leases had been pooled. All of the parties and all three members of the Court appeared to accept the proposition that the expiration of one lease would affect the validity of the pooling and hence the validity of all of the other leases. However, there was some concern that not all the proper parties with interests in two of these leases were before the Court. The majority, (Justice O’Ferrall and Justice McDonald concurring (at para 267)) did not regard the absence of some interested parties as material and concluded that all five leases had expired. There is a certain logic to this position insofar as it draws on the pooling reasoning outlined above. Essentially, the point is that if one of the pooled leases is invalid then all are invalid and it must make little if any substantive difference (there may still be a procedural fairness issue) if all of the potential parties with affected interests in other leases that contribute to the pooling are before the court (see para 448). Justice Rowbotham (paras 131 – 155, dissenting on this point) was unwilling to make definitive rulings with respect to those two leases. All three members of the Court were however prepared to conclude that three of the leases had expired in accordance with their terms (and the same reasoning does in fact extend to the remaining two leases although of course Justice Rowbotham could not (at para 155) opine on that point).

The Court discusses two distinct lease expiration arguments. The first argument, espoused by the majority (O’Ferrall JA, McDonald JA concurring), was that the leases expired in 1995 when the productive formations in the 7-25 well were abandoned. Abandonment of these productive formations meant that there was no well on the lands that was capable of production and that therefore the ameliorative provisions of the third proviso were not available to the lessees at all – they were inapplicable. The second argument, championed by Justice Rowbotham, by-passed the first argument but still concluded that the leases had expired on the basis that the 7 – 25 well could have produced into an economic market before it did so.

No Well Capable of Production: The Majority

As noted above, the majority concluded that the leases expired in 1995 when the productive formations in the 7-25 well were abandoned. Abandonment of these productive formations meant that there was no well on the lands that was capable of production and that therefore the ameliorative provisions of the third proviso were not available to the lessees at all. This conclusion turns on a careful and detailed analysis of the facts surrounding the shut-in of the 7 – 25 well.

The 7-25 well was drilled in 1968. It encountered sour gas in the targeted Crossfield Member of the Stettler Foundation in the Wabamun group but it also encountered sweet gas in the Basal Quartz formation (BQ). The lessees elected to produce from the BQ formation until the single well BQ pool that the 7-25 well had discovered was depleted (1981). Then, the lessees, having recompleted the well two years earlier in the Crossfield, produced and processed sour gas from the Crossfield formation from 1981 to 1995. However, gas from the well could not readily be processed at the lessee-owned Balzac plant and was instead processed under contract at the non-lessee owned East Crossfield plant – and on less than favourable best-efforts terms (at para 366). The well also experienced deliverability problems (at para 369) but the lessees were reluctant to incur the costs associated with further stimulation of the well. One result of the deliverability problems was that TransCanada reduced the nomination attributable to the well under its gas purchase contract with the lessees. It was in these circumstances (declining production, deliverability issues and high costs) that the majority (per Justice O’Ferrall (Justice McDonald concurring)) concluded that the lessees decided not just to suspend temporarily production, but effectively to abandon the well in the Crossfield Formation (having previously abandoned the BQ formation):

[372] It is important to distinguish between interrupting or suspending production from a well capable of production and ceasing production from a formation which is no longer commercially productive. It is important to make this distinction because the fourth proviso in the lease provides some relief only for production operations which are “interrupted or suspended”. In 1995, production from the Crossfield Member was not being interrupted or suspended. Production was being brought to an end and the producing formation abandoned. Subsequent events and the fact that the lessees never resumed production from the Crossfield Member bear this out.

[373] A lack of or an intermittent market was not the cause of the cessation of production from the 7-25 Well. Continued production was simply uneconomic and there was no foreseeable prospect of that situation changing. From that point forward, the lessors were simply holding on to a lease which had terminated in accordance with its terms (the emphasis is Justice O’Ferrall’s).

Further evidence that the actions of the lessees were tantamount to abandonment came from the physical and contractual steps that the lessees took in relation to the well (at para 382):

What happened next was that the 7-25 Well was shut in a tubing plug and inhibitor set, and the wellhead locked. Surface equipment necessary to produce the well from any formation was removed. The well owners cancelled their gas processing agreement with the owners of the East Crossfield gas plant, thereby giving up their share of the East Crossfield gas plant’s processing capacity. Their contract operating agreement with Amoco (also operator of the East Crossfield Gas Unit and the East Crossfield plant) was cancelled. They also released their firm transportation capacity with Nova or TransCanada. The well’s maximum daily contract (purchase) nominations were cut by TransCanada to zero. And, significantly, in light of what happened later, even the sweet gas gathering line which had been used to take away production from the BQ formation was abandoned. Further production from the BQ formation was not contemplated in 1995.

The legal implication of all of this is that the majority (per Justice O’Ferrall, Justice McDonald concurring) held that the lessees never triggered the interruption or suspension language of the proviso because (at para 389) “There was, in fact, a complete cessation of production” and furthermore, with the physical actions taken above, there was no longer a well capable of production on the lands and that was a condition precedent to relying on the interruption and suspension provisions (at paras 389, 395 & 407 – the proviso is simply inapplicable). In this case, before the well could be turned on again (as ultimately it was in 2001, but from the BQ formation) the following steps had to be taken (at para 392):

… the 7-25 Well did have to be recompleted in an entirely different zone at a cost of about a half million dollars. A drilling rig had to be brought onto the lease to recomplete the well in the BQ formation. A pipeline to take away the production from the well had to be constructed (or the previously-abandoned production pipeline unplugged and recommissioned). Firm transportation on TransCanada had to be obtained and either a new gas purchase contract entered into or an existing one amended with respect to contract quantities.

In sum, the leases terminated when (1995) the well was abandoned in both formations from which it had produced. At that time there was no well on the lands capable of production.

Expiration for Failing to Produce When There Was a Market: Justice Rowbotham

There were two elements to this argument. The first element was an interpretive issue. The second element involved the application of the authoritative interpretation to the facts. As to the first, the lessors wanted to insist on a strict and literal interpretation of the lease language and thus, since the market at the relevant time was deregulated, the lessees should have been able to produce if they lowered their price. The lessees, however, contended that they could not be expected to produce at a loss and thus argued that the reference to market should be understood to include the lack of an economical or profitable market. At trial, Justice Romaine sided with the lessees, as did Justice Rowbotham on appeal applying (at paras 77 – 78) the deferential standard of review. Perhaps the key passage is this (at para 75):

… it could not have been the objective intention of the parties to insist that the lessee market the produced substance when it was uneconomical or unprofitable. As the trial judge observed, a contextual reading of the phrase suggests a broader interpretation than the literal and narrow interpretation advanced by the appellants. However, to be clear, this is not an interpretation which suggests that a lessor would agree to tie up its land beyond the primary term for speculative purposes.

As for the application of this interpretation to the facts, Justice Rowbotham concluded that Justice Romaine had made a palpable and overriding error in concluding that the lessees had re-commenced production in a timely way. The 7-25 well was shut in from July 1995 until February 2001 but the expert evidence tended to show that by no later than January 2000 recompletion of the well was economic. By allowing the lessees to defer production until the economics of the well became more “attractive” or “compelling” Justice Romaine erred. Such an approach was unduly deferential to the interests of the lessees and failed to take into account the presumed commercial interests of the lessors. Justice Rowbotham put the point this way:

[125] The trial judge was entitled to conclude that the market for the produced substances must be economical or profitable. However, she erred in principle when she assessed profitability solely from the perspective of the lessees without giving equal weight to what was commercially viable and sensible from the lessors’ perspective. As was said in Freyberg and Omers, lessors would not agree to tie up land when it was no longer commercially viable from their perspective.

[126] I conclude that on the evidence of the respondents’ own expert, it was profitable for a prudent operator to recomplete the 7-25 Well no later than January 1, 2000. In January 2000, by all objective measures (i.e., the three hurdle rates referred to earlier), it became economical and profitable to resume production. The fact that it was not yet “compelling” or “very” profitable (to use the words of the trial judge’s preferred expert) from the perspective of these particular lessees, under-emphasizes the commercial objectives of the lessors.

Given the manner in which the majority approached the issue of lease expiration, the majority had no need to examine either the interpretation of the term market or the application of the authoritative interpretation to the facts. However, it does appear that the majority would have agreed with Justice Rowbotham on both elements of this argument were it necessary to address the two points. This seems clear from Justice O’Ferrall’s brief but pointed comments (at para 394):

The trial judge read into the lease the requirement that the market be economic or profitable. I do not believe she erred in so doing, but there could also be no doubt that a market for the gas existed and that it was profitable. Offsetting wells were selling gas into that market.

Justice O’Ferrall also makes it quite clear, however, that in assessing the profitability of the market, no account should be taken of the capital expenditures that might be required of the lessee in order to turn the tap back on. This is a useful, important and principled characterization which flows (at para 406) from the passive nature of the royalty interest:

… these [factors] … had nothing to do with the fourth proviso [because] … under the leases, the lessors were indifferent to those capital costs. Lessor royalties are not subject to any of the costs of bringing the leased substances to the surface. …. Just as the lessors are not concerned about the capital cost of drilling the well in the first instance, they also are not concerned about the costs of stimulation, abandonment or re-completion. Those are costs borne by the lessees and are not expenses incurred to render the gas marketable and are therefore not taken into account in calculating the lessors’ royalties. Nor are the lessors concerned about the risks associated with these production operations, which risks played a prominent role in the lessees’ expert’s opinion that continued production of the well was not economic. The lessors’ only concern is that the revenue from sales of the natural gas exceeds the costs of rendering it marketable.

The point is important with respect to this second ground for assessing lease expiration because it goes to the issue of what factors are relevant in concluding whether the market is “economical” or profitable. Justice Rowbotham seems to take on board the idea of assessing whether or not the lessees’ investment hurdle rates can be met as part of establishing profitability; but if those investments include the cost of re-completion, then the majority, per Justice O’Ferrall, would presumably say that those costs, and the internal hurdle rates associated with a return on those investments, are irrelevant to assessing the profitability of ongoing production.

Date of Termination, the Date Production Became Unlawful, the Doctrine of Leave and Licence, and the Role of Limitations Rules

Given the differences between the majority per Justice O’Ferrall (McDonald JA concurring) and Justice Rowbotham as to what caused the leases to terminate, it follows that they must also have different views as to when the leases terminated – 1995 for the majority and 2000 for Justice Rowbotham. In the end however these difference are mediated by the application of the Limitations Act (which limited the lessors to recovering under conversion or trespass for the two years prior to the date of filing of the statement of claim, August 9, 2005 (at para 174)) and application of the doctrine of leave and licence.

The majority (this time per Justice Rowbotham, McDonald JA concurring) were evidently of the view that production from the leased lands was unlawful as of lease expiration (January 1, 2000 (at para 129) – at least for Justice Rowbotham, Justice McDonald is committed to lease termination as of 1995) and that the lessors would therefore be entitled to a declaration to that effect (at para 161). However, no remedial order (i.e. damages) could reach back prior to August 9, 2003 (at paras 161 & 183) – and in relation to one set of lessors, Justice Rowbotham finds a leave and licence that protects the lessees from liability until their lessors joined the action as plaintiffs (at paras 184 – 195).

Justice O’Ferrall had a different view. While he concluded that the leases terminated back in 1995 when the lessees abandoned all operation in productive zones in the well, he was also of the view that the lessees did not become trespassers immediately. Indeed, in his view, they only become trespassers when served with a notice to vacate in September 2005, a month after the filing of the statement of claim:

… in the absence of any steps being taken by the lessors to exclude the lessees, the lessees were not trespassers following cessation of production in 1995. The lessees had initially come on the lands as a matter of right. They had produced the natural gas as a matter of right. They then lost that right. But at that point, in the absence of any steps being taken by the owners of the hydrocarbons, the lessees did not become trespassers. No action was taken by the lessors. Their acceptance of rentals and royalties, while it did not revive the terminated leases, did indicate that the lessors consented to the status quo. And, for their part, given their prior mutually-beneficial and lengthy relationship, the lessees were justified in believing they could continue to conduct themselves on the assumption that the landowners took no objection to the resumption of production operations in March 2001. The legal fact that their leases were subject to termination in accordance with their terms is of no consequence if no steps are taken by lessors to eject their lessees.

[431] …. until the lessors made it clear to their lessees that they no longer consented to continued production, the leases may have been subject to termination, but the lessors were not entitled to damages for trespass or conversion. The lessors had to make it clear that they were relying on that termination.

[432] But once the lessors served notices to vacate, the fact that they continued to accept royalties from the wrongful conversion of their hydrocarbons is of no consequence. Acquiescence in continued production of the well and acceptance of royalties was not indicative of consent. At that point, the lessors were simply accepting proceeds of the sale of a portion of the production which belonged to them and which the lessees persisted in wrongly converting in the face of a notice to vacate. The hydrocarbons were owned by the lessors. By continuing to accept royalty payments, the lessors were simply receiving a part of the benefit to which they were entitled by virtue of their ownership.

[433] Once served with the Notice to Vacate in September 2005, the lessees were not innocent tortfeasors who acted under the mistaken belief that they were acting lawfully. The lessees had been warned by at least one very experienced petroleum landman that their leases had terminated. It wasn’t until several years later that they were served with notices to vacate. But, having been served and armed with the advice they had received, the lessees took the position that they were acting lawfully, knowing full well that their position might not be sustained….

This seems more than a little strange and inconsistent with the conclusion that the leases had expired in 1995 (and see also Justice O’Ferrall’s remarks at para 416 and quoted below under the heading “cause of action”). Conversion is a strict liability tort: it doesn’t matter if the person converting is “innocent”. And even if the lessees are not trespassers because they entered with permission (which proposition Justice Rowbotham rejects) it is hard to read any continuing licence that the former lessees might have with respect to surface operations as extending to production operations that dissipates the lessors’ reversionary interests, or as in some way waiving the lessors’ ownership interest in the severed substances.

The Legal Status of Production Operations on a Dead Lease, the Remedy, and the Assessment of Damages

All three members of the Court concluded that the leases terminated before production re-commenced in 2001 and that for at least some of this time the lessees were producing without the permission of the lessors. It was therefore necessary for the Court to consider the legal status of these producing operations on a dead lease and the remedies available to the lessors, including the basis for assessing damages for unlawful production.

Production on a dead lease for which there is no continuing leave and licence (as above, per Justice O’Ferrall) is unlawful but there is a lively debate about how to characterize that production within existing causes of action, including the relevant torts and the independent cause of action of unjust enrichment. I have canvassed some of these issues in an article referred to by Justice Rowbotham in her decision: Nigel Bankes, “Termination of an Oil and Gas Lease, Covenants as to Title, and Assessment of Damages for Wrongful Severance of Natural Resources: A Comment on Williston Wildcatters” (2005) 68 Sask L Rev 23.

The Cause of Action

Within the domain of tort there are two causes of action to which lessors resort: trespass (to land) and conversion (of chattels). The Court found that the lessors could rely on both (at para 171). Thus at paras 166 – 168 the majority (per Justice Rowbotham, McDonald JA concurring) concluded that production on a dead lease constituted trespass to the lessors’ reversionary interests: “When the right to go on the land and sever the minerals has terminated but severance nevertheless continues, the reversioner has been deprived of its fee interest, which constitutes the trespass of the reversion.” Similarly, Justice Rowbotham finds there to be conversion – albeit citing (at para 169) a rather odd definition of conversion from Klar’s, Tort Law, which emphasizes possession rather than interference with title or the rights of the owner as the gravamen of conversion. Given these findings, Justice Rowbotham found it unnecessary to discuss the availability of a cause of action in unjust enrichment.

