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Don’t Gossip About Your Client to the Press… Some (Mildly) Complicating Thoughts on Robidoux

Fri, 07/04/2014 - 10:00am

By: Alice Woolley

PDF Version: Don’t Gossip About Your Client to the Press… Some (Mildly) Complicating Thoughts on Robidoux

Decision commented on: In the matter of the Legal Profession Act, and in the matter of a hearing regarding the conduct of Kristine Robidoux, QC, a Member of the Law Society of Alberta

On June 9 2014 the Law Society of Alberta suspended Kristine Robidoux for four months after she admitted to violating her duties of confidentiality and candour to her client, provincial Conservative party candidate and former journalist Arthur Kent. Robidoux was legal counsel to Kent’s election team in the 2008 Alberta provincial election. She was also Kent’s agent and the Conservative party’s quadrant chair for five of the electoral constituencies in Calgary. During that time Robidoux had e-mail correspondence with Don Martin, a journalist, in which she gave Martin information about problems with the Kent campaign and, in part based on which, Martin wrote a column that “was unbalanced and wholly negative, thereby leaving a misleading and false impression about the candidate” (Agreed Statement of Facts, para 24).

Because of Robidoux’s admissions, the Law Society Hearing Panel reasons (see here) are relatively limited. After noting that Robidoux was Mr. Kent’s counsel, they state that they had “no difficulty in accepting that she improperly disclosed confidential information” (para 11), that she was not candid about having done so (para 12) and that there was an “element of cover-up” given her failure to admit what she done, instead hoping that journalist-source privilege would mean her disclosures were never revealed (para 13).   The bulk of the Panel’s decision focused not on the finding of professional misconduct, but rather on the issue of whether the 4 month suspension proposed by the Law Society and Ms. Robidoux was the appropriate sanction.

In this post I will argue that, as a matter of the law governing lawyers, Robidoux’s conviction was based on relatively weak grounds. The justification for the decision can only follow because the central problem with her behaviour was that she violated the central ethical obligations of the lawyer – loyalty and confidence keeping – and she did so in circumstances proximate to legal practice, even if not actually related to legal practice.

As a matter of professional regulation, finding that Robidoux violated her duty of confidentiality requires showing that she disclosed information subject to that duty. But the information disclosed by Robidoux was not provided to her in relation to her provision of legal advice to Kent.  She told the reporter about: (1) the candidate’s decision making and his failure to follow “the advice of his campaign team” (Agreed Statement of Facts, para 18); (2) the resignation of the candidate’s finance agent; (3) the candidate not attending an announcement by the Premier (information she learned from a third party); and, (4) that campaign brochures had scattered across Deerfoot Trail while workers scrambled to pick them up. Some of this information was inaccurate. None of it was communicated directly to Robidoux by Kent.  None of it related directly to any legal matter or question brought to her by Kent. Some of it was based on Robidoux’s own observations, rather than information provided to her.

The information Robidoux communicated to Martin was thus not privileged. Was it confidential? Under the Alberta Code (and all other provincial codes) confidentiality covers “all information concerning the business and affairs of a client acquired in the course of the professional relationship.” The breadth of that definition does seem to cover the type of information Robidoux disclosed – it makes it irrelevant that the information was not from the client or that it was known to third parties. All that is required is that the information be acquired “in the course of the professional relationship”.

But was it? Robidoux did provide legal advice to Kent. She advised him about setting up the campaign’s bank account, paying for radio ads, about Election Act provisions related to volunteer door knocking, executing the official nomination papers and reimbursing expenses (Agreed Statement of facts, para. 43). These are, however, discreet and straightforward legal matters; it seems likely that the vast majority of the work Robidoux did on the campaign did not relate to the provision of legal advice. It seems a bit of a stretch to say that the information she learned, which was not communicated by Kent, which had no obvious connection to the matters on which she gave him legal advice, and which she learned while working on his campaign in a variety of ways, was nonetheless “acquired in the course of a professional relationship”.

If Robidoux did not violate her duty of confidentiality, the allegation that she violated her duty of candour also becomes suspect. The duty of candour arises only in relation to the lawyer’s professional obligations. The candour required is in relation to the provision of legal services, not generally. If Robidoux did not violate confidentiality in her legal role then there was no violation she was required to disclose.

But when examined on more general ethical grounds, these arguments seem fairly obviously to miss the point. Robidoux is a lawyer. She was Kent’s legal counsel, even if only for narrow and discreet purposes. And while occupying that role Robidoux violated the key ethical duties that lawyers owe: loyalty, confidentiality and candour (See, e.g., R. v. Neil, 2002 SCC 70 at para 19). She may not have done so in her capacity as his legal counsel, or in relation to the legal services she provided. But there are good reasons not to allow lawyers to rely on “well, I wasn’t a lawyer then” defences when they act improperly in matters closely related to their legal role; otherwise lawyers could simply frame activities as outside legal practice in order to escape professional duty. In Robidoux’s case the defence based on the law governing lawyers may have had some legitimacy given her narrow advising role and her broader campaign involvement.  Nonetheless, the significance of her ethical violations, the centrality of those violations to the ethical duties of lawyers, and the fact that she and Kent were in a lawyer-client relationship, make her admission of professional misconduct, and the severity of the sanction, understandable.

In short, “I acted disloyally and I told secrets I was obligated to keep, but I wasn’t being a lawyer in the precise moment when I did so” doesn’t carry much water as a defence to professional misconduct. And nor should it.

This comment was originally posted in Alice Woolley’s column on Slaw.             

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Northern Gateway Approved Despite Uncertain Environmental Effects: Is This What Sustainable Development Looks Like?

Thu, 07/03/2014 - 10:00am

By: Shaun Fluker

PDF Version: Northern Gateway Approved Despite Uncertain Environmental Effects: Is This What Sustainable Development Looks Like?

Decision commented on: National Energy Board, Northern Gateway Decision Statement

On June 17, 2014 the National Energy Board issued a decision statement to Enbridge under section 54(1) of the Canadian Environmental Assessment Act, 2012, SC 2012, c 19, s 52 announcing that the federal Governor in Council had approved the Northern Gateway pipeline subject to the 209 conditions recommended by the Northern Gateway panel (The panel report was the subject of earlier ABlawg comments here and here). The Governor in Council accepted the panel’s recommendations that the pipeline will have significant adverse environmental effects to populations of woodland caribou and grizzly bears, but that these effects are justified in the circumstances. I will comment on this approval by comparing it to another major resource project decision issued on the very same day, June 17, 2014 – albeit one issued on the other side of the globe in New Zealand.

This approval of Northern Gateway by the federal Conservatives was a foregone conclusion. Before the Northern Gateway review panel even commenced formal hearings in January 2012, the federal Minister of Natural Resources issued an open declaration that Canada needs more access to Asia-Pacific markets for resource exports.  In the words of Minister Oliver himself:

Canada is on the edge of an historic choice: to diversify our energy markets away from our traditional trading partner in the United States or to continue with the status quo.  Virtually all our energy exports go to the US.   As a country, we must seek new markets for our products and services and the booming Asia-Pacific economies have shown great interest in our oil, gas, metals and minerals. For our government, the choice is clear:  we need to diversify our markets in order to create jobs and economic growth for Canadians across this country.  We must expand our trade with the fast growing Asian economies. We know that increasing trade will help ensure the financial security of Canadians and their families. (See Natural Resources Canada, Media Room).

 Oh sure, the law tells us the National Energy Board is an independent administrative agency. But let’s inject some realism here. In the face of the Minister’s open declaration, the only real decision in this whole process was what conditions to attach to the approval.  After hearing evidence and considering submissions for 180 days, the Board arrived on 209 conditions it deemed necessary to mitigate the risks and adverse socio-ecological effects associated with the pipeline and its associated infrastructure to ensure the project is in the public interest.  The conditions are set out in the Appendix to the panel report (See here).

My concern is that this project was given the green light despite so many uncertainties concerning these socio-ecological effects.  For example, readers may recall that there was extensive disagreement before the panel on whether Enbridge conducted adequate research to fully assess the impact of the project on threatened caribou and marine species. The panel concluded it was uncertain whether Enbridge could successfully mitigate impacts on caribou populations and that there was insufficient knowledge on the effects of vessel traffic and noise on marine species.  Enbridge asserted it would conduct more detailed surveys and gather more baseline data after the project receives regulatory approval, and use the information to develop species protection plans. The panel and subsequently the Governor in Council accepted this position incorporating these commitments into the conditions.  See conditions 57 to 59, which require Enbridge to conduct a pre-construction assessment of caribou habitat impacted by the project and conditions 51 and 191, which require Enbridge to prepare a construction phase and operations phase marine mammal protection plan.

Is this what sustainable development looks like?  A widely contested project with potentially severe and in some cases uncertain socio-ecological impacts gets approved in order to open new markets for bitumen, and we will sort out the difficulties later. Never mind who exactly will hold Enbridge to account for the content and integrity of its post-approval assessments and plans.

Canada might learn a thing or two about sustainable development by reading the Trans-Tasman Resources Marine Consent Decision issued by New Zealand’s Environmental Protection Agency (NZ EPA) on the same day that Northern Gateway was approved. The Trans-Tasman decision is available here.   Trans-Tasman applied to excavate iron ore from the bed of the Tasman Sea off the western coast of New Zealand’s north island.  This was the first application for a resource consent under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act, Public Act 2012 No 72(the EEZ Act) and, like the Northern Gateway project, it promised economic gains but only in exchange for uncertain and potentially significant environmental risks.  The NZ EPA denied the application.

I am familiar with the Trans-Tasman application because the hearing took place during my stay in New Zealand as an academic visitor with the Te Piringa Faculty of Law at the University of Waikato.  I was studying the role of public participation in resource project decision-making in New Zealand, and came across a local group organized as Kiwis Against Seabed Mining (KASM) which had become the front of opposition to the Trans-Tasman mining proposal. My introduction to KASM was instructive because it led me to the broader controversy in New Zealand concerning offshore resource development in the country’s exclusive economic zone and the enactment of the EEZ Act in 2013.

The size of New Zealand’s exclusive economic zone far exceeds its land mass, and has attracted a large amount of interest from resource exploration companies in recent years. In turn, the New Zealand government foresees a windfall of future royalties from this largely untapped and unknown region.  The EEZ Act was enacted in 2013 to provide a regulatory framework to manage the environmental effects of offshore resource development such as oil exploration and seabed mining. The objective of the EEZ Act is the familiar sustainability rhetoric – enable economic growth while maintaining ecological integrity – but it is tricky business because these are large capital-intensive projects in remote locations that bring environmental risks that are considered low probability with severe consequences.  Sound familiar?

The EEZ Act sets up a typical licensing framework for resource development projects. Most proposals require the consent of the Environmental Protection Agency, with the exception of those deemed to have low environmental impact such as scientific studies or mineral prospecting (section 20).  An applicant for a resource consent must file prescribed documentation and an environmental impact assessment completed to the satisfaction of the regulator (section 38).  With the exception of activities prescribed by regulation, all resource consent applications are subject to a full public hearing if requested. Any person may trigger and/or participate in the hearing; you will not find any reference to a ‘directly affected’ test for standing in this framework. The Environmental Protection Agency received 4700 submissions on the Trans-Tasman application, and all but 20 of those submissions were opposed to the mining project.

The mining activity was proposed for a 65 square kilometre region between 22 and 36 kilometers offshore. The process involves the excavation of seabed materials which are processed on a floating platform to extract iron ore.  Approximately 90% of excavated seabed would be returned to the ocean floor along with tailings, creating a sediment plume approximately 1000 square kilometres in size. The project had a project lifespan of 20 years. Submissions at the hearing revealed significant uncertainties on the effects of the project on primary productivity in the water ecosystems, impacts on endangered marine mammals, and impacts on existing indigenous and commercial fishing interests.  The EPA panel hearing the application also questioned the economic benefits of the project beyond royalties paid for resource development. The EPA denied the resource consent on the basis of the uncertainties and was not convinced the applicant’s proposed conditions and adaptive management scenarios would ensure sustainable development (See the executive summary of the decision here).

No doubt we should be cautious about reading too much into a comparison between resource project decisions governed by different statutory regimes in countries separated by half the globe. Nonetheless, for me the comparison is instructive and both CEAA 2012 and the EEZ Act share a common purpose of promoting sustainable development. The Trans-Tasman decision is an illustration of what precaution looks like in practice and is a sincere effort to ensure sustainable development of resources.  The Northern Gateway decision is an illustration of throwing caution to the wind.

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Establishing Aboriginal Title: A Return to Delgamuukw

Wed, 07/02/2014 - 9:30am

By: Jonnette Watson Hamilton

PDF Version: Establishing Aboriginal Title: A Return to Delgamuukw

Case commented on: Tsilhqot’in Nation v British Columbia, 2014 SCC 44

The declaration of Aboriginal title by the Supreme Court of Canada on June 26, 2014 — a first in Canada — is a momentous decision that should have long-lasting significance for the Tsilhquot’in Nation, other Aboriginal groups, and the rest of Canada. The unanimous Supreme Court decision made new law in the areas of the duty to consult and accommodate, governments’ justification of infringements of Aboriginal title, and federalism — matters that my colleagues Nigel Bankes, Sharon Mascher and Jennifer Koshan will be writing about. On the law of Aboriginal title — the focus of this post — the decision is extremely important for at least two reasons. First, as part of its return to principles set out in the Court’s 1997 decision in Delgamuukw v British Columbia, [1997] 3 SCR 1010, Tsilhqot’in Nation includes a return to an equal role for Aboriginal perspectives that includes Aboriginal  laws, instead of the exclusive focus on Aboriginal practices that was a feature of R v Marshall; R v Bernard, 2005 SCC 43, [2005] 2 SCR 220, the Court’s second post-1982 decision on Aboriginal title. Second, Tsilhqot’in Nation clarifies an understanding of occupation that accords with a territorial approach to Aboriginal title, one that does not require and piece together intensive use of well-defined tracts of land. In doing so, the Court turned its back on the approach it took in Marshall/Bernard, an approach that was the source of the arguments made by the governments of Canada and British Columbia in Tsilhqot’in Nation and the basis of the British Columbia Court of Appeal decision in this case (William v British Columbia, 2012 BCCA 285). The June 26 decision therefore brings increased certainty to the law of Aboriginal title by clarifying the type of occupation that will ground Aboriginal title. It also increases the likelihood of more successful Aboriginal title claims and, hopefully, more intensive and good faith negotiations in modern land claims and treaty processes.

The unanimous decision in Tsilhqot’in Nation is written by Chief Justice Beverley McLachlin. She is the only member of the current Supreme Court who also heard Delgamuukw in 1997. In addition, she authored the majority judgment in Marshall/Bernard in 2005.

Chief Justice McLachlin tells us relatively little about the Tsilhqot’in people and their occupation of their traditional territory or about the evidence presented during 339 trial days before Justice David Vickers in the Supreme Court of British Columbia (Tsilhqot’in Nation v British Columbia, 2007 BCSC 1700). Justice Vickers’ 1,382 paragraph judgment summarizes much of that evidence, but the Supreme Court of Canada’s focus is on the law. They do mention that the immediate roots of this action are found in the province’s 1983 grant of a forest licence to cut trees in part of the Tsilhqot’in Nations’ traditional territory. After blockades and unsuccessful negotiations,  the Xeni Gwet’in First Nation — one of six bands that make up the Tsilhqot’in Nation — sued for a declaration prohibiting commercial logging. That lawsuit was amended in 1998, one year after Delgamuukw was decided, to include a claim for Aboriginal title on behalf of all Tsilhqot’in people. No mention is made of the gold and copper mine proposed for the area, but the Tsilhqot’in peoples opposition to that proposed mine and its consequences for area lakes and rivers is well known and another factor sustaining their quest for a say over at least some of their traditional territory (see, e.g., Kristian Secher, “Tsilhqot’in celebrate as feds again block New Prosperity mine”, The Hook, 27 February 2014).

The test for Aboriginal title

The Chief Justice begins the discussion of the test for Aboriginal title by emphasising occupation. Initially, the test is put in the context of what she calls “a semi-nomadic indigenous group”, a characterization of the six bands making up the Tsilhqot’in Nation (para 24, 29), but the test does apply to claims for Aboriginal title by all Aboriginal groups. The test is a highly contextual one (para 37). Intensity and frequency of use is to vary with the characteristics of the Aboriginal group and the nature of the land (para 37). The characteristics of the Aboriginal group include “its laws, practices, size, [and] technological ability” (para 41).

Chief Justice McLachlin reiterates (at para 26) the three-part test for Aboriginal title that was first set out in Delgamuukw:

(i) the land must have been occupied prior to sovereignty,

(ii) if present occupation is relied on as proof of occupation pre-sovereignty, there must be a continuity between present and pre-sovereignty occupation, and

(iii) at sovereignty, that occupation must have been exclusive.

In her words, the type of occupation that grounds Aboriginal title must have three characteristics: “(i) it must be sufficient; it must be continuous (where present occupation is relied on); and it must be exclusive” (para 25). The sufficiency of the Tsilhqot’in peoples’ occupation was the main point of disagreement between the Tsilhqot’in Nation and government and also between the judges of the two lower courts.

In a puzzling paragraph, the Chief Justice next makes the point that the three elements of the Delgamuukw test could be considered to be related aspects of a single concept, quoting from the High Court of Australia’s decision in Western Australia v Ward (2002) 213 CLR 1 at para 89 for the idea that there is little merit in assessing the different elements of occupation separately (para 31). The Chief Justice ties the idea of a holistic approach to Aboriginal title to the Aboriginal perspective, saying that “ancestral practices” should not be forced “into the square boxes of common law concepts” (para 32). However, she then notes that sufficiency, continuity, and exclusivity are “useful lenses through which to view the question of Aboriginal title” (para 32) and in the following paragraphs she proceeds to consider each of those elements separately. A role for a more integrated approach to Aboriginal title is therefore left up in the air. Even more confusing is the fact this paragraph ends with the metaphor of translation, a metaphor introduced in the Chief Justice’s judgment in Marshall/Bernard. In that earlier case she stated (at para 48) that “[t]he Court’s task in evaluating a claim for an aboriginal right is to examine the pre-sovereignty aboriginal practice and translate that practice, as faithfully and objectively as it can, into a modern legal right.” In Tsilhqot’in Nation, she states that forcing “ancestral practices … into the square boxes of common law concepts” is to be avoided because it would “frustrate[e] the goal of faithfully translating pre-sovereignty Aboriginal interests into equivalent modern legal rights” (para 32). The problems with Marshall/Bernard’s portrayal of Aboriginal title as a translated right held under English common law were succinctly described in Brian Slattery, “The Metamorphosis of Aboriginal Title” (2006) Can Bar Rev 255 at 279-81, an article unfortunately not cited by the Court in Tsilhqot’in Nation. Is the Chief Justice suggesting in this paragraph in Tsilhqot’in Nation that Aboriginal interests are to be translated into modern legal rights that are not common law concepts? Is this simply a way of saying Aboriginal title is sui generis (something she does say at para 72)? Or that it is an inter-societal concept?  And what effect do those ideas have on the three elements of the Delgamuukw test?

Immediately following that particular paragraph, the Chief Justice turns to the first of the three elements of the Delgamuukw test.

On the central question of the sufficiency of occupation, the Chief Justice reaffirms Delgamuukw by holding that the issue must be looked at from both the common law and the Aboriginal perspective (para 34). And the Aboriginal perspective includes “laws, practices, customs and traditions of the group” (para 35), another Delgamuukw point. As pointed out in the opening paragraph, this is one of the ways in which the Chief Justice breaks with Marshall/Bernard and reaffirms the approach in Delgamuukw, i.e., she includes the laws of Aboriginal peoples and not just the facts of their physical occupation. (The omission of Aboriginal law in Marshall/Bernard was critiqued in the concurring judgment by Justices Fish and LeBel in that case.)The Aboriginal perspective appears to be taken more seriously, with the Chief Justice acknowledging that it might require a conception of the possession of land that differs from that of the common law (para 41).

In a key passage, the Chief Justice spells out the standard for sufficient occupation (para 38):

[T]he Aboriginal group in question must show that it has historically acted in a way that would communicate to third parties that it held the land for its own purposes. This standard does not demand notorious or visible use akin to proving a claim for adverse possession, but neither can the occupation be purely subjective or internal. There must be evidence of a strong presence on or over the land claimed, manifesting itself in acts of occupation that could reasonably be interpreted as demonstrating that the land in question belonged to, was controlled by, or was under the exclusive stewardship of the claimant group.

On the sufficiency of occupation point, the Chief Justice also adopts (para 39) the reasoning of Justice Cromwell (as he then was) in R v Marshall, 2003 NSCA 105, rather than her own reasoning in Marshall/Bernard (the appeal from the Nova Scotia Court of Appeal decision).  Justice Cromwell had analogised the standard to establish Aboriginal title to the requirements for general occupancy at common law, requiring an actual entry and actions from which an intent to occupy land could be inferred. The wide variety of acts that could be evidence of an intention to occupy land is emphasised, varying from obvious practices such as “enclosing, cultivating, mining, building upon, maintaining, and warning trespassers of land” to acts such as “cutting trees and grass, fishing in tracts of water, and even perambulation” (para 39). Exactly which acts will be sufficient to prove Aboriginal title depends on the nature of the land and the way of life of the Aboriginal people in question.

The Chief Justice also adopts Justice Cromwell’s positioning of the standard of occupation, from the common law perspective, as lying between the minimal occupation which would permit a person to sue a wrongdoer in trespass and the most onerous standard required to ground title by adverse possession as against a true owner (para 40).

Justice Vickers summarized (para 960 BCSC) the evidence in this case as revealing village sites occupied for portions of each year and tied to cultivated fields, hunting grounds and fishing sites by networks of foot trails, horse trails and watercourses that defined the seasonal rounds. He found these sites and their interconnecting links set out large tracts of land in regular use by Tsilhqot’in people at the time the Crown asserted sovereignty. Thus, for Justice Vickers, a finding of Aboriginal title to approximately 40 percent of the Claim Area was warranted (and the Claim Area was itself only about five percent of the Tsilhqot’in’s traditional territory).

The key point of disagreement in the lower courts and between the parties was whether a court’s approach to occupation should be what came to be called a “territorial approach” or whether it should be what became known as a “site specific approach.”

The BC Court of Appeal called Justice Vickers’ approach a territorial approach (paras 125, 214 BCCA) that had been rejected by the Supreme Court of Canada in Delgamuukw (based on the examples used in that case rather than on the test it articulated) and, especially, in Marshall/Bernard (paras 219-225 BCCA). The Crown had argued, and the Court of Appeal agreed, that Aboriginal title could only be proven and declared for well-defined, intensively used areas. The Tsilhqot’in Nation characterized this approach as a “postage stamp” approach to Aboriginal title, a characterization Justice Vickers had agreed with (para 610 BCSC).

To the surprise of many, the Supreme Court of Canada rejected the narrow “postage stamp” or “site specific” approach to Aboriginal title used by the Court of Appeal, and adopted the broader territorial approach of Justice Vickers. Indeed, the Chief Justice recognized that Delgamuukw affirmed a “territorial used- based approach to Aboriginal title” (para 57). Thus the primary area of uncertainty in the test for Aboriginal title, introduced by Marshall/Bernard, has now been clarified by the Supreme Court.

In her discussion of Aboriginal title, the only mention by the Chief Justice of her judgment in Marshall/Bernard is in two paragraphs that refute British Columbia’s interpretation of her decision in that 2005 case (paras 43-44). The province had argued that Marshall/Bernard rejected a territorial approach to Aboriginal title and instead required intensive use of specific, defined sites. The Chief Justice, however, held that Marshall/Bernard required only “sufficiently regular and exclusive use” of the land and followed Delgamuukw on this (para 44). She did acknowledge that her Marshall/Bernard decision framed the issue of sufficient physical possession in terms of whether the common law test for possession was met (para 44). However, she stated that the need to consider the perspective of the Aboriginal group was not abandoned in her earlier decision.

With all due respect, the Chief Justice’s lack of reliance in Tsilhqot’in Nation on her own decision in Marshall/Bernard speaks more loudly than does her insistence that Marshall/Bernard has been misunderstood. Many people feared a negative outcome in Tsilhqot’in Nation based on the Marshall/Bernard decision.

Charlotte A. Bell, Q.C., “A Corner Turned: Supreme Court of Canada Decisions of the Year Past” (2006) 34 SCLR (2d) 433 at 436 sets out the general understanding of the difference between Delgamuukw and Marshall/Bernard after the latter case was decided:

The 1997 Delgamuukw decision evoked visions of vast tracts of hunting territory, “exclusively used and occupied” by a First Nation (essentially, being under the sovereign power of a First Nation), that were declared to be, in the present day, lands from which the First Nation was entitled to exclude all others, even the Crown. However, the Bernard and Marshall decisions introduced new language into the definition of Aboriginal title. The mantra “exclusive use and occupation” is now more adjective intense. In order to establish title to land, a claimant must demonstrate that their activity was “sufficiently regular and exclusive” and thus, comports with title at common law.