Justice O’Ferrall gave independent reasons for concluding that there was both a trespass and a conversion (at para 416 and n 6):

[416] the court is not simply compensating for trespass. It is also compensating for a wrongful conversion. In other words, the wrongdoers (the lessees) not only overheld, but they also damaged (depleted or wasted) the reversion while they overheld. An irreplaceable value was taken from the fee. This was not simply a wrongful occupation of land for which compensation for use and occupation (e.g., rent) might be appropriate. This was a wrongful failure to vacate accompanied by a wrongful conversion of personal property (when the hydrocarbons were severed from the realty and produced by the lessees) for which the value of the goods wrongfully converted may be an appropriate measure of damages.

[n 6] The debate over whether there can be a trespass to mines and minerals should be put to bed. Mines and minerals are interests in land …. To suggest that the registered owner of the mines and minerals underlying Blackacre lacks possession, and therefore cannot sue in trespass because he is not actually mining the mines and minerals, is to suggest that a farmer owning unused, vacant land hasn’t sufficient possession to sue in trespass. Mines and minerals, like vacant land, can be trespassed upon in a variety of ways. Subject to the rule of capture, minerals can also be wrongfully converted when a party without authority reduces them to possession by severing them from the subterrain. Also, the principle that an overholding tenant cannot be sued in trespass loses its validity when the overholding tenant refuses to vacate when given proper notice to do so.

The Assessment of Damages

Prior to this decision, the general direction of the case law in Canada seemed to be to the effect that damages awards for unlawful production of resources after the expiration of the lease should be strictly compensatory (in the absence of bad faith or other unconscionable conduct on the part of the lessee) and that the best measure of such a compensatory award would be a royalty (perhaps not the royalty prescribed by the dead lease but another amount such as the royalty prevailing in the area at the relevant time) and a new bonus payment: see Williston Wildcatters and Freyberg. There are all sorts of difficulties with this approach which are referred to in both of the leading judgements in this case: see Justice Rowbotham at paras 208 – 213 and Justice O’Ferrall at paras 421 – 424). The bottom line is that all three judges generally reject the royalty approach or the royalty-plus-bonus approach as an appropriate means of assessing damages in cases such as these. That said, Justice O’Ferrall in particular is at pains to emphasise (at paras 413, 421, 437 & 440) that he is articulating no general principle and that much will depend on the facts of each case. Indeed, Justice O’Ferrall suggests (at para 440) that the royalty-plus-bonus approach might be appropriate in some circumstances and that the Court should be concerned that a disgorgement approach may simply (at para 445) “[stir] up trouble in the oil patch by awarding the net benefits of production received by the lessees” a return to the lessors greater “than they could have dreamed of ever realizing from their ownership of the minerals”.

It was implicit if not explicit in the former approach of Williston Wildcatters and Freyberg that the courts were rejecting a disgorgement (or unjust enrichment) approach in which the lessees would be required to disgorge their ill-gotten gains and make restoration to the lessors of the wrongfully produced and marketed substances. In this case, all three judges endorse disgorgement as the most appropriate means of assessing damages in cases such as these. In doing so, Justices O’Ferrall, McDonald and Rowbotham all rely heavily on the old decision of the Supreme Court of Canada (and the Saskatchewan Court of Appeal) in Sohio Petroleum Co. et al v Weyburn Security Co Ltd, 1970 CanLII 137 (SCC), [1971] SCR 81, 13 DLR (3d) 340, aff’g (1969), 1969 CanLII 625 (SK CA), 7 DLR (3d) 277 (SKCA). However, while all agree on the source of authority for this approach (and indeed all suggest that the result in this case is required by Sohio, see Justice Rowbotham at para 207, Justice McDonald at para 314 and Justice O’Ferrall at paras 412 – 413) they differ on the application of Sohio and on the important question of what costs, if any, the lessee should be able to claim as a deduction from the gross proceeds received from producing and marketing the product.

One of the difficulties with relying so heavily on Sohio is that the judgement is, to say the least, cryptic and the Supreme Court of Canada does not provide independent reasons for endorsing disgorgement as an appropriate means of assessing damages. Instead, the Court instead simply repeats the reasons offered by the Saskatchewan Court of Appeal. Those reasons in their entirety were as follows (as quoted by Justice Rowbotham at para 203 with her emphasis added):

The [lessor] requested that the judgment of the Court of Appeal be varied in so far as it dealt with the date from which the [lessee] should be required to account to the [lessor] for production taken from the leased lands. The [lessor] contends that the date should be October 28, 1959, the date on which the lease terminated, subject to an allowance for expenses incurred by the [lessee]. This phase of the matter was dealt with in the following passage from the judgment of the Court of Appeal:

The [lessor] also sought an accounting of all petroleum, natural gas and related hydrocarbons removed from the land by the [lessee], or damages in lieu thereof. The court has jurisdiction to grant this relief on terms which will be just and equitable to all parties involved. The [lessee] proceeded under a mistake as to its rights, and did not knowingly take an unfair advantage of the [lessor’s] lack of appreciation of its legal rights. The [lessees] were first aware that their position was challenged when the writ of summons was served upon them. At that time the revenue which they had received from the sale of the production exceeded the amount they had expended. Under the circumstances, it would appear just and equitable to order the [lessee] to account for all benefits from production received by them after the date of service of the writ of summons upon them.

In effect, Justice Rowbotham (for the majority on this point) concludes (at para 218) that “all benefits” is a net concept which must allow the defendant lessees to recover their operating expenses but no expenses attributable to drilling or recompletion – since these expenses can never be for the account of the royalty owner (at para 230). In reaching this conclusion Justice Rowbotham evidently seeks to move beyond the language of hard and mild rules for recovery (which dominates the older case law), for it is her view (and I wholeheartedly concur) that disgorgement in these cases (with allowance for expenses) is not a punitive remedy (and see also Justice O’Ferrall at para 417 and then at 437) and that if a lessee is deserving of sanction, that sanction should take the form of a punitive damages award (at paras 221 – 223). Justice O’Ferrall agreed with this outcome (see at para 447) although he gave rather different reasons for concluding that the lessees should be able to make deductions choosing to emphasize that the royalty provisions of the lease allow a lessee to make deductions against royalties with respect to any enhanced value (e.g. through transportation and processing and see Acanthus Resources Ltd. v Cunningham, 1998 ABQB 168) conferred by a lessee post severance (at para 415): “If the lessors were prepared to have those costs deducted before their 12 1/2% royalty shares were calculated, it seems appropriate to deduct those costs after they became entitled to 100% of the value of the produced substances.”

Justice McDonald (dissenting on this point) took a more hawkish view of the behavior of the lessees in this case. In his view, the lessees were not acting in good faith. The lessees clearly had doubts as to the validity of their leases and yet still re-completed and re-commenced production. This “egregious behavior” (at para 317) fully justified imposition of the so-called harsh rule such that (at para 317) Justice McDonald would have directed “the respondents disgorge the full amount of the revenue obtained from the subject leases, without any deduction for operating or other costs, for the period commencing two years prior to the issuance of the statement of claim.” Justice McDonald went on to say (at para 318) that this ruling was also consistent with the Supreme Court of Canada’s decisions on punitive damages (Vorvis v Insurance Corporation of British Columbia, 1989 CanLII 93 (SCC), [1989] 1 SCR 1085, 58 DLR (4th) 193; Whiten v Pilot Insurance Company, 2002 SCC 18 (CanLII), [2002] 1 SCR 595) although he does not seem to have concluded that this justified a separate and additional punitive damages award. Perhaps he was of the view that the difference between gross receipts, and gross receipts minus what Justice Rowbotham considered to be reasonable operating costs, represented an appropriate award of punitive damages.

The Liability of the Gross Overriding Royalty Owner (Esprit)

In addition to suing the working interest owners in tort and unjust enrichment, the lessors also sued Esprit which held a gross overriding royalty (GORR). In that capacity, Esprit had received royalty payments from its working interest owner (Bonavista). Esprit’s royalty interest dated from June 1, 2000. It appears (Justice Rowbotham at para 247) that Esprit is sued in trespass and conversion. The majority (Justices McDonald and O’Ferrall) concluded that the lessors did have an independent cause of action against Esprit. Justice Rowbotham (dissenting on this point) held that Esprit could not be liable in tort to the lessors.

In relation to this matter, I will first consider Justice Rowbotham’s opinion and then turn to the majority.

Justice Rowbotham first concluded that there was no basis for interfering with Justice Romaine’s conclusion at trial to the effect that Esprit was not a joint tortfeasor and therefore could not be held jointly and severally liable – principally on the basis of what is said to be the absence of the necessary degree of proximity (at para 252) (Justices O’Ferrall and McDonald concur on this point, see at para 468). That left, according to Justice Rowbotham, the question of whether or not the lessors might claim disgorgement against Esprit (at para 253). With respect, this is a rather odd way of putting the matter. Disgorgement (unlike unjust enrichment) is not a cause of action; it is one possible characterization of the measure of damages where a plaintiff has established liability (whether in tort, contract or unjust enrichment). We first need to know whether the lessors have a cause of action against Esprit.

On the face of it, there can be no liability in contract because there is no privity between Esprit and the lessors. It is also exceptionally hard to see how the facts might meet any of the possibly relevant causes of action in tort. There can be no trespass to land committed by Esprit since the holder of a GORR has no possessory rights. Neither can there be trespass to chattels since Esprit never took possession of somebody else’s chattels. But it is also hard to see how there can be a conversion, because even if we concede that the severed gas is the personal property of the lessors, Esprit has not interfered with that personal property. It is true that Esprit had the right to take its royalty in kind but it did not do so. Instead, it received payments based upon its contractual entitlements with its counterparty (Bonavista). It did not act in a manner that was inconsistent with the rights of the true owner of the natural gas and therefore did not commit the tort of conversion. It may be that Esprit’s counterparty can recover the royalty that it has paid Esprit on the basis of mistake of law (i.e. no liability to pay because the lease is invalid and therefore the GORR must have died with the lease) and unjust enrichment, but it is hard to characterize Esprit as a tortfeasor against the lessors.

The lessors seem to have tried to get around this problem by arguing the law of agency. The premise here must be that the relevant working interest owner committed the alleged wrong (tort or unjust enrichment) as the agent for Esprit as principal and thus that Esprit must assume that liability. The alleged wrong must relate to the lessors’ gas. At first blush this is rather far-fetched unless the GORR holder takes in kind. If it does so, and if the working interest owner out of which the GORR is carved has no title to the natural gas, then it is conceivable that the GORR holder will commit the tort of conversion, since, by taking delivery and\or selling that gas the GORR holder is purporting to exercise the rights of the owner. If the GORR holder does not take in kind, the only party that commits the tort is the working interest owner (and conceivably the parties to whom it sells). The subsequent payment on account to the royalty owner is not tainted by the wrongful sale of the gas by the working interest owner. The lessors could only follow (trace) the proceeds of sale of the gas if the GORR holder were a trustee for the lessors – which of course is not the case.

But sometimes GORR owners attempt to do weird and wonderful things in order to maximize the chances of characterizing the royalty as an interest in land, even if they do not take in kind. One such example of this drafting wizardry is for the contract to designate the relationship between the working interest owner and the royalty owner as an agency relationship. Such was the case here since the royalty agreement incorporated (at para 245) the terms of CAPL’s 1997 Overriding Royalty Procedure which provides that where the payee (Esprit) elects not to take in kind the payor (Bonavista) “will act as Esprit’s agent … for the handling and disposition” of its royalty share of the gas and Bonavista will “be as a trustee” for Esprit.” While it seems clear law that a principal must bear responsibility for the torts committed by its agent in the course of the agency relationship (at para 254) Justice Romaine at trial was not prepared to concede that the mere assertion of an agency relationship (as well as a trust relationship) in the CAPL form was enough to establish that agency. This seems problematic (after all, that’s what the contract said and the contracting parties should not be able to pick and choose different parts of the contractual language depending on the issue or argument they are seeking to respond to) but Justice Rowbotham declined to interfere. She suggested that the existence of an agency relationship is partly a question of fact and therefore a matter on which it was appropriate to defer to the trial judge. While that was enough to decide the case for Justice Rowbotham her conclusion takes the form of an assertion rather than a fully reasoned conclusion. It does suggest to me that GORR owners might want to think carefully about the risks of proclaiming a principal\agent relationship with their working interest owners. That said, I think that the risk here must be limited to the GORR owner’s royalty share of the gas that the working interest owner sells. I don’t see how it could extend to the entire volume of sales gas on the basis of an agency relationship. This is because that agency relationship must be confined to the GORR owner’s share of the gas – albeit a commingled share.

Justice O’Ferrall (McDonald JA concurring) for the majority seems to have concluded that Esprit’s behavior was wrongful as against the lessors without needing to resort to the law of agency. The crucial passage is at para 467:

… Esprit received the value of a portion of the production coming out of the 7-25 Well. Esprit was paid that value rather than taking its gross overriding royalty share of production in kind. But Esprit was not entitled to that value because the lessees of those lands were not entitled to the natural gas produced. The leases had terminated and once the underlying lease terminates, the overriding royalty interest expires. … But since Esprit continued to receive an overriding royalty interest share of production from the 7-25 Well after the leases had terminated, it was obligated to account for that share of production which it received in the form of gross overriding payments. Esprit was not entitled to that share. It wrongly received a portion of the value of the natural gas which belonged to the lessors (emphasis added).

The problem with this passage is that Justice O’Ferrall never tells us what might be the basis of the duty to account and on what basis Esprit’s behavior was wrongful as against the lessors. What is the cause of action?

Nevertheless, having made these findings Justice O’Ferrall then appears to equivocate as evidenced by the following paragraph which seems to suggest that the issue is perhaps better dealt with as between Esprit and its counterparty Bonavista (at 468):

The fact that Esprit, as an overriding royalty interest owner, was not a working interest owner meant only that Esprit could not be held jointly and severally liable for the value of all the natural gas wrongfully converted. But that does not absolve it from accounting for the royalty share of production it continued to collect …. In the Agreed Statement of Revenues, Expenses and Royalties, Esprit’s gross overriding royalties were deducted from the lessees’ (Bonavista’s) income from production. So either the lessees are not entitled to that deduction or Esprit is independently liable to the lessors for the royalties it received. That is a matter to be left to Bonavista and Esprit. … We leave it to the parties to implement our direction, with any disputes to be settled by the trial judge or another judge of the Court of Queen’s Bench (emphasis added).

I agree that the lessees cannot reduce their liability to the lessors by referring to and relying on GORR payments they had no obligation to make, but it does not follow from this that Esprit had any liability (whether based on tort or unjust enrichment) to the lessors. In sum, the issue is an issue to be resolved between Esprit and Bonavista. The lessors can recover in full from their lessees (jointly and severally); and the lessees (Bonavista) may be able to recover a portion of its damages assessment from the holder of the GORR who had no right to be paid.

Conclusions

This is already a long post and so I will conclude where I began: interesting case, lots of important issues, lots to argue about in the future – and a very difficult case to untangle. I hope that I have captured where the majority lies on the different issues but I certainly invite comments if readers have different assessments of the judicial alignments than those presented in this post.

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Alberta’s New Climate Plan: Can Alberta Be a Model for Texas?

Fri, 11/27/2015 - 10:00am

By: James Coleman

PDF Version: Alberta’s New Climate Plan: Can Alberta Be a Model for Texas?

Mater Commented On: Alberta’s Climate Leadership Report 

On Monday, Premier Rachel Notley announced Alberta’s new climate plan, which is supported by a detailed report from a panel of experts. The centerpiece of the plan is a $30/tonne price on carbon emissions in Alberta that is implemented through a modified tax dubbed a “carbon competitiveness regulation.” The plan also includes more targeted measures aimed at phasing out coal power, boosting renewable power, lowering methane emissions, and capping emissions from the oil sands.

The most important question about Alberta’s regulation is whether it will encourage other jurisdictions to follow suit. Alberta’s carbon emissions are just under 1% of the global total so it cannot do much to slow climate change by itself. But if Alberta can make stringent carbon regulations work in an energy-producing economy, it could stand as an important example for other energy producing jurisdictions.

As a result, Alberta’s plan may be the most important climate announcement of the year. To achieve the world’s climate goals, major energy producers around the world will have to lower their carbon emissions. But Texas and North Dakota or, for that matter, Russia and Saudi Arabia, aren’t looking to California or Europe for inspiration on climate policy. They will, however, be watching to see whether Alberta’s plan works out.

Alberta’s Announced Carbon Policy

Under the new plan, Alberta’s carbon price will rise to $20/tonne in 2017 and $30/tonne in 2018 and it will apply to anyone that burns or sells fossil fuels. The carbon tax’s design—known as the “carbon competitiveness regulation”—is more complex than its headline numbers suggest. Large industrial facilities, such as the oil sands, will receive credits from the government toward compliance and the companies that produce the least carbon-per-barrel will have more credits than they need to comply. These companies can then sell their excess credits to less-efficient companies who will snap up any credits sold at less than the headline carbon price. So even after 2018, companies may sometimes pay a bit less than $30/tonne of emissions and they will receive a substantial subsidy for their production, which will limit the net impact of the policy on industry.

On the other hand, the baseline carbon price is intended to rise over time slightly faster than inflation “as long as similar prices exist in peer and competitor jurisdictions.” About 90% of Alberta’s exports go to the United States, where there is no carbon price. So this may mean that the price will stay at $30/tonne until the U.S. takes similar action on climate.

Alberta’s proposed climate plan has other elements but the government has not yet revealed exactly how they will work. First, the province will take steps beyond the carbon price to make sure that coal-power is phased out by 2030. Alberta is targeting coal because it emits more carbon and air pollution than Alberta’s other sources of electricity. At the same time, Alberta will provide extra funding for renewable power through a “clean power call” that pays extra for sources like solar power and wind power.

Alberta also aims to cut methane emissions from the oil and gas sector 40% by 2030. The panel proposes to start cutting methane by providing offset credits to companies that find ways to reduce their emissions; these credits may be a cheaper way to comply with the carbon competitiveness regulation. After five years, the government would begin to mandate reductions to ensure that the oil and gas sector meets the 40% target by 2030.

Finally, Premier Notley also announced that carbon emissions from the oil sands would have a special 100 megatonne annual cap. (This policy is not contained in the panel’s recommendations to the government.) Right now, the oil sands emits about 70 megatonnes of carbon per year so it might eventually bump up against this cap if production continues to expand without efficiency improvements. But given lower oil prices and slower projected growth of the oil sands, emissions will probably not approach this cap for a decade, particularly because the cap includes exemptions for co-generation and crude processing. Ultimately, this supposed cap may be helpful rhetorically but it’s hard to say whether future governments would stick by it if it ever threatened to have real economic consequences.

The Big Question: Will Alberta’s Carbon Plan Encourage Action Elsewhere?

Unilateral climate regulations such as Alberta’s plan are politically challenging because they impose costs without providing any immediately obvious benefit. Clean air and clean water rules impose costs but provide citizens with the benefit of clean air and clean water. Climate change, on the other hand, is caused by global emissions so Alberta’s climate regulation will only provide tangible benefits if it encourages other provinces and countries to follow suit.

Premier Notley also implied that the new climate plan will have an indirect benefit by improving Alberta’s reputation in the U.S, and thus reducing foreign resistance to pipelines carrying Canadian crude such as the Keystone XL pipeline. This is a long-shot. Opposition to the Keystone pipeline was never conditional on the stringency of Alberta’s regulation. As I explain in this presentation, most opposition to the Keystone pipeline came from groups that are opposed to all new fossil-fuel infrastructure. Many Canadians favor both stronger climate regulation and better access to markets for Canadian crude; it would be pleasant to think that accomplishing one goal would lead to the other, but there is little evidence for this comforting theory.

So the success of Alberta’s carbon policy will be determined by whether it convinces other countries that its stringent carbon policy is workable in a major energy-producing economy. Like any carbon price, Alberta’s will encourage everyone in the province to burn less fuel by raising the price of electricity, natural gas, and gasoline. It will raise the average household’s cost of heat, power, and transport by about $500 a year.

Despite its costs, economists say this kind of carbon tax is the cheapest way to reliably lower carbon emissions because all carbon reduction policies have costs. But if you were a political leader in Texas or North Dakota or Russia would you follow suit? Would you be willing to impose these costs on your local economy to address a global problem like climate change?

There’s reason for hope: after all, governments raise taxes on their own businesses all the time. Carbon taxes may not be any more politically dangerous than other broad-based taxes such as a sales tax. And a carbon tax probably does less harm to the economy than common taxes such as those on corporate income. So countries or provinces can actually help both the planet and their economy by adopting a carbon tax and using the money to lower distortionary taxes like the corporate income tax. When a carbon tax is only used to replace other taxes, that’s called a “revenue-neutral” carbon tax, and it is what British Columbia has been using since 2008.

Alberta, however, chose not to take this route. Instead, Premier Notley said the government would “reinvest” much of the new revenue in green infrastructure, renewable energy, and efficiency programs. Alberta will rebate some of the costs of the program to low and middle-income consumers, but it is not yet clear how it will do this. So far, there is no indication that the government will use the revenue to reduce other taxes.

Oddly, during the announcement, Premier Notley claimed that the new carbon tax would be revenue-neutral, because all the revenue will be “recycled back into the Alberta economy”—apparently she meant that the government will spend all the revenue it takes in. But that’s not what “revenue-neutral” means, and it is dangerous to call such a tax “revenue neutral.” Conservatives often point to British Columbia’s tax as an example of how climate regulation can be consistent with the small government principles that often drive policy in energy producing jurisdictions. These advocates of revenue neutral carbon taxes won’t get very far if “revenue neutral” becomes a euphemism for higher taxes and higher spending.

Alberta’s new climate policy will be one of the most carefully watched experiments in climate policy and it could change perceptions of what is possible in a major energy exporter. Much will depend on its success.

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

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While You Were Sleeping: Sexual Assault Involving Intoxicated or Unconscious Complainants

Tue, 11/24/2015 - 10:00am

By: Jennifer Koshan

PDF Version: While You Were Sleeping: Sexual Assault Involving Intoxicated or Unconscious Complainants

Case Commented On: R v Garrioch, 2015 ABCA 342

One of the contexts in which women are particularly susceptible to sexual assault is when they are intoxicated, asleep or unconscious. This context also creates challenges when it comes to assessing consent. Section 273.1(2)(b) of the Criminal Code specifically provides that no consent to sexual activity is obtained where “the complainant is incapable of consenting to the activity”, and this section has been interpreted to include circumstances where the complainant is unconscious or incapacitated by intoxication (see R v Esau, [1997] 2 SCR 777). Advance consent to sexual activity that takes place while the complainant is unconscious or asleep is also outside the scope of the consent provisions (see R v JA, [2011] 2 SCR 440; 2011 SCC 28 and see my post on that decision here). In addition, section 273.2 of the Criminal Code requires the accused to take reasonable steps to ascertain whether the complainant was consenting before he can raise the defence of a mistaken belief in consent. The difficult cases arise where the complainant’s intoxication is seen to fall short of producing incapacity to consent, but at the same time creates problems with her ability to recollect the incident in question. This type of scenario was at issue in a recent Alberta case, R v Garrioch, 2015 ABCA 342.

In Garrioch the accused was charged with sexual assault against two complainants, both described as having been “very intoxicated” at the time. The sexual assaults were alleged to have occurred at a party. At trial, the accused was convicted of sexual assault against only one of the complainants, N. N testified that “she fell asleep or passed out on a couch in the living room, [and] woke up in pain to find the appellant having anal sex with her. She told him to stop and fell back asleep until morning.” In the morning she noted blood in the toilet, anal pain, and soreness in her “other area” (at para 2). She testified that she did not consent to either vaginal or anal sex with the accused, but could not recall if she had said anything that would have led him to believe she was consenting. The accused testified that he and N had consensual vaginal sex and denied having anal sex, although he had earlier provided a statement to the police that he had both vaginal and anal sex with N. The trial judge found that the complainant was not so intoxicated that she was unable to consent to some sexual activity, but also that her level of intoxication meant that she did not have a good recollection of events. She was “prepared to accept that the complainant had consented to vaginal intercourse although she could not remember having done so” (at para 5), but convicted the accused of sexual assault in relation to the anal sex.

On appeal, the accused argued that the trial judge’s findings on consent to the vaginal and anal intercourse were inconsistent and that his conviction should accordingly be overturned. The Court of Appeal (Justices Picard, Paperny, and Rowbotham) disagreed, accepting the Crown’s argument that the trial judge’s finding of consent to vaginal intercourse was not based on a negative credibility determination against the complainant that would have tainted her credibility regarding anal sex as well. Rather, it was the complainant’s level of intoxication that led the trial judge to conclude that she could not remember the events clearly (at para 7). On the other hand the trial judge “gave detailed reasons as to why she believed the complainant’s evidence that anal intercourse had occurred, including the pain the act caused her at the time and for days following the event” (at para 9). The accused’s conviction based on non-consensual anal intercourse was upheld on appeal. The Court did not mention R v JA and the legal inability to consent to sexual activity that occurs during unconsciousness, which one would have thought to be relevant on these facts.

Cases involving women who were unconscious or asleep at the time of the sexual assault, whether because of intoxication, disability, medication or otherwise, are numerous, yet in spite of the Criminal Code provisions relating to capacity to consent and the reasonable steps requirement, acquittals are not uncommon in these cases (see e.g. Elizabeth Sheehy, “Judges and the Reasonable Steps Requirement: The Judicial Stance on Perpetration against Unconscious Women” in Sheehy, Sexual Assault in Canada: Law, Legal Practice and Women’s Activism (University of Ottawa Press, 2012) 483; Janine Benedet, “The Sexual Assault of Intoxicated Women” (2010) 22 Canadian Journal of Women & the Law 435). Acquittals may be based on the memory issues already noted, or on the failure of intoxicated complainants to live up to the standards of the “ideal victim” (see e.g. R v Wagar and ABlawg posts on that case here and here; see also Emily Finch & Vanessa Munro, “Juror Stereotypes and Blame Attribution in Rape Cases Involving Intoxicants: The Findings of a Pilot Study” (2005) 45 British Journal of Criminology 25).

This context was, in part, what led the Women’s Legal Education and Action Fund (LEAF) to argue against the recognition of advance consent in JA (see LEAF’s factum here; I was a member of the committee that developed LEAF’s arguments). In situations involving intoxication especially, it would be relatively easy for the accused to argue that the complainant had simply forgotten that she consented beforehand to sexual activity that occurred while she was passed out. As determined by a majority of the Supreme Court in JA, however, consent requires an ongoing, conscious state of mind while the sexual activity is occurring. Only this interpretation protects against the risk that the conscious party might exceed the limits of specific sexual activity that was agreed to in advance of the other party becoming unconscious. Similarly, only this interpretation protects the unconscious party’s right to revoke her consent if circumstances change, are not as she expected, or she otherwise changes her mind. The right to revoke consent is recognized in section 273.1(2)(e) of the Criminal Code, which provides that no consent is obtained “where the complainant, having consented to engage in sexual activity, expresses, by words or conduct, a lack of agreement to continue to engage in the activity.”

Nevertheless, there have been arguments that advance consent should be permitted in cases involving truly consenting sexual partners. Several dissenting justices (led by Fish J) took this position at the Supreme Court, raising concerns about the “sleeping spouse” scenario and whether intimate partners might be criminalized for awakening each other with a kiss or caress (For discussions see Elaine Craig, “Capacity to Consent to Sexual Risk” (2014) 17 New Criminal Law Review 103; Joshua Sealy-Harrington, “Tied Hands?: A Doctrinal and Policy Argument for the Validity of Advance Consent” (2014) 18 Canadian Criminal Law Review 119; Hilary Young, “R. v. A.(J.) and the Risks of Advance Consent to Unconscious Sex” (2010) 14 Canadian Criminal Law Review 273).

One solution proposed by Justice Fish to deal with this scenario was the approach taken in England and Wales, where the Sexual Offences Act 2003 (UK), c 42, introduced an evidential presumption of non-consent where the complainant was asleep or otherwise unconscious. For Justice Fish, this legislation offered a suggestion for how Parliament might respond to evidentiary concerns arising from a recognition of advance consent in Canada, such as the complainant not being able to recall what happened while she was asleep or unconscious coupled with the usual absence of corroborative evidence.

The Sexual Offences Act 2003 provides in section 74 that “a person consents if he agrees by choice, and has the freedom and capacity to make that choice.” Section 75 lists a number of evidential presumptions related to consent. Generally, if it is proved that the accused committed the relevant act and that certain circumstances existed to his knowledge, the complainant is presumed not to have consented unless sufficient evidence is adduced to raise an issue as to consent or reasonable belief in consent (section 75(2)). In addition to the presumption created where “the complainant was asleep or otherwise unconscious at the time of the relevant act,” evidential presumptions also exist in circumstances where there was violence or threats of violence against the complainant or another person; the complainant was unlawfully detained; the complainant was unable to communicate consent because of physical disability; and the complainant was given a stupefying substance (section 75(2)(a)-(f)). Additionally, the Sexual Offences Act 2003 provides for conclusive presumptions against consent in circumstances where the accused “intentionally deceived the complainant as to the nature or purpose of the relevant act” or “intentionally induced the complainant to consent to the relevant act” by impersonation (section 76).

This is a very different scheme than Canada’s Criminal Code, where we have a number of conclusive presumptions against consent in section 273.1(2) but no evidential presumptions. Indeed, the Sexual Offences Act 2003 has been critiqued on the basis that there is no apparent rationale for differentiating between the circumstances leading to conclusive versus evidential presumptions. Moreover, the lists of presumptions are closed, and omit certain circumstances where consent might reasonably be presumed to be absent, such as the complainant’s incapacity caused by voluntary intoxication (See Jennifer Temkin and Andrew Ashworth, “The Sexual Offences Act 2003:(1) Rape, sexual assaults and the problems of consent” [2004] Criminal Law Review 328, 336-7).