This expanded definition severely limits the expectation of the size of a tract that can be declared subject to Aboriginal title. The speculation after Delgamuukw was that all of the territory between and around an even infrequently used hunting tract would qualify as Aboriginal title. Some might say that now, only actual village sites can qualify.

See also Kent McNeil, “Aboriginal Title in Canada: Site-Specific or Territorial?” (at 5), arguing that even though the territorial approach was not explicitly adopted in Delgamuukw, Chief Justice Lamer’s decision “points undeniably in that direction.” McNeil traces the British Columbia Court of Appeal’s “postage stamp” approach directly back to Chief Justice McLachlin’s decision in Marshall/Bernard, noting that “she disagreed explicitly with the territorial approach that had been taken by Cromwell J.A. (as he then was) of the Nova Scotia Court of …, favouring instead a site-specific approach whereby Aboriginal title has to be established by proof of physical occupation of specific sites …”.

The governments of British Columbia and Canada and the British Columbia Court of Appeal adopted what they understood to be Marshall/Bernard’s changes to the test set out in Delgamuukw. Marshall/Bernard has been forcefully criticized for ignoring Aboriginal law and for insisting on intensive use of specific sites in order to found Aboriginal title. See, for example, Paul LAH Chartrand, “R. v. Marshall; R. v. Bernard: The Return of the Native” (2006) 55 UNBLJ 135; Margaret McCallum, “After Bernard and Marshall” (2006) 55 UNBLJ 73; S. Imai, “The Adjudication of Historical Evidence: A Comment and an Elaboration on a Proposal by Justice LeBel” (2006) 55 UNBLJ 146; and Nigel D Bankes, “Marshall and Bernard: Ignoring the Relevance of Customary Property Laws” (2006) 55 UNBLJ 120. Unfortunately, none of this scholarly literature, nor that of Slattery, Bell or McNeil cited above, is cited by the Court (though earlier pieces by Slattery and McNeil are cited).

Tsilhqot’in Nation’s repudiation of the widespread (mis)understanding of Marshall/Bernard, even if not acknowledged to be such, is welcomed — and necessary for a successful claim for Aboriginal title in this case.

On the element of continuity, the second part of the test for Aboriginal title in Delgamuukw, the Chief Justice adds nothing to what was said in that case (para 45). Delgamuukw required that continuity between present and pre-sovereignty occupation be proved if the former was relied upon as proof of the latter. However, she does expand somewhat on the element of exclusivity, the third part of the test. Delgamuukw required that the Aboriginal group (or groups under the notion of shared exclusivity) had to have the intent and capacity to retain exclusive control over the land. The Chief Justice expands on exclusivity with examples similar to those set out in Delgamuukw (para 48), and adds an emphasis on context and the need to use both the common law and the Aboriginal perspective (para 49).

After setting out the clarified test for Aboriginal title, the Chief Justice then applies it to the facts of this case noting that, because it is a question of fact, the issue is whether Justice Vickers made a palpable and overriding error (para 52). The Chief Justice found that there was no basis on which to disturb the fact findings of Justice Vickers on the elements of sufficiency, continuity or exclusivity.

The content of Aboriginal title

Chief Justice McLachlin also took the opportunity in Tsilhqot’in Nation to discuss the characteristics of Aboriginal title. Before doing so, however, she discusses the content of the Crown’s underlying or radical title in Aboriginal title land, a notion seldom discussed in Canadian jurisprudence.

She begins with the conceptually difficult but not new idea that the Crown acquired underlying title to all the land in British Columbia at the time of assertion of European sovereignty (para 69). Following that assertion, Aboriginal title is conceived of as a burden on the Crown’s underlying title. The Chief Justice also says something about the content of the Crown’s underlying title, stating that it is “what is left when Aboriginal title is subtracted from it” and it is not a beneficial interest in the land (para 70). Once Aboriginal title is declared, as it was in this case, what remains of the Crown’s underlying title is two things: first, a fiduciary duty owed to the Aboriginal title holders when the Crown is dealing with the Aboriginal land, and, second, the right to encroach on the Aboriginal title if the government can justify the encroachment (paras 71, 85).

On the content of Aboriginal title, as the Chief Justice notes, Delgamuukw established that it “encompasses the right to exclusive use and occupation of the land held pursuant to that title for a variety of purposes” (para 67). It is a beneficial interest in the land (para 70), conferring “the right to use and control the land and to reap the benefits flowing from it” (para 2). The incidents that attached to that title are analogised to those associated with fee simple titles: “the right to decide how the land will be used; the right of enjoyment and occupancy of the land; the right to possess the land; the right to the economic benefits of the land; and the right to pro-actively use and manage the land” (para 73). Aboriginal title holders may use their Aboriginal title land in modern ways if they wish to do so (para 75). These aspects of title — all previously set out in Delgamuukw — make up what the Chief Justice calls the “positive proposition” associated with the content of Aboriginal title (para 15).

There is also what the Chief Justice calls a “negative proposition” associated with Aboriginal title, namely, that the Aboriginal title holder’s use of the land “must not be irreconcilable with the nature of the group’s attachment to that land” (para 15, quoting Delgamuukw at para 117). The Chief Justice elaborates on this “important restriction” which she directly ties to the collective nature of Aboriginal title, a collective nature that not only encompasses the present members of the group, but also succeeding generations (para 74). As a result of this negative proposition or, to use Delgamuukw’s words, this inherent limitation, Aboriginal title land can only be alienated to the Crown; cannot be encumbered in ways that would prevent future generations from using and enjoying it; and cannot be developed or misused in ways that would substantially deprive future generations of the benefit of the land (para 74). Nonetheless, the Chief Justice states that even permanent changes to the land may be possible. No examples are given. Although the Chief Justice elaborates somewhat on this inherent limitation on Aboriginal title, the scope of this limitation and the types of activities that are restricted are still uncertain and their resolution awaits a case in which the inherent limitation is itself the issue.

Other questions remain unanswered by Tsilhqot’in Nation. Neither continuity nor exclusivity were contentious in this case. Thus, for example, the significance of overlapping and competing claims to Aboriginal title over the same territory is uncertain.

Conclusion

As a result of the Tsilhqot’in Nation decision, we will most likely see many more First Nations bringing forward to the courts claims for declarations of Aboriginal title. Within hours of the Tsilhqot’in Nation decision the Tahltan First Nation announced it planned to launch an Aboriginal rights and title claim (Emma Crawford Hampel and Nelson Bennett “First Nations armed with Supreme Court ruling put mines in their sights” June 27, 2014, The First Perspective).

Tsilhqot’in Nation’sclarification of the test for Aboriginal title and its return to the promise and more expansive nature of the territorial approach in Delgamuukwshould also affect the positions of both First Nations and governments at treaty negotiation tables. Although the only question the rest of Canada (or at least the mainstream media) seemed to be interested in is the impact of the Court’s decision on resource development, it seems likely that a much broader understanding of just how the ground has shifted will become both a necessity and a good in the future.

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U.S. Supreme Court Narrows Greenhouse Gas Rules: What It Means for the U.S. Climate Agenda

Tue, 06/24/2014 - 10:20am

By: James Coleman

PDF Version:U.S. Supreme Court Narrows Greenhouse Gas Rules: What It Means for the U.S. Climate Agenda

Case commented on:Utility Air Regulatory Group v. Environmental Protection Agency (EPA), USSC No. 12–1146 (June 23, 2014)

On Monday, the U.S. Supreme Court struck down a portion of the United States’ first regulations for greenhouse gas emissions from industrial sources. The Court held that the Environmental Protection Agency (EPA) may not apply its “Prevention of Significant Deterioration” (PSD) program to new industrial sources on the basis of their greenhouse gas emissions. Instead, EPA can only regulate greenhouse gas emissions from new sources that are already subject to the PSD program because they emit other pollutants.

This is the first Supreme Court decision on EPA’s authority to regulate greenhouse gases from industrial sources, so it has important implications for EPA’s future climate agenda—including its recently proposed rule for the electricity sector. And the varied opinions offered by the Supreme Court justices offer hints about how courts will approach the inevitable legal challenges to those regulations.

EPA’s PSD program has two basic requirements:

1)    You need a permit before you build a new major industrial source of air pollution.

2)    And to get a PSD permit, you must show that you are using the “best available control technology” for the air pollutants that you emit.

In this case, the Supreme Court held:

1)      EPA may not require new sources to get a PSD permit simply because they will emit large amounts of greenhouse gases. The Court held that it would be unreasonable for greenhouse gases to trigger the permit requirement, because the PSD permit program is only meant to apply to the thousands of industrial sources that emit conventional pollutants, not the millions of sources that emit significant amounts of greenhouse gases.

2)      But if a source needs a PSD permit anyway, because it emits other pollutants, then EPA may require it to adopt the “best available control technology” for greenhouse gases, along with other air pollutants.

I will not say anything more about the complexities of the decision, because I described them extensively in a previous post, which read the tea-leaves of oral argument in the case, and suggested the Supreme Court would reach exactly this compromise. So you can read that post both for a description of the statutory interpretation question and an explanation of the reasoning that the court eventually followed.

The most pressing question raised by the case today may be its implications for the United States’ future climate agenda, including EPA’s recently proposed rule for existing power plants. There are three important implications, and each could spell trouble for EPA’s climate agenda.

First, the Court suggested that one reason for rejecting EPA’s rule is that “it would bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization” because millions of sources would be subject to a greenhouse gas permit requirement. EPA, it is true, had suggested it would only regulate a reasonable number of them, but the court was not willing to leave that decision in the agency’s hands.  The court noted: “When an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism.”

This passage will trouble EPA. In the agency’s recent proposal to cap greenhouse gas emissions from state power sectors, which the agency calls the “Clean Power Plan,” the agency is using a long-ignored statutory provision, Clean Air Act §111(d), to overhaul the nation’s electricity sector. As noted in a previous post, §111(d) has rarely been used, and it is so obscure that when Congress passed the Clean Air Act amendments in 1990, no one even noticed that the House and Senate had passed two different versions. Talk about unheralded.

Second, the Court expressed some skepticism about controlling greenhouse gas emissions through energy efficiency, which is an important part of EPA’s climate agenda. Carbon dioxide, the most common greenhouse gas, is the inevitable result of burning fossil fuels. Clean combustion of clean fossil fuels emits carbon dioxide and water. And once carbon dioxide is emitted, it is hard to pull out of the air. So most attempts to limit carbon dioxide emissions are really attempts to limit fossil fuel combustion. The only other option is carbon capture and storage, which is usually too costly to be feasible. EPA’s Clean Power Plan and its guidance on what is the “best available control technology” under the PSD program both rely on encouraging energy efficiency.

But the Supreme Court was not willing to endorse this approach. First, it stated that it didn’t need to decide whether energy efficiency could be the “best available control technology” because EPA also said states could consider carbon capture and storage. Second, it said that even if EPA could mandate energy efficiency at new sources, it could not redesign the source, require it to consume less electricity, or otherwise micromanage industrial source proposals. In doing so, the Supreme Court handed industry arguments to use against regulators in permit proceedings.

A third important takeaway from the case is that Justice Scalia, the conservative justice that authored the Supreme Court’s opinion, was able to convince Justice Kennedy to join his opinion limiting EPA’s authority to regulate greenhouse gases. Justice Kennedy is generally considered the Court’s swing vote and he was a deciding vote on the Court’s 5-4 decision in Massachusetts v. EPA, 127 S.Ct. 1438 (2007),which required EPA to consider the climate consequences of greenhouse gases from cars and trucks.

Justice Kennedy has seemed very supportive of EPA’s efforts to regulate greenhouse gases. At oral argument, he admonished industry’s lawyers that he would continue to follow “both the result and the reasoning” of Massachusetts v. EPA—and the reasoning of Massachusetts v. EPA stressed the possible benefits of greenhouse gas regulation. Until now, EPA may have been justified in believing that the Court’s swing justice would sympathize with the challenges they face in adapting the Clean Air Act to address global warming and give them the benefit of the doubt. But Monday’s decision shows that Justice Kennedy’s sympathy only goes so far: he is quite willing to strike down overly broad climate regulations. That may have much longer-term implications for EPA’s climate agenda—only the coming years will tell.

Full disclosure: Before entering my academic career in 2011, I represented some of the petitioners in their challenge to EPA’s regulations.

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

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Conservation Easements and Fraud under the Land Titles Act

Mon, 06/23/2014 - 8:30am

By: Jonnette Watson Hamilton

PDF Version: Conservation Easements and Fraud under the Land Titles Act

Case commented on: Nature Conservancy of Canada v Waterton Land Trust Ltd, 2014 ABQB 303

This 130 page, 605 paragraph judgment penned by Justice Paul R. Jeffrey deals with a number of note-worthy legal issues in a fascinating factual context. The case started when the Nature Conservancy of Canada (NCC) tried to enforce a conservation easement that it had registered against its title to the Penny Ranch, a large cattle ranch near Waterton Lakes National Park in the south-west corner of the province. One of the main purposes of the conservation easement was to ensure that, when the NCC sold the Penny Ranch, development by the purchasers or their successors in title would not impede wildlife migration through the area, an area which the NCC described as the “North American Serengeti.” The case ended (barring appeals) with Justice Jeffrey finding that defendant’s new bison fence was not a breach of the conservation easement and ordering the NCC to pay over $700,000 to Thomas Olson for the NCC’s failure to issue him a timely tax receipt. In between, numerous legal issues arose, including: (1) the nature of conservation easements under the Alberta Land Stewardship Act; (2) contract rectification; (3) fraud as an exception to indefeasibility; (4) rectification of a caveat with a missing page in the underlying document; and (5) damages for the late issuance of a tax receipt. In this post, I will deal with only one of those issues and that is the fraud issue. Colleagues will address some of the other issues. General Background

The NCC is national registered charity dedicated to conserving Canada’s natural heritage through land conservation. It partners with individuals, corporations, foundations and governments to protect ecologically significant land, plants and wildlife.

Thomas Olson is a tax lawyer who splits his time and his transnational tax planning and tax litigation practice between Alberta and Utah. He and his family owned three other bison ranches in Western Canada and operate a bison meat distribution business.

The Penny Ranch lies on the eastern slopes of the Rocky Mountains and within the migratory corridors of a wide variety of species. The NCC bought the ranch from Penny in 2001 for $3.3 million. The ranch consisted of eleven mostly contiguous quarter sections, plus a leased twelfth quarter section, within a narrow strip of land lying just northeast of Waterton Lakes National Park. The ranch occupied the last fringe — a five to six mile wide band — between cultivated or otherwise developed lands to the east and the mountainous lands to the west. The NCC arranged to sell the ranch to Thomas Olson, who planned to raise wild bison there. Before selling the ranch to Olson, the NCC had a conservation easement registered against the titles to the ranch.

In July 2003 the NCC filed caveats against the titles to the Penny Ranch to protect a “placeholder” conservation easement. It was their practice to use a standard form conservation easement for this purpose and then later negotiate and revise its terms using an amending agreement to suit a specific purchaser, while still satisfying the NCC’s conservation goals. In this case the placeholder conservation easement was granted by the NCC to the Alberta Conservation Association (ACA), rather than to itself. The idea was that once the NCC sold the ranch, the ACA would transfer the conservation easement back to the NCC. The placeholder conservation easement dealt with fencing, including fencing height restrictions. The parties negotiated and reached an amending agreement that included new terms for the height and location of replacement fencing on the ranch.

The first caveat the NCC filed to protect the conservation easement amending agreement had several defects. Most importantly, the filing omitted page 5 of the attached amending agreement which contained a replacement fence height restriction. The first caveat was discharged and an amended second caveat was filed against the titles to the ranch on August 3, 2004. While this second caveat corrected many of the defects of the first caveat, the entire page 5 of the five-page amending agreement attached to the caveat was still missing.

The NCC transferred the Penny Ranch to Olson on August 11, 2004 and the transaction closed on August 24, 2004.

As soon as he bought the ranch, Olson began to replace the old cattle fences around its perimeter with new fencing that he claimed would be more effective at restraining his bison, while still allowing wildlife to migrate through the ranch. The NCC claimed that the new fence violated the conservation easement because it was higher than it was allowed to be and it would obstruct migrating wildlife. When Olson disagreed and the parties were unable to settle the matter, the NCC sued to enforce the conservation easement and to force Olson to modify his new fencing.

When the placeholder conservation easement was replaced by the one negotiated by the NCC and Olson, the parties disagreed on whether the oral agreement they reached about the height and location of replacement fencing was accurately reflected in the written agreement. That is the contract rectification issue. Justice Jeffrey did rectify the amending agreement to accord with the parties’ actual oral agreement, which he found to be as Olson described it. Olson claimed the conservation easement was only partially registered on the titles to the ranch because of a different lawyer’s conveyancing error and that the NCC’s interest in the fencing restrictions in particular was an unregistered interest. That is the land titles rectification issue based on the defective second caveat, an issue Justice Jeffrey resolved by rectifying the caveat.  It had not been rectified at the Land Titles Office before Olson transferred the ranch to a third party which was a limited partnership/corporate trustee arrangement Olson had created for the purpose of holding title to the ranch. The parties disagreed on whether the fence height restriction in the conservation easement was binding on the successor in title to Olson, raising the fraud issue. Justice Jeffrey found there was no fraud.

Olson also presented a number of questions about the validity of the conservation easement itself. He argued that the fencing terms of the NCC’s version did not satisfy the statutory purposes for conservation easements and the conservation easement was therefore invalid and unenforceable. He also argued that the conservation easement was invalid because of the relationship between the NCC and the ACA before and at the time NCC sold the property to Olson. Justice Jeffrey concluded the conservation easement was valid and enforceable.  He also found that Olson’s fence did not breach the fencing restrictions in the rectified conservation easement.

The tax receipt issue arose because Olson had bought the ranch from the NCC at a significant premium over fair market value for a property with a conservation easement on it, with the excess understood to be his charitable donation to the NCC. However, the NCC did not issue a tax receipt for the charitable donation to Olson for more than five years because Olson had taken the position that the conservation easement was unenforceable. Olson therefore counter-claimed for damages for the NCC’s failure to issue the tax receipt within a reasonable time. He was successful, with Justice Jeffrey ordering the NCC to pay Olson more than $700,000 in damages.

Facts Specific to the Fraud Issue

Olson had purchased the ranch in his personal capacity in August 2004. He was bound by whatever agreement about fence height restriction had been reached with the NCC, regardless of whether or not the amending agreement needed to be rectified and whether or not the attachment to the second caveat was missing page 5 with the fence height restrictions. However, the defective second caveat had not been rectified at the Land Titles Office before Olson transferred the ranch from himself to a third party. That third party was a limited partnership/trustee/trust arrangement that Olson had created specifically for the purpose of holding title to the ranch. The corporate trustee in that arrangement bought the ranch from Olson in March 2005 for $500,000 and the limited partner interest in the limited partnership, after Olson had been asked to help rectify the second caveat and the missing page 5 and after the NCC threatened litigation over the fencing problems. Olson encumbered the ranch with almost $2 million in mortgages and promised to continue to make the mortgage payments, but that promise was unsecured. Olson’s limited partner interest was substantially redeemed for just over $1.6 million by the end of 2005.

Olson created the Waterton Land Trust on September 28, 2004. He created the Waterton Land Trust Limited Partnership as trustee for the Waterton Land Trust on March 10, 2005 by an agreement between himself and Waterton Land Trust Ltd, the trustee. The only limited partner of the Limited Partnership was Olson. The general partner of the Limited Partnership was the Waterton Land Trust. The trustee of that trust was the corporation, the Waterton Land Trust Ltd.  The Waterton Land Trust Ltd. had only two directors: one a good friend of Olson and also Olson’s partner in his law firm, and the other a professor of neuroscience at the University of Calgary who lived near Olson’s home in the Bragg Creek area of Alberta. The trust included the use of a “protector,” a role held by Olson at all relevant times. The protector oversaw the management of the trust by the trustees; had the power to appoint, remove and replace trustees; had the power to veto any decision by trustees; and had to be given 30 days’ written notice of the trustees’ intended exercise of many of their powers.

The trust was intended to be a typical “asset protection trust,” created to ensure the preservation of the ranch and protect it from creditors through future generations. Olson had used comparable limited partnership/trust/ trustee arrangements with his other bison ranches. When the trust was created, Olson’s intention was to keep the property in his name until the end of 2004 and then transfer it to the trust in early 2005. Olson wanted to remain owner of the ranch to the end of the personal tax year to mitigate the risk he might not be entitled to the charitable donation tax receipt in his personal capacity.

The Arguments and Decision on the Fraud Issue

s interest in the fencing restrictions was an unregistered interest. Normally, under the Land Titles Act, RSA 2000, c L-4,sections 60, 62 and 203, that would mean that the new owner was not bound by NCC’s unregistered interest.

But the NCC argued that the transfer by Olson to a limited partnership/trust/trustee over which he had effective control was a “self-serving sham transaction” (at para 273). It argued that Olson engaged in the series of transactions that culminated in the ranch being transferred to the Waterton Land Trust Ltd, while the fencing dispute remained unresolved, to ensure that the conservation easement and caveats could not be rectified and bind the new registered owner. That conduct, the NCC argued, amounted to fraud under the Land Titles Act.

Justice Jeffrey examined what amounts to fraud for the purposes of the Alberta land titles system (at paras 445-450). There is no definition of fraud in the Land Titles Act. Butthe statute does tell us what is not fraud. Section 203 states that mere knowledge of an unregistered interest, even when combined with the knowledge that registration will defeat that interest, is not fraud: Holt Renfrew & Co v Henry Singer Ltd (1982), 37 AR 90, 20 Alta LR (2d) 97 (CA). Cases consistently hold that “something more” in the way of dishonest dealings is required than just knowledge of the unregistered interest: Holt Renfrew; Boulter-Boulter-Waugh & Co v Phillips (1919) 58 SCR 385.

Olson made a novel argument about the test for recognizing fraud in the land titles context. He argued that Holt Renfrew established an additional requirement for a finding of fraud. In addition to knowledge of an unregistered interest and “something more,” the holder of the unregistered interest had to rely on the new owner’s fraud and had to have been induced by that reliance to conclude the transaction. Justice Jeffrey decided that Olson was wrong about the need for reliance (at para 452). An argument that reliance is required seems to be a misreading of Holt Renfrew, which held that reliance was required in order to find a fraudulent misrepresentation, which is what amounted to the “something more” in that case. But fraudulent misrepresentation does not have to be proved in order to prove fraud under the Land Titles Act and there was no allegation of fraudulent misrepresentation in this case.

Olson also submitted, rather bizarrely, that the relevant transaction was his purchase of the ranch from the NCC, i.e., that it was the transaction that had to be tainted by fraud in order for the trustee’s title not to be indefeasible. The basis of this argument was not disclosed in the judgment. Justice Jeffrey held that Olson was wrong about which transaction was to be scrutinized (at para 452-454). The transaction to be examined for fraud was the sale by Olson to the limited partnership/trust/trustee.

The test for fraud used by Justice Jeffrey was thus the well-established one that requires knowledge of an unregistered interest and “something more.”  The NCC successfully argued that the new registered owner, Waterton Land Trust Ltd, had knowledge of the NCC’s unregistered interest and knowledge that registration of the transfer to the trustee would defeat that interest because Olson personally had such knowledge and he effectively controlled the trustee and trust. The NCC did not succeed in proving that there was “something more.”

Knowledge

The NCC first argued that the creation of the trust and the transfer of the Penny Ranch by Olson to the limited partnership/trust/trustee arrangement were not arm’s length transactions. Justice Jeffrey agreed. He concluded (at paras 246, 275) that Olson retained de facto control over the various family corporations and limited partnerships and trusts, including the Waterton Land Trust, and thus he retained control of the Penny Ranch after he transferred it to the limited partnership/trust/ trustee arrangement. Justice Jeffrey enumerated three reasons for reaching the conclusion that it was “difficult to imagine a situation in which Olson could be any less of a non-arms’ length party” (at para 280):

(1) As “protector” of the trust, Olson had the ability to effectively control it.  His control of the trust gave him control over the Penny Ranch (at para 276).

(2) Olson also controlled the trust because the trustee’s directors did not exercise independent judgment (at para 277). The director of the Waterton Land Trust Ltd responsible for the trust’s purchase of the Penny Ranch was simply a “straw man” acting on Olson’s directions (at paras 250, 252).