With respect to the evidential presumption involving complainants who were asleep or otherwise unconscious, Temkin and Ashworth argue that it “takes the law backwards” by altering the conclusive presumption at common law that there was no consent in these circumstances (at 337). The common law position was based on the understanding – similar to that of the majority of the Supreme Court of Canada in JA – that consent must be present at the time of the sexual act.

Case law on the application of the evidential presumption regarding sleeping or unconscious complainants in England and Wales raises some of the concerns enumerated by LEAF in its intervener factum in JA.

R v White, [2010] EWCA Crim 1929, involved a scenario where the accused took intimate photographs of himself engaged in sexual activity with the complainant, his former intimate partner, on his mobile phone. She testified that she did not consent to the photos being taken or the sexual activity they captured, which must have occurred while she was asleep. In cross-examination “she agreed that the images could have been taken after an act of consensual sexual intercourse [and that there] had been occasions when she had consented to sexual intercourse with the appellant when she had been drinking alcohol” (at para 3). This evidence was seen to be sufficient to rebut the evidential presumption relating to unconscious complainants by raising an issue of consent or belief in consent. According to the Court of Appeal, the jury’s question: “If she gave consent beforehand and then fell asleep during the photo preparation, is the consent still current?” should be answered in the affirmative and provide a defence to the accused (at paras 9, 12).

In another case, R v Ciccarelli, [2011] EWCA Crim 2665, the Court of Appeal considered a situation where the complainant was sexually touched by the accused while she was “fast asleep or unconscious through drink, and possibly drugs, without her consent” (at para 4). The only issue was the accused’s reasonable belief in consent. The trial judge concluded that sufficient evidence had not been raised to leave the issue of belief in consent with the jury. The Court of Appeal upheld this ruling, but also suggested that if there had been a previous relationship between the parties, that may have affected the question of whether there was sufficient evidence to rebut the presumption (at paras 5, 19).

This case law on section 75(2) of the Sexual Offences Act 2003 reinforces concerns with respect to the difficulties of proof in cases involving sleeping or unconscious partners. My research on marital rape in Canada shows that cases involving sleeping or unconscious complainants often only come to light where the accused recorded the sexual activity, as in White (see e.g. R v Berry, 2013 BCSC 1878; 2014 BCSC 284; 2015 BCCA 210; R v Truong, 2012 ABQB 661; 2013 ABCA 373; R v NW, 2013 ABCA 393; R v Cassels, 2013 MBPC 47; R v BJW, 2011 ONSC 5584; R v JH, 2013 ONCA 693; R v DR, 2013 ONSC 161). But in White the finding of sufficient evidence to rebut the presumption meant the case should have gone to the jury to decide whether the complainant consented to the sexual activity that occurred while she was asleep. In Canada, that activity would fall outside the parameters of the consent provisions. The evidential presumption in the Sexual Offences Act 2003 also raises the possibility of the introduction of sexual history evidence and the relaxation of standards around consent and mistaken belief in consent in cases involving a previous relationship between the parties, as the Court of Appeal adverted to in Ciccarelli.

I therefore maintain that the Supreme Court majority was correct in JA by holding that advance consent should not be permitted within the context of Canadian sexual assault law, and disagree with the dissent’s suggestion that it would be appropriate to introduce an evidential presumption similar to that under the Sexual Offences Act 2003. Even without an evidential presumption, it can be difficult to maintain Canada’s affirmative understanding of consent in cases involving complainants who were intoxicated, even to the point of passing out, as Garrioch shows.

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Everything Must Go!!!

Fri, 11/20/2015 - 10:00am

By: Theresa Yurkewich

PDF Version: Everything Must Go!!!

Case Commented On: Edmonton (City) v Peter, 2015 ABQB 635

It began with an ordinary accumulation of garbage bags. Next, a giant “Yard Sale” sign followed, made on cloth and propped up by the house. And in no time, the property located on Edmonton’s busy 113th Street was increasingly riddled with a variety of materials from household goods, to cardboard and other debris, and, on occasion, even a spray-painted “Closed” sign. By June 2015, it appeared Mr. Peter was running a permanent yard sale, visible from the street and encompassing both his front and back yard; and frankly, the City of Edmonton – and likely Mr. Peter’s neighbors – had enough. This article examines the decision of Justice J.B. Veit in Edmonton (City) v Peter, 2015 ABQB 635.

Under Section 546(1)(c) of the Municipal Government Act, R.S.A. 2000, c. M-26, the City of Edmonton sought, and received, an order in June 2015 requiring Mr. Peter to removal all garbage bags, cardboard, loose litter, and debris from his property. Mr. Peter, however, appealed this order to the License and Community Standards and Appeal Board and continued to accumulate debris on his property. In fact, in his refusal to comply, Mr. Peter issued a “notice” to the City, objecting to the entrance of enforcement officers on his property without a warrant.

The provisions of section 546 of the Municipal Government Act relied upon by the City to issue the removal order are as follows:

546(0.1) In this section,

(a) “detrimental to the surrounding area” includes causing the decline of the market value of property in the surrounding area;

(b) “unsightly condition”,

(i) in respect of a structure, includes a structure whose exterior shows signs of significant physical deterioration, and

(ii) in respect of land, includes land that shows signs of a serious disregard for general maintenance or upkeep.

(1) If, in the opinion of a designated officer, a structure, excavation or hole is dangerous to public safety or property, because of its unsightly condition, is detrimental to the surrounding area, the designated officer may by written order

(a) require the owner of the structure to

(i) eliminate the danger to public safety in the manner specified, or

(ii) remove or demolish the structure and level the site;

(b) require the owner of the land that contains the excavation or hole to

(i) eliminate the danger to public safety in the manner specified, or

(ii) fill in the excavation or hole and level the site;

(c) require the owner of the property that is in an unsightly condition to

(i) improve the appearance of the property in the manner specified, or

(ii) if the property is a structure, remove or demolish the structure and level the site.

(2) The order may

(a) state a time within which the person must comply with the order;

(b) state that if the person does not comply with the order within a specified time, the municipality will take the action or measure at the expense of the person.

The refusal by Mr. Peter to comply with the City’s order over the next 3 months, led the City to bring an application via section 554(1)(b) of the Municipal Government Act, seeking a mandatory injunction of Mr. Peter’s yard sale, thereby requiring him to end the sale and remove the items from his yard. This application was based on a variety of bylaw infringements, including Mr. Peter’s failure to apply for and obtain a business license for his yard sale, and the excessive accumulation of material amounting to unsightliness.

Mr. Peter opposed the injunction application on five grounds, including that the City had no evidence he was actually running a sale or had made a transaction, and therefore arguing he did not require a business license to operate the yard sale itself. Further, he argued the term “unsightly” was too subjective for the court to enforce.

In support of its position, the City relied on section 6 of the Community Standards Bylaw, City of Edmonton Bylaw 14600, which states in part:

6 (1) A person shall not cause or permit a nuisance to exist on land they own or occupy.

(2) For the purpose of greater certainty a nuisance, in respect of land, means land, or any portion thereof, that shows signs of a serious disregard for general maintenance and upkeep, whether or not it is detrimental to the surrounding area, some examples of which include:

(a) excessive accumulation of material including but not limited to building materials, appliances, household goods, boxes, tires, vehicle parts, garbage or refuse, whether of any apparent value or not.

The City further relied upon the definition of “business” and “general business” within the Business License Bylaw, City of Edmonton Bylaw 13138, and argued a yard sale met the classification of a second hand store, reading:

2 In this bylaw:

(a) “Business” means:

(i) a commercial, merchandising or industrial activity or undertaking,

(ii) a profession, trade, occupation, calling or employment, or

(iii) an activity providing goods or services,

as described in Schedule “A”, and whether or not for profit and however organized or formed, including a co-operative or association of Persons;

The relevant portions of Schedule A are as follows:

General Business: Any Business not otherwise specified in this Schedule.

Second Hand Store: Selling previously owned goods other than by Auction, Traveling or Temporary Sales or in a Flea Market or Farmer’s Market.

In addition, section 82 of the Business Licence Bylaw provides:

82 In addition to any other requirements, before the issue or renewal of a Licence for a Second Hand Store a Person must submit to the City Manager, in a form acceptable to the City Manager:

(a) if the applicant is a corporation:

(i) the full name and date of birth of all primary managers, owners, partners, directors and officers of the corporation; and

(ii) a recent Police Information Check issued by the Edmonton Police Service for all primary managers, owners, partners, directors and officers of the corporation;

(b) if the applicant is an individual:

(i) the full name and date of birth of the applicant; and

(ii) a recent Police Information Check issued by the Edmonton Police Service for the applicant;

(c) the full name, date of birth and job title of every Person working in the Second Hand Store.

The City acknowledged that an exemption from the Business License Bylaw exists for a garage sale that lasts a minimum of three days, and occurs only once per year. Mr. Peter’s “yard sale”, however, had been enduring long past that limitation.

The Court deemed it necessary to proceed with the City’s application, regardless of Mr. Peter’s pending appeal of the June 2015 order, stating that the application was not based on the same facts as the June 2015 order, given that the situation had escalated, as admitted by Mr. Peter and as illustrated through the City’s evidence.

The Court agreed with Mr. Peter that a yard sale is not a second hand store, however, as provided above, the Business License Bylaw still requires every business to be licensed as a general business. Referring to Stewart v Canada, 2002 SCC 46, the Court applied a two-stage approach to summarize the principles of a “business”. This approach includes determining whether the individual’s activity is undertaken in pursuit of profit, and if so, whether the source of the income is business or property. Where the individual’s nature of activity is clearly commercial, however, a pursuit of profit is established.

In regards to Mr. Peter’s activity, the Court looked subjectively at the evidence, searching for evidence of business like behaviour. In this case, the placement of a yard sale sign on the property was an indication of a commercial operation, regardless of whether any transactions actually occurred. The choice of the word “sale”, together with the photographs provided by the City, including the closed sign, established a commercial intent. In response to Mr. Peter’s argument that there was no evidence of any commercial transactions, at paragraph 43 the Court stated that “evidence of a transaction actually being concluded is not a necessary component of a “business”. A business owner that never concluded any transaction would be an unsuccessful business, but it would be a business all the same”.

Regardless of the lack of evidence that Mr. Peter was actually operating the sale, the Court relied on the circumstantial evidence, including his ownership and presumptive control of the land as well as his frequent attendance at the property.

In response to Mr. Peter’s argument that the term “unsightly” is too difficult to define, the Court applied section 6(2)(a) of the Community Standards Bylaw in conjunction with section 546(0.1) of the Municipal Government Act, to find that there was an excessive accumulation of material on Mr. Peter’s property, amounting to unsightliness, and ultimately permitting an order for removal of the materials and compliance by Mr. Peter.

In determining Mr. Peter was in breach of the City of Edmonton’s bylaws, the Court then turned to remedies, first discussing a typical hesitance to award injunctions. In this case, however, the Court stated there were no other remedies available to the City, especially given the City’s previous attempts to enforce the June 2015 order and the worsening of the situation. For this reason, the Court agreed that an injunction was necessary to resolve the situation and not only granted the City’s application, but also provided the City with the right to enter Mr. Peter’s property and remedy the situation if Mr. Peter did not do so himself.

It was Mr. Peter’s use of the word “sale” that ultimately led to his own downfall. In the end, the sign was ultimately relied upon to establish a commercial intent, rather than a personal endeavour, regardless of whether any transactions actually occurred on the property. Had Mr. Peter merely accumulated the materials in his yard, however, he would have still been trapped under the Community Standards Bylaw, due to his excessive accumulation of materials – seemingly increasing each day. For now, the moral of the story seems that the success of a business, or lack thereof, will not exempt an individual from the applicability of the Business License Bylaw, and if you wish to hoard items in your yard – limit it to a duration of three days per year.

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Protection for the Rights of Farm Workers Finally Proposed in Alberta

Thu, 11/19/2015 - 10:00am

By: Jennifer Koshan

PDF Version: Protection for the Rights of Farm Workers Finally Proposed in Alberta

Legislation Commented On: Bill 6, Enhanced Protection for Farm and Ranch Workers Act

On November 17, 2015 the Minister of Jobs, Skills, Training and Labour Lori Sigurdson introduced Bill 6 in the Alberta Legislature. She described the Enhanced Protection for Farm and Ranch Workers Act as an omnibus bill that:

proposes to amend workplace legislation so Alberta’s farm and ranch workers will enjoy the same basic rights and protections as workers in other industries. Proposed changes would remove the exemption of the farm and ranch industry from occupational health and safety, employment standards, and labour relations legislation. Bill 6 also proposes to make workers’ compensation insurance mandatory for all farm and ranch workers. If passed, Alberta would join every other jurisdiction in Canada in applying workplace legislation to Alberta’s farms and ranches. This is a historic day for Alberta (Hansard, November 17, 2015).

In a constitutional clinical course in winter 2014, my students undertook research and discussions with labour and employment groups and concluded that these changes were constitutionally mandated. Their conclusions, based on analysis of case law under Charter section 2(d) (freedom of association), section 7 (the right to life, liberty and security of the person) and section 15 (equality rights) can be found in ABlawg posts here:

Kay Turner, Gianna Argento, Heidi Rolfe, Alberta Farm and Ranch Workers: The Last Frontier of Workplace Protection

Brynna Takasugi, Delna Contractor and Paul Kennett, The Statutory Exclusion of Farm Workers from the Alberta Labour Relations Code

Nelson Medeiros and Robin McIntyre, The Constitutionality of the Exclusion of Farm Industries under the Alberta Workers’ Compensation Act

Graham Martinelli and Andrew Lau, Challenging the Farm Work Exclusions in the Employment Standards Code

See also my post The Supreme Court’s New Constitutional Decisions and the Rights of Farm Workers in Alberta, which argues that the constitutional mandate to include farm workers in labour and employment legislation was strengthened by a number of Supreme Court decisions from earlier this year.

Bill 6 proposes the following measures:

  • Part 1 will repeal sections 2(3) and (4) of the Employment Standards Code, RSA 2000 c E-9. These sections currently exclude farm and ranch workers from provisions of the Employment Standards Code relating to Hours of Work, Overtime and Overtime Pay, General Holidays and General Holiday Pay, Vacations and Vacation Pay, and Restrictions on the Employment of Children. It will also repeal section 138(1)(l) of the Code and section 1.1 of the Employment Standards Regulation, AR 14/97, both of which provide definitions of agricultural operations encompassed by the current exclusions. For arguments that these exclusions violate sections 7 and 15 of the Charter see Martinelli and Lau, above. The proposed amendments in this Part would come into force upon Proclamation, which the government anticipates for spring 2016. A government news release indicates that the delay is to allow “consultations with industry regarding exemptions that may be needed for unique circumstances such as seeding or harvesting”.
  • Part 2 will repeal section 4(2)(e) of the Labour Relations Code, RSA 2000 cL-1, which currently excludes farm and ranch workers from the entire Labour Relations Code. The exclusion deprives farm and ranch workers of the right to join a trade union and have that union collectively bargain on its behalf, the right to strike, and protection from unfair labour practices on the part of employers. For arguments that these exclusions violate sections 2(d), 7 and 15 of the Charter see Takasugi, Contractor and Kennett, above. The proposed amendments in this Part would come into force upon Proclamation in spring 2016. The government also contemplates the possibility of special provisions in this legislative context “to address the unique aspects of the farm and ranch industry” (see here).
  • Part 3 will repeal section 1(s)(i) of the Occupational Health and Safety Act, RSA 2000 cO-2, as well as the Farming and Ranch Exemption Regulation, AR 27/95. These provisions currently exclude farm and ranch workers, as defined in the Regulation, from workplace standards designed to protect the health and safety of workers, including the right to refuse unsafe work. For arguments that these exclusions violate sections 7 and 15 of the Charter see Turner, Argento, and Rolfe, above. Part 3 also proposes amendments to the Occupational Health and Safety Code 2009, adopted under the Occupational Health and Safety Code 2009 Order, AR 87/2009. These amendments would, unless expressly provided otherwise, maintain the exclusion of some farm and ranch workers from the Code. According to the government’s news release, it intends to develop specific occupational health and safety standards for farms and ranches that would presumably be included in the Code. The proposed amendments in Part 3 would come into force on January 1, 2016, with the government promising detailed standards by 2017.
  • Part 4 will repeal a number of exclusions in the Workers’ Compensation Regulation, AR 325/2002, Schedule A, by striking out the categories of farm and ranch workers who are currently excluded from mandatory workers compensation coverage, i.e. those involved in: agrology and agronomy services; operation of apiaries; artificial breeding services; breeding of animals, birds, fish or reptiles; collection of urine from pregnant mares; operation of dude ranches; commercial egg production; farming; farming contracting, including haying and threshing; operation of commercial feed lots; fertilizer spreading services; commercial fruit growing operations; game farms; horse exercising, training or racing; commercial poultry production; commercial rabbit production; ranching; operation of riding academes or horse stables; and commercial vegetable growing. For arguments that the current exclusions violate sections 7 and 15 of the Charter see Medeiros and McIntyre, above. The proposed amendments in Part 4 would come into force on January 1, 2016.

A number of town hall meetings will take place before the end of December to allow broad consultation into the proposed changes. The government has also developed a website on the Enhanced Protection for Farm and Ranch Workers Act that permits input to be provided online.

As noted in the government’s FAQ, Alberta is the only province where Occupational Health and Safety (OHS) legislation does not apply to farms and ranches. Ontario was one of the last provinces to extend its OHS legislation to farm workers, which it did in 2006. Ontario was also a hold out in extending labour relations protections to farm workers. Although Bob Rae’s NDP government did so in 1994, and farm workers were covered for a short time, the Mike Harris Conservatives repealed that legislation when they came to power in 1995. This resulted in litigation culminating with the Supreme Court of Canada’s decision in Dunmore v. Ontario (Attorney General), [2001] 3 SCR 1016, 2001 SCC 94. In Dunmore, the Court held that the blanket exclusion of farm workers from labour relations protections violated their freedom of association under section 2(d) of the Charter, and could not be justified by the government under section 1 on the basis of protecting “family farms”. As noted by the Court, farming has changed drastically over the last 100 years and often takes place in large scale commercial operations, making the family farm justification overbroad.

In spite of the decision in Dunmore (which I nominated as one of the top cases of the 2000s on ABlawg several years ago), successive Conservative governments in Alberta continued to maintain a blanket exclusion of farm and ranch workers from not just the Labour Relations Code, but from the Employment Standards Code, Occupational Health and Safety Act and Workers’ Compensation Act as well. This was in spite of some excellent advocacy on behalf of these workers by the Alberta Federation of Labour, the United Food and Commercial Workers, the Calgary Workers Resource Centre, the Farm Workers Union of Alberta, and Dr David Swann. It is about time that the government is proposing to extend to farm and ranch workers the same legislative protections enjoyed by other workers in this province and by farm and ranch workers elsewhere in Canada.

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Is there Space for the Homeless in our City’s Parks? A Summary and Brief Commentary of Abbotsford (City) v Shantz

Tue, 11/17/2015 - 10:00am

By: Ola Malik and Megan Van Huizen

PDF Version: Is there Space for the Homeless in our City’s Parks? A Summary and Brief Commentary of Abbotsford (City) v Shantz

Case Commented On: Abbotsford (City) v Shantz, 2015 BCSC 1909

The recent B.C. decision of Abbotsford (City) v Shantz) highlights the central issue which seems to arise whenever there is a conflict over the management of public city space – who does this space “belong” to, and who gets to use it? When we answer that question, many of us would agree that this space belongs to those who live in our communities — parents with strollers, families on an outing, people walking their dogs or playing with their kids. When we think about who belongs in our community, how many of us include the homeless?

The homeless are often excluded from our conception of community. It is easy to ignore the issue of homelessness when it is hidden from view. But as soon as the homeless become visible in our parks and neighbourhoods they are seen as a nuisance requiring a solution. The well-known phrase, “you don’t have to go home, but you can’t stay here” aptly captures the dilemma the homeless face — and when you have no place to call home – where do you go?

A Precursor: Victoria (City) v Adams

In the previous B.C. case of Victoria (City) v Adams (2008 BCSC 1363, 2009 BCCA 563), The City of Victoria sought to remove a tent city comprised of 20 tents which was being used by 70 homeless people in one of its downtown parks. The City of Victoria argued that the tent city was in contravention of its bylaws which prohibited people from temporarily erecting shelters, such as tents or other structures, and sleeping in parks overnight. The City of Victoria commenced civil proceedings and was initially successful in getting the tent city removed pursuant to a temporary civil injunction. However, The City of Victoria lost at trial where its bylaws were challenged on the basis that they infringed upon the homeless campers’ section 7 Charter rights because of arbitrariness and overbreadth. The trial judge found that The City of Victoria’s bylaws were both arbitrary and overbroad and therefore constituted a breach of their section 7 Charter interests which were not saved by section 1 of the Charter. The City of Victoria appealed to the BC Court of Appeal, which upheld the trial judge’s conclusions that the bylaws were overbroad (BCCA, at paras 112-116) but did not find that they were arbitrary (BCCA, at paras 117-124).

It is important to note how the constitutional question in the Adams case was framed. The City of Victoria’s bylaws allowed a person to sleep in a park during the daytime under a non-structural covering, such as under a blanket, in a sleeping bag, or under a tarp. What the bylaw prohibited was sleeping in parks overnight, and the erection of any structure, howsoever temporary, such as a tent, a tarp strung between trees, or cardboard boxes.

Taken together, the courts’ decisions in Adams establish that where the number of homeless exceeds the number of available shelter beds, prohibiting the homeless from sleeping overnight in municipal parks and from erecting temporary, adequate overhead shelter constitutes a breach of section 7 of the Charter. Erecting a temporary overhead structure in which to sleep invokes one of the basic life choices that go to the core of what it means to enjoy individual dignity and independence. This is because without some form of overhead protection from the elements, the homeless are significantly exposed to the elements and risk health problems such as hypothermia and even death. Consequently, the erection of some overhead structure is a necessary response to a person’s health and well being, and is therefore protected by the security interest enshrined in section 7 of the Charter.

The BC Court of Appeal agreed with the trial judge’s findings that the bylaw restrictions were overbroad: The City of Victoria didn’t prohibit sleeping in parks during the daytime, so what was the purpose for banning night-time sleeping? Further, The City of Victoria failed to establish how the erection of temporary, non-invasive structures or an increase in the number of homeless campers would have a more harmful impact on park assets than that caused by other park users.

The courts’ decisions in Adams leave us with three key issues which, as we shall see, remain relevant after Shantz:

  • The courts’ conclusions regarding the section 7 breach rest on a finding that there were insufficient shelter beds to provide overnight shelter. The courts acknowledged that a decision regarding the homeless’ section 7 Charter rights would be much more difficult if a municipality could prove that there were enough accessible, safe, shelter beds for the homeless to use (BCSC, at para 191; BCCA, at para 74).
  • Finding in favour of a section 7 Charter breach should not be viewed as constituting an interference with a municipality’s discretion in how it chooses to address homelessness, nor does it impose an obligation on a municipality to provide the homeless with adequate shelter (for more of a discussion on this, see Joshua Sealy-Harrington’s blog here where he discusses the Ontario Court of Appeal’s decision in Tanudjaja v. Canada (Attorney General), 2014 ONCA 852 which upheld a motion court’s decision to strike an application brought under section 7 of the Charter which sought to require the federal government and Ontario provincial government to provide for “affordable, adequate, accessible housing”). What the section 7 analysis is concerned with is whether government action deprives someone of their liberty rights, not with the imposition upon government of positive obligations to fix the problem. How government chooses to remedy a section 7 Charter breach is for government to decide, not the courts (BCSC, at paras 114-123; BCCA, at paras 90-96).
  • Adams does not grant the homeless with a vested property right, or a “free-standing constitutional right” to camp in a municipality’s parks. In Adams, both the trial judge and BC Court of Appeal were careful to point out that the homeless were not being granted an exclusive use of municipal park space. While overnight camping under temporary structures was allowed, there was nothing in the courts’ decision which opened the door (at least on the facts before them) for the establishment of permanent or semi-permanent homeless encampments or “tent cities” (BCSC, at paras 126-132; BCCA, at paras 98-101).

The Present: Abbotsford (City) v Shantz

In the case of Shantz, The City of Abbottsford had been dealing with the erection of various homeless camps. In the case of one camp, The City of Abbotsford obtained an interim injunction, requiring the removal of all structures of shelters and tents which had been erected (including a wooden structure) as part of a homeless camp. The City of Abbotsford brought an application to make the injunction permanent. The BC/Yukon Association of Drug War Survivors (“DWS”) responded by challenging the constitutional validity of The City of Abbotsford’s various bylaws pursuant to sections 2 (rights to freedom of expression, peaceful assembly, and association), 7 and 15 of the Charter.

In contrast to The City of Victoria’s bylaws under consideration in Adams which imposed a blanket prohibition on overnight camping and the erection of temporary shelters in its city parks, the City of Abbotsford’s bylaws subjected this very same activity to a permitting scheme. In order to camp overnight or erect a temporary structure such as a tent, building, shelter pavilion or other construction, you were required to obtain permission from the general manager of parks. A valid credit card was required to make the booking. The cost per night was $10.00 per tent or vehicle. Insurance was also required (at paras 22-23).

Would The City of Abbotsford’s permitting regime survive a Charter challenge?

In Shantz, the court arrived at the same ultimate conclusions as those arrived at in Adams: the homeless have a constitutionally protected liberty right under section 7 of the Charter to sleep overnight in parks under temporarily erected overhead shelters where a municipality does not have sufficient accessible shelter space to accommodate them. The permitting scheme which The City of Abbotsford had set up was not practically accessible by the homeless, and effectively acted as a prohibition.

It is important to note that in Shantz, The City of Abbotsford had engaged in various efforts to shut down some of the homeless camps and keep the homeless moving. These efforts included spreading chicken manure over one camp, spraying pepper spray into empty tents, and cutting tent straps and tents. The court was condemnatory of these tactics which affected the homeless psychologically and made it more difficult for The City of Abbotsford’s homeless providers to locate them and provide help (at para 209).

The court dismissed DWS’s Charter challenge brought forward for breaches of sections 2 and 15 (these won’t be discussed here) but otherwise concluded that The City of Abbotsford’s regulatory scheme infringed upon the homeless campers’ section 7 liberty interests and that the impact of the bylaws was overbroad and grossly disproportionate, thereby violating principles of fundamental justice.

With respect to overbreadth, the court (at para 200) cited the definition of overbreadth from (Canada (Attorney General) v. Bedford, 2013 SCC 72, (“Bedford”) and found that The City of Abbotsford’s permitting scheme was overbroad (at paras 200-203). The court indicated that less intrusive measures could have been imposed that would still have supported The City’s objectives of effectively managing its parks for all of its park users. Similar to the analysis of overbreadth, the court concluded that imposing a permitting scheme which the homeless could not satisfy and displacing the homeless from their camps was grossly disproportionate to these objectives (at paras 209, 221, 223-224).

Finally, the court found that the section 7 breaches were not saved by section 1 of the Charter (at paras 237-247). This is unsurprising as it is extremely rare that a court, having concluded that a law which infringes upon those fundamental personal rights protected by section 7 and a manner which in some way violates the principles of fundamental justice can ever be saved by more compelling societal interests.

In the result, the court declared that the bylaw provisions which prohibited overnight sleeping and the erection of temporary shelters violated section 7 and were of no force and effect, pursuant to section 52 of the Charter. Further, the court concluded that a minimally impairing bylaw would allow overnight shelters in The City of Abbotsford’s public parks between the hours of 7:00 pm and 9:00 am the following day.

The issues which we identified in Adams continue to be of interest following the court’s decision in Shantz.

  • For the court in Shantz, assessing whether The City of Abbotsford had sufficient overnight shelter accommodations invokes both quantitative and qualitative assessments (although this was not expressly articulated in this way). The quantitative question asks whether there are enough available shelter beds to meet demand. The qualitative question is more difficult and examines the nature of barriers that would prevent someone from accessing normally available shelter space. Examples of barriers include shelter open hours, restrictions pertaining to sobriety and drug abstinence, unaffordable rental fees, and, in some cases, the poor living conditions found in some of the market housing (at paras 47-68). In Shantz, the court essentially concluded there was both insufficient (quantitative) and inaccessible (qualitative) shelter space (at para 82).

As in Adams, the court in Shantz addressed The City of Abbotsford’s argument (at paras 76-77) that some homeless people prefer to camp outside despite the presence of available shelter beds. The City of Abbotsford tried to make the point that it was caught in an intractable bind — irrespective of how much accessible shelter space there was, there are homeless people that simply prefer to camp outside.

In Shantz, the court addressed this issue (at para 78) by referring to the Bedford decision where the Supreme Court of Canada expressly addressed the issue of “choice” for those engaging in risky activities at paras 86 and 87:

First, while some prostitutes may fit the description of persons who freely choose (or at one time chose) to engage in the risky economic activity of prostitution, many prostitutes have no meaningful choice but to do so. Ms. Bedford herself stated that she initially prostituted herself “to make enough money to at least feed myself”. As the application judge found, street prostitutes, with some exceptions, are a particularly marginalized population…Whether because of financial desperation, drug addictions, mental illness, or compulsion from pimps, they often have little choice but to sell their bodies for money. Realistically, while they may retain some minimal power of choice — what the Attorney General of Canada called “constrained choice” — these are not people who can be said to be truly “choosing” a risky line of business.

Second, even accepting that there are those who freely choose to engage in prostitution, it must be remembered that prostitution — the exchange of sex for money — is not illegal. The causal question is whether the impugned laws make this lawful activity more dangerous. An analogy could be drawn to a law preventing a cyclist from wearing a helmet. That the cyclist chooses to ride her bike does not diminish the causal role of the law in making that activity riskier. The challenged laws relating to prostitution are no different.

It’s important to point out how the courts in Adams and in Shantz address this question of “choice” as it pertains to section 7 interests.   All of us have heard the arguments that only those who make poor life choices or are otherwise irresponsible end up homeless. This is a convenient argument which releases us from any further obligation to render assistance because they have “chosen” how to live their lives, just as we have ours.