(3) Olson was not acting at arm’s length to the trustee or the trust on the transfer of the ranch because, at that time, he held all of the shares of the trustee, which also served on behalf of the trust as the general partner of the limited partnership, of which he was the sole limited partner (at para 279).

“Something more”

The key question on the fraud issue was therefore whether “something more” existed. First year Property law students should recognize in the fraud-specific facts of this case a situation analogous to that in Alberta Minister of Forestry, Lands & Wildlife v McCulloch (1991), 83 Alta LR (2d) 156 (CA) aff’g 1991 CanLII 5819, 78 Alta LR (2d) 375 (QB).

McCulloch provides an example of “something more.” In 1986, McCulloch purchased a mill site, which was subject to a caveat protecting an option to purchase the land at a specified price in favour of the Crown. In 1987, an error in the Land Titles Office resulted in the Crown’s caveat being cancelled. McCulloch discovered the cancellation and told a Crown employee about it. Then, a few days later, McCulloch transferred the mill site to a numbered company of which he was the director and president. The new title in the name of the numbered company was free of the Crown caveat. The Crown sued, seeking declarations that the transfer to the numbered company was made in circumstances amounting to fraud and that the numbered company’s interest in the mill site was subject to the Crown’s interest. Sinclair J. found for the Crown. He held that the numbered company was deemed to have knowledge of the Crown’s unregistered interest when it acquired the mill site by virtue of the knowledge of its director and president, McCulloch. While knowledge of an unregistered interest does not, by itself, constitute fraud under the Land Titles Act, the purpose of the transfer to the numbered company was to defeat the Crown’s interest and to relieve McCulloch of his obligations to the Crown. Therefore, the court held that the numbered company acquired the parcel in circumstances amounting to fraud.

As was the case in McCulloch where the knowledge of its director and president was imputed to the numbered company, Justice Jeffrey had imputed Olson’s knowledge about the missing page 5 in the registration of the conservation easement to the trust because of Olson’s de facto control of the trust (at para 457). However, Justice Jeffrey held that Olson did not take advantage of his knowledge of the unregistered interest (at para 458). The key distinguishing fact appeared to be that more than three months passed between the time Olson learned of the defective caveat and the time he transferred the ranch to the trustee. The sale by McCulloch to the numbered company he created for the purpose of defeating the Crown’s interest took place within a few days of McCulloch learning that the Crown caveat had been accidently discharged (at para 462).

Justice Jeffrey noted (at para 262) that the NCC could have filed a caveat against the title to the ranch in that three month period to protect its position against all third parties that Olson might transact with. He accepted Olson’s argument that the NCC’s failure to file a caveat when they learned of the missing page 5 in December 2004 did not mean that Olson’s transfer three months later was either hasty or fraudulent (at para 467).

In addition, unlike McCulloch, Olson did not create the limited partnership/trust/trustee for the purpose of defeating the NCC’s unregistered interest (at para 460). Olson had a long term pre-existing plan that he carried out in the normal course (at para 459). The trust had been created in September 2004, before Olson knew that the amending agreement’s fencing restrictions were different from what he and the NCC had agreed on and that page 5 containing those fencing restrictions was missing from the conservation easement amending agreement attached to the second caveat (at para 256). Olson did not accelerate the timing of the transfer to Waterton Land Trust Ltd. as he had only intended to hold the ranch personally until the end of the 2004 calendar year and the transfer actually happened later than planned, in March 2004 (at para 261).The limited partnership/trust/trustee arrangement was also one that Olson had previously used for his other bison ranches (at para 258).

The NCC tried to add to the list of things that Olson did that, taken together, might amount to “something more”, by arguing that Olson, a lawyer, breached the standards of professional conduct required of him by the Law Society of Alberta. They pointed specifically to his failure to disclose his awareness of the missing page 5 of the conservation easement amending agreement during the fencing negotiations with the NCC and his hasty transfer of the ranch to the limited partnership/trust/trustee arrangement. However, Justice Jeffrey held that Olson’s conduct did not provide the NCC with a cause of action (at para 318). If there was any professional misconduct, it was a matter for the Law Society of Alberta.

The NCC also made an argument based on “badges of fraud,” i.e., fact situations which had been accepted as circumstantial evidence of fraud (at paras 468-72). While the phrase stems from the fraudulent preferences context and is unknown in the Alberta land titles context, the argument really amounts to nothing more than a series of analogies to facts which have been held in other cases to amount to “something more.” Justice Jeffrey appeared to be unpersuaded that “badges of fraud” was an appropriate approach.

Conclusion

Justice Jeffrey therefore concluded that Olson did not engage in fraudulent conduct when he transferred the Penny Ranch from himself to the limited partnership/trust/trustee. Olson’s knowledge of the NCC’s unregistered interest was imputed to the new registered owner, the trustee, due to Olson’s effective control of that entity. However, there was no “something more” to take the transaction beyond section 203 of the Land Titles Act. In applying the test set out in the leading case of Holt Renfrew, this case provides us with another example of drawing the line between fraud and not-fraud in the Land Titles Act context. Justice Jeffrey’s distinguishing of McCulloch is one of the most valuable aspects of this case. It creates a helpful precedent by narrowing down the instances in which a transfer to an entity created and controlled by a transferor, which has the effect of defeating a prior unregistered interest that the transferor knew about, amounts to fraud.

Justice Jeffrey also dealt with a number of novel arguments. He correctly dismissed the claim that reliance was required in order to prove fraud in the land titles context. He also correctly focused the fraud inquiry on the transaction alleged to be the fraudulent one, rather than on the too-early transaction transferring the land to the party alleged to be the fraudster. Justice Jeffrey did not accept that allegations of professional misconduct might be relevant to the fraud inquiry. He also refused to accept the “badges of fraud” approach, although he did not indicate his reasons for not doing so. Aside from the fact it is not the approach adopted in the leading cases, such as Holt Renfrew, presumably he thought that approach added nothing to the usual exercise of analogizing and distinguishing the facts in the case in front of him from those in other cases dealing with the same issue.

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Defining Prosecutorial Discretion (With an Invitation to the Court to Re-define Abuse of Process)

Fri, 06/20/2014 - 6:58am

By: Alice Woolley

Case Commented On: R. v. Anderson, 2014 SCC 41

With its unanimous judgment in R. v. Anderson, 2014 SCC 41, the Supreme Court has clarified the scope of “prosecutorial discretion”, distinguishing it from matters that go only to “tactics and conduct before the court” (para 35) while confirming its application to a “wide range of prosecutorial decision making” (para 45).  The Court also confirmed the non-reviewable nature of prosecutorial discretion absent demonstration of an abuse of process, and reviewed the law governing assessment of an abuse of process. Finally, the Court held that Crown counsel have no constitutional obligation to consider an accused’s aboriginal status when they tender Notice to the accused that the Crown intends to seek the mandatory minimum punishment that may be applicable given that accused’s prior convictions.

On the matter of prosecutorial discretion, Justice Moldaver’s judgment is persuasive.  It is consistent with prior Court decisions on the subject – Krieger v. Law Society of Alberta, 2002 SCC 65 and R. v. Nixon, 2011 SCC 34 – while also clarifying confusion that had apparently arisen following Krieger. The constitutional decision also seems justifiable given that, as the Court points out, the consideration of the accused’s aboriginal status is a matter for the trial judge; the Notice offered by the Crown only ensures that the mandatory minimum sentence is properly before a court.

In this brief comment I will summarize the Court’s decision and support its approach to prosecutorial discretion.  I will also note, however, an issue with the Court’s test for establishing abuse of process, and in particular the Court’s emphasis on the motivations and intentions of Crown counsel, rather than looking only at the actions taken by the Crown.  I suggest that requiring the accused to provide evidence that the Crown has acted in “bad faith” or with “improper motives” (para 55) misdirects the inquiry to the ethics of the actor rather than to the effect of the action.  It also places defence counsel in an untenable position given how the law societies have articulated the duty of civility. This latter argument is one that has been made persuasively by Donald Bayne, a criminal defence lawyer in Ottawa, most recently at the Canadian Bar Association’s first annual Legal Ethics Forum.

The Decision

Anderson pled guilty to impaired driving contrary to s. 253(1)(b) of the Criminal Code, RSC 1985, c C-46. It was his fifth conviction, and the Crown served a Notice that it would be seeking a mandatory minimum sentence of not less than 120 days imprisonment (para. 6). Anderson argued that the Criminal Code provisions imposing the mandatory minimum sentence and requiring the filing of the Notice violated s. 7 of the Charter by transferring “what is a judicial function to the prosecutor” (para 7) and violated s 15 because “it deprived an Aboriginal person of the opportunity to argue for a non-custodial sentence” (para 7).

The trial judge accepted this argument, holding that the Crown must “provide justification for relying on the Notice” in all cases, and that the legislative provisions violated s 15 if applied to Aboriginal offenders. He sentenced Anderson to 90 days in prison and imposed two years’ probation and a five-year driving ban (para 8).

The Newfoundland and Labrador Court of Appeal denied the Crown’s appeal of this decision, holding that the Crown must consider an accused’s aboriginal status. The Crown had to include a “specific direction to consider the offender’s Aboriginal status” (para 9, emphasis in original). The majority of the Court of Appeal also held that tendering the Notice was not part of the Crown’s “core prosecutorial function” (para 10).

The Supreme Court rejected the constitutional argument and allowed the Crown’s appeal.  It held that the constitutional argument “conflates the role of the prosecutor and the sentencing judge by imposing on prosecutors a duty that applies only to judges” (para 20). A constitutional issue would arise if “a mandatory minimum regime requires a judge to impose a disproportionate sentence” (para 25); it does not arise simply because a prosecutor puts the mandatory minimum before a court. Further, the Court did not accept that imposing a constitutional requirement on the Crown to consider an accused’s aboriginal status in exercising its prosecutorial discretion was consistent with fundamental justice.  It would rather be “contrary to a long-standing and deeply rooted approach to the division of responsibility between the Crown prosecutor and the courts” (para 30).  It would make a matter that is not properly subject to judicial oversight “up for routine judicial review,” which would be “contrary to our constitutional traditions” (para 32).

The Court went on to consider whether, apart from constitutional grounds, the Crown’s “decision to tender the Notice is reviewable in some other way, and if so, under what standard” (para 34).  The Court held that the decision to issue the Notice was a matter of prosecutorial discretion and, as such, was “only reviewable for abuse of process” (para 36, emphasis in original). Prosecutors have independence in their exercise of their discretion to ensure their freedom from “judicial or political interference” and to allow them to fulfill “their quasi-judicial role as ‘ministers of justice’” (para 37).  Contrary to what has been suggested by some courts subsequent to the Krieger decision, there are not “core” and “outside the core” exercises of discretion (para 43); rather, prosecutorial discretion is a single “expansive term that covers all ‘decisions regarding the nature and extent of the prosecution and the Attorney General’s participation in it’” (para 44). This covers a “wide range of prosecutorial decision making” (para 45) and includes repudiation of a plea agreement, pursuing a dangerous offender application, preferring a direct indictment, proceeding by summary conviction or indictment, charging an accused with multiple offences, negotiating a plea or pursuing an appeal (para 44). And it includes tendering the Notice, given that it “fundamentally alters the extent of prosecution” (para 62, emphasis in original)

What prosecutorial discretion does not include are “tactics or conduct before the court” (para 57) or the satisfaction of constitutional obligations, such as providing proper disclosure: “prosecutorial discretion provides no shield to a Crown prosecutor who has failed to fulfill his or her constitutional obligations such as the duty to provide proper disclosure to the defence” (para 45).

Prosecutorial discretion can be reviewed for abuse of process – i.e., to determine if it “‘undermines the integrity of the judicial process’ or ‘results in trial unfairness’” (para 49).  Also relevant is whether there are “‘improper motive[s]’ and ‘bad faith’” (para 49).  If a Crown decision was “motivated by prejudice against Aboriginal persons [it] would certainly meet this standard” (para 50).

To require the Crown to explain its decision the applicant must establish a “proper evidentiary foundation” for the allegation of an abuse of process (para 52); “prosecutorial authorities are not bound to provide reasons for their decision, absent evidence of bad faith or improper motives” (para 55, citing Sriskandarajah v. United States of America, 2012 SCC 70), emphasis added by Court).  A failure to comply with a Crown policy may be relevant to establishing the evidentiary threshold, but “Crown policies and guidelines do not have the force of law, and cannot themselves be subjected to Charter scrutiny in the abstract” (para 56)

Where a matter is not one of prosecutorial discretion, but is rather a matter of tactics and conduct, it is subject to the courts’ “inherent jurisdiction to ensure that the machinery of the court functions in an orderly and efficient manner” (para 58). The Court also noted, however, that tactical decisions by lawyers are subject to “a high degree of deference” (para 59), and that sanctions should be directed at the “conduct of the litigants” but not at the “conduct of the litigation” (para 59, emphasis in original). These matters may also be reviewed for abuse of process “but abuse of process is not a precondition for judicial intervention as it is for matters of prosecutorial discretion” (para 61).

Comments

As noted at the outset, Justice Moldaver’s analysis of the scope of prosecutorial discretion makes sense, and is consistent with the Court’s original approach in Krieger.  In Krieger the Court considered the propriety of law society discipline of Crown prosecutors, and noted that while exercises of prosecutorial discretion are not generally susceptible to law society review (absent egregious impropriety), Crown conduct that does not fall within prosecutorial discretion may be subject to law society review.  In Krieger the Court had said that “prosecutorial discretion refers to decisions regarding the nature and extent of the prosecution and the Attorney General’s participation in it” (Krieger at para 47; cited in Anderson at para 40). The Court’s definition of prosecutorial discretion in Anderson tracks that definition exactly, and appropriately eschews the idea that a decision can be sort of within prosecutorial discretion, any more than one can be sort of pregnant.

There is, however, some reason to be concerned with the Court’s continued linking of abuse of process to a demonstration that the Crown has acted with improper motive or bad faith. There are two difficulties with this emphasis. First, it assesses the propriety of conduct through the motivations or intentions of the actor. While the personal motivations or attitude of a Crown prosecutor may be relevant for a disciplinary hearing, it is hard to see its relevance to the determination of whether conduct undermines the administration of justice. Well-intentioned idiocy that undermines the integrity of the trial process or results in trial unfairness should be as concerning to the court as malicious decisions do so; the effect on the accused and on justice – which is the real concern – is the same in either event.

Further, and this is the point made by Donald Bayne, emphasizing the mala fides of the Crown counsel as part of the test for abuse of process places defence counsel in an impossible position, in which their legal obligations conflict. On the one hand is the need to raise issues of trial fairness, and to frame those issues in the relevant legal terms – i.e., with reference to the improper motives and bad faith of the Crown. On the other hand is the obligation of defence counsel to honour their duty of civility, which has been held to preclude personal attacks on opposing counsel, including prosecutors (See, e.g., Groia v. Law Society of Upper Canada 2013 ONLSAP 41 at para 10).  If the defence counsel suggests that the Crown acted with improper motives or bad faith that could be construed as a personal attack, yet if the counsel does not allege improper motives or bad faith she will not establish an evidentiary basis for the court to consider whether there has been an abuse of process.

While one response to this is for law societies to refrain from disciplining defence lawyers who make allegations of an abuse of process, another response is for the Court to shift the emphasis in abuse of process cases to the conduct rather than the motives for the conduct. Such an approach makes more sense given that the purpose of abuse of process is to protect the administration of justice, not to explore the ethics of Crown lawyers.  And given the ongoing (although tempered) enthusiasm of Canadian law societies for civility regulation, a shift in the abuse of process doctrine may be a more realistic response to this dilemma than an elimination of civility regulation for defence counsel (see this paper I wrote in 2013 indicating the number of civility prosecutions: Uncivil by Too Much Civility).

Crossed Wires: The AESO-Milner Transmission Loss Saga

Thu, 06/19/2014 - 10:00am

By: Sean Bullen

PDF Version: Crossed Wires: The AESO-Milner Transmission Loss Saga

Decision commented on: AUC Decision 2014-110, Application for Review of AUC Decision 2012-104: Complaint by Milner Power Inc. regarding the ISO Transmission Loss Factor Rule and Loss Factor Methodology

On April 16, 2014, an Alberta Utilities Commission panel released Review and Variance Decision 2014-110 (the “R & V Decision”) relating to a complaint made by Milner Power Inc. (“Milner”) in 2005. Milner is a subsidiary of Maxim Power Corp. and is the general partner of the limited partnership owner of the HR Milner power plant, a 150 megawatt coal-fired generation facility located near Grande Cache, Alberta. Milner’s 2005 complaint came on the heels of a change made by the Alberta Electric System Operator (the “AESO”) to the rule and methodology employed to determine the allocation among Alberta’s electricity generation owners of “transmission losses” resulting from the transmission of electricity from the sources of generation to the locations of consumer load. A lengthy regulatory entanglement has ensued involving each of the province’s leading electricity generators, including TransAlta, Capital Power, ATCO, ENMAX and TransCanada, together with Milner and the AESO. Coming nearly a decade after Milner’s original complaint, the R & V Decision represents a partial step toward resolution of the transmission losses issue. However, much remains unsettled. This comment will provide some background to the decision, summarize its procedural history, review the R & V Decision itself and consider the path forward.

Transmission Losses

When electricity is transmitted along power lines, some electricity is lost through the dissipation of heat. This lost electricity is referred to as “transmission losses” or “line losses.” As an example, if electricity is transmitted from the Edmonton region to the Calgary region, a small (but nevertheless valuable) portion of the electricity introduced into the system at the source of generation in Edmonton is lost in transit to the location of the consumer load in Calgary.  The longer the distance the power must be transmitted, the higher the proportion of transmission losses.

Various methods of calculating and allocating transmission losses have been devised, here and in other jurisdictions. The one common characteristic, however, is that each method is mathematically dense and difficult to conceptualize in physical terms. The properties of electricity are a challenge to understand. Transmission losses are all the more challenging because they are a complex non-linear function of electricity generation, length of transmission lines and a host of other grid characteristics, including each generator’s geographic location on the grid (which either increases system-wide transmission losses or in some exceptional cases actually decreases system-wide transmission losses).

In Alberta, by regulation, the  cost of transmission losses is to be borne by all generators, and it is the AESO’s task to calculate and allocate this very significant cost among the generators (see section 31(1) of the Transmission Regulation, Alta Reg 86/2007).

This much is clear. It has been the specific transmission loss rule and methodology employed by the AESO and the resulting allocations that have given rise to a regulatory dust-up of notable proportions.

The Milner Complaint

In early 2004, a group of investors, including Maxim Power Corp., purchased the HR Milner power plant. The investors’ calculation of the value of HR Milner leading up to the purchase took into account the plant’s annual transmission loss allocation. Under the methodology then being employed by the AESO, rather than being assessed a charge the plant was granted a credit. This was the case because it was considered that the plant’s location on the grid tended to reduce system-wide transmission losses. Rather than being charged for transmission losses, therefore, HR Milner had been receiving an annual credit. In 2004, for example, the credit granted and paid to HR Milner was approximately $3.6 million.

Unfortunately for HR Milner’s investors, the AESO introduced a change to its transmission losses methodology in 2005. In place of a credit, the AESO’s new methodology resulted in a charge to the HR Milner plant of approximately $2.6 million, a sharp swing in bottom line revenue in the range of $6 million. For a relatively small coal plant, this change significantly affected the financial outlook for Milner. In response, Milner filed a complaint (the “Milner Complaint”) with the AUC’s predecessor, the Alberta Energy and Utilities Board (the “EUB”) objecting to the AESO’s change in the transmission losses rule and methodology.

Procedural History

The Milner Complaint was filed with the EUB on August 17th, 2005, and sought relief under those provisions of the which empowered the EUB to order the AESO to change an AESO rule that in the opinion of the EUB is “unjust, unreasonable, unduly preferential, arbitrarily or unjustly discriminatory or inconsistent with or in contravention of” the EUA or its regulations (under section 25(6) (b) at the time of the complaint). The EUB denied the Milner Complaint and held that the AESO was free to implement the new transmission losses rule and methodology.

Milner appealed the EUB’s determination to the Alberta Court of Appeal. On July 29, 2010, the Court of Appeal ruled  the EUB’s decision was vacated and that further investigation be undertaken or a hearing held to determine the merits of the Milner Complaint (see Milner Power Inc v. Alberta (Energy and Utilities Board), 2010 ABCA 236).

On September 20, 2010, the AUC (which by this time had replaced the EUB) issued a notice of proceeding (Proceeding No. 790) concerning the Milner Complaint, and followed up shortly after with a procedural direction bifurcating the hearing into two phases, the first to consider the merits of the Milner Complaint, and the second to decide upon appropriate relief were the Milner Complaint to be upheld. The first phase of Proceeding No. 790 (AUC Decision 2012-104) was held in October of 2011, and a decision was issued by the hearing panel of the AUC in April of 2012 . A majority of the hearing panel upheld the Milner Compliant, finding that AESO’s new methodology was not in the public interest and did not support a fair, efficient and openly competitive market (the “2012 Majority Decision”). The majority also found that the rule was unjust, unreasonable, unduly preferential and arbitrary or unjustly discriminatory and ordered that the second phase of the bifurcated hearing be commenced. However, there was a strong dissenting opinion from hearing panel member, Tudor Beattie, who would have deferred to the AESO and denied the Milner Complaint.

During the hearing of Proceeding No. 790, the province’s generators lined up behind either the AESO or Milner, presumably based on the impact of the AESO’s transmission losses methodology on their various generation facilities. ATCO and ENMAX fell into the Milner camp. Capital Power, TransAlta and TransCanada aligned themselves with the AESO and took on the mantle of the “Generator Group” although of course not representing all generators.

In June of 2012, the AUC received applications from the AESO and the Generator Group seeking a review and variance of the 2012 Majority Decision.  In April of 2013,  finding that the AESO and the Generator Group had demonstrated sufficient doubt as to the correctness of the 2012 Majority Decision so as to require a review and variance hearing.

As an important aside, in June of 2012, Milner submitted a second complaint to the AUC regarding a further revision by the AESO to the transmission losses rule and methodology. This further revision took effect in January of 2009 and remains in effect to present. The AUC ruled that it would not hear this second complaint at the same time as the review and variance hearing.

The review and variance hearing was held in October of 2013 and, as already noted, the Commission’s R & V Decision was released in April. The R &V Decision for the most part affirms the principal aspects of the 2012 Majority Decision and finds in favour of Milner. The R & V Decision also confirms that the second phase of the bifurcated hearing, the phase dealing with remedies, must now proceed. The parties have recently begun making submissions to the AUC with respect to this second phase. In view of the financial consequences of the retroactive application of a transmission losses methodology that the AUC may ultimately find to be acceptable, it would seem that this muddy matter is far from being fully resolved, with an appeal to the Alberta Court of Appeal quite possibly on the horizon. It should be kept in mind, as well, that the R & V Decision does not cover the period after January of 2009, consistent with the Commission’s refusal to consider Milner’s second complaint as part of the review and variance hearing.

The R & V Decision

The R & V panel agreed with the 2012 Majority Decision that the AESO’s 2005 line loss rule does not comply with the requirements in the Transmission Regulation and, further, did not meet the standard in the EUA as it was when the rule was implemented. Further, the R & V panel quoted the majority (at para 121) in stating that the rule “is also ‘unjustly discriminatory as it violates all the principles of rate design that would normally be observed in a regular rate or tariff proceeding.” This idea of common law rate-making requirements in the context of transmission loss rule making was discussed in more detail in the 2012 Majority Decision, but the R & V panel also used it as justification. In the 2012 decision (at para 60), the majority  took the view that the right of an industry participant such as Milner to challenge, under section 25 of the EUA, a rule of the AESO that may be “unjust, unreasonable, unduly preferential or arbitrarily or unjustly discriminatory” has its roots in the common law requirements concerning common carrier rate-making. One such common law concept that has been especially evident in arguments and decisions throughout this dispute is the principle of cost causation: the idea that users should pay rates proportional to the costs that they individually are responsible for. The fact that the 2005 rule defied this principle is arguably the most significant consideration of the R & V panel’s decision (see para 117 of the R & V decision). Unlike the 2012 Majority Decision, the R & V panel avoided making a decision or even commenting on the validity of the rule under the current standard in the EUA, a standard that does not share the common law, rate making roots of its predecessor.

The R & V Panel conducted an in-depth analysis of the legislation relevant to line loss rule making, however, only a few sections were directly relevant to the decision. Section 17(e) of the EUA requires the AESO to manage and recover the costs of transmission losses. The Transmission Regulation more specifically sets out the AESO’s duties with respect to transmission losses. Section 19(1)(a) of the regulation stipulates that the AESO must make rules to reasonably recover the cost of transmission losses by establishing and maintaining “loss factors” for each generating unit based on their location and their contribution, if at all, to transmission losses. There are also a number of other more technical requirements in section 19, such as absolute limits on credits and charges as a percentage of generation.

The R & V Decision held that the AESO’s 2005 transmission loss methodology unjustly penalized generators that are oriented in a geographically efficient manner relative to the transmission grid. The injustice of the methodology was found to be that it arbitrarily allocated the cost of transmission losses to these “loss savers”, as the Commission described them, while at the same time provided a financial benefit for those generators considered “loss causers.” The R & V Decision does not prescribe a replacement methodology or make any recommendations to the AESO in this regard, but simply made it clear that it is the view of the Commission that AESO’s approach does not adhere to the principle of cost causation.

In defending its rule-making authority, the AESO argued that deference be given, particularly in an area as technically complex as transmission losses. It further  argued that conflicting requirements in the Transmission Regulation called for the AESO to perform a balancing act to satisfy each of the requirements. The Commission agreed with the AESO that the AESO’s rule making authority allows it to adopt a range of valid alternatives, but concluded that the AESO’s chosen transmission losses methodology was not one such valid alternative.

The review and variance hearing panel declined to consider the appropriateness of alternative methods of calculating and allocating transmission losses, insisting instead that the ambit of the hearing must be confined to the legality of the AESO’s 2005 transmission losses methodology in the context of the legislation and regulations in effect at the time (and confined to the period 2006 to 2008 when that methodology was in effect, see para 12 of the decision).

The review and variance hearing panel also avoided any discussion of the legality of the current AESO transmission loss rule and methodology, which is substantively the same as the now impugned rule and methodology. As expressed in the preliminary review and variance decision:

[53] The review panel will also not consider in step 2 of the review and variance applications either the 2012 complaints or whether the original complaint by Milner Power Inc. extends beyond 2008. No determination was made in Decision 2012-104 with respect to the latter question, and none of the review applicants has asked that this question be determined in this proceeding. The review panel will consider the 2012 complaints and whether the original complaint by Milner Power Inc. survives beyond 2008 at a later date.

The foregoing is of particular interest because the AUC’s statutory standard of review of AESO rule making under the EUA was amended in 2007. The new standard, which would apply to the current AESO transmission loss rule and methodology, arguably gives more leeway to the AESO.  As discussed further below, this new standard is the “fair, efficient, and openly competitive market” or “FEOC” requirement that now appears in a number of places in applicable legislation (see, for example, Fair, Efficient and Open Competition Regulation,Alta Reg 159/2009).

As just noted, the AESO’s 2005 rule and methodology and current rule and methodology are nearly identical and have, together, been in place for the past nine years. According to the 2012 Majority Decision, the difference in the rules and methodologies is more of a minor amendment than an actual rule change. However, the simple fact that the 2005 Line Loss Rule has been rechristened the “2009 Line Loss Rule” seems to have given credence to the AESO’s view that the 2009 Line Loss Rule is a new rule for regulatory review purposes.

The implications of this slight change may prove to be of considerable consequence to Milner and other generators in a similar position. Had the review panel considered the legality of both rules, the financial stakes of the review and variance hearing would have increased dramatically. A conservative estimate of a $5 million annual under-collection by Milner would result in a $45 million shortfall over the period the two rules were in effect (as compared to credits that would be received under a methodology more rewarding to loss “savers,” for example, Incremental Loss Factor methodology as described at para 107 of the 2012 Majority Decision). In addition, the review and variance panel of the Commission cited provisions in both the Administrative Procedures and Jurisdiction Act, RSA 2000, c A-3and the Alberta Utilities Commission Act, SA 2007, c A-37.2as authority  for the proposition that it would be procedurally unfair to make a ruling in relation to the current transmission losses rule and methodology, as Milner’s original complaint only referred to the 2005 rule. Nevertheless, in view of the fact that the end does not appear to be in sight for this extended regulatory tussle, one would think that the AUC would want to clear up the uncertainty and controversy in one all-encompassing decision.

Remedies

In the second phase of the bifurcated hearing the Commission will have to decide on remedies for Milner, ATCO, ENMAX, and potentially other generation owners that were adversely affected by the AESO’s 2005 transmission loss rule and methodology. Financial compensation would appear to be in order, but giving practical effect to any determination by the Commission in this regard may be difficult.

Under the Transmission Regulation, the AUC may direct the AESO to reimburse a market participant for any fee paid to it that is determined to be unjust or unreasonable. Assuming that the transmission losses credit/charge mechanism can be classified as a “fee,” this could be a potential avenue. Based on Milner’s estimates of their financial losses caused by the implementation of the AESO’s 2005 methodology, compounded with those losses suffered by ATCO, ENMAX and others over that three year period, the total amount would be likely be in the tens of millions of dollars. The AESO is a not-for-profit organization and would certainly be unable to provide that level of compensation. Could the required amounts be extracted from those generation owners who “over-collected” in the years 2006 to 2008? Section 33(2) of the Transmission Regulation provides as follows:

If the actual cost of losses is over?recovered or under?recovered in one year, the over?recovery or under?recovery must be refunded or collected in the next year or subsequent years.

In practice, this section operates to create “calibration factors” that are used to compensate Alberta generators on an aggregate basis for the AESO over-recovering for transmission losses in a particular year. This section could also be interpreted to allow the AESO to collect from those generators who “over collected” on the basis of the impugned 2005 transmission losses rule, given the broad language of the provision. This would, however, be unfair to these “over collectors,” because at the time they believed it to be a valid AESO rule, albeit one that was being challenged. In addition, it is unreasonable to expect these owners to have pools of capital set aside in case rules are retroactively struck down. The parties are currently making submissions to the AUC with regards to this very point and the AUC’s jurisdiction to award such a remedy.

Still, there may be a solution available through section 33(2) of the Transmission Regulation. If, for the operational period of the 2005 rule, the AESO and the AUC are able to recalculate loss charges and credits using a method that is acceptable under the old legislation, there is a potential source for compensation.  The AESO makes a habit of over-collecting for transmission losses annually, relying on section 33(2) as its authority for doing so. A rate rider is created for the excess funds wherein the funds are carried over to the next year and each generator is credited a portion of the surplus. The portion of the surplus allocated to each generator is determined by the above mentioned “calibration factors”.  According to an AESO forecast, there will be close to $4 million in total over-collections for losses in 2014. Over the coming years, these monies could be allocated in full or in part to Milner and the other affected generation owners until they are fully compensated, with appropriate adjustments where required.

Current Transmission Loss Rule

Also of concern in light of the R & V Decision is the status of the AESO’s current transmission loss rule and methodology. Milner and the others involved will undoubtedly attempt to have this rule also adjudged by the AUC to be in contravention of the EUA and Transmission Regulation. But would such an attempt be successful?

In 2007, new grounds for challenging an AESO rule were added to the EUA. With the addition of these grounds, the standard of review that was applicable to the 2005 AESO methodology was removed. Section 127 states that the complainant now has the onus of proving that the AESO rule:

(a) is technically deficient

(b) does not support the fair, efficient and openly competitive operation of the market (“FEOC”), or

(c)  is not in the public interest

(Emphasis added).

Although the old standard of review was removed as a direct method of challenging AESO rules, the language was not completely removed from the EUA. Section 127, which deals with the obligations of industry participants and the AESO, says that the AESO in relation to tariffs “shall not act in a manner that is unjust, unreasonable, etc.” It could be argued that the common carrier principle of non-discriminatory tolling and the cost-causation described above has survived in the EUA in relation to AESO. Despite being in a section related to tariffs, this wording coupled with the nature of the AESO’s role as a monopoly provider of a transportation service could be an argument for the continued inclusion of common carrier and rate-making principles in AESO rule making.  However, the fact that the standard was specifically changed with respect to AESO rules and replaced with a standard that includes economic efficiency as a factor speaks strongly to the intentions of the legislator. Rules that are the most economically efficient are not necessarily the same as those that are the most fair, non-discriminatory or even reasonable. There is the potential here for the new statutory requirements to conflict with the common carrier principles endorsed by the AUC in the 2012 Majority Decision and the R & V Decision. Of course, in the case of such a conflict, the clear terms of the statute will override the common law.

The apparent upside of current AESO rule and methodology is that fewer generators are being given credits and the cost allocations vary less as between generators. There are limits on both charges and credits in the regulations (i.e. no matter how much a generator causes in losses, there is a maximum percentage charge). It appears that the AESO prefers the current methodology because it does a better job of keeping outliers within these limits without further mathematical manipulation. However, when looking through the lens of the economic efficiency requirement, this approach seems questionable. Encouraging generators to locate themselves closer to loads or in areas that reduce losses would be economically efficient for the Alberta electricity system in the long run because it would reduce the amount of electricity lost due to ineffective generator orientation. This was the view that the majority expressed in the 2012 Decision, that economic efficiency might be attained through the common law lens of cost causation. The majority preferred a method that did not result in cross-subsidization of loss causers.

Whichever way the specific words in the new standard are interpreted, the exercise becomes a balancing act between the competing interests of efficiency and fairness. The standard is no longer simply whether or not the rule itself is unjust or discriminatory. The 2012 Majority Decision noted that the new standard is broader than the old one because of the fact it includes economic efficiency as a factor. This seems to leave more room for AESO prioritizing and points to a more deferential AUC evaluation of AESO rule making.

Moving Forward

After nearly a decade of regulatory sparring, the R & V Decision has dealt with a part of the overall dispute. While it has been determined that for the period 2006 through 2008, the 2005 AESO transmission losses rule and methodology were in contravention of applicable legislation, the consequences to affected parties have yet to be considered.  The remedies ultimately imposed by the Commission will need to be fair and practical, and undoubtedly creative.

It also remains unclear what lies ahead for Milner’s remaining complaint against the current AESO rule and methodology. Any AUC decision on this would have to answer the question of how much deference should be given to the AESO under the EUA’s new FEOC standard. The underlying technicalities of the AESO’s transmission losses rule and methodology are highly complex. At the same time, the AESO’s activities must comply with legislative requirements, and it is only fair to industry participants that there be recourse if those activities do not comply.

The problem, as we have seen in the string of proceedings set out above, is that the complexity of a matter can test the capacity of a regulator to respond effectively. When this is coupled with the requirement that the AESO’s activities comply with overarching and broadly stated principles of market efficiency, fairness and openness, the regulator’s task is elevated from one that is difficult to one that may never be completed, notwithstanding honest and consistent effort. Taking into account the twisted path the Milner Complaint has taken to date, and the still to be resolved related aspects of the complaint (as well as any potential further application to the Court of Appeal), perhaps it is time to consider whether there is a better way.

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“Arbitrary Disadvantage”: A Slip of the Pen or Something More?

Wed, 06/18/2014 - 10:00am

By: Jennifer Koshan

PDF Version: “Arbitrary Disadvantage”: A Slip of the Pen or Something More?

Case commented on:McCormick v Fasken Martineau DuMoulin LLP, 2014 SCC 39

I have written several ABlawg posts on the test for discrimination under human rights legislation (see e.g. here, here and here). The ongoing issue in this series of cases is the extent to which the test for violations of equality rights under section 15 of the Charter should influence the approach in the human rights sphere. In the Supreme Court’s most recent human rights decision, McCormick v Fasken Martineau DuMoulin LLP, 2014 SCC 39 (CanLII), the Court continues to muddy the waters on the appropriate test. Linda McKay Panos has already written about the McCormick case and its implications for employment related complaints of discrimination here. As she noted in that post I have a few things to say about the case as well.

First, let me review the tensions when it comes to the test for discrimination. The traditional approach under human rights legislation has been to require the complainant to prove a prima facie case of discrimination, after which the burden shifts to the respondent to refute the claim or raise a defence. This approach was established by the Supreme Court in the early 1980s in cases such as Ontario Human Rights Commission v Etobicoke,[1982] 1 SCR 202 at 208, and Ontario Human Rights Commission and O’Malley v Simpsons-Sears, [1985] 2 SCR 536 at para 28 (O’Malley). Under this approach, what the complainant had to prove was that the conduct of the respondent had the effect of imposing “obligations, penalties, or restrictive conditions not imposed on other members of the community” (O’Malley at para 12). When the Supreme Court was first called upon to develop its approach to constitutional equality rights under section 15 of the Charter, O’Malley provided the Court with guidance, leading to a broad interpretation of Charter equality rights (see Andrews v Law Society of British Columbia, [1989] 1 SCR 143).

Fast forward to the end of the 1990s, and the Supreme Court’s approach to section 15 of the Charter underwent a major shift inLaw v Canada (Minister of Employment and Immigration), [1999] 1 SCR 497. In Law, the Court focused on the violation of “human dignity” as the measure of discrimination, and whether there was a violation of human dignity was assessed according to several contextual factors, including “[t]he correspondence, or lack thereof, between the ground or grounds on which the claim is based and the actual need, capacity, or circumstances of the claimant or others” (Law at para 88). In its application, the “correspondence” factor imported considerations of the rationality / arbitrariness of government laws and policies into section 15 determinations, and often made it very difficult to prove claims of discrimination (see Sheilah Martin, “Balancing Individual Rights to Equality and Social Goals” (2001) 80 Can Bar Rev 299 at 322 – 328, citing e.g. Granovsky v Canada (Minister of Employment and Immigration), [2000] 1 SCR 703, 2000 SCC 28 and Lovelace v. Ontario, [2000] 1 SCR 950, 2000 SCC 37; see also Gosselin v. Quebec (Attorney General), [2002] 4 SCR 429, 2002 SCC 84).

As a result of the difficulties with Law, many complainants turned to human rights legislation for claims of discrimination in government service provision rather than pursuing those claims under the Charter (see Claire Mummé, “At the Crossroads in Discrimination Law: How the Human Rights Codes Overtook the Charter in Canadian Government Services Cases” (2012) 9 JL & Equality 103 at 105). Human rights tribunals and courts then began to use the Law test for discrimination under human rights legislation, especially in government services cases. The rationale for this approach was that governments should not face different tests for discrimination depending on whether the claim was brought under the Charter or human rights legislation  (see e.g. Gwinner v Alberta (Human Resources and Employment), 2002 ABQB 685 at para 103, aff’d 2004 ABCA 210; leave to appeal denied, [2004] SCCA No 342. See also Alberta (Minister of Human Resources and Employment) v Weller, 2006 ABCA 235, leave to appeal denied [2006] SCCA No 396; British Columbia Government and Service Employees’ Union v British Columbia (Public Service Employee Relations Commission), 2002 BCCA 476; Braithwaite v Ontario (Attorney General) (2007), 88 OR (3d) 455, 62 CHRR D/315 (Div Ct)).

The influence of the Law test could be seen even in cases that did not involve government services, however. At the Supreme Court level, Justice Abella’s concurring opinion in McGill University Health Centre (Montreal General Hospital) v Syndicat des employés de l’Hôpital général de Montréal, 2007 SCC 4, [2007] 1 SCR 161 defined discrimination as “the understanding that a… practice, standard, or requirement cannot disadvantage an individual by attributing stereotypical or arbitrary characteristics… The essence of the discrimination is in the arbitrariness of its negative impact, that is, the arbitrariness of the barriers imposed, whether intentionally or unwittingly” (at para 48, emphasis added). Justice Abella’s opinion in McGill was referenced by a majority of the Supreme Court in Honda Canada Inc v Keays, 2008 SCC 39, [2008] 2 SCR 362,where it found that there was no discrimination at play because “[t]here is no stereotyping or arbitrariness here” (at para 71, emphasis added). Lower courts have followed this reliance on stereotyping and arbitrariness in several human rights cases (see e.g. British Columbia (Public Service Agency) v British Columbia Government and Service Employees’ Union, 2008 BCCA 357, leave to appeal denied [2008] SCCA No 460; Armstrong v British Columbia (Ministry of Health), 2010 BCCA 56); Ontario (Disability Support Program) v Tranchemontagne, 2010 ONCA 593; Wright v College and Association of Registered Nurses of Alberta (Appeals Committee), 2012 ABCA 267, leave to appeal denied, 2013 CanLII 15573 (SCC)).

The Supreme Court’s approach to section 15 of the Charter came to focus on stereotyping and prejudice, while maintaining the relevance of the correspondence factor (and thus considerations of arbitrariness – see R v Kapp, 2008 SCC 41, [2008] 2 SCR 483). This focus also influenced the test for discrimination in human rights cases, with some cases adding prejudice as an aspect of the test (see e.g. Tranchemontagne at para 95).

This was the state of play when the Supreme Court decided Moore v British Columbia (Education),2012 SCC 61 in late 2012. As I noted in a previous post, Justice Abella, writing for a unanimous Court in Moore, declined to explicitly clarify the proper test for discrimination under human rights legislation, yet implied that the traditional prima facie approach to discrimination is correct. According to Justice Abella, “to demonstrate prima facie discrimination, complainants are required to show that they have a characteristic protected from discrimination under the Code; that they experienced an adverse impact with respect to the service; and that the protected characteristic was a factor in the adverse impact” (Moore at para 33). However, echoing her judgment in McGill, Justice Abella referred to arbitrariness at several points in her judgment: “the focus is always on whether the complainant has suffered arbitrary adverse effects based on a prohibited ground” (at para 59, emphasis added); “[t]he question in every case is the same: does the practice result in the claimant suffering arbitrary — or unjustified — barriers on the basis of his or her membership in a protected group. Where it does, discrimination will be established” (at para 60, emphasis added; see also paras 26 and 61).

These references to arbitrariness are problematic in the context of a prima facie test for discrimination, as they suggest that government rationales and policy objectives are relevant to whether there is discrimination. Under the traditional approach, the objectives of government (or other respondents such as employers) would only be considered after the burden shifted to the respondent. Yet in Moore, Justice Abella suggested that it was appropriate that the government’s objectives and goals in delivering educational services should inform the question of whether there was discrimination (at paras 37-39). To the extent that the government’s conduct is assessed for discrimination in terms of whether its delivery of a particular service (for example education) comports with its objectives, this is a consideration of arbitrariness.

However, in a number of appellate decisions post-Moore, the case has been cited as support for the traditional prima facie approach to discrimination without any discussion of the role of arbitrariness or the preceding debate about the appropriate test.  For example, in Telecommunications Workers Union v Telus Communications Inc., 2014 ABCA 154, a claim of disability discrimination in the employment context, the Alberta Court of Appeal indicated that the three step test articulated in Moore is the proper approach for adverse effects discrimination cases, thus overturning the lower court’s ruling that an employer’s conduct cannot be found discriminatory unless it had knowledge that the employee had a disability requiring accommodation (at paras 28-29). See also NWT (WCB) v Mercer, 2014 NWTCA 1 at para 42, holding that “a claimant seeking to establish prima facie discrimination in the provision of services need not establish the purpose behind the allegedly discriminatory conduct” (and see here for more discussion of that decision).

We also have the Supreme Court’s latest Charter equality rights decision in Quebec (Attorney General) v A, 2013 SCC 5 to consider. Writing for the majority on section 15, Justice Abella indicated that prejudice and stereotyping should be seen as simply two indicia of discrimination rather than as crucial factors, and focused more on disadvantage and historical disadvantage in her reasons (at paras 325-8). Justice Abella reverted to the language of “arbitrary disadvantage” at one point in her judgment (at para 331), and Jonnette Watson Hamilton and I queried whether this reference was a “slip of the pen” rather than evidence of intent to retain a focus on arbitrariness in the test for discrimination (Jennifer Koshan and Jonnette Watson Hamilton, “The Continual Reinvention of Section 15 of the Charter” (2013) 64 UNB LJ 19 at note 209). However, the language of arbitrary disadvantage is back once again in McCormick.

As noted in the McKay Panos post, McCormick involves the issue of whether an equity partner in a law firm was covered by the protections against discrimination in employment under British Columbia’s Human Rights Code, RSBC 1996, c 210. Writing for a unanimous Court, Justice Abella finds that whether someone is in an employment relationship for the purposes of the Code should focus on “control exercised by an employer over working conditions and remuneration, and corresponding dependency on the part of a worker … The more the work life of individuals is controlled, the greater their dependency and, consequently, their economic, social and psychological vulnerability in the workplace” (at para 23). In the case at hand, McCormick’s role as an equity partner in a law firm was such that he was “someone in control of, rather than subject to, decisions about workplace conditions.  As an equity partner, he was part of the group that controlled the partnership, not a person vulnerable to its control” (at para 39).

Because McCormick was not in an employment relationship with his law firm, the case never reached the stage of addressing whether the partnership’s mandatory retirement requirement was discriminatory. Justice Abella’s comments about discrimination are thus obiter, but in light of her repeated references to arbitrariness in the earlier case law, they are nevertheless of interest. Early on in McCormick, Justice Abella states that the purposes of human rights legislation “include the prevention of arbitrary disadvantage or exclusion based on enumerated grounds, so that individuals deemed to be vulnerable by virtue of a group characteristic can be protected from discrimination” (at para 18, emphasis added). Then, near the end of the judgment, she writes “While this case does not require us to decide the point, the duty of utmost good faith in a partnership may well capture some forms of discrimination among partners that represent arbitrary disadvantage” (at para 48).

It is becoming difficult to see these references to arbitrary disadvantage as slips of the pen. But I am wondering if there is a different way to cast Justice Abella’s usage of this language that is more in keeping with a substantive approach to discrimination. Given Justice Abella’s focus on disadvantage in Quebec v A and on vulnerability in McCormick, might it be the case that her use of the term arbitrariness is meant to incorporate these notions rather than the rationality of government laws and policies (i.e. the old correspondence factor)? In other words, perhaps arbitrary disadvantage is meant to capture those distinctions that deprive vulnerable and historically disadvantaged individuals and groups from access to social benefits (or impose differential burdens on them) in ways that are arbitrary in light of the overall purpose of human rights legislation in protecting the interests of such groups. This could be contrasted to distinctions drawn in relation to more advantaged individuals, whereby the denial of benefits to or imposition of burdens on them would not be arbitrary in light of the purpose of human rights legislation.

If Justice Abella’s references to arbitrariness are focused on the purpose of human rights laws (and section 15 of the Charter for that matter) rather than the specific objectives behind the impugned government laws or policies, that would be much more in line with substantive equality principles. It would also be more in line with the traditional prima facie test for discrimination, as that test focuses on protected grounds (which generally map to vulnerability and disadvantage), adverse treatment, and the link between the two. However, there may be cases like McCormick where the test for discrimination would not be made out if my take on Justice Abella’s use of arbitrariness is correct. Assuming that McCormick had passed the employment relationship hurdle, he would have had no difficulty meeting the requirements of the prima facie test as stated by Abella J in Moore: he had a characteristic protected from discrimination (age); he experienced an adverse impact with respect to employment (termination); and the protected characteristic was a factor in the adverse impact (terminated because of age). But since he was not a vulnerable employee (in spite of his age), this was not an arbitrary disadvantage in light of the purposes of the Code. Arbitrary disadvantage may therefore add an extra element to the prima facietest for discrimination, even if it is more in keeping with substantive equality principles generally.

I may be grasping at straws here, but Justice Abella does seem committed to a fulsome approach to human rights and so I am struggling to understand her intentions in this context. I do think it is fair to conclude that her use of the term arbitrariness has caused sufficient confusion that it is incumbent upon the Court to provide some clarification. Otherwise, respondents will continue to argue that their specific policy objectives should play a role in the consideration of whether there is discrimination, and lower courts may continue to accept these sorts of arguments in negating claims of discrimination before they get past the prima facie stage.

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#Yesallwomen/#Notallmen: Sexual Harassment in the Legal Profession

Fri, 06/13/2014 - 10:00am

By: Alice Woolley

PDF Version:#Yesallwomen/#Notallmen: Sexual Harassment in the Legal Profession

How do we understand bad things done to women by men?  Through the few men who do them (#Notallmen)?  Through misogyny in our culture as a whole?  Through the experience of all women living with the risk that such bad things can happen (#Yesallwomen)? The ferocity of recent internet debate on this topic clouds the possibility that harm done by men to women should be understood as about all these things: the men who inflict it, the society in which it occurs and the lives of the women who live with the possibility of that threat.

In this post I explore the thought that sexual harassment and sexual discrimination in the legal profession must be understood with this sort of breadth of perspective: it is conduct reflecting the pathologies of the specific men who do it; it in no way reflects the conduct of all – or even that many – men in the profession; yet it is conduct that reflects aspects of our professional culture, aspects that we need to address to achieve gender equity and fairness.

I make my case through recounting a story from which I make some general observations, the story being my own experience of sexual harassment and assault (i.e., unconsented to sexual touching) by a senior lawyer early in my career.  By doing so I will endeavor not to over claim.  I know my story is only my own.  It is necessarily a story that I tell from my own perspective.  But the number of personal stories told publicly by women lawyers about sexual harassment is small; I am privileged to be senior enough and tenured enough and removed enough from the emotional turmoil of that time to take the risk of telling it.   It may not be the best evidence, but it may nonetheless be evidence of something.