But making a Sophie’s Choice is not a free choice. In the same way in which court decisions such as Bedford and R v Parker ((2000), 49 O.R. (3d) 481, referred to in the Adams decision, BCCA, at para 106)) have refined the section 7 interests in respect of prostitutes and epileptics, the courts in Adams and Shantz have now examined these interests in respect of the homeless. This is how the court framed this issue in Shantz (at paras 81-82):

…[T]o assert that homelessness is a choice ignores realities such as poverty, low income, lack of work opportunities, the decline in public assistance, the structure and administration of government support, the lack of affordable housing, addiction disorders, and mental illness. I accept that drug and alcohol addictions are health issues as much as physical and other mental illnesses. Nearly all of the formerly homeless witnesses called by DWS gave evidence relating to some combination of financial desperation, drug addiction, mental illness, physical disability, institutional trauma and distrust, physical or emotional abuse and family breakdown which led, at least in part, the witness becoming homeless.

Given the personal circumstances of the City’s homeless, the shelter spaces that are presently available to others in the City are impracticable for many of the City’s homeless. They simply cannot abide by the rules required in many of the facilities that I have discussed above, and lack the means to pay the required rents at others. While some of those who are amongst the City’s homeless have declined available shelter, I am satisfied that at present there is insufficient accessible shelter space in the City to house all of the City’s homeless persons.

It appears that this issue of “choice” has now been put to rest. However, we wonder from a practical perspective whether a municipality would ever be able to demonstrate that it had sufficient accessible shelter beds to meet its homeless population. Providing the quantity of overnight shelter beds is, in itself, a difficult challenge for any municipality to meet. Now add to that the additional challenge of having to ensure that overnight shelter beds qualitatively meet the broad range of challenges by imposing suitably low barriers to admission. Can a municipality realistically ever prove that it has made available sufficient shelter space to meet a vast range of current, individualized needs? Can the test, which requires a municipality to show that it has both sufficient and accessible shelter space ever be met?

  • In Shantz, the court confirmed that the section 7 analysis should only focus on the effect of how laws deprive someone of their section 7 interests (at paras 181-182). Neither in Adams nor in Shantz did the courts affirm that section 7 of the Charter grants the homeless with a constitutionally protected right to adequate food, shelter or any other basic necessities of life. To do so, would constitute the granting of positive social and economical interests which the court in Shantz expressly declined to do based on previous case law (at paras 176,177 and 181).

However, in Shantz (at para 178), the court quoted from an article written by Martha Jackman titled The Protection of Welfare Rights Under the Charter ((1988) 20 Ottawa Law Review 257), which was cited by the trial judge in Adams:

…[A] person who lacks the basic means of subsistence has a tenuous hold on the most basic of constitutionally guaranteed human rights, the right to life, to liberty, and to personal security. Most, if not all, of the rights and freedoms set out in the Charter presuppose a person who has moved beyond the basic struggle for existence. The Charter accords rights which can only be fully enjoyed by people who are fed, are clothed, are sheltered, have access to necessary health care, to education, and to a minimum level of income…

There appears to be a growing consensus within the legal academy and the courts that our laws are not being carefully crafted enough to recognize their effects and impact upon those who live on the margins of our society. That conclusion should perhaps come as no surprise given that issues of poverty, homelessness, mental illness, drug addiction, and crime are complex and require deeper understanding. (For anyone writing on the intersection between laws and the homeless, we would strongly recommend two excellent articles written by Jeremy Waldron: Homelessness and Community, (2000), 50 University of Toronto Law Journal, 372-406; and Homelessness and the Issue of Freedom, 39 UCLA L. Rev. 295-324, (1991-1992)).

We’re curious to see how far the application of section 7 rights will extend to the rights of the homeless although we’re sure we’re at the start of what could be an enlargement of section 7 jurisprudence in this regard. That poses a challenge for municipalities to ensure that they carefully consider the interests of the marginalized who are often disproportionately impacted by municipal enforcement (for example, see Justin Douglas: The Criminalization of Poverty: Montreal’s Policy of Ticketing Homeless Youth for Municipal and Transportation Bylaw Offences (2011) 16 Appeal 49-64) and who very often don’t have sufficient input into the political or administrative process regarding the drafting of municipal bylaws.

  • In Adams, one of the questions which the courts considered was whether, in successfully establishing that they had they had a right to camp overnight in city parks, the homeless were being granted a property right in appropriating public park space. This is critically important for municipalities who fear this would create permanent tent cities. As you might recall, this was one of the central arguments which Canadian municipalities articulated in their efforts to rid their parks of the Occupy protest encampments which swept across Canada in late 2011.

In Adams, the trial judge suggested that The City of Victoria’s concerns regarding the environmental impact of overnight camping could be alleviated by requiring the overhead structures to be dismantled each morning and to delineate which ecologically sensitive park areas were off limits for sleeping and camping (BCSC at para 185). In Shantz, the court raised the idea that overnight camping be allowed in a roster of rotating, non-developed parks, closer to homeless facilities and perhaps more appropriate (from an ecological standpoint) for overnight camping (at para 278). As discussed above, the court disapproved of the displacement tactics which The City of Abbotsford used to move the homeless on because of their destabilizing impact on an already vulnerable group.

We might suggest that where there is any doubt as to what the correct strategy ought to be, municipalities are far better served redressing the issue of established homeless encampments through formal court proceedings or pursuant to trespass legislation rather than asking enforcement officials to exercise their individual discretion. While seeking court remedies takes much longer time, municipalities who avail themselves of the legal process will far often be seen as having acted properly, through the appropriate legal channels and in good faith, as compared to those who exercise questionably harsh tactics (as in Shantz). Further, effectively dealing with the homeless requires the assistance of specialized agencies, social workers and homeless advocates who understand the challenges of homelessness and who can suggest appropriate resources for follow-up help.

For many municipalities, the effect of the 2011 Occupy protest movement was to focus the mind on how to balance competing interests and demands brought to bear on public park space. To find the appropriate balance was novel for many municipalities who didn’t quite know how to balance the rights of those engaging in legitimate political protest with those who were concerned that their parks were being appropriated and rendered unusable by other park users.

In much the same way, the Adams and Shantz decisions challenge us to think about how we make our public spaces available to the homeless. What Jeremy Waldron argues in his article Homelessness and the Issue of Freedom, is that the homeless are unfree in virtually every activity they undertake and which the rest of us take for granted: the homeless can, like the rest of us, be in all of our public spaces. Yet none of those spaces allow them to do what you and I can do in our homes, our friends’ homes, bars, restaurants or nightclubs – sleep, eat, cook, wash, go to the bathroom, attend to personal hygiene or simply stand around. Because the homeless have no place to call their own, they can only engage in these basic human activities in public places which prohibit them from doing so (which the court in Shantz recognizes, para 278). To return to our initial question: When you have no place to call home – where do you go?

We suspect that the outcome of Shantz is that municipalities across Canada will (or at least should) re-assess their parks and other bylaws and their impact upon the homeless and marginalized. Yes, our public parks belong to parents with strollers, families on an outing, people walking their dogs or playing with their kids. And they also belong to our homeless.

This blog does not necessarily represent the views of The City of Calgary.

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Impaired Driving and Approved Screening Devices

Thu, 11/12/2015 - 10:00am

By: Shaun Fluker, Elliot Holzman, and Ian Pillai

PDF Version: Impaired Driving and Approved Screening Devices

Case Commented On: Goodwin v British Columbia (Superintendent of Motor Vehicles), 2015 SCC 46; Wilson v British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47

In October the Supreme Court of Canada issued two companion judgments concerning the constitutionality and meaning of the Automatic Roadside Prohibition (ARP) provisions set out in the Motor Vehicle Act, RSBC 1996, c 318. In Goodwin v British Columbia (Superintendent of Motor Vehicles) the Supreme Court upheld British Columbia’s ARP scheme as valid provincial law that does not unlawfully invade federal criminal law power or contravene section 11 of the Charter, but the Court also ruled that the seizure of a breath sample using an approved screening device (ASD) under the scheme as previously administered was an unreasonable seizure under section 8 of the Charter. In ruling as such, the Supreme Court upheld the ruling of the Chambers Justice who heard the matters back in 2010. Subsequent to that initial ruling the Province of British Columbia amended the ARP scheme in an attempt to remedy the unreasonable seizure, and the Supreme Court’s companion judgment in Wilson v British Columbia (Superintendent of Motor Vehicles) concerns the interpretation of these new provisions employing principles of statutory interpretation. In this comment we provide an overview of the ARP scheme and the issues raised by the use of ASDs in impaired driving cases, and bring this matter into an Alberta context. We also examine the Supreme Court’s constitutional analysis in Goodwin and its application of the principles of statutory interpretation in Wilson.

Overview of the ARP Scheme and the Use of ASDs

Prior to 2010, impaired driving investigations in British Columbia looked similar to every other province. If an officer had reasonable and probable grounds that an individual had a blood alcohol level that exceeded 80 milligrams of alcohol in 100 milligrams of blood (“over 80”), they were statutorily required to serve a notice of driving prohibition on the individual. In practice, the grounds for serving notices came from a breath analysis by an approved instrument (“breathalyser”) usually done at the police station. This scheme was upheld as constitutional, as regards both the division of powers and s.7 of the Charter: Buhlers v Superintendent of Motor Vehicles (B.C.), 1999 BCCA 114.

In 2010, British Columbia instituted a regime in the Motor Vehicle Act (MVA) known as “ARP” – automatic roadside driving prohibition – and it marked a shift in the province’s approach to the regulation of impaired driving. Under s.215.41(3.1) of the MVA, reproduced in a later section of this analysis, instead of relying on the breathalyser reading at the police station, driving prohibitions would now be issued immediately at the roadside, following an analysis using an ASD.

The ASD is a handheld machine administered by a peace officer that a driver blows into at the roadside. Typically, the peace officer puts in a new straw every three blows and the machine will read “Fail” if a driver blows over the legal limit. In Alberta, the ASD is used as an investigatory aid rather than an evidentiary instrument in most impaired investigations. That is, no criminal charges flow from registering a “Fail” on an ASD. Rather, a peace officer, having formed reasonable and probable grounds that the driver is operating a vehicle while impaired by alcohol, will then demand a breath sample from the approved instrument at the station. The maintenance logs of an ASD used in an impaired investigation are not disclosed partly because there is no direct charge that result from blowing a “Fail” on an ASD, while the maintenance logs for the approved instrument are: see R v Kilpatrick, 2013 ABQB 5, leave denied in R v Kilpatrick, 2013 ABCA 168.

When a driver registers a “Warn” or “Fail” on the ASD under the British Columbia scheme, a peace officer must issue a Notice of Driving Prohibition, provided that the officer “has reasonable grounds… that the driver’s ability to drive is affected by alcohol.” A “Fail” reading (blood alcohol over 80mg) would immediately result in a 90-day driving suspension, while for the first time, a “Warn” reading (blood alcohol between 50mg and 80mg) would result in a suspension between 3 and 30 days, depending on past driving history.

A person issued an ARP can apply to the BC Superintendent of Motor Vehicles for a review. When this new scheme was enacted in 2010, the grounds for review by the Superintendent were limited to three areas: whether the applicant was actually the driver, whether in the case of a “Warn” reading, the prohibition was a subsequent prohibition, and whether the driver failed or refused, without reasonable excuse, to provide a sample. The scheme was amended in 2012 and now allows review by the Superintendent regarding the calibration of the ASD (i.e. whether the ASD was working properly).

Both appeals involved persons who were subject to an ARP. Richard Goodwin failed to provide an adequate sample into the ASD. Lee Michael Wilson was stopped at a police road check and provided two samples of his breath that registered a “Warn” reading. Wilson was served with a Notice, prohibiting him from driving for three days. Goodwin was prohibited from driving for 90 days, had his car impounded for 30 days, and was required to pay monetary penalties and fees.

Wilson: Principles of Statutory Interpretation and the ARP scheme

The Wilson judgment looks at the ARP provisions in the British Columbia Motor Vehicle Act as amended to address the section 8 Charter violations noted above. Wilson was pulled over at a road check where a police officer noted the odour of alcohol on his breath. Wilson provided breath samples into two ASDs – and both devices registered a “Warn” reading. As a result of these readings, the officer issued Wilson a Notice prohibiting him from driving for 3 days pursuant to the Act.

Wilson sought a review with the Superintendent of Motor Vehicles, asking that the Notice be revoked on the ground that the officer lacked reasonable grounds to believe his ability to drive was affected by alcohol. Wilson’s argument was that the applicable provision in the Act does not provide the officer with the power to form reasonable grounds on the basis of the ASD readings alone. The Superintendent dismissed Wilson’s appeal, finding that the “Warn” reading from the ASD alone provides the officer with reasonable grounds to issue the notice of driving prohibition under the relevant provision of the Act.

The relevant provision is section 215.41(3.1) of the Motor Vehicle Act as follows (emphasis added):

(3.1) If, at any time or place on a highway or industrial road,

(a) a peace officer makes a demand to a driver under the Criminal Code to provide a sample of breath for analysis by means of an approved screening device and the approved screening device registers a warn or a fail, and

(b) the peace officer has reasonable grounds to believe, as a result of the analysis, that the driver’s ability to drive is affected by alcohol,

the peace officer, or another peace officer, must,

(c) if the driver holds a valid licence or permit issued under this Act, or a document issued in another jurisdiction that allows the driver to operate a motor vehicle, take possession of the driver’s licence, permit or document if the driver has it in his or her possession, and

(d) subject to section 215.42, serve on the driver a notice of driving prohibition.

The legal issue here comes down to the meaning of the phrase ‘as a result of the analysis’ in clause (b) noted above. Specifically, can the analysis be solely the readings provided by the ASD in a roadside checkstop? Or must the analysis be in addition to the ASD readings?

The Supreme Court begins its analysis by observing the now familiar position in substantive judicial review that the interpretation by the Superintendent of its home legislation is presumptively owed deference (at para 17). The issue being one of statutory interpretation, the Court then cites the principle on statutory interpretation known as the ‘modern approach’ as the authority to determine whether the Superintendent’s interpretation of its home legislation is a reasonable one (at para 18). The modern approach essentially amounts to reading statutory provisions in their literal sense as well as in light of their nearby context and overall purpose, to decipher the intention of the Legislature (or Parliament for federal legislation) in relation to the meaning of legislative text. In cases where ‘real’ ambiguity in meaning remains after these various approaches, a reviewing court will turn to either or both of external context (eg. committee work or house debates) and common law presumptions to decide on meaning. The leading authorities on the modern approach are Rizzo and Rizzo Shoes Ltd (Re), [1998] 1 SCR 27 and Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42.

The Court also notes the onus is on Wilson to not only provide a reasonable interpretation of the provisions in question, but also demonstrate the Superintendent’s interpretation is unreasonable (at para 20). This onus comes from the Court’s 2013 decision in McLean v British Columbia (Securities Commission), 2013 SCC 67 and was the subject of an earlier ABlawg.

Wilson argues section 215.41(3.1) requires the peace officer to have additional evidence of impairment in addition to the ASD readings in order to form reasonable grounds to believe a driver is impaired and issue the Notice to prohibit driving. His reading of the words “as a result of the analysis” in clause (b) is that the legislature would not have included this phrase if it were solely the ASD readings that triggered the obligation to issue the Notice, and therefore the phrase itself must stand for analysis in addition to the ASD readings (at paras 27 and 28). He further argues this reading is necessary to ensure section 215.41(3.1) is consistent with Charter values, and in particular the rights of drivers contained in sections 8 and 10(b) of the Charter (at paras 23 and 24).