I began practicing law as an articling student in Calgary in 1996; I had graduated from the University of Toronto law school in 1994 but had gone on to complete my LLM at Yale and to clerk for Chief Justice Lamer.  After my call to the bar I was working at a boutique litigation firm in the city; the firm did high end corporate-commercial cases, and was led by a very senior and eminent lawyer, “XY”, and a few much younger partners and associates whose work was primarily through him.  Calgary was blessed by a number of very strong corporate-commercial litigators whose careers began in the 1960s – former Supreme Court justice Jack Major and current Alberta Court of Appeal justice Cliff O’Brien amongst them; XY was part of that group.  He had a brilliant legal mind and a willingness to do whatever work was required to be fully prepared for his cases.  He was a fierce advocate for his clients.  XY was also generous with the pay and benefits that he offered to his partners and associates. The work he gave them was excellent.

Yet the conditions for doing that work were complicated by XY’s remarkably volatile personality – his temper was legend, and I later learned that one of XY’s opposing counsel said that he used to feel growing stress as he flew into Calgary for meetings or discoveries in which XY would be involved. When he shouted at me, XY would sometimes shake with rage.

As I discovered soon after joining the firm, XY was also willing to make derogatory comments about women, using the c-word in reference to a judge who had decided against his client, and commenting on the attractiveness – or not – of other women.  He expressed surprise that a woman at his former firm did not have a boyfriend because she was very pretty, and wondered if she was a lesbian.  He commented on how one of the legal assistants was “a little girl with big boobs” (this is a paraphrase based on my recollection).  Eventually I became one of the people that he made comments about.  I remember in particular one incident, where the topic of Princess Diana’s 1997 Vanity Fair cover had come up, and I had observed that people sometimes said that I resembled her.  He responded, “except for your boobs” and then followed with “but it’s OK, you’ve got great legs” (again, a paraphrase).

I found this remarkably difficult to deal with.  I did not feel like it would be remotely acceptable to say anything negative in response to his comments about other women.  I very much wanted XY to think well of me; I wanted his approval and praise.  And I did not know how to create a relationship with him where he would consider the quality of my professional work, without considering the quality of my appearance.  I did not know how to discourage one sort of reaction while generating the other, and I generally just tried to be positive with him, even while feeling that this was almost certainly not helping the situation.

Things became much worse at firm social events when XY was drinking.  At the firm dinner to celebrate my call to the bar, he put his hand on my leg under the table as we were eating.  And at a firm retreat, as we sat around a campfire after dinner, he put his hand up the back of my shirt and undid my bra.

After that incident it was obvious that I had to do something – that the situation was out of hand.  I spoke to the two male partners who worked on litigation with XY and to my husband (who had known about the earlier incidents as well); the more senior of the partners talked to XY, and XY apologized to me.

After the apology XY did not sexually touch me again, and I do not remember him commenting on my appearance.  But his outbursts and temper continued; they were not directed just at me, but for the next year I was the lawyer working most closely with him, and so internally to our firm I bore the brunt of it.  I found that almost as difficult and upsetting as his sexual harassment, although in some ways it was difficult to separate the two experiences. They felt like different versions of the same behaviour. The two partners did what they could to protect me.  One began working on the file I was on, and tried to create space for me from XY.  When we were away for the arbitration, he made sure that I was able to go home for a break.  I was also protected by the in-house lawyer at the client, who observed XY’s behaviour and did what he could to ameliorate it, and to protect me from it.

Nonetheless, after a year, I had to leave.  My departure was greatly assisted by the lawyer at the client, who worked to have his company consent to my joining a firm where there would otherwise have been a serious conflicts problem; I know he understood why I was leaving, and I know he had to make real efforts internally to get that result.

I never had another experience like that in legal practice, although I worked almost entirely with senior male lawyers over the next 5 years.

In the 16 years since, in thinking about what happened to me, it is obvious to me that XY’s behaviour was very much reflective of his own personality and issues.  In the words that I would use now as a parent, he seemed to me to lack self-regulation: if he wanted something he took it; if he felt something he expressed it.  He had no grasp of the difference between professional and personal space, of the effect of his degrading comments about women on the women he worked with, of the effect of his angry outbursts on others.

It is also equally obvious to me that most male lawyers do not act as he did.  Even the male lawyers at his own firm and who worked at his client did not follow XY’s example or endorse his behaviour.  In addition, incidents of sexual harassment would not normally include actual physical touching.  His behaviour was – and is – the exception.

But it also seems to me that his actions are not divorced from the professional culture of lawyers – a culture I am part of.  After all, his behaviour – at least his comments about women and his rage – was tolerated for over 30 years and had little real effect on his professional success (although it certainly had some).  At the end of the day, I took no steps to derail that success.  And while it was clearly not normal, XY’s behaviour was also not entirely aberrational; excess drinking, angry outbursts and sexist comments are things that lawyers other than XY engage in, albeit to a lesser degree.  I drank to excess at more than one firm event, and I’ve said sexist things.  Even the harassment is something more than one of my friends experienced in legal practice (and once you have more than one close friend who something has happened to, the law of probabilities suggests that there are an awful lot of women it has happened to).  Some general statistics on complaints about harassment and discrimination by Ontario lawyers, indicating 132 complaints about sexual harassment between 2003 and 2011, are here.  In Alberta, the most recent Law Society survey of lawyers leaving the profession reported that 47.3% of female respondents had experienced discrimination (at 19), and women also reported experiencing and witnessing abusive, harassing behaviour in the profession (at 25).

Yet even if I’m right, what to do about it is not obvious.  Our professional culture reflects our broader society; the insistent requirement that women be sexually attractive even if professionally accomplished, the verbal and physical aggression directed at women, the blasé attitude towards derogatory discussion of women, are things that occur across Canada, not just across the legal profession.

I am also not inclined to think that sanctions or discipline are the answer.  I never seriously considered complaining about XY’s conduct to the law society – the personal exposure and costs of being a complainant to my career and life were not something I wanted to bear.  My guess is that my reaction is the typical one.  I also do not think post-facto reactions are the most effective tool in relation to any ethical issue.

Yet I cannot suggest that we give up – I will not suggest that.  My niece is entering this profession and one day my daughter may do so. I never want them to experience what I did, or to live their professional lives making an effort to avoid it happening – going along with sexist banter in fear of being an outsider or a target.  I refuse to believe that we cannot do better.  If we can learn to call each other learned friends, and express our most hostile thoughts with respect, then surely we can try to create a culture where the subject of our colleagues’ “hotness” is not discussed, where we create appropriate separation between professional and sexual interactions, where senior lawyers embrace the limits on personal interactions that come with seniority and power, and where drinking much too much is not a normal condition of social interactions between lawyers.

That learning comes through acculturation.  And I have told this story as much as anything in the hopes that it will begin productive conversations and – hopefully – further progress towards that kind of change.

This post originally appeared on Slaw. It has been revised to include some statistics from Alberta.

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Sealing: It’s a Moral Not a Technical Issue and Animals Outweigh Indigenous Communities

Thu, 06/12/2014 - 10:00am

By: Elizabeth Whitsitt and Nigel Bankes

PDF Version: Sealing: It’s a Moral Not a Technical Issue and Animals Outweigh Indigenous Communities

Decision commented on: World Trade Organization, Appellate Body Report – European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (22 May 2014)

Just a few short weeks ago the World Trade Organization (WTO) issued its final word on the legality of a regime that bans seal products from the European Union (EU) market. In a decision that has Canadian and EU officials claiming victory, the WTO Appellate Body (AB) determined that the EU’s ban on seal products is justified under the right to protect public morals, specifically on the grounds of protecting animal welfare. The AB also found, however, that the ban is discriminatory in the way it is applied, and should be modified in order to fully comply with international trade obligations.

Briefly summarized, the measure at issue in this case bans the sale of seal products in all EU member states, subject to certain implicit and explicit exceptions. Explicitly, the measure permits the sale of seal products in the EU market if those products are: (i) derived from hunts carried out by indigenous peoples (IC), (ii) derived from hunts that were conducted for the sustainable management of marine resources (MRM), (iii) or personally imported into the EU by travellers. Implicitly, the measure also permits the import of seal products into the EU for process and re-export, a convenient loophole that protects commercial interests within the EU.

The AB’s decision comes some six months after a Panel ruled that the EU’s Seal Regime could be justified on public morals grounds despite the fact that certain aspects of the Regime discriminated against Canadian Inuit interests. Shortly after that decision all parties to the dispute issued notices of appeal, resulting in a wholesale challenge to many aspects of the Panel’s ruling. While the AB upholds some of the Panel’s findings, it does depart from the Panel’s reasoning in significant ways. Most importantly, the AB takes steps to clarify and distinguish between the analysis of measures challenged under the General Agreement on Tariffs and Trade (GATT) from the analysis of measures challenged under the Agreement on Technical Barriers to Trade (TBT).

Applicability of TBT Agreement

On appeal the EU challenged the Panel’s conclusion that the TBT Agreement was applicable to the dispute. Specifically, the EU argued that its Seal Regime did not meet the definition of a technical regulation as contemplated in the TBT Agreement. The first paragraph of Annex 1.1 defines the term “technical regulation” as follows:

Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labeling requirements as they apply to a product process or production method.

In its challenge the EU claimed that its Seal Regime (more specifically the exceptions within the Regime) did not lay down product characteristics. Urging the AB to consider the measure in its entirety, the EU argued the IC and MRM exceptions impose requirements relating to the identity of the hunter or the purpose of the seal hunt, not characteristics of the products that are later created as a result of seal harvesting (see paras 5.2-5.4). In siding with the EU, the AB expressed concern that the Panel did not conduct “a holistic assessment of the weight and relevance of each of the relevant components of the EU Seal Regime…” (at para 5.28). The AB acknowledged that the ban on products containing seal could be conceptualized as imposing characteristics on products by providing that they may not contain seal (para 5.39). In considering the permissive aspects of the EU Seal Regime, however, the Panel found no textual or jurisprudential basis to suggest that the identity of the hunter, the type of hunt or the purpose of the hunt could be viewed as product characteristics (para 5.45).

Overturning one of the fundamental findings of the Panel, the AB held that the EU Seal Regime is not a technical regulation as defined in Annex 1.1 of the TBT Agreement. As a result, the AB declared the bulk of the Panel’s decision “moot and of no legal effect” (see paras 5.58-5.59). Thus the AB’s decision on the validity of the EU’s dealing regime turns entirely upon GATT rather than the TBT.

Non-Discrimination Provisions under GATT distinguished from Non-Discrimination under TBT Agreement

Having so found, the AB proceeded to distinguish between non-discrimination analyses under Articles I (Most Favoured Nation (MFN) obligation) and III:4 (National Treatment (NT) obligation) of GATT and the non-discrimination obligation in Article 2.1 of the TBT Agreement (paras 5.71-5.130). On appeal the EU tried to conflate these analyses. For example, in its analysis of non-discrimination under Article 2.1 of the TBT Agreement, the EU contended that determinations of discrimination under GATT should include a consideration of whether a measure’s detrimental impact on imports stems exclusively from a legitimate regulatory distinction (para 5.72). The AB rejected this assertion. Specifically, it indicated that “…the principle that the provisions of the WTO covered agreements should be read in a coherent and consistent manner [does not mean] that the legal standards for similar obligations – such as Articles I:1 and III:4 of the GATT 1994 on the one hand, and Article 2.1 of the TBT Agreement, on the other hand – must be given identical meanings.” (para 5.123). In coming to this conclusion the AB upheld the Panel’s reasoning on the distinct nature of non-discrimination analyses under GATT and the TBT and easily supported a violation of GATT Article I:1 on grounds that the EU Seal Regime detrimentally affects the conditions of competition for Canadian and Norwegian seal products when compared to Greenlandic seal products (paras 5.90, 5.95).

Arbitrary or Unjustifiable Discrimination under GATT Article XX Chapeau distinguished from Non-Discrimination under TBT Agreement

While the Panel analytically distinguished between GATT and TBT non-discrimination provisions, Canada and Norway challenged the Panel’s reasoning under the chapeau of GATT Article XX. In particular, they contended that the Panel wrongly applied the same test to determine the existence of arbitrary or unjustifiable discrimination under the chapeau of GATT Article XX as it applied to determine whether the measure was inconsistent with Article 2.1 of the TBT Agreement (para 5.308). The AB agreed with Canada and Norway on this point. Consistent with its previous findings that the TBT Agreement and GATT are analytically distinct agreements, the AB contrasted the legal standards applicable under the chapeau and Article 2.1 of the TBT Agreement, indicating that “under Article 2.1…a panel has to examine whether the detrimental impact that a measure has on imported products stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products” (para 5.311). This, along with other differences between the two provisions, justified a separate analysis of the consistency of the EU Seal Regime with the requirements of the chapeau (paras 5.311-5.313). Under this examination the EU failed to justify its Seal Regime. Most notably, the AB had trouble with the distinction between IC and commercial seal hunts in the EU Seal Regime. Noting “the same animal welfare concerns as those arising from seal hunting in general also exist in IC hunts,” the AB struggled to see how the measure operated to address public moral concerns regarding seal welfare (para 5.320, 5.338). Additionally, the AB was not persuaded that the EU had made “comparable efforts” to facilitate the access of the Canadian Inuit to the IC exception as it did with respect the Greenlandic Inuit (para 5.337). As a result, the AB requested the EU to bring its measure into conformity with its international trade obligations (para 6.2).

For many, the above findings come as a welcome development insofar as it places some parameters around the definition of a technical regulation and further clarifies the relationship between the TBT Agreement and GATT. In result, the ruling also seems more palatable than the Panel’s decision because it acknowledges the EU’s failure to meaningfully facilitate access to the IC exception by the Canadian Inuit. This acknowledgment, along with the message that the EU must make bona fide attempts to accommodate seal products derived from Canada’s Inuit population, undoubtedly explain the Canadian government’s positive response to the decision. However, Canada’s Inuit community remains less than enthused about the AB’s decision. On the day the decision was released National Inuit Leader, Terry Audla, blasted the decision as “morally reprehensible.” Such reactions are almost certainly a response to the AB’s decision about the moral justifications for the EU’s ban on seal products. As noted at the start of this post the AB did find that the EU’s ban on seal products is justifiable under the public morals exception articulated in GATT Article XX(a). The AB reached this conclusion notwithstanding the discriminatory nature of the EU Seal Regime and with little recognition that the prohibition will effectively destroy a cultural and economic practice of certain indigenous communities.

In a previous post we criticized aspects of the Panel’s analysis under the public morals exception. Specifically, we questioned the Panel’s narrow characterization of the objectives of the EU Seal Regime and whether the evidence in the case supported a finding that the Regime does in fact contribute to seal welfare. Both issues featured prominently in this appeal. Norway argued that the panel should have considered the protection of IC and MRM as separate, independent objectives of the EU Seal Regime (paras 5.141-5.167). Additionally, Norway (along with Canada) argued that the EU Seal Regime should materially contribute to protecting seal welfare, a fact not established by the evidence in the case (paras 5.204-5.259). In a disappointing ruling, the AB rejected these arguments. By narrowly construing the primary objective of the EU Seal Regime as “protecting animal welfare” and choosing to emphasize the ban’s potential to contribute to seal welfare, the AB’s decision does little to alleviate the troublesome aspects of the Panel’s decision. Despite evidence of discrimination against indigenous communities and spurious evidence that the EU Seal Regime actually protects seals from inhumane treatment, it is ironic that animal welfare concerns appear to outweigh concerns for the welfare and human rights of indigenous communities to pursue their own means of subsistence (Article 1(2) of the International Covenant on Civil and Political Rights).

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Supreme Court Limits Employment Relationship in Human Rights Cases

Wed, 06/11/2014 - 10:00am

By: Linda McKay-Panos

 PDF Version: Supreme Court Limits Employment Relationship in Human Rights Cases

Case commented on: McCormick v Fasken Martineau DuMoulin LLP, 2014 SCC 39

In an earlier post, I expressed hope that in McCormick, the Supreme Court of Canada would clear up the issue of “employment” in human rights cases. They have certainly spoken, but perhaps have not cleared up the issue in the way I was hoping they would.

Until recent times, employment (i.e. the legislative terms “employ”, “employee”, “employer”) was given a large and liberal interpretation, in keeping with the notion that human rights law is quasi-constitutional.  For example, an employment relationship would be found to exist for human rights law, where it might not be found for tax law. The trend of narrowing the interpretation of employment may contradict the educational and remedial purposes of human rights law. Concerns about this trend in law may explain why several human rights commissions —including Alberta’s—intervened in this Supreme Court of Canada case.

McCormick was an equity partner in Fasken Martineau DuMoulin LLP (“Fasken”). The partnership agreement provided that equity partners would no longer remain as partners at the end of the year they turned 65. On an exceptional, individual basis, continued employment could be negotiated afterward. McCormick argued that the partnership agreement discriminated against him on the ground of age in the area of employment under British Columbia’s Human Rights Code, RSBC 1996, c 210.

In order to determine whether the BC Human Rights Commission had jurisdiction to address this complaint, the SCC had to “examine the essential character of the relationship and the extent to which it is a dependent one” (para 4). On this issue, the British Columbia Human Rights Tribunal had relied on Crane v British Columbia (Ministry of Health Services (No.1)), (2005) 53 CHRR D/156, reversed on other grounds (2007), 60 CHRR D/381 (BCSC) and applied the factors as follows (para 13):

    • Utilization: Fasken utilized McCormick to provide legal services to clients and to generate intellectual property;
    • Control: Fasken’s managing partners, clients and file managers directed the partners;
    • Financial burden: While partnership involves sharing profits rather than paying fixed wages, the firm must determine and pay compensation; and
    • Remedial purpose: McCormick was treated differently because of his age and this involved the broad, remedial purpose of the Human Rights Code.

The Tribunal concluded that McCormick was in an employment relationship. The British Columbia Supreme Court dismissed Fasken’s application for judicial review. The British Columbia Court of Appeal disagreed with the lower court and the Tribunal, and concluded that McCormick was not in an employment relationship because a partnership is not a separate legal entity from its partners; thus it is a legal impossibility for a partner to be employed by his/her partnership (para 14).

Justice Abella wrote the judgment and the other members of the SCC concurred. All parties had agreed that the standard of review in the case should be correctness. British Columbia’s Human Rights Code defines “employment” and “person” as follows (para 20):

“employment” includes the relationship of master and servant, master and apprentice and principal and agent, if a substantial part of the agent’s services relate to the affairs of one principal, and “employ” has a corresponding meaning;

. . .

“person” includes an employer, an employment agency, an employers’ organization, an occupational association and a trade union;

Justice Abella noted that statutory interpretation principles require that the definition of “employment” includes these relationships (e.g., master and servant) but is not restricted to them (para 21). She held that while the Court should not rely on a “formalistic” approach to the relationship, the types of relationships to be included should be analogous to those found in the definition (para 21).

Justice Abella also noted that independent contractors had been found to be employees for the purposes of human rights legislation, even though they might not be in other contexts (para 22). She held that the test for “employment” involves:

[23] Examining how two synergetic aspects function in an employment relationship: control exercised by an employer over working conditions and remuneration, and corresponding dependency on the part of a worker. In other words, the test is who is responsible for determining working conditions and financial benefits and to what extent does a worker have an influential say in those determinations?

Justice Abella held that the test in Crane (set out above) applied by the Human Rights Tribunal is in essence a control/dependency test (para 24). If a worker has the “ability to influence decisions that critically affect his or her working life”, this is the “compass for determining the true nature of the relationship” (para 27). The key is the degree of control or the “extent to which the worker is subject and subordinate to someone else’s decision-making over working conditions and remuneration” (para 28, citation omitted). Justice Abella also noted that partnerships have distinctive features such as “the right to participate meaningfully in the decision-making process that determines their workplace conditions and remuneration” (para 31, citations omitted). Usually partnership agreements “create a high threshold for expulsion” (para 32). Thus, “control over workplace conditions and remuneration is with the partners who form the partnership” (para 33).  Justice Abella also discusses precedents from the United States, Britain, Australia, New Zealand and elsewhere in Canada where courts have held that partnerships are not employment relationships for the purposes of human rights legislation or “other protective legislation” (paras 34, 35, 37). In jurisdictions where human rights legislation applies to partnerships there is an “express statutory provision [that is] usually required” (para 36). Justice Abella concluded that even though it is the case that partnerships are often not covered under human rights laws, the court must still look at the substance of the actual relationship at issue and the role of control and dependency in it (para 38).

In this case, McCormick had control of decisions about workplace conditions because he had ownership, profit and loss sharing and the right to participate in management (para 39). He was therefore a part of the “group that controlled the partnership, not a person vulnerable to its control” (para 39). Further, Fasken’s administrative rules did not transform its relationship with McCormick to one of subordination or dependency (para 40). Fasken’s board, regional managing partners and compensation committees were “directly or indirectly accountable to, and controlled by the partnership as a whole, of which McCormick was a full and equal member” (para 40). McCormick even had an equal say in the mandatory retirement policy (para 40). McCormick was not “dependent on Fasken in a meaningful sense” (para 42). He was not working for the benefit of someone else; he was in “a common enterprise with his partners for profit, and was therefore working for his own benefit” (para 42).

The SCC concluded that the Tribunal had paid insufficient attention to whether McCormick was subject to the control of others and dependent on them (para 45). Thus, the Tribunal had erred when it concluded that it had jurisdiction over McCormick’s partnership relationship (para 45).

Commentary

This case joins the cases that are tending to find that certain types of relationships are not employment for the purposes of human rights law. For example, in Lockerbie & Hole Industrial Inc. v Alberta (Human Rights and Citizenship Commission, Director), 2011 ABCA 3 (see blog post here) the Alberta Court of Queen’s Bench held, and the Alberta Court of Appeal agreed, that “employer” was not wide enough “to cover the relationship between the owner of an industrial site, and the employees of arm’s length contractors working on the site” (paras 6 and 24). Taken with McCormick, and in light of the current realities in Alberta employment, it may be that the way a company structures its relationship with the workers can affect whether human rights law applies. In the case of Lockerbie, which involved a site owner and a contractor of a trade, the failure to recognize the role of the site owner means that all human rights liability for policies of the site owner will fall on the shoulders of the trade contractor, who has to decide whether to risk a discrimination claim from his or her employee or to comply with the discriminatory request by the site owner in order to do business with them.

Justice Abella commented in McCormick that in the case of partners, the Partnership Act provides that partners owe a duty of utmost fairness and good faith to each other (para 47).  She notes (in obiter) that while this duty may well capture discrimination among partners, in McCormick’s case, “it is difficult to see how the duty of good faith would preclude a partnership from instituting an equity divestment policy designed to benefit all partners by ensuring the regenerative turnover of partnership shares” (para 48). Thus, McCormick really had no alternative legal measures available in this case.

While Justice Abella says that the character of the individual relationship must be examined for control and dependency, this case seems to be a victory of form over substance. The nature of the relationship did define whether or not human rights law could apply.

Complainants could seek to distinguish this case, but we may be running out of contemporary “employment” relationships to which human rights law provisions might apply. Of course, the legislature could choose to amend human rights law so that the definition of employment includes these relationships.

[Another concern I have with the judgment is Justice Abella’s use of “arbitrary disadvantage” to define discrimination. As this is being discussed by Jennifer Koshan in a separate blog post, I will refrain from further comment, except to say I share her concerns].

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Bishop Tutu: His Challenge to the Legal Profession on the Morals and Ethics of Climate Change

Tue, 06/10/2014 - 10:00am

By: Kathleen Mahoney

PDF Version: Bishop Tutu: His Challenge to the Legal Profession on the Morals and Ethics of Climate Change

Conference commented on: As Long as the Rivers Flow: Coming Back to the Treaty Relationship in our Time, Fort McMurray, AB, May 31-June 1, 2014

 I was privileged this past weekend to hear Desmond Tutu speak at a conference on climate change and treaty rights in Fort McMurray Alberta. (See the program here). His remarks were directed at climate change in general and the Alberta oil sands development in particular. He clearly made the link between carbon emissions from the oil sands and climate change. He then situated the issue of climate change squarely in a moral and ethical dimension. He argued that consideration of this dimension must play a central role in legal and policy decisions about responses here in Canada and around the world.

It is clear that Tutu’s ethical and moral concerns touch on fundamental rights and the very nature of justice and equity. Distributive justice, compensatory justice, procedural justice and human rights are all implicated. We heard from many speakers at the conference that in the Canadian context, First Nations bear the brunt of resource development when their treaty rights, food sources, water and cultures are compromised by climate change and environmental damage.

Saying that climate change is the greatest moral question of this era, Tutu’s remarks underscored an important ethical and legal theoretical void, especially in Alberta where climate change and development, if discussed at all, are usually talked about in terms of economic or technology-based benefits, not moral, legal or ethical dilemmas.