Writing for the Court, Justice Moldaver rejects these arguments in favour of a reading that the phrase ‘as a result of the analysis’ in clause (b) can mean solely the readings provided by the ASD in a roadside checkstop. In other words where a driver triggers a “Warn” or “Fail” reading in two ASD samples, the officer administering the ASD test must issue the Notice to prohibit driving. Justice Moldaver dismisses the application of Charter values here because the Court sees no real ambiguity here (at para 25). As noted above, the modern approach only calls for external aids and presumptions such as the presumption that legislation conforms with Charter values where there is real ambiguity.

Justice Moldaver runs through a literal, contextual and purposive analysis to find the Superintendent’s interpretation is a reasonable one. The literal text of section 215.41(3.1) links the officer’s assessment of the driver to the ASD results. In the words of the Court: “The wording could not be clearer. The ASD analysis is the yardstick against which to measure the reasonableness of the officer’s belief” (at para 26). Justice Moldaver also looks at the factors a Superintendent may consider when hearing a review application from a driver on the issuance of a Notice, and he observes those factors are focused primarily on the manner in which the ASD is administered and the reliability of the results (at para 30). For Justice Moldaver this context supports the interpretation that analysis means ASD results only. Finally, Justice Moldaver looks to external aids of interpretation (other judicial decisions and Hansard debates) to confirm the Superintendent’s interpretation is in line with the overall public safety purpose of the legislation to confront and reduce impaired driving (at para 37).

This judgment is another example of the Court speaking of deference at the outset but seemingly applying correctness when it gets into the substance of the matter. Of note, we are never provided with the reasons of the Superintendent for rejecting Wilson’s appeal of the Notice in the first instance. Accordingly, Justice Moldaver’s statutory interpretation analysis stands alone and reads very much like the Court is deciding the interpretive issue for itself rather than deferring in any way to the Superintendent’s reasons.

And then there is the perception that the modern approach to statutory interpretation is a very results-orientated principle. The literal text of section 215.41(3.1) is not all that clear about linking the phrase ‘as a result of the analysis’ in clause (b) solely to the ASD readings. More clarity in the drafting of clause (b) to expressly link the analysis to that conducted by the officer under clause (a) would be helpful. And moreover the external context cited by the Court near the end of its judgment (at paras 36 to 39) in fact says nothing specific about relying on ASD readings alone as the basis for issuing Notices to prohibit driving under the legislation.

Goodwin: Constitutionality of the ARP Scheme

While the issue in Wilson came down to a question of statutory interpretation, the central issue in Goodwin was whether the ARP scheme was intra vires the province (see generally paras 16 to 34). The Supreme Court ruled it was. Goodwin argued that, in pith and substance, the scheme replaced the Criminal Code’s impaired driving provisions with a provincial regime of severe penalties – a roundabout way of ousting the criminal law. The province argued that the ARP scheme fell under s.92(13) of the Constitution Act, 1867, which gives the provinces jurisdiction over civil rights and property.

The Court found that the scheme was intra vires for two principal reasons. First, they rejected Goodwin’s submission that the true intent of the scheme was to provide a criminal law response to drunk driving without having to engage the Charter. The Court found that the purpose of the legislation was to prevent death and serious injury on the roads of B.C.

Second, the Court rejected Goodwin’s submission that the “punitive” nature of the penalties imposed by the legislation was akin to the criminal law. Goodwin asserted that the tendency for police officers to enforce the ARP scheme over the criminal law provisions set out in the Criminal Code illustrated the legislation’s “criminal” intent. The Court found that while Goodwin’s submission was a factor to consider in determining pith and substance, it was not determinative, as police are granted more discretion than other members of society to adopt different strategies to prevent death and serious injury.

These findings constitute further evidence of Canadian courts’ reluctance to use the Constitution to invalidate schemes that are regulatory and not penal, and deny persons the same procedural rights afforded to those accused of crimes: see also Guindon v Canada, 2015 SCC 41. Moreover, it is relevant that there is a growing tendency to use ARPs and not charge people under the Criminal Code when assessing the constitutionality of provincial legislation. The Court found that the scheme was not meant to oust the criminal law, yet in practice, that is exactly what it has done. It is our understanding that for the vast majority of first-time offenders, police go straight to the ARP scheme, thus denying many of the Charter rights that someone charged criminally would receive. Moreover, even where there is an accident causing bodily harm or death, or the individual has past impaired driving convictions, the ARP scheme is increasingly used over the Criminal Code provisions. So while the Supreme Court dismissed Goodwin’s submission on this point, there is evidence to support his claim that the scheme’s practical effects are ousting the criminal law as the preferred means of dealing with suspected impaired drivers.

ARPs Coming to a Province Near You?

In dismissing the appeals in Goodwin and Wilson, the Court may be opening the door for other provinces to enact similar schemes. Earlier this year, Justice Wakeling of the Court of Queen’s Bench of Alberta dismissed a challenge to section 88.1 of the Traffic Safety Act RSA 2000, c T-6 (TSA) on similar grounds that the Supreme Court used in Goodwin and Wilson: Sahaluk v Alberta (Transportation Safety Board), 2015 ABQB 142.

At issue in Sahaluk were amendments made to the TSA that provided for an immediate suspension of a person’s drivers’ licence who was charged with an alcohol-related driving crime. In practice, Albertans charged with alcohol-related driving crimes under sections 253 and 254 of the Criminal Code have their licenses suspended for the entire pre-trial period, and if found guilty at trial, face a mandatory one-year driving suspension for first-time offenders. Sahaluk raised similar arguments to Goodwin and Wilson: the Alberta scheme was ultra vires the head of government that enacted it, and if that argument failed, the scheme violated sections7, 8 or 11(d) of the Charter.

Similar to the decisions in Goodwin and Wilson, Justice Wakeling found no conflict between the provincial scheme and the Criminal Code, noting at para. 244 that section 88.1 of the TSA promoted highway safety, while the Criminal Code punishes the offender by imposing post-conviction sanctions. The Charter arguments were similarly dismissed: a person has no constitutional right to drive, therefore the liberty interests protected by section7 are not applicable. Moreover, the sanction under section 88.1 of the TSA does not charge the person with anything, therefore s.11(d) is not engaged.

The Alberta and B.C. schemes raise serious issues about procedural rights. Both cleverly sidestep basic Charter rights by using provincially administered suspension schemes to tackle the issue of impaired driving, which bar the accused from accessing the remedial provisions of the Charter. Both are an attack on the presumption of innocence by revoking the drivers’ licence of an individual before they can mount a defence at trial or in an administrative hearing. By removing these licences from people who have not been found guilty by a court or tribunal, it potentially extorts guilty pleas out of people who may have legitimate defences but who neither have the money nor time to spend months or sometimes years awaiting trial.

There is a common thread running the opening lines of these decisions. In Sahaluk, Justice Wakeling notes that the Government of Alberta is taking “dead aim at those who choose to drink and drive,” while the Supreme Court in Goodwin and Wilson mentions the “devastating consequences of impaired driving reverberate throughout Canadian society” and “Impaired driving is a matter of grave public concern in Canada.” In fact, some found it odd that the Supreme Court even granted leave to appeal in Goodwin and Wilson. After all, the Court essentially adopted the exact same position as the British Columbia Court of Appeal: see Sivia v British Columbia (Superintendent of Motor Vehicles), 2014 BCCA 79 and Wilson v British Columbia (Superintendent of Motor Vehicles), 2014 BCCA 202.

Perhaps the Supreme Court is trying to send a message that impaired driving is such a scourge on society that the Court is increasingly less likely to allow Charter arguments to continue to dominate impaired driving law. One also may wonder whether the Court was trying to send a message to the provinces that they will be more deferential to provincial schemes that avoid Charter rights by treating drunk driving as a regulatory, rather than criminal offence. Time will tell whether the provinces will heed the call.

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Court of Appeal Affords Deference to Alberta Securities Commission in Platinum Equities Case

Mon, 11/09/2015 - 10:00am

By: Shaun Fluker

PDF Version: Court of Appeal Affords Deference to Alberta Securities Commission in Platinum Equities Case

Case Commented On: Alberta (Securities Commission) v Chandran, 2015 ABCA 323

In February 2014 the Alberta Securities Commission found that Shariff Chandran was the governing mind of an elaborate scheme of capital market misconduct under the general umbrella of Platinum Equities and ruled that Chandran and others were guilty of contravening various provisions of the Securities Act, RSA 2000, c S-4 concerning the illegal distribution of approximately $58 million in securities to the public, misrepresentations, fraud, and conduct contrary to the public interest (See Re Platinum Equities Inc, 2014 ABASC 71). In addition to these administrative proceedings before the Commission, there are civil and criminal proceedings underway concerning Platinum Equities. In September 2014 the Commission issued its sanctions order 2014 ABASC 376 against Chandran and others for their misconduct under the Securities Act. Chandran asked the Court of Appeal to set aside a portion of these sanctions ordered by the Commission, and in Alberta (Securities Commission) v Chandran the panel of Justices Martin, O’Ferrall, and Shutz dismisses his appeal. The Court’s decision is a good example of how deference should work in substantive judicial review.

Section 38 of the Securities Act provides for a right of appeal to the Court by a person who is directly affected by a Commission decision. Notably section 38 does not limit this right of appeal to questions of law and neither does it require leave of the Court. Moreover, section 38 expressly states the Court may confirm, vary or reject the Commission decision, direct the Commission to re-hear the matter, or even decide the matter itself and substitute its decision for that of the Commission. In short, section 38 is a very generous and potentially intrusive statutory appeal provision.

I set out section 38 in some detail here to give the context for this decision from the Court, but also say a few words about where the Court seems to be headed on standard of review. Readers may recall I posted some entries earlier this year on decisions from the Court of Appeal on standard of review that seem to stray from the direction of the Supreme Court of Canada on the presumption of deference to administrative decision-makers interpreting their home legislation. In particular, see Where are we going on standard of review in Alberta? posted in March 2015 in relation to the Court’s decision in Edmonton East (Capilano) Shopping Centres Limited v Edmonton (City), 2015 ABCA 85 where the Court stated oddly that the presence of a statutory right of appeal is a strong indication that the presumption of deference is rebutted. In the Court’s words from Capilano:

Where the Legislature has specifically provided for a right of appeal to the ordinary courts, the Legislature clearly intended that the administrative decision maker make the initial decision, subject to review by the court. As pointed out in Pushpanathan at para 43 (quoted supra, at para 21), if a correctness review is not applied, this legislative scheme makes little sense. The presence of a statutory right of appeal may not invariably signal a correctness standard of review, but it is clearly enough to displace any presumption that reasonableness applies (Capilano, at para 24).

I noted back in March that the Court was far too strong in Capilano stating the presence of a statutory right of appeal provides for an exception to the presumption of deference, and the Court’s decision here in Chandran is case-in-point. Section 38 in the Securities Act is as broad and generous a statutory right of appeal as will be found in a legislative scheme and would thus under the reasoning of Capilano seemingly rebut the presumption of deference owed to the Commission. And yet the Court here in Chandran makes very short work of the standard of review applicable to the Commission sanction order, stating definitively that the standard is reasonableness (at paras 12 to 14). No mention of the Capilano decision or the generous statutory right of appeal in section 38 whatsoever. No question by the Court that it should defer to the Commission’s sanction order, which is itself a highly discretionary decision under sections 198 and 199 of the Securities Act.

As for what deference looks like in practice, I would say the Court’s decision here is a good example of that. In its September 2014 sanctions order, the Commission considers a number of factors such as the seriousness of the misconduct and any mitigating circumstances in deciding on appropriate sanctions to be applied against Chandran. The Court simply makes reference to the Commission’s analysis and justification for the sanctions ordered, and finds the Commission analysis to be intelligible and transparent, and the sanctions ordered to be within the range of acceptable outcomes. Accordingly, the Court finds the sanctions ordered to be reasonable and dismisses the appeal (at paras 15 to 22).

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When Judicial Decisions Go from Wrong to Wrongful – How Should the Legal System Respond?

Tue, 11/03/2015 - 2:30pm

By: Alice Woolley

PDF Version: When Judicial Decisions Go from Wrong to Wrongful – How Should the Legal System Respond?

Case Commented On: R v Wagar, 2015 ABCA 327 (CanLII)

Introduction

Judges make wrong decisions. As I discussed in a recent ABlawg post, errors in judicial decisions are to be expected given the human frailty of participants in the judicial system – the judges, the lawyers and the parties. But at some point can the quality of an error in a legal judgment change – can it go from wrong to wrongful? That is, at some point does the error go from being a product of the judge’s humanity to being a product of a moral or ethical failure?  And if a judicial decision crosses that line, how ought the legal system to respond? In particular, how can it respond so as to respect judicial independence while also ensuring public confidence in the administration of justice?

In this blog I explore these questions through Judge Robin Camp’s decision and conduct in R v Wagar, a decision overturned by the Court of Appeal (R v Wagar 2015 ABCA 327 (Canlii) and summarized and commented on by my colleague Jennifer Koshan here. I argue that legal decisions go from being wrong to wrongful when they demonstrate both disrespect for the law and a failure of empathy in regards to the persons who appeared before the court.   In my opinion, Judge Camp’s decision falls within this category; it demonstrates both disrespect for the law governing sexual assault and a pervasive inability to understand or even account for the perspective of the complainant.

I also argue that while appellate courts, and official regulators like the Canadian Judicial Council, need to be cautious in sanctioning judicial decisions, they also need to be willing to do so when those decisions are wrongful. Because when a judge demonstrates disrespect for the law and disregard for the people the law affects, the need to act to maintain public confidence in the administration of justice outweighs concerns about protecting judicial independence. In addition, academics and lawyers must be willing to identify and criticize wrongful judgments, and rules in codes of conduct directing lawyers to “avoid criticism that is petty, intemperate or unsupported by a bona fide belief in its real merit” should be interpreted and applied carefully so as not to inhibit such criticism (Law Society of Alberta, Code of Professional Conduct, Rule 4.06(1), Comm’y; Federation of Law Societies, Code of Professional Conduct, Rule 5.6-1, Comm’y).

When Does a Judicial Decision Become Wrongful?

In his work on moral psychology, Jonathan Haidt argues that our moral judgments – our decisions and our reactions – flow from our intuitions and emotions. We do not reason through to moral conclusions; rather, we use reason to explain and justify our intuitive responses to moral circumstances (“The emotional dog and its rational tail: a social intuitionist approach to moral judgment” (2001) 108(4) Psychol Rev 814-34).

Haidt identifies key “other-condemning” emotions as anger and disgust. Triggers for anger include the moral wrongs of betrayal, insult and unfairness; triggers for disgust include “hypocrisy, betrayal, cruelty, and fawning” (Jonathan Haidt “The Moral Emotions” in R. J. Davidson, K. R. Scherer, & H. H. Goldsmith (Eds.), Handbook of affective sciences (Oxford: Oxford University Press, 2003) pp. 852-870; my papers on intuition/moral emotion and legal ethics can be found here and here).