He set out three major moral imperatives that require an ethical response that should influence our legal thinking:

1. Responsibility to future generations of humanity

2. Responsibility to different populations around the world

3. Responsibility to the natural world and its natural state

1. Future Generations

With respect to the first imperative, Tutu challenged us to consider the effects of climate change on future generations whose rights are at the mercy of those living in the present. Aboriginal elders at the conference echoed this point when they reminded us that Aboriginal peoples see themselves as having the moral duty to steward the environment for the benefit of seven generations to come.

Both observations are bolstered by the views of philosophers and economists. John Rawls in his famous book, Theory of Justice along with numerous other prominent philosophers and economists say it is ethically indefensible to give more weight to the welfare of current generations than to that of future generations just because they were born sooner in time.  If we wish to create intergenerational equality, the only morally defensible approach to any intergenerational event is to treat the generations equally. This moral imperative only intensifies when one generation causes the harms by their acts or failures to act, subjecting subsequent generations to foreseeable harm to their resources or opportunities. But the responsibility to mitigate climate change for future generations is difficult to place in conventional legal discourse because it requires legal tools we presently do not have.

In their article “Climate Change and Future Generations”, (2011) 84 S Cal LR 1097, Revesz and Shahabian discuss the futility of using traditional methods of calculating future losses when it comes to mitigating climate change. Foreseeing harms to climate for future generations that will accumulate and persist for a very long time, even centuries or millennia, is difficult enough. The fact of the irreversibility of the effects of global warming such as the melting of the polar ice cap or the extinction of species, adds a further layer of complexity to legal or philosophical analyses to make decisions regarding responsibility for harms caused, degree of mitigation expenditures and when and on what they should be spent. For example, investments in infrastructure may make mitigation cheaper for future generations but if future generations are already stuck with irreversible, catastrophic damage that can no longer be prevented; mitigation efforts in infrastructure may be futile. Policy making in this scenario is very difficult indeed and underscores the urgency of stopping or slowing climate change as soon as possible.

It is precisely the long-term, possible preventative nature of climate change responses that makes it a moral and ethical issue. The mismatch between the need to act now for benefits that will accrue for future generations explains why so many politicians, economists, industrialists, judges, and other decision-makers find it so difficult to engage and respond to climate change. Their interests are usually focused on immediate evidence of present harm, election cycles or quarterly returns. This short-term thinking or generational buck-passing, Tutu would say, is immoral and unethical.

UNESCO in its Report, The Ethical Implications of Global Climate Change, suggests that instead of thinking about an infinite number of future generations, it would make more sense legally to think about the next 100 years. Although the full impacts of climate change may not be known in 100 years, at least it is possible for lawyers and judges to think of three future generations in terms of rights, needs, interests, and harms that we can imagine, put a value on, and plan for in the present. Although this approach falls short of the First Nations imperative to steward the environment seven generations into the future, it at least would illuminate wider concerns than those that affect the present generation alone and provide a point of departure for future generations in their struggles to diminish the impacts of climate change.

2. Poorer Populations and Countries

 On Tutu’s second point, that of moral responsibility to poorer populationsaround the world most affected by climate change, ethical challenges abound. Very little has been done by legal scholars to articulate relevant conceptual issues, as well as what policy should look like in practice.

The fact that climate change is a global phenomenon is the starting point. Once emitted, greenhouse gas emissions can have climate effects anywhere on the planet, regardless of the source. While all countries would like to see global emissions curtailed, none wish to experience the economic consequences of doing so individually. Our Prime Minister has made this clear many times, as have leaders in many other countries. For example see the commentary here.

At the same time, many of the countries and populations most vulnerable to climate change are those who have emitted or are emitting the least amount of greenhouse gasses. People living in the Arctic, in desert or semi-arid or equatorial regions, large river deltas or coastal and island regions, the elderly and children, all fall into categories of those most vulnerable to climate change. For a discussion of disproportionate impacts on the poorer nations see here. For a discussion on how climate change impacts millions of Asian children see here.

Procedural justice requires that the most vulnerable groups must participate in the decision-making about measures to prevent, mitigate or adapt to climate change. What mechanisms need to be put in place to ensure this dialogue can take place and that local and traditional knowledge are integrated in the decision-making processes?

Poorer nations who have not emitted comparable amounts of greenhouse gasses believe it unfair to demand that they minimize their emissions for the sake of future generations, especially if future people are likely to be better off, and if many present high emitters are already much richer than the future poor are likely to be. This skewed vulnerability in both cause and effect can result in serious unfairness between countries and regions. I am sure Bishop Tutu would say global cooperation in limiting emissions must consider distributive and procedural justice as a critical part of the decision-making process.

Unfairness in the distribution of the negative consequences of climate change is not the only distributive justice issue. The unfairness in the distribution of the benefits derived from actions that cause climate change should also be considered. For example, the Chipewyan First Nation that is down river from the oil sands and is adversely impacted by the environmental degradation caused by the mining of the bitumen, is not allowed any share in the revenues from resource development on their lands. Chief Alan Adam said at the conference, if the nation had a fair share of the oil sands revenues, they could use them for programs and services to ameliorate some of the impacts of the harms caused by the oil sands development. (See also commentary here).

On a broader scale, distributive justice principles would dictate that developed countries should be permitted fewer emissions than developing countries because developed countries are responsible for most of the cumulative emissions contributing to climate change and are more able to bear the burden of reducing emissions. Nonetheless, arguments that developed countries should not be responsible for emissions prior to 1990 because of ignorance about the climatic effects of these emissions, and that present inhabitants of developed countries should not be held responsible for past emitters now dead, indicate tension and a lack of consensus that needs to be resolved.

Other issues such as vulnerability to climate impacts affected by previous wrongs, such as the legacy of colonization, slavery, economic exploitation, and so on may compound injustices and increase feelings of alienation and anger which we see played out in the Canadian courts where First Nations feel their treaty and aboriginal rights are disrespected by resource developers and governments. (For a thorough discussion of case law on these issues see, Bill Gallagher, Resource Rulers: Fortunes and Folly on Canada’s road to Resources).

Climate change issues also raise considerations of human rights, remedies and compensatory justice. Climate change scientists say it is possible that some impacts such as sea level rise will threaten the very existence of entire coastal countries and communities. The Universal Declaration of Human Rights and other applicable human rights conventions will be invoked by displaced populations and climate change refugees who will be seeking asylum in other countries which may be reluctant to receive them. Others will claim that their life, liberty and security of the person rights are violated as well as their rights to use their property to enhance their well-being and choose their own way of life. How will the rights of the most vulnerable be validated? Will human rights bodies even recognize these rights or will the rights themselves be put under threat by climate change? Bishop Tutu recognized the rights issue in his remarks. He said, “Oil sands development not only devastates our shared climate, it is also stripping away the rights of First Nations and affected communities to protect their children, land and water from being poisoned.”

If violations of human rights are recognized, numerous compensatory issues arise. Who should bear the costs of mass movements of peoples? How will causal responsibility be assigned? What mechanisms and structures will be required to address these claims? Who will the beneficiaries of the compensation and how will it be distributed?

These questions of distributive justice, human rights, and compensation will only be answered when the ethical discussion about climate change is put at the forefront of negotiation tables, law school courses, economic forecasting, political debates and meetings of world leaders. (The University of Calgary Law School offers the following relevant courses: Law of Species and Spaces, International Development Law, Pollution Control and Waste Management Law, International Environmental Law, Environmental Law and Ethics, Water Law, Environmental Law and Alternative Energy Law. For a description of the courses see here).

3. The natural world

The third theme Bishop Tutu identified in his talk in Fort McMurray was with respect to the moral and ethical duty to protect the natural world. He said there is a need to develop a much stronger ethical and legal relationship between humans and the rest of nature. He said the concept of justice is meant to be not only for human beings but also for the world’s other sentient creatures:

“It is a kind of theological folly to suppose that God has made the entire world just for human beings, or to suppose that God is interested in only one of the millions of species that inhabit God’s good earth…..We do not honor God by abusing other sentient creatures,” he said.

Whether one agrees with Tutu’s religious rationale or not, climate change raises numerous new questions about the moral value of nonhuman nature including asking ourselves whether we have obligations to protect nonhuman animals, unique places, or nature as a whole, and if so, when and what form such obligations take?

One influential study placed a third of the world’s species on a path to climate-driven extinction as a result of global climate change. (Chris D. Thomas et al, “Extinction risk from climate change” (2004) 427 Nature 145; see also Lee Hannah ed, Saving a Million Species: Extinction From Climate Change. We heard evidence at the conference that caribou populations have dramatically diminished in their natural, historic habitat which used to occupy the area of the oil sands development.

Historically, philosophers, scientists, and advocates focused on establishing good reasons for caring about the plight of threatened species and their habitats. Now, because of the effects of global climate change, questions like: Should species be protected at all? Should they be protected within the historical habitats in which they evolved? Is it appropriate to modify habitats through creating parks, refuges, and protected areas? are on the table.

It is inevitable that conservation decisions in the future will require more interventionist conservation policies leading to debates regarding risks, benefit and of novel practices as well as consideration of impacts on basic human rights, distributive justice and procedural justice for those whose livelihoods, food supply and cultural practices depend upon the preservation of the natural world.

In speaking out about justice for nature Bishop Tutu sees the similarities to disempowered humans. He says, “I have seen firsthand how injustice gets overlooked when the victims are powerless or vulnerable, when they have no one to speak up for them and no means of representing themselves to a higher authority. Animals are in precisely that position.” Should legal theorists adopt the same view?

4. Conclusion

Climate change involves serious ethical issues, especially in its global, intergenerational, human rights, aboriginal and treaty rights and ecological dimensions. The need for work in moral, legal and political philosophy that articulates compelling reasons as to how and why we should address climate change is clear. Are judges, lawyers and legal academics sufficiently prepared to participate in these discussions? Is space being created for those who need to be heard?

Our theoretical tools are underdeveloped in many of the relevant areas and Bishop Tutu’s message is one that needs to be carefully considered and acted upon.

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Greenpeace v Canada: Symbolic Blow to the Nuclear Industry, Game-changer for Everyone Else?

Mon, 06/09/2014 - 10:00am

By: Martin Olszynski

 PDF Version: Greenpeace v Canada: Symbolic Blow to the Nuclear Industry, Game-changer for Everyone Else?

Case commented on: Greenpeace Canada v Canada (Attorney General), 2014 FC 463 (CanLII)

In this lengthy (431 paragraphs) decision, the Federal Court allowed in part Greenpeace et al’s application for judicial review regarding the Joint Review Panel report(the Report) for the Darlington New Nuclear project proposed by Ontario Power Generation (OPG). Justice Russell held that the environmental assessment (EA) conducted by the Joint Review Panel (JRP) failed to comply with the Canadian Environmental Assessment Act, SC 1992 c 37 (as it then was).  Specifically, there were gaps in the treatment of hazardous substances emissions and spent nuclear fuel, and a failure to consider the effects of a severe “common cause” accident.  As noted by the media, while the decision is of limited effect on a project already indefinitely postponed by the province, “it is a symbolic blow to an industry coping with the public and political fallout from Japan’s 2011 Fukushima meltdown.”  As further discussed below, the decision is also likely to have implications for EA in Canada generally and several other projects currently making their way through either the regulatory process or the courts, including Taseko’s New Prosperity mine, Enbridge’s Northern Gateway pipeline and Kinder Morgan’s Trans Mountain pipeline.

Background

In the fall of 2006 and under direction from the Ontario Minister of Energy, OPG applied to the Canadian Nuclear Safety Commission (CNSC) for a site preparation license for several new reactors at its existing Darlington nuclear plant in Bowmanville, Ontario.  OPG’s application for this license, as well as for authorizations under the federal Fisheries Act, RSC 1985 c F-14 and the Navigable Waters Protection Act, RSC 1985 c N-22 (now the Navigation Protection Act), triggered the application of the then CEAA (since replaced with the Canadian Environmental Assessment Act, 2012, SC 2012 c 19). The project was referred to a joint review panel in 2008 and a three-member panel was appointed in 2009. Following 284 information requests (IRs) and seventeen days of hearings in the spring of 2011, the JRP submitted its final report to the Minister in August of that same year, concluding that the project was not likely to result in significant adverse environmental effects.  The applicants challenged the adequacy of the EA and JRP Report shortly thereafter.

Justice Russell summarized the applicants’ argument as follows:

 [127] As identified in the Report, the [JRP] itself found that key information about the proposed Project was absent from the EA documentation.  For example, the Panel found that no specific nuclear reactor technology, site design layout, cooling water option, used nuclear fuel storage option, or radioactive waste management option has been selected.  Thus, at the present time, federal decision-makers still do not know: (a) the particulars of the specific project to be implemented at the Darlington site; (b) the full range of site-specific or cumulative environmental effects; or (c) whether there are feasible mitigation measures over the project’s full lifecycle.  These and other fundamental gaps are attributable to the fact that what the [JRP] had before it was not a “project”, but merely a plan for future planning, assessment, and decision-making. (See paras 218 – 220 for the full list of alleged gaps and deficiencies)

 The reason that so many project components remained unspecified was that OPG, with the JRP’s blessing, had prepared its environmental impact statement based on a “plant parameter envelope” (PPE) or “bounding scenario” approach. As described by OPG, “this approach involves identifying the salient design elements of the Project and, for each of those elements, applying the “limiting value” (the value with the greatest potential to result in an adverse environmental effect) based on the design options being considered” (at para 5).  The respondents argued that such an approach was consistent with the requirement, pursuant to section 11 of the CEAA, to conduct the assessment as early as practicable in the planning process and before irrevocable decisions are made (at para 66), and further that it was supported by the case law (at para 72).

Decision

After a thorough review of the statutory regime and associated jurisprudence, Justice Russell concluded that there was nothing that precluded the adoption of the PPE approach per se (at para 181). However, he did find inadequacies with the JRP’s treatment of three specific issues (at para 228):

    • The failure of the Panel to insist on a bounding scenario analysis for hazardous substance emissions, in particular liquid effluent and stormwater runoff to the surface water environment, and for the sources, types and quantities of non-radioactive wastes to be generated by the project;
    • The Panel’s treatment of the issue of radioactive waste management; and
    • The Panel’s conclusion that an analysis of the effects of a severe common cause accident at the facility was not required at this stage, but should be carried out prior to construction.

In assessing these matters, Justice Russell accepted the applicants’ argument – unchallenged by the respondents – that the EA process under CEAA is fundamentally different from future licensing or regulatory processes (at para 230) and that there is therefore a limit to the extent to which the consideration of environmental effects and their mitigation can be left to those later processes. Justice Russell described this as a matter of improper delegation:

[232] Under the CEAA, the ultimate decision-maker for projects referred to review panels is the Governor in Council (in practical terms, the federal Cabinet), which decides whether the responsible authorities will be permitted to take steps to enable the project to move forward.  Parliament chose to allocate this decision to elected officials who are accountable to Parliament itself and, ultimately, to the electorate…

[235] The most important role for a review panel is to provide an evidentiary basis for decisions that must be taken by Cabinet and responsible authorities. The jurisprudence establishes that gathering, disclosing, and holding hearings to assemble and assess this evidentiary foundation is an independent duty of a review panel, and failure to discharge it undermines the ability of the Cabinet and responsible authorities to discharge their own duties under the Act [citing Pembina Institute for Appropriate Development v Canada (Attorney General), 2008 FC 302 (CanLII) at paras 72 – 74]…

[237] In short, Parliament has designed a decision-making process under the CEAA that is, when it functions properly, both evidence-based and democratically accountable. The CNSC, in considering future licensing decisions, will be in a fundamentally different position from the Panel that has conducted the EA. The CNSC will be the final authority making the decision, not merely an expert panel. Although the CNSC approaches this role with considerable expertise, it does not have the same democratic legitimacy and responsibility as the federal Cabinet.

(Emphasis added)

With respect to OPG’s PPE approach, which the JRP acknowledged was a departure from typical EA practices, this meant that it “was incumbent on the Panel to ensure the methodology was fully carried out” (at para 247), bearing in mind also the challenges that such an approach poses for public participation: “The less specific the information provided… the more difficult it may be for interested parties to challenge assumptions, test the scientific evidence, identify gaps in the analysis, and ensure their interests are fully considered” (at paras 247, 249).

Applying this standard to hazardous substance emissions and on-site chemical inventories, Justice Russell concluded that the EA came up short. He noted EC’s submissions to the JRP that, notwithstanding several IRs to OPG, the remaining gaps prevented EC from assessing effects with respect to effluent and storm water management (at paras 257 – 259).  The JRP itself noted that “OPG did not undertake a detailed assessment of the effects of liquid effluent and storm water runoff to the surface water environment” but that it “committed to managing liquid effluent releases in compliance with applicable regulatory requirements and to applying best management practices for storm water” and on this basis concluded that the project was not likely to result in significant adverse environmental effects (at paras 264, 265).

In a passage that is sure to interest administrative law scholars and practitioners (discussed further below), Justice Russell held that while such a conclusion may be reasonable, it did not comply with CEAA:

 [272] To repeat what is stated above, because of its unique role in the statutory scheme, a review panel is required to do more than consider the evidence and reach a reasonable conclusion. It must provide sufficient analysis and justification to allow the s. 37 decision-makers to do the same, based on a broader range of scientific and public policy considerations. One could say that the element of “justification, transparency and intelligibility within the decision-making process” (Dunsmuir, above, at para 47; Khosa, above, at para 59) takes on a heightened importance in this context.

[273] In this case, there are references to commitments by OPG to comply with unspecified legal and regulatory requirements or applicable quality standards, and to apply good management practices. There are references to instruments that may or may not contain relevant standards or thresholds based on the information before the Court (e.g. the Ontario Stormwater Management Planning and Design Manual (March 2003)). And there are references to thresholds or standards in statutory instruments (e.g. Fisheries Act, Canadian Environmental Protection Act) without specific information about how these are relevant to or will bound or control the Project’s effects…

[275] In essence, the Panel takes a short-cut by skipping over the assessment of effects, and proceeding directly to consider mitigation, which relates to their significance or their likelihood.  This is contrary to the approach the Panel says it has adopted (see EA Report at p. 39), and makes it questionable whether the Panel has considered the Project’s effects at all in this regard.

(Emphasis added)

 This is not to suggest that future regulatory processes “have no role to play in managing and mitigating a project’s environmental effects” (at para 241). For Justice Russell, a conceptual distinction can be made between two kinds of situations where a panel, despite some uncertainty, might conclude that significant adverse environmental effects are unlikely (at para 280):

(a)  Reliance upon an established standard or practice and the likelihood that the relevant regulatory structures will ensure compliance with it; or

(b)  Confidence in the ability of regulatory structures to manage the effects of the Project over time.

The latter approach is problematic in that it “may short-circuit the two-stage process whereby an expert body evaluates the evidence regarding a project’s likely effects, and political decision-makers evaluate whether that level of impact is acceptable in light of policy considerations, including “society’s chosen level of protection against risk”” (at para 281, referring to the Government of Canada’s policy on the application of the precautionary principle and adopted by the Darlington JRP).

Turning next to the issue of spent nuclear fuel, there does not appear to have been any real dispute between the parties that the JRP’s treatment of this issue was cursory. Rather, OPG’s position was that this was something that Canada had mandated the Nuclear Waste Management Organization (NWMO) to study. Justice Russell disagreed:

[297] In my view, the record confirms that the issue of the long-term management and disposal of the spent nuclear fuel to be generated by the Project has not received adequate consideration.  The separate federal approvals process for any potential NWMO facility, which has not yet begun…will presumably ensure that such a facility is not constructed if it does not ensure safety and environmental protection. But a decision about the creation of that waste is an aspect of the Project that should be placed before the s. 37 decision-makers with the benefit of a proper record regarding how it will be managed over the long-term, and what is known and not known in that regard.

(Emphasis added)

According to Justice Russell, the management and storage of spent nuclear fuel was not a “separate issue” (at para 312). Rather, the EA “is the only occasion…on which political decision-makers at the federal level will be asked to decide whether that waste should be generated in the first place” (ibid). Nor was there anything in the Terms of Reference that suggested that this issue was not to be addressed (at para 313).

Finally, with respect to a severe “common cause” accident, the problem was not that OPG failed to assess the risks of accidents associated with its new build (at para 327) but rather that it failed to assess these risks in conjunction with the existing Darlington plant.  The JRP itself recognized this gap and recommended that OPG “evaluate the cumulative effect of a common-cause severe accident involving all of the nuclear reactors in the site study area” prior to construction (Recommendation # 63). For Justice Russell, however, that was insufficient:

[334] In my view, the one conclusion that is not supported by the language of the statute is the Panel’s conclusion that the analysis had to be conducted, but could be deferred until later.  Rather, in my view, it had to be conducted as part of the EA so that it could be considered by those with political decision-making power in relation to the Project.

In light of these three deficiencies, and as was the case in Pembina Institute cited above, the Court remitted the Report to the JRP for further consideration, pending which the relevant government agencies have no jurisdiction to approve the project.

Discussion

Justice Russell’s thorough treatment of the federal EA regime means that the decision is likely to have implications for the federal EA regime going forward. This is so because notwithstanding the fact that Greenpeace dealt with the prior CEAA regime and CEAA 2012 is in many ways different, the provisions dealing with a panel’s duties and political decision-making are effectively unchanged. These implications, as well as Justice Russell’s somewhat unprecedented (but in my view correct) approach to judicial review in this context, are further discussed below.

Failure to Assess Environmental Effects “Short-Circuits” the CEAA Regime

Perhaps the most important take-away message from Greenpeace is that, generally speaking, Panels must do the work of actually assessing potential environmental effects and their mitigation. This is a necessary consequence of CEAA’s two-step decision-making process, which Justice Russell describes as “evidence-based and democratically accountable” (at para 237). Democratic accountability is hindered where the evidence with respect to potential adverse environmental effects is missing, inadequate or postponed to some future regulatory proceeding. This finding, supported by prior jurisprudence and the 2008 Pembina Institute decision in particular, is likely to cause problems for both Taseko’s proposed New Prosperity mine and Enbridge’s proposed Northern Gateway pipeline.

I have previously written about Taseko’s New Prosperity project here and here.  Briefly, the second federal panel that reviewed Taseko’s revised project concluded – like the first one – that the project is likely to result in significant adverse environmental effects.  In the first of my posts, I suggested that this result was at least partially its own undoing, and its refusal to provide sufficient information to the panel in particular. Like OPG, Taseko was of the view that such “details” could be dealt with at the regulatory phase (see e.g. its final written submissions to the panel at p 8 – 11), an approach that the New Prosperity panel ultimately rejected (see New Prosperity Report at p 22). In its December 2013 application for judicial review, Taseko argues, inter alia, that the panel erred in law when it did so.  Greenpeace suggests that this aspect of Taseko’s challenge is unlikely to succeed.

Greenpeace also lends support to the recent letter to the Prime Minister, signed by 300 scientists, which urges him to reject the Northern Gateway Joint Review Panel report.  Amongst five major flaws, the signatories to the letter allege inappropriate reliance on yet-to-be-developed mitigation measures:

…Northern Gateway omitted specified mitigation plans for numerous environmental damages or accidents. This omission produced fundamental uncertainties about the environmental impacts of Northern Gateway’s proposal (associated with the behaviour of bitumen in saltwater, adequate dispersion modeling, etc…). The panel recognized these fundamental uncertainties, but sought to remedy them by demanding the future submission of plans… Since these uncertainties are primarily a product of omitted mitigation plans, such plans should have been required and evaluated before the JRP report was issued.

Whether or not the foregoing is an accurate characterization of the JRP’s conclusions and recommendations (a quick glance of the NEB’s 209 conditions does suggest that these scientists may well be onto something), the letter’s characterization of the EA process as one intended to offer “guidance, both to concerned Canadians in forming their opinions on the project and to the federal government in its official decision” (at page 3) could have been written by Justice Russell himself.

What is Separate?

A related aspect of Greenpeace worth discussing is the Court’s approach to the management of spent nuclear fuel.  As noted above, Justice Russell concluded that this was not a separate issue, and that the “creation of nuclear waste” was “an aspect of the Project that should be placed before [Cabinet]” (at para 297).

Such dicta could prove useful to those, such as the City of Vancouver in the context of the National Energy Board’s Trans Mountain pipeline application, arguing that the EAs for major pipelines (including Northern Gateway) should assess the climate change implications of the increased oil production enabled by the construction of such pipelines (in its application, Trans Mountain states that the pipeline is in response to requests for increased capacity “in support of growing oil production”). Although the matter is not free from doubt, the statutory language on this front certainly is broad (see CEAA, 2012 para 5(1)(a): “…a change that may be caused…”).  It also seems plain that panels cannot arbitrarily decide to exclude certain environmental effects, nor is deference to government policy or other initiatives appropriate (e.g. the NWMO in Greenpeace, or Alberta’s intensity-based approach to greenhouse gas emissions in Pembina Institute).

Assessing the climate change effects of increased oil production would not amount to “a trial of modern society’s reliance on hydrocarbons,” as the NEB’s outgoing chief recently stated in an interview with the Financial Post, and which he described as a policy question belonging “to the world of policy-making and politics, in which we are not involved at all.”  With respect to its obligations under CEAA, 2012 at least (recognizing that the NEB is dealing with a dual mandate here, the other coming from s 52 of the National Energy Board Act, RSC 1985 c N-7, which does actually require the NEB to reach a conclusion with respect to the public interest), it would be the exact opposite. Although complex, it would entail an evidence-based analysis of whether Trans Mountain or Northern Gateway may contribute to an increase in oil production and, if so, the greenhouse gas emissions associated with that. Importantly, the final Environmental Impact Statement for Keystone XL determined that this was not likely to be the case for that particular pipeline.

A Green Shade of Reasonableness Review?

There has been much action at the Supreme Court lately with respect to judicial review, most of it dealing with the thorny (in my view) issue of the appropriate standard of review to be applied to questions of law when it is a member of the executive (e.g. a Minister), rather than an adjudicative body, that is interpreting a statute.  In Canadian National Railway Co. v. Canada (Attorney General), 2014 SCC 40, the Supreme Court confirmed that the Dunsmuir framework, and the subsequent presumption of deference on questions of law falling within a decision-maker’s “home statute”, applies to administrative decision-makers generally (at paras 53 and 54).  The issue didn’t come up in Greenpeace, dealing as it does with a tribunal, although there is an interesting discussion to be had as to whether the roster-like (i.e. non-permanent) membership of CEAA panels is sufficient to rebut the presumption of deference given the potential for inconsistent and potentially conflicting, but otherwise reasonable, interpretations of the legislation by different panels.

In the final part of this post, however, I want to briefly discuss Justice Russell’s approach to reasonableness review. For convenience, the relevant passage is as follows:

[272] To repeat what is stated above, because of its unique role in the statutory scheme, a review panel is required to do more than consider the evidence and reach a reasonable conclusion. It must provide sufficient analysis and justification to allow the s. 37 decision-makers to do the same, based on a broader range of scientific and public policy considerations. One could say that the element of “justification, transparency and intelligibility within the decision-making process” (Dunsmuir, above, at para 47; [Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12 (CanLII)] at para 59) takes on a heightened importance in this context.

(Emphasis added)

In my view, this is precisely the kind of analysis that Justice Binnie had in mind when he stated, at para 59 of Khosa, that “[r]easonableness is a single standard that takes its colour from the context.”  In the EA context, judicial review is not available on the merits of government-decision making – as Justice Russell observed that is a matter of democratic accountability. In this context, judicial review should function in the service of democratic accountability by ensuring the integrity of the decision-making process, a process that government predictably and – where it has been adequate – justifiably relies on to gain support for its political decisions.  In the context of Northern Gateway, for example, the Prime Minister and then Minister of Natural Resources Joe Oliver were reported as saying that they will “make a decision only after considering the recommendations of the ‘fact-based’ and ‘scientific’ review panel.”  Mr. Oliver also released a statement where he described the JRP report as “a rigorous, open and comprehensive science-based assessment.”  In this context, the role of a reviewing court should be to ensure that the EAs do in fact meet these standards, failing which there can be no democratic accountability.

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Court of Appeal Confirms the Availability of a Disgorgement Remedy as a Possible Means of Assessing Damages for Breach of a Modern Land Claim Agreement

Thu, 06/05/2014 - 10:00am

By: Nigel Bankes

PDF Version:Court of Appeal Confirms the Availability of a Disgorgement Remedy as a Possible Means of Assessing Damages for Breach of a Modern Land Claim Agreement

Case commented on: Nunavut Tunngavik Incorporated v Canada (Attorney General), 2014 NUCA 02

The Nunavut Court of Appeal has confirmed the availability of a disgorgement remedy as a possible means of assessing damages for breach of a modern land claim agreement. However, the majority of the Court (Justices Slatter and O’Brien) ruled that summary judgment was not available to the Nunavut Tunngavik Inc (NTI) in this case and that consequently damages must still be assessed following the trial. Justice Hunt (dissenting on this point) concluded that summary judgment was available. All members of the Court were agreed that nominal damages would not be appropriate in this sort of case even if NTI were unable to prove actual damages. To allow an award of nominal damages for breach of a land claim agreement would not foster the overall goal of reconciliation.

I discussed the facts of this case and commented on the judgement at trial here.  In brief, NTI is suing the federal Crown for its alleged failure to implement the terms of the Nunavut Final Agreement, a land claim agreement between Canada and the Inuit of Nunavut. One of the specific claims made by NTI is that Canada failed to fulfil its promise to establish an environmental monitoring program for the Nunavut Settlement Area. NTI sought summary judgement on this specific matter based on admissions made by the Crown on discovery and it claimed damages to be assessed on the basis of the savings that accrued to Canada as a result of its delayed implementation of this obligation. The case management judge found a breach and awarded damages on the basis sought by NTI. On appeal the Crown indicated that it would not appeal the finding of breach.

NTI supported its claim for damages on the basis of disgorgement by arguing that the federal Crown owed NTI a fiduciary duty with respect to the discharge of the monitoring obligation. The majority would have none of that and I think rightly so. It will always be hard to argue that a fiduciary obligation covers the same ground as that of an express contractual covenant and perhaps now even more so since the Court has made it clear that in general fiduciary law the test for establishing a “facts and circumstances” fiduciary obligation rests upon establishing a reasonable expectation of loyalty rather than vulnerability: (see Alberta v Elder Advocates of Alberta Society, 2011 SCC 24).

But of course it is not necessary to establish the existence of a fiduciary duty in order to claim restitutionary damages for a breach of contract – and there was certainly a breach of contract here as the majority emphasized:

 [67] If the Land Claims Agreement contains a covenant to do something, the appellant is obliged by that covenant to do it. It has never been a defence to breach of contract that: “Sorry, we ran out of money”, or “Sorry, we never included that in our budget”. If the covenant in the Land Claims Agreement requires a fixed amount of funding, that amount must be provided. If the covenant creates an obligation to fund, but without a fixed amount, the amount must be determined in accordance with the proper interpretation of the covenant (possibly, a “reasonable” amount). If the covenant in the Land Claims Agreement requires the appellant to do something, the appellant must find the necessary funds to perform.

 As to the availability of restitutionary damages, the majority referred to the Supreme Court’s decision in Bank of America Canada v Mutual Trust Co, 2002 SCC 43 noting that:

 [80] Restitutionary damages are available in exceptional cases, where the expectation damages are difficult or impossible to calculate, or where expectation damages would effectively allow the breaching party immunity notwithstanding the breach.

 The majority provided the following principles to guide assessment of damages (at para 85):

 a)   The presumptive rule is that the plaintiff is entitled to expectation damages: Bank of America Canada at paras. 25-6. The plaintiff is to be put in the position it would have been in if the contract had been performed.

b)   Exceptionally, where damage is shown but expectation damages are not readily quantifiable, or where the circumstances of the case call for a different measure of damages to provide an effective remedy:

i)   where the anticipated “bargain” was non-financial or intangible, then damages can be assessed and awarded at large to reflect the expectations of the parties, for example where the contract is not commercial in nature, or the damages are not liquidated: Fidler v Sun Life Assurance Co. of Canada, 2006 SCC 30 (CanLII), [2006] 2 SCR 3 at paras. 44-5, 2006 SCC 30; Honda Canada Inc. v Keays, 2008 SCC 39 (CanLII), 2008 SCC 39 at paras. 55, 59, 2008 SCC 39 (CanLII), [2008] 2 SCR 362; Jarvis v Swan Tours Ltd., [1973] QB 233 (CA).

ii)   in some cases a restitutionary remedy (disgorgement of some benefit achieved by the defendant from the breach) is a potential remedy. Some exceptional circumstances are required (as in Blake, and the facts in Dolly Varden) to justify this approach. The trial judge should give consideration to the concept of “efficient breach”, and the effect that has on the calculation of damages: Bank of America Canada at paras. 31-3; Dasham Carriers Inc. v Gerlach, 2013 ONCA 707 (CanLII), 2013 ONCA 707 at paras. 29-30.

For these purposes “not readily quantifiable” does not just mean that the plaintiff has not marshaled the evidence necessary to prove what would be provable.

c)   Where breach is shown, but no damage is evident, nominal damages should be awarded: B.M.P. Global Distribution Inc. v Bank of Nova Scotia, 2009 SCC 15 (CanLII), 2009 SCC 15 at para. 90, 2009 SCC 15 (CanLII), [2009] 1 SCR 504; Métis National Council Secretariat Inc. v Dumont, 2008 MBCA 142 (CanLII), 2008 MBCA 142 at paras. 40-6, 305 DLR (4th) 356; Place Concorde East Limited Partnership v Shelter Corp. of Canada Ltd. 2006 CanLII 16346 (ON CA), (2006), 270 DLR (4th) 181 at para. 78, 211 OAC 141 (CA).

 Evidently it is principle (b) that is important here. In concluding that the case management judge had not erred the majority considered the following factors to be important (paras 86 – 88):

    • The covenant to establish a system of statistical monitoring is not truly commercial in nature, and there is no obvious way of measuring its value in economic terms.
    • The benefits that accrue from the statistical data would be indirect, and would benefit the general Inuit population in ways that could not easily be measured.
    • Canada had already received valuable consideration (the surrender of aboriginal title) for the covenant to establish a system of statistical monitoring. If Canada could simply refuse to perform that covenant, and argue that it need not pay any damages because none could readily be established, it would potentially deprive the Inuit of many of the intended benefits of the Land Claims Agreement. In the context of a land claims treaty, insulating the contracting government from any consequences of a breach of a covenant like this is legally unacceptable.
    • The case management judge had relied heavily on AG v Blake, [2001] 1 AC 268 but both the majority and the dissent seemed more persuaded by the mining case of Dolly Varden Mines Ltd v Sunshine Exploration Ltd, [1970] SCR 2 – a case which the Court (and I am guessing that this was Justice Hunt) brought to the attention of counsel. In Dolly Varden the defendant had agreed to undertake a program of exploration but failed to do so. The Court held that damages should be assessed based on the cost of performing work program rather than any loss that the plaintiff could prove (or not) as a result of not having the work performed (at para 88): “The ‘savings’ achieved by [Canada] in not performing [the monitoring obligations] are different in character from the profits recovered in Blake, but roughly analogous to the saved expenses in Dolly Varden, and are a relevant consideration.”

At the end of the day however the majority failed to endorse the case management judge’s assessment of the appropriate damages in this case on the grounds that this should not have been determined on an application for summary judgement. Ordinarily one would not expect that a decision on the availability of summary judgement would be a matter on which the disappointed party would be able to obtain leave to appeal from the Supreme Court of Canada. However, the Court’s recent ruling in Hriniak v Mauldin, 2014 SCC 7 suggests that the Court favours making summary judgement more readily available as part of an important agenda of facilitating access to justice. Both the majority and the dissent referred to this decision but the majority was evidently of the view that summary judgement on this issue would be unfair to Canada. Some of the reasons offered by the majority (e.g. Canada did not really know the case it had to meet until the case management judge had rendered his decision (at para 98) and that “both parties” anticipated that the entire dispute would proceed to trial (at para 91)) seem far from convincing – so perhaps this is a case that the Court could be persuaded to review.

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EPA’s New Power Sector Climate Rules: A Brewing Political and Legal Storm

Wed, 06/04/2014 - 10:00am

By: James Coleman

PDF Version: EPA’s New Power Sector Climate Rules: A Brewing Political and Legal Storm

Proposal commented on:United States Environmental Protection Agency proposal for cutting power plant greenhouse gas emissions.

On June 2, the United States Environmental Protection Agency (EPA) proposed requiring all fifty states to adopt greenhouse gas controls for their existing power plants. And EPA went further, proposing that, together, states would have to cut U.S. power sector emissions by 30% by 2030.  (You can see a chart of how much each state would have to cut here.)

These rules face strong political and legal opposition and will not go into action until 2020 at earliest. Their ultimate fate will depend on whether President Obama’s administration stands behind them, whether the public elects a new President that supports them, and whether the courts agree that EPA has authority to cap state greenhouse gas emissions. Their immediate impact is twofold: 1) it tells other countries that there’s a chance the U.S. could commit to strong greenhouse gas rules at 2015 negotiations in Paris; and 2) it sets the stage for an epic political and legal struggle over energy policy in the United States. Many nations, including Canada, are eager to see what will result.

What happened?

EPA acted under Clean Air Act § 111(d). (The text of § 111(d) is at the bottom of this post.) This provision allows EPA to “establish a procedure” for each state to adopt “standards of performance” for existing sources of air pollutants that would have otherwise slipped through the cracks of the Clean Air Act because they 1) are not new sources, subject to new source performance standards, and 2) are not regulated under other existing source regulations in the Clean Air Act.

This section of the Clean Air Act has rarely been used: it’s designed for sources that somehow escaped the Act’s relatively comprehensive coverage. So there are few precedents for EPA to follow, and the courts that review EPA’s rule will not have past cases to go by. There are several ongoing legal disputes about the extent of EPA’s authority to adopt greenhouse gas rules under § 111(d), summarized below, and EPA is pushing for maximum authority to reduce greenhouse gas emissions across the power sector.

Can EPA Issue Greenhouse Gas Rules for Coal Power Plants?

Some question if the Clean Air Act requires greenhouse gas controls at all for existing power plants. The published U.S. Code says § 111(d) doesn’t apply to sources that EPA already regulates under the “hazardous air pollutants” section of the Clean Air Act, § 112. And EPA already regulates power plants under § 112. So how can EPA regulate power plants under § 111(d)?

Bizarrely, the U.S. Code does not reflect the actual text of the law signed by President George H.W. Bush in 1990, and the signed law, not the Code, controls. The signed law actually included two different § 111(d) that were passed by the U.S. House and Senate, respectively, and never reconciled. (#bicameralism) The House text made it into the U.S. Code, but the Senate version is different: it only says that § 111(d) doesn’t apply to pollutants that are regulated under § 112. Although power plants are regulated under § 112, greenhouse gases aren’t, so this version would allow EPA’s greenhouse gas rules.

In 2013, William Haun, writing for the Federalist Society, suggested that the Senate and House versions should be reconciled by applying the plain text of both exclusions, which would negate EPA’s standards. Kate Konschnik, Policy Director of the Harvard Environmental Law Program, has countered with several reasons to think that Congress intended to adopt the narrower Senate exclusion, and arguing that, at a minimum, EPA should be given deference on which text to apply. EPA issued a legal memorandum with its proposed power rule, echoing Konschnik’s arguments, and noting that a 2011 Supreme Court decision also suggested that EPA can regulate greenhouse gases under § 111(d). (See memo at pp. 20-27).

Can EPA Cap State Power Emissions?

The biggest battle over EPA’s power sectors rules will be its scope.

Remember: section 111(d) lets EPA set a “procedure” for states to set “standards of performance for any existing source” that would be subject to standards of performance for new sources. So EPA is proposing § 111(d) standards to accompany the new source performance standards it has proposed rules for new coal and natural gas plants.

But EPA isn’t suggesting source-by-source standards of performance for existing coal and natural gas plants. Instead it’s proposing to cap all greenhouse gas emissions from each state’s power sector. How can the agency propose this?

Under previous EPA regulations, § 111(d) standards must mandate the “best system of emission reduction” for each source. You might think that meant making each coal plant cleaner, but EPA says it also means taking steps to replace coal with other power sources: 1) using natural gas plants instead, 2) using low carbon sources like hydro, nuclear, wind, and solar, and 3) lowering electricity demand through energy efficiency. In other words, the best system of emission reduction for a coal plant is simple: don’t turn it on.

EPA recognizes that state-by-state caps are a departure from the usual approach, but it offers several reasons that they might make sense here. First, it notes that a state cap “achieves greater emission reductions at a lower cost”—if EPA limited itself to the coal plants themselves it could only get small greenhouse gas reductions (4-6%) unless it was willing to demand prohibitively expensive carbon capture. Second, a state cap “takes better advantage of the wide range of measures that states, cities, towns and utilities are already using to” cut greenhouse gas emissions, such as renewable power standards and cap-and-trade systems. Third, EPA says statewide caps “reflect the integrated nature of the electricity system and the diversity of electricity generation technology.”

There’s a lot of political rhetoric right now about “power grabs” but over the next months you will see others develop careful arguments that EPA has overstepped its authority by transforming a “procedure” for state “source” standards into state greenhouse gas caps. Even before the rule came out, Nathan Richardson, at Resources for the Future, suggested that it might be illegal to cap coal & gas together—much less combine the entire electric sector. On the other, hand, Kate Konschnik and Ari Peskoe of Harvard’s Environmental Law Program have defended the broader approach taken by EPA. If EPA’s rules ever go into effect, those arguments will have to be resolved in court.

Is EPA’s Proposed 30% Cut Reasonable?

EPA also says it decided to include all power sector emissions because states, industry, and interest groups all asked for compliance flexibility. And a state cap is flexible because it allows states to choose any low-carbon path that they like: natural gas or energy efficiency, nuclear or wind.

But calling EPA’s statewide caps “compliance flexibility” takes enough chutzpah to make you smile when you’re reading a 645-page proposed rule. Some states are, of course, delighted by EPA’s caps, which validate their pre-existing attempts to lower their greenhouse gas emissions. But the point of EPA’s state-wide caps is to force more greenhouse gas emissions: if EPA limited itself to coal plants, it could only cut emissions by 4-6% without shutting them all down. Many states requesting “compliance flexibility” were hoping to use alternate methods to make that 4-6% cut. Instead, EPA is requiring a 30% cut on average.

It’s as though you asked for an extension on a ten-page paper and your teacher said, “Sure—and since you have more time, make it twenty pages.” So EPA will have to convince the courts not only that it can sweep all power sector emissions into one rule, but also that it can use that wider scope to justify more dramatic reductions.

Will this Administration and Future Administrations Stand Behind This Rule?

This rule will not require states to cut greenhouse gas emissions until 2020, long after President Obama leaves office in 2016. And the proposed rules would run through 2030, by which time there may have been four more presidencies. So the future of EPA’s proposal will not turn on any particular politician, it will depend on the political and legal sustainability of the rules.

And EPA’s existing carbon rules have long been subject to political winds. In 2010, EPA promised to issue today’s proposal by July 2011, and finalize it by May 2012. Then, in the run-up to the 2012 election, it delayed these rules indefinitely. Now the rules are on again, and EPA says it will finalize this rule in June 2015, and will expect state implementing plans from 2016 to 2018, after President Obama has left office. Whether that schedule will stick remains to be seen.

(d) Standards of performance for existing sources; remaining useful life of source

(1) The Administrator shall prescribe regulations which shall establish a procedure similar to that provided by section 7410 of this title under which each State shall submit to the Administrator a plan which

(A) establishes standards of performance for any existing source for any air pollutant

(i) for which air quality criteria have not been issued or which is not included on a list published under section 7408 (a) of this title or emitted from a source category which is regulated under section 7412 of this title but

(ii) to which a standard of performance under this section would apply if such existing source were a new source, and

(B) provides for the implementation and enforcement of such standards of performance. Regulations of the Administrator under this paragraph shall permit the State in applying a standard of performance to any particular source under a plan submitted under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies.

(2) The Administrator shall have the same authority—

(A) to prescribe a plan for a State in cases where the State fails to submit a satisfactory plan as he would have under section 7410 (c) of this title in the case of failure to submit an implementation plan, and

(B) to enforce the provisions of such plan in cases where the State fails to enforce them as he would have under sections 7413 and 7414 of this title with respect to an implementation plan.

In promulgating a standard of performance under a plan prescribed under this paragraph, the Administrator shall take into consideration, among other factors, remaining useful lives of the sources in the category of sources to which such standard applies.

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

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Directly and Adversely Affected: The Actual Practice of the Alberta Energy Regulator

Tue, 06/03/2014 - 10:00am

By: Nigel Bankes

PDF Version: Directly and Adversely Affected: The Actual Practice of the Alberta Energy Regulator

Decisions commented on:(1) AER Letter decision to Beaver Lake Cree First Nation re CNRL’s Kirby Expansion Project; (2) AER Letter decision to Cold Lake First Nation re CNRL’s Kirby Expansion Project, (3) AER Letter decision to Fort McMurray First Nation re CNRL’s Kirby Expansion Project, (4) AER Letter decision to Kehewin Cree Nation re CNRL’s Kirby Expansion Project, (5) AER Letter decision to Oil Sands Environmental Coalition re CNRL’s Kirby Expansion Project, (6) AER Letter decision to Whitefish Lake Nation re CNRL’s Kirby Expansion Project, (7) AER Letter decision to AltaGas Ltd re Keyera Energy Ltd’s Rimbey Plant Turbo Expander Project, (8) AER Letter decision to ATCO Energy Solutions re Keyera Energy Ltd’s Rimbey Plant Turbo Expander Project, (9) AER Letter decision to NOVA Chemicals Corporation re Keyera Energy Ltd’s Rimbey Plant Turbo Expander Project

This post examines the actual practice of the Alberta Energy Regulator (AER) with respect to a number of related matters: (1) decisions by the AER as to whether a person is directly and adversely affected by an application, (2) decisions by the AER as to whether or not to hold a public hearing on an application, and (3) decisions by the AER as to whether it should disregard a statement of concern. The discussion is based on nine letter decisions of the AER in relation to two different project applications: CNRL’s Kirby in situ oil sands expansion project, and Keyera Energy’s application to enhance the extraction of liquids at its Rimbey Plant.  The interested parties who filed statements of concern (SOCs) or requests to participate with respect to the two applications include First Nations, an environmental organization, and industrial competitors. Thus the range of decisions examined here provides valuable guidance as to how the AER will exercise its discretion in relation to standing, hearing and statement of concern matters involving a number of different types of interests.

I became aware of these decisions as a result of a presentation by AER counsel Meighen LaCasse at the annual meeting of the Alberta Regulatory Forum on May 14, 2014 in Calgary. The Forum is sponsored by Alberta’s energy regulators including the AER and the Alberta Utilities Commission. Ms. LaCasse kindly provided me with copies of these decisions. My own presentation at the Forum returned to two themes that I have pursued on previous ABlawg posts namely the importance of publishing ERCB/AER letter decisions and questions relating to the AER and aboriginal consultation. This post indirectly speaks to the first of those themes.

There are four parts to this post. The first part summarizes the principal differences between the AER legislation and the previous ERCB legislation in relation to hearings and standing. The second part refers to the provisions of the AER legislation that deal with the power to make subordinate legislation (i.e. regulations and rules) and discusses the relevant rules and regulations pertaining to hearings and standing. Part three summarizes and analyzes the AER’s decisions in relation to the two applications referred to above. Part four discusses the AER’s duty to publish its decisions.

1. The principal differences between the ERCB legislation and the AER legislation with respect to the related matters of public hearings and standing

The ERCB legislation

The ERCB’s principal statute with respect to such matters as standing and hearing was the Energy Resources Conservation Act, RSA 2000, c E -10 (ERCA, now repealed). Under s 26 of that Act the Board was required to give a person a hearing “if it appears to the Board that its decision on an application may directly and adversely affect the rights of a person …”.

The AER legislation

The AER’s principal statute is the Responsible Development Act (REDA), SA 2012, c R-17.3 (REDA). ABlawg has published a good number of posts on the AER and REDA. For a sampling use AER as a search term in ABlawg’s data base or search the REDA category archives.

The following are the relevant steps under REDA.

1. The AER need only consider holding a hearing where a person has filed a statement of concern (SOC): REDA, s 33.

2. A person may only file a SOC if that person believes themselves to be directly and adversely affected by an application: REDA, s 32.

3. The AER shall hold a hearing on an application where required to do so by an energy resource enactment, when required to do so by the rules, or where required by the regulations: REDA, s 34. It is very rare for the energy resource enactments to require a hearing.  For example, the AER is only required to hold a hearing under the Oil and Gas Conservation Act, RSA 2000, c O – 6 in the rare situation under s 99 of the Act where the Lieutenant Governor in Council requires the AER to hold a hearing on the design of a compensation scheme. Similarly, under the Oil Sands Conservation Act, RSA 2000, c O-7 the only time when the AER must hold a hearing is when it is considering ordering adoption of a scheme for enhanced recovery under s 18 of that Act.

4. Where the AER holds a hearing, a person who is directly and adversely affected is entitled to be heard: REDA, s 34(3).