Judge Camp’s conduct and reasons in Wagar angered and disgusted me. And, following Haidt, my claim here is that my anger and disgust are moral emotions elicited by the wrongfulness of that conduct and reasons. And the purpose of this part of this post is to use reason to explain those emotions, and by doing so to derive general lessons about the type of judicial behaviour that properly evokes anger and disgust – i.e., that is wrongful, rather than merely wrong.

The first disturbing aspect of Judge Camp’s reasons is with respect to his legal analysis. As Professor Koshan notes, Judge Camp suggested that the limits on questioning the complainant’s sexual history “hamstring the defence” and arose from “very, very incursive legislation” (Crown Factum, para. 73). Having made this comment, he then proceeded to allow cross-examination in this regard without complying with the requirements for a hearing under section 276(2) and section 276.1 of the Criminal Code.

Judge Camp also criticized the Canadian legal position that a judge ought not to consider whether a complainant reports the assault immediately.   As described in the Crown’s Factum:

In the Crown’s preliminary submissions, the Trial Judge commented that the Complainant “abused the first opportunity to report” before conceding this was “no longer contemporarily relevant”. In the Crown’s final submissions, he commented that the recent complaint doctrine (defined as complaining to your family or someone in authority as soon as you can) was “followed by every civilized legal system in the world for thousands of years” and “had its reasons” although “[a]t the moment it’s not the law”. When the Crown submitted that the antiquated thinking had been set aside for a reason, he replied “I hope you don’t live too long, Ms. Mograbee” (Crown’s Factum, at para 58).

The Supreme Court of Canada has been clear (in R v DD, [2000] 2 SCR 275 at para 60-63) that adverse inferences as to credibility, premised on the mere fact that a complainant failed to ‘raise a hue and cry,’ constitute an error of law. Judge Camp’s comments suggest that he was aware of that rule, but skeptical as to its validity given its departure from the historical practices of “every civilized legal system.”

The Crown also details in its Factum Judge Camp’s troubling approach to the law of consent, in which he appeared to place the onus on the complainant to “make it clear that she’s not consenting” (Crown’s Factum, at para 97) and also to assess the fact of the complainant’s consent from the respondent’s point of view (which would be relevant to a defence of a mistaken belief in consent, but not to the existence of consent itself) (Crown’s factum at paras 92-99).

In its reasons, the Court of Appeal stated “we are satisfied that the trial judge’s comments throughout the proceedings and in his reasons gave rise to doubts about the trial judge’s understanding of the law governing sexual assaults” (Wagar, at para 4).

Making a mistake when applying the law does not make a judgment wrongful, even in a serious criminal case. As noted above, judges make mistakes all the time and that they do so is an understandable product of their humanity. Mistakes merit neither anger nor disgust. But in this case, Judge Camp’s errors, when combined with his criticisms of the law and his overall attitude towards the complainant, suggest that the issue was not human error. Rather, it invites the inference that Judge Camp simply did not accept the parameters the law imposes on judging allegations of sexual assault, that the failures in his legal analysis arose not from a mistake, but because he did not like the law as it exists and so assessed the case through his personal judgment, not the legal judgment law requires.

As I have written about extensively in relation to the lawyer’s role (see, e.g., on advising here, on fiduciary duties here and in general here) fidelity to law – respect for the compromise to the problem of pluralism that the law reflects – is an essential ethical and legal obligation of lawyers. Lawyers ought to respect the confines of legality in their advising and in their advocacy (although what that looks like in each context is quite different). And if lawyers ought to do so, then surely no real argument needs to be made to assert that judges must as well. Indeed, what authority can a judge claim other than through the law? A judge who adopts an attitude other than fidelity to law seeks to rule by fiat, not by law. And that is wrongful.

The second disturbing aspect of the judgment arises from Judge Camp’s apparent inability to occupy a point of view different from his own. Here, to imagine what it would be like to be a broke and homeless 100 lb woman, and to imagine how that person might experience the world. Judge Camp implied through his questions that a 100 lb. woman may be able to avoid being sexually assaulted by a 240 lb man simply by closing her knees (“why couldn’t you just keep your knees together”) or by sinking her “bottom down into the basin” (Crown Factum, at para 59). He also implied that a rational response to a perceived threat of violence when you are a 100 lb woman is to scream, and that if that woman does not complain about an accused locking her in a bathroom with him, “She can take her chances, perhaps in the hope of getting him in trouble” (Crown Factum, at para 62). He suggested that a 19 year-old girl who is broke and homeless and steals does so not out of desperation, but because it “didn’t cross her mind that she should work to earn money to buy those things” (Appeal Record, p. 431).

What is troubling about this to me is not that this occurred in relation to a sexual assault complainant (although I agree very much with Professor Koshan’s critique of that aspect of the case). What is disturbing to me is that this occurred in relation to anyone at all whose conduct the judge is assessing. As a judge, it is essential that you be able to imagine what it would be like to be someone else, to have had a different set of cultural, socio-economic, gender or sexual experiences than the ones you have had or enjoyed. Otherwise you will simply fail to appreciate the evidence before you – you will draw the wrong inferences, and make the wrong findings, because what you think you see will not actually be what happened. As Justice Abella recently noted in Yukon Francophone School Board Education Area #23 v Yukon (Attorney General) 2015 SCC 25:

A judge’s identity and experiences are an important part of who he or she is, and neither neutrality nor impartiality is inherently compromised by them. Justice is the aspirational application of law to life. Judges should be encouraged to experience, learn and understand “life” — their own and those whose lives reflect different realities ((at para 34). See also: Adam Dodek “In Praise of Judicial Empathy, Humility and Sympathy”).

And perhaps because my lived experience is at least somewhat closer to that of the complainant, Judge Camp’s apparent perspective here seems illogical and even bizarre. A 100 lb woman will not prevent a 240 lb man from having sex with her by shutting her knees or dropping her bottom into the sink. In many circumstances staying quiet is the safest and most rational way for a physically weaker person to avoid harm. To be clear, I am not making any judgments about whether Mr. Wagar sexually assaulted the complainant. But what I am saying is that whatever the nature of that sexual encounter, the complainant’s failure to shut her knees, drop her bottom into the sink or to make a fuss when the door was locked could not be seen as relevant to consent by anyone who imagined, even for a moment, what it would be like to be her in those circumstances.

When you put those two aspects of the judgment together, you have I think the key elements of a wrongful judicial decision: disrespect for the law and an absence of empathy.  A judge who merely disrespects the law acts very badly. And a judge who lacks empathy does so as well. But it is the judge who does both, who disregards the law and the people who appear before him or who are affected by his judgments, who acts wrongfully, and whose judgments properly warrant anger and disgust.

How Do We Respond?

One response to a wrongful decision is censure of the judge by a higher court. That did not happen here. The Court of Appeal’s reasons, while clear and unequivocal in overturning Judge Camp’s decision, are also temperate and measured. They do not criticize the trial judge himself, or suggest that his decision had crossed from the wrong to the wrongful.

A different approach was taken by Justice L’Heureux-Dubé in her concurring decision in R v Ewanchuk [1999] 1 SCR 330. In that judgment Justice L’Heureux-Dubé said the following about then Alberta Court of Appeal Justice McClung:

In the Court of Appeal, McClung J.A. compounded the error made by the trial judge (at para 88).

Even though McClung J.A. asserted that he had no intention of denigrating the complainant, one might wonder why he felt necessary to point out these aspects of the trial record. Could it be to express that the complainant is not a virgin? Or that she is a person of questionable moral character because she is not married and lives with her boyfriend and another couple? These comments made by an appellate judge help reinforce the myth that under such circumstances, either the complainant is less worthy of belief, she invited the sexual assault, or her sexual experience signals probable consent to further sexual activity (at para 89).

The expressions used by McClung J.A. to describe the accused’s sexual assault, such as “clumsy passes” (p. 246) or “would hardly raise Ewanchuk’s stature in the pantheon of chivalric behaviour” (p. 248), are plainly inappropriate in that context as they minimize the importance of the accused’s conduct and the reality of sexual aggression against women (at para 91).

This case has not dispelled any of the fears I expressed in Seaboyer, supra, about the use of myths and stereotypes in dealing with sexual assault complaints (see also Bertha Wilson, “Will Women Judges Really Make a Difference?” (1990), 28 Osgoode Hall L.J. 507). Complainants should be able to rely on a system free from myths and stereotypes, and on a judiciary whose impartiality is not compromised by these biased assumptions (at para 95).

In response Justice McClung wrote a heated letter to a national newspaper, for which he was subject to censure by the Canadian Judicial Council. One famous Canadian lawyer, Eddie Greenspan, came to his defence, noting in an editorial that L’Heureux-Dubé had effectively labeled McClung “the male chauvinist pig of the century, the chief yahoo from Alberta, the stupid, ignorant, ultimate sexist male jerk”.   He described her judgment as “unnecessary and mean-spirited” and that she was “intemperate, showed a lack of balance, and a terrible lack of judgment.” In his view, Supreme Court judges “were not given the right to be bullies. They were not given the right to pull a lower court judge’s pants down in public and paddle him.” (reproduced in Lawyers’ Ethics and Professional Regulation, 2d ed (LexisNexis, 2012) pp. 583-584).

Greenspan does have a point. Judges in a superior court do have power in relation to lower court judges. They have the last word as well as the power to reverse. And if a superior court uses its power to excoriate lower court judges, those lower court judges may write to avoid censure rather than to search for justice – i.e., their independence may be impaired.

On the other hand, Greenspan’s rhetoric overstates to an absurd extent what Justice L’Heureux-Dubé actually said. Further, when a judge in a lower court makes a decision that crosses the threshold from wrong to wrongful – where he or she disrespects the law and exhibits a total failure of empathy – the decision brings the administration of justice into disrepute. It undermines the rule of law: the ability of people to receive a fair and impartial consideration of their position in law, and to believe that that consideration is available to them. At that point, the concern for judicial independence has to be balanced against the need to uphold both the reality and the belief in the rule of law, and the fair administration of justice.

As a consequence, while I admire the Court of Appeal’s restraint – and understand that it may have been warranted in part because of the failure of Wagar to participate in the appeal – I also think that superior court criticism of judges who make wrongful decisions are justifiable and appropriate for ensuring public confidence in the judicial system.

Another response to wrongful decisions is official regulatory sanction through the Canadian Judicial Council or, for Alberta provincial court judges, the Alberta Judicial Council. Regulatory sanctions against judges are rare, time-consuming and occasionally contentious; like appellate court criticism of lower court judges, they raise the real threat of interference with judicial independence. Again, however, regulators must – and do – take into account the need to maintain confidence in the administration of justice; judicial decisions which reflect a disregard for the law and a failure of empathy are appropriately subject to regulatory sanction.

Cases in which regulators have been willing to act against judges who have made wrongful decisions include the Dewar case out of Manitoba, where a judge was censured (and apologized and undertook sensitivity training) after making comments in a sexual assault trial which reflected “negative and outdated gender stereotypes, as casting blame on the victim and showing an unacceptable gender bias against women” (CBC, November 2011). They also include the Cosgrove case out of Ontario, where Paul Cosgrove resigned as a judge following the recommendation by the Canadian Judicial Council that he be removed from office. As summarized in the Council’s report:

The Inquiry Committee found that the judge’s conduct included: an inappropriate aligning of the judge with defence counsel giving rise to an apprehension of bias; an abuse of judicial powers by a deliberate, repeated and unwarranted interference in the presentation of the Crown’s case; the abuse of judicial powers by inappropriate interference with RCMP activities; the misuse of judicial powers by repeated inappropriate threats of citations for contempt or arrest without foundation; the use of rude, abusive or intemperate language; and the arbitrary quashing of a federal immigration warrant (Council Report, at para 6).

In a case out of New Brunswick, a provincial court judge was removed from office after saying that the people of the Acadian Peninsula were all dishonest (Moreau-Bérubé  v New Brunswick 2002 SCC 11 at para 3). In these cases, the regulatory concern has been that “the actions and expressions of an individual judge trigger concerns about the integrity of the judicial function itself.” (Moreau-Bérubé at para 58). Or as the Council put it in the Cosgrove case:

Public confidence in the judiciary is essential in maintaining the rule of law and preserving the strength of our democratic institutions. All judges have both a personal and collective duty to maintain this confidence by upholding the highest standards of conduct. After inquiring into the conduct of the Honourable Paul Cosgrove, we find that he has failed in the due execution of his office to such an extent that public confidence in his ability to properly discharge his judicial duties in the future cannot be restored (Council Report, at para 1).

In my view Judge Camp’s failures in this case – his failure to respect the law or to be able to imagine or perceive accurately the perspective of the complainant – are of this kind. They trigger concerns about the integrity of the judicial function and they undermine the rule of law and the strength of our democratic institutions.

It is noted that since the time he issued his decision in Wagar, Judge Camp has been appointed to the Federal Court of Canada. This could lead some to argue that there is no ongoing concern here, since he will no longer hear sexual assault cases. The Federal Court does, though, hear judicial reviews of immigration cases, and sexual violence can be an issue in that context, particularly in refugee claims. And even if that were not the case, it does not redress the injury to the administration of justice caused by this decision. That injury warrants official regulatory response.

The final response to wrongful judgment is informal – criticism by lawyers and academics of the kind offered here by myself and Professor Koshan.   While not having the power and authority of formal regulatory sanction, informal criticism has the benefit of being able to identify and respond to issues in a more timely fashion. It can also draw on a range of perspectives and expertise on the issues. And it can help to inform and motivate the formal regulatory agenda.

The various Codes of Conduct that govern Canadian lawyers, direct caution in criticizing judges. In the Commentary to Rule 4.06(1), the Law Society of Alberta Code states:

Proceedings and decisions of courts and tribunals are properly subject to scrutiny and criticism by all members of the public, including lawyers, but judges and members of tribunals are often prohibited by law or custom from defending themselves. Their inability to do so imposes special responsibilities upon lawyers. First, a lawyer should avoid criticism that is petty, intemperate or unsupported by a bona fide belief in its real merit, since, in the eyes of the public, professional knowledge lends weight to the lawyer’s judgments or criticism (See also, Federation of Law Societies Code of Professional Conduct, Rule 5.6-1).

This point is well taken. Judges cannot defend themselves and lawyers must ensure their criticisms are temperate and made in good faith. But at the same time, as the Code notes elsewhere:

Lawyers are often called upon to comment publicly on the effectiveness of existing statutory or legal remedies or the effect of particular legislation or decided cases, or to offer an opinion about cases that have been instituted or are about to be instituted. This, too, is an important role the lawyer can play to assist the public in understanding legal issues (Rule 6.05(1) Comm’y); FLS Rule 7.5-1 Comm’y).

Fair trials and hearings are fundamental to a free and democratic society. It is important that the public, including the media, be informed about cases before courts and tribunals. The administration of justice benefits from public scrutiny (Rule 6.05(2) Comm’y; FLS Rule 7.5-2 Comm’y).

The exhortation to fair and temperate criticism needs to be understood in light of these broader concerns. As the Supreme Court said in Doré v Barreau du Québec, 2012 SCC 12, [2012] 1 S.C.R. 395, “lawyers should not be expected to behave like verbal eunuchs. They not only have a right to speak their minds freely, they arguably have a duty to do so” (at para 68).

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