5. Where the AER has made a decision on an application, an “eligible person” may request a regulatory appeal: REDA, s 38. The definition of an eligible person is complex but it includes a person who is directly and adversely affected where the decision in question was made without a hearing: REDA, s 36(b).

6. The AER may make a decision on a regulatory appeal with or without a hearing but if it holds a hearing an eligible person is entitled to be heard: REDA, s 40.

The most significant practical difference between the ERCA scheme and the REDA scheme is that under the ERCA scheme a person who is directly and adversely affected was entitled to trigger the hearing at the application stage. Under the REDA scheme a person who is directly and adversely affected cannot require a hearing at the application stage.

2. The provisions of REDA that deal with the power to make subordinate legislation i.e. regulations and rules

REDA distinguishes between the power to make rules and the power to make regulations.  The power to make regulations is reserved to the Lieutenant Governor in Council (LGiC). So far as relevant here the LGiC may make regulations prescribing the circumstances in which a hearing is required in respect of an application and in respect of an appeal (REDA, s 60(a) and (d).  The AER has the power to make rules. The rules, inter alia, may address the form and content of a SOC (REDA, s 61(c)).

The LGiC addressed the matter of hearings on regulatory appeals in the Responsible Energy Development Act General Regulation, Alta Reg 90/2013. Section 4 provides that the AER shall conduct a regulatory appeal with a hearing if the concerns of an eligible person have not been addressed through any alternative process or otherwise resolved by the parties: REDA Regulation, s 4. Thus, the regulations supplement the provisions of the Act and in effect confirm that a person who is directly and adversely affected is entitled to a hearing either on the application itself or on the regulatory appeal (but not both).

The AER’s Rules of Practice, Alta Reg 99/2013 contain extensive provisions dealings with SOCs as well as decisions to hold a hearing. The Rules confirm the importance of filing a SOC in a timely manner. The AER may disregard a SOC that is filed late or on any number of possible grounds (s 6.2(1)) including on the grounds that the person “has not demonstrated that the person may be directly and adversely affected by the application.” Further it may ignore a concern (s 6.2(2)) if the AER considers that any of the following apply:

(a) the concern relates to a matter outside the Regulator’s jurisdiction;

(b) the concern is unrelated to, or relates to a matter beyond the scope of the application;

(c) the concern has been adequately dealt with or addressed through a hearing or other proceeding under any other enactment or by a decision on another application;

(d) the concern relates to a policy decision of the Government;

(e) the concern is frivolous, vexatious, an abuse of process or without merit;

(f) the concern is so vague that the Regulator is not able to determine the nature of the concern.

The Rules also list a number of factors that the AER may take into account in deciding whether or not to conduct a hearing on an application although they are, as Professor Fluker points out, largely a set of directions as to when the AER should not hold a hearing. Thus, the AER should not hold a hearing on an application where the AER is entitled to disregard a SOC or a concern under the circumstances referred to above.

The general tenor of these provisions as Professor Fluker has pointed out in his post on the Rules is to ensure that the AER will only hold a hearing where there is a person whose interests are directly and adversely affected and whose interests or concerns have not been resolved. Where there is no such person there will be no hearing.

3. The actual practice

CNRL’s Kirby Application

In the case of the Kirby project the AER made an initial decision to hold a hearing in respect of the project and accordingly issued a notice hearing asking parties wishing to participate to file submissions indicating the nature of their interest. The notice is available here. Submissions were filed by at least the following parties: Cold Lake First Nation (CLFN), Fort McMurray First Nation (FMFN), Beaver Lake Cree Nation (BLCN), Kehewin Cree Nation (KCN), the Whitefish Lake First Nation (WLFN) and the Oil Sands Environmental Coalition (OSEC). Upon review of those submissions however the AER ruled under s 9(3) of its Rules that none of those parties should be permitted to participate in the hearing. Furthermore, since that meant that there was no party left with standing the AER would no longer be holding a hearing and would instead make a decision on the application without a hearing. The hearing panel provided each of the above parties with written reasons in the form of a letter decision for its conclusions. Section 9(3) of the Rules provides that:

The Regulator may refuse to allow a person to participate in the hearing on an application if the Regulator is of the opinion that any of the following circumstances apply:

(a) the person’s request to participate is frivolous, vexatious, an abuse of process or without merit;

(b) the person has not demonstrated that the decision of the Regulator on the application may directly and adversely affect the person;

(c) in the case of a group or association, the request to participate does not demonstrate to the satisfaction of the Regulator that a majority of the persons in the group or association may be directly and adversely affected by the decision of the Regulator on the application;

(d) the person has not demonstrated that

(i) the person’s participation will materially assist the Regulator in deciding the matter that is the subject of the hearing,

(ii) the person has a tangible interest in the subject-matter of the hearing,

(iii) the person’s participation will not unnecessarily delay the hearing, and

(iv) the person will not repeat or duplicate evidence presented by other parties;

(e) the Regulator considers it appropriate to do so for any other reason.

 In support of its submissions, the BLCN stated that its members exercised treaty rights and carried out traditional activities “on lands within and adjacent to the Project area.” It also noted that part of the project area overlapped with a Fur Management Area registered in the name of a BLCN member. The First Nation filed affidavits in support and a traditional land use (TLU) report. The Panel relied on the Alberta Court of Appeal’s decision in Dene Tha’ First Nation v Alberta (Energy and Utilities Board), 2003 ABCA 372 and the practice of the Environmental Appeal Board in appearing to adopt CNRL’s contentions that in order to meet the directly and adversely affected tested it was not enough for BLCN to show that its members had the right (whether based on the relevant treaty or the Natural Resources Transfer Agreement) to use the lands in question, the First Nation must also “demonstrate actual use of land and other natural resources in the Project area by its members and a potential for those to be directly affected by the Project.” The First Nation had failed to do that in this case and had failed to take advantage of opportunities offered by CNRL to identify whether the project might directly and adversely affect BLCN or its members.

In its submission FMFN had indicated that it intended to use the hearing to raise two constitutional questions relating to the validity of s 21 of REDA (the section that provides that the AER has no jurisdiction to consider the adequacy of Crown consultation). The Panel concluded (FMFN letter at 5) that these were not matters that should be considered in a public hearing.

The panel’s decisions with respect to the other First Nations largely followed the approach taken on BLCN’s application indicating that the applications to participate all fell short in detailing how this project would affect the harvesting rights of its members. Plainly the AER was not satisfied with general information or traditional land use reports that showed evidence of use of the area or even the affidavits of members showing some use of the project area; instead the AER is signaling that it requires detailed and site specific information about use of the particular area before it will conclude that an applicant has passed the factual part of the directly and adversely affected test. The Panel’s summative comments in response to WLFN’s application are representative of the Panel’s reasoning (WLFN letter at 4):

In conclusion, the Panel has decided that the information from the WLFN harvesters does not provide the degree of location or connection between the Project and the traditional land uses that are asserted by WLFN to satisfy the directly and adversely affected test for any of the twenty-two harvesters, which WLFN stated was a representative sample of WLFN’s membership. The information in the TLU and TLU Update provides only a vague indication of traditional uses in or near the Project area, and it does not locate any WLFN uses within any specific proximity to the Project area.

Thus, concerns about cumulative impacts will perhaps never be enough. The Panel suggested as much (KCN letter at 4) with respect to KCN’s concerns “about cumulative impacts” which it dismissed as “general in nature and not related to the Project or the Project lands.” Any consideration of cumulative impacts must, by the nature of the alleged affect, reach beyond the Project lands.

In a number of the letter decisions the panel also mentioned an additional factor to the effect that industrial activities were already occurring within the project area on the basis of other approvals that had been issued to CNRL. This suggested that (WLFN letter at 4) “much of the land in the Project area has already been approved for development …”.  See also CLFN letter at 6, BLCN letter at 5, and FMFN letter at 6. It is not clear how the Panel believed this to be relevant. Perhaps it was suggesting that this was therefore a concern that already been “adequately dealt with” within the meaning of s 6.2(2)(c) of the Rules but the Panel did not make that point specifically.

OSEC is a coalition of Alberta public interest groups and individuals with a long-standing and documented interest in a range of environmental issues in the oil sands area. Its members include the Alberta Wilderness Association, the Pembina Institute and the Fort McMurray Environmental Association. OSEC’s position was (at least initially) supported by an individual with a Registered Fur Management Area (RFMA) but that person later seems to have withdrawn his support and interest. OSEC sought to present evidence about habitat disturbance in the area of the project which exceeded that prescribed in a federal recovery strategy for caribou. The AER panel gave two reasons (OSEC letter at 4) for concluding that OSEC would not even be given participation rights if a hearing were to be held. First, neither OSEC nor its members “appeared to have a tangible interest in the subject-matter of the Project application.” Second, OSEC’s concerns were “general in nature and … not related to the Project” and as a result OSEC had failed to demonstrate that its participation would materially assist the AER in its deliberations.

Keyera’s Rimbey Application

Statements of concern with respect to the Rimbey project were filed by at least three parties: NOVA Chemicals, AltaGas, and ATCO Energy Solutions. Both AltaGas and ATCO are part owners of the downstream Edmonton Ethane Extraction Plant (EEEP). They argued that Keyera’s proposal would result in a leaner feedstock entering EEEP which would reduce operational efficiency at EEEP which might in turn render EEEP non-viable. NOVA uses ethane and natural gas liquids as feedstock for its operations and sought to obtain a better understanding of the potential impacts of the project.

The AER concluded that the SOCs or the concerns could all be disregarded on several grounds. First, and in respect of both ATCO and AltaGas, under the heading of “Direct and Adverse Effect”, the AER ruled (AltaGas letter at 3) that any impact on either of them would be the direct result of the decisions of producers to have their gas removed at the Keyera facility in the field rather than leaving it in the common stream and not the result of any decision by the AER to approve the application. “At most (AltaGas at 3) the Application might have an indirect impact on EEEP as a result of reduced receipts.” Additionally under this heading the AER noted that neither company had provided adequate information to determine what impacts either might suffer. And finally under this heading it noted that since the basis of the complaints of these two parties was effectively a complaint about competition for feedstock this was not a matter on which the AER was able to make a decision. All of this led the AER to conclude that any impact on ATCO and AltaGas was remote and thus there was no direct and adverse effect on either.

The AER also put the competition point to work in concluding that it was entitled to ignore the concern on the basis that it was outside the AER’s jurisdiction and outside the scope of the application (s 6.2(2)(a) and (b) of the Rules). This was because (AltaGas at 3): “While the AER has the jurisdiction to consider whether the project is consistent with the efficient, safe, orderly and environmentally responsible development of energy resources in Alberta, it does not have the jurisdiction to compel gas producers to have their gas processed as EEEP and to protect EEEP from market forces and the competition arising therefrom. It is not within the scope of the AER’s authority in the context of this application for the AER to interfere with market competition.”

Finally, the AER took the view under s 6.2(c) of its Rules that the matter had already been decided in a previous application. This serves to draw attention to the scope of paragraph (c). Thus it applies not only with respect to the current application but to previous applications in which the same issue had been addressed. The AER in this case (AltaGas letter at 4) reasoned as follows:

Implicit in the Energy Resources Conservation Board’s approval of Keyera’s 2007 application is the determination that recovery of ethane and propane plus from the existing raw gas inlet stream from the field to the Rimbey Plant is, subject to such extraction meeting the applicable technical requirements and regulations, in the public interest. In its consideration of the Keyera 2007 application, the Board noted that “producers have the right to extract NGL in the field.” While each application before the AER must be considered on its own facts and meet the AER’s requirements, in this matter the public benefit of filed extraction of NGLs, particularly at Keyera’s Rimbey Plant, has already been determined.

This provides one more reason why the AER must make its letter decisions systematically available since the previous decision that the AER relies on is indeed a letter decision of March 13, 2008.

Observations

First, “direct and adverse affect” may be relevant at multiple points in proceedings before the AER. It is an important factor in establishing whether or not to hold a hearing, it is important in establishing the right to participate in a hearing, and it is important in assessing whether or not the AER needs to take account of a SOC.

In the case of First Nations the AER has established a very high threshold that a First Nation must meet before it can establish that it is directly affected. It is not enough for it to establish that it has rights in the area and that the proposed activity might interfere with those rights, it must also establish that it exercises its rights in that particular area. The third factor has the potential to be discriminatory. It seems unlikely that the AER would ask whether a fee simple owner actually used her land as part of determining whether that person was directly and adversely affected. Furthermore, the Supreme Court’s decision in Mikisew Cree First Nation v Canada (Minister of Canadian Heritage), 2005 SCC 69 surely establishes that if a First Nation has a treaty right (or an NRTA right) to hunt in an area any authorization by the Crown that results in a taking up of lands causes legal prejudice to the First Nation insofar as the taking up causes land to move categories (i.e. from hunting allowed to hunting not allowed) (and see also Beckman v Little Salmon/Carmacks First Nation, 2010 SCC 53 at para 13). In the case of a First Nation this prejudice is both particular and cumulative; that is to say the change of category affects both the particular lands and potentially the meaningful exercise of hunting rights within the treaty (or NRTA) area. The demanding nature of the tests suggests that a First Nation will never be able to establish direct and adverse effect based on a cumulative effects argument (either with respect to ecological concerns or with respect to its legal rights). Such a conclusion is inconsistent with the statutory mandate of the AER (inter alia to protect the environment and to ensure environmentally responsible development of the environment, REDA, s 2(1) and s 3 of the AER’s General Regulation) and Canada’s obligations under Article 27 of the International Covenant on Civil and Political Rights (see, for example, Poma Poma v Peru (2009)).

4. The AER’s duty to publish its decisions

 Section 33 of REDA requires the AER to publish its decisions in accordance with the Rules. Sections 38 and 7.1 of the Rules requires the AER to post its decisions on its website. The AER’s decision on Keyera’s application is not available on the AER’s website so far as I can determine. The AER’s publication of decision tool indicated that the AER rendered its decision on April 1, 2014 but a reader that clicks on the “view the decision” button is taken to the AER’s Integrated Application Registry (IAR) where, in conformity with the announced practice, all relevant documents will have been removed 30 days following the disposition.

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Swift Judgment in a Complex Commercial Case

Mon, 06/02/2014 - 10:00am

By: Nigel Bankes

PDF Version: Swift Judgment in a Complex Commercial Case

Case commented on: Blaze Energy Ltd v Imperial Oil Resources, 2014 ABQB 326

The Commercial Court of the English High Court is well known for its capacity to give swift judgments in complex commercial cases. This decision confirms that the Alberta Court of Queen’s Bench can offer the same service provided that the parties can agree on the procedures to be followed.

The statement of claim in this matter was filed on April 23, 2014 and on April 29 Chief Justice Wittman granted a Consent Order for an expedited trial confined to three issues. Absent an Agreed Statement of Facts the trial proceeded on the basis of filed affidavits and the transcripts of cross examination on those affidavits. The Consent Order provided that there would be no questioning or viva voce evidence. The trial concluded on May 26 and Justice Frederica Schutz acceded to counsels’ request and gave well written reasons for judgement on May 30.

The case involved two transactions (A and B) involving the purchase and sale of oil and gas assets and an interest in a natural gas processing plant (Plant) and rights of first refusal rights (ROFR) arising under two distinct agreements (the 1960 Lands Agreement and the Plant Agreement).

In Transaction A, Imperial agreed to sell its interests in certain lands to Whitecap. The sale included lands subject to the 1960 Lands Agreement which were part of a block of lands known as the West Pembina Area lands. The sale also included Imperial’s 90% interest in the West Pembina Gas Plant. This Plant which was built in 1988 processes gas from the West Pembina Area including gas from lands subject to the 1960 Lands Agreement. The ownership and operation of the Plant was governed by a Construction Ownership and Operation Agreement (the 1988 CO & O Agreement or Plant Agreement). Imperial concluded that Transaction A triggered the ROFR provision in the 1960 Lands Agreement and accordingly gave notice to Blaze of the proposed sale. Imperial attributed a value of $17 million to its interest in the 1960 Lands Agreement properties in a total transaction of $855 million. In response, Blaze made inquiries as to the additional interest (Blaze already had an 8% interest) that it might be able to acquire in the Plant if it exercised its ROFR rights under the Lands Agreement. Imperial ultimately took the view that Blaze had failed to exercise its ROFR rights under the Lands Agreement in the manner prescribed by the relevant clause.

Imperial concluded that the sale of its interest in the Plant did not trigger the ROFR in the 1988 CO & O Agreement on the grounds that the disposition fell within an exception to ROFR obligations. The exception provided that “Any Owner may, without restriction, dispose of an interest in the Plant in conjunction with the disposal of the Owner’s corresponding working interest in the lands in the West Pembina Area from which Gas is being produced into the Plant.” Imperial advised the relevant parties, including Blaze, that it was taking this position.

In Transaction B, Whitecap agreed to sell Keyera a portion of the assets that it had acquired from Imperial, specifically an 85% interest in the Plant and a corresponding interest in Gas assets in the West Pembina Area. Whitecap provided Blaze with a ROFR notice under the Lands Agreement but, relying again on the exception referred to above, did not provide a ROFR notice under the CO & O Agreement. Blaze exercised its ROFR rights under the 1960 Lands Agreement and then took the position, crucial to this litigation (at para 64) that if it acquired Whitecap’s interest in these lands Whitecap could no longer be said to be selling a “corresponding working interest” in the West Pembina Area Gas Lands to Keyera. Thus, Blaze argued, Whitecap could not take advantage of the exception in the CO & O Agreement and must therefore offer Blaze the opportunity to acquire at least some level of additional interest in the Plant.

The Consent Order directed an expedited trial of three issues:

(a)    Does Blaze have the ROFR rights it claims to have in relation to Transaction A?

(b)   Does Blaze have the ROFR rights it claims to have in relation to Transaction B?

(c)    If Blaze has ROFR rights is it entitled to specific performance?

Justice Schutz concluded that Blaze failed on all three grounds.

(a)   Does Blaze have the ROFR rights it claims to have in relation to Transaction A?

Blaze claimed a right to acquire a 4% interest in the Plant as a result of Transaction A. Blaze fixed on 4% on the basis that the 1960 Lands provided about 4% of Imperial’s production to the Plant from the West Pembina Area over the previous five years.

The short answer to this claim is that neither the 1960 Lands Agreement nor the CO & O Agreement gave Blaze any such right. Furthermore, the Agreements could not be read together to produce such a result since there was no evidence that the two agreements were intended to be connected. One only has to refer to the dates of the two agreements (1960 and 1988) and the different lands served by these two agreements to see that this must be the case.

[17] Put plainly, the 1960 Lands Agreement has nothing whatsoever to do with rights or interests in the Plant and nothing subsequent to the 1960 Agreement has changed that fact.

Blaze also claimed that Imperial’s notice under the 1960 Lands Agreement was defective on the basis that it failed to connect the Lands transaction with the Plant transaction and the later Disposition B (see para 108). For the reasons already stated this submission was doomed to failure insofar as it depended on being able to read the Agreements together, but it also meant that Blaze had failed to exercise its ROFR rights under the Lands Agreement. That was fatal: see para 123 and subsequent discussion of Pierce v Empey, [1939] SCR 247 and Chase Manhattan Bank of Canada v Sunoma Energy Corp, 2002 ABCA 286, at paras 161 et seq.

(b) Does Blaze have the ROFR rights it claims to have in relation to Transaction B?

There appears to be no issue with respect to Blaze’s rights as against Whitecap under the 1960 Lands Agreement. However, Justice Schutz had no hesitation in concluding that the exercise of Blaze’s rights under the Land Agreement could have no effect on the ability of Whitecap to claim the benefit of the exemption under the CO & O Agreement. This must be right. The two agreements are independent (at para 148) and in any event, as Justice Schutz points out (at para 144), the CO & O Agreement uses the term “corresponding” and not “identical”.

(c) If Blaze has ROFR rights is it entitled to specific performance?

Justice Schutz gave three reasons for concluding that specific performance would not be available. First, and with respect to the alleged Plant ROFR entitlement arising under Transaction B, the alleged interest was far too contingent to permit an order of specific performance (at para 158): “Blaze cannot persuade me … that there is unambiguous content or object or subject-matter to the claimed Plant ROFR … Blaze resorts to altering the express contractual language … and contorts the plain meanings” of the relevant clauses in the two agreements. Second, and with respect to the Lands ROFR under Transaction A, Blaze had failed to comply with the terms of the ROFR (see references above to Pierce and Chase Manhattan). And finally Justice Schutz was prepared to apply the clean hands doctrine to forestall claims to relief on the grounds that there was evidence that Blaze was in default under the CO & O Agreement. While this latter hardly seems to be closely enough connected to be a relevant consideration, the first two grounds are convincing. Interestingly, Justice Schutz did not find it necessary to refer to Semelhalgo v Paramadevan, [1996] 2 SCR 415 although it was certainly provided to her.

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British Columbia’s Water Sustainability Act – A New Approach to Adaptive Management and No Compensation Regulation

Wed, 05/28/2014 - 10:00am

By: Deborah Curran

 PDF Version: British Columbia’s Water Sustainability Act – A New Approach to Adaptive Management and No Compensation Regulation

Bill commented on:Bill 18 – 2014 (British Columbia), The Water Sustainability Act, 2014 Legislative Session: 2nd Session, 40th Parliament

The British Columbia Legislature gave third and final reading to Bill 18 – 2014, B.C.’s new Water Sustainability Act (“the Act”), on April 29, 2014 as the long awaited overhaul of the water management and allocation regime in B.C. As someone who teaches both municipal and water law I am pleased with the legislation. I have been so bold as to say that the Act is the best piece of environmental legislation introduced in B.C. in more than a decade. Of particular interest, in this age of if not climate change then more extreme weather events that typically involve precipitation in its liquid or frozen forms, is the way the Act strives towards an adaptive approach to water management and thus water rights. Under the new law licences issued in perpetuity will be subject to regional water sustainability plans that can reduce water diversions (ss 64-85) and subject to having their terms and conditions reviewed anytime after thirty years from when the Actcomes into force (s 23). This spectre of changing water rights may hasten a new era of water use as decision makers may amend the terms and conditions of a licence for more efficient use of water or water conservation, and may take into account the following factors when reviewing licence terms and conditions:

    • the best available technology in respect of water use efficiency and water conservation;
    • best practices in respect of water use efficiency and water conservation;
    • any increase in knowledge respecting actual stream flow or aquifer conditions;
    • the effects of climate change;
    • the licensee’s beneficial use of the water;
    • the use, operation or maintenance of works; and
    • other prescribed factors.

This attention to multiple ways by which water entitlements can be altered over time is fascinating in the context of provincial Crowns that assert their ownership or regulatory jurisdiction over natural resources and their longstanding grappling with the concept of adaptation in law. Law strives towards fixed entitlements to natural resources and we can see this impulse very clearly in water licences issued in perpetuity. The original intent in providing certainty of water use was for land owners and owners of works to be able to rely on a specific amount of water in priority to those who acquired rights to use water after they did. This reliance provided certainty of the ever important water input for investment.

However, the natural environment and hydrology change over time and those entitlements to use water may need to be altered. Indeed, one longstanding debate in the water community is how to deal with existing water rights in times of shortage and climate change where there is simply less water to go around during the summer months. In the Western United States and Australia the approach often has been to provide monetary compensation to water rights holders who are required to cut back from taking water, even over the short term, due to concerns for the environment, or to retire water rights altogether. See, for example, Tulare Lake Basin Water Storage District v United States, 49 Fed Cl 313 (2001), one of the original cases where the court found that forced reductions in water use due to flow requirements for endangered species were a physical taking of private property in the United States.

This is also the approach taken in Alberta under the Water Act, RSA 2000, c W-3 where the presumption is compensation for changes to water rights, subject to a contrary intention expressed in regulations. Not only do the terms of a deemed licence authorizing water rights prior to 1999 take precedence over the Water Act itself (see s18(2)(b)), but s 158(1) explicitly requires compensation to water licensees when the Director amends, suspends or cancels licences for conservation purposes. The changes to licences are authorized under various sections of the Water Act if an adverse effect on the aquatic environment occurs and it was not reasonably foreseeable at the time the licence was issued (see, for example, s 54(2)).

This granting of explicit property rights in a flowing and changing resource is an awkward legal and policy choice, one that is contrary even to how we treat land, which is arguably the category of property that is granted the most firm legal status as property. Of surprise to many landowners, the Canadian approach to land use is to allow governments to restrict virtually all use of land by, for example, zoning regulation without compensating the rights holder. This “no compensation” principle is codified in s 914 of the B.C. Local Government Act, RSBC 1996, c 323 and s 621 of the Alberta Municipal Government Act, RSA 2000, c M-26 which essentially state that no compensation will be paid for changes in the value of land caused by specified decisions made under a land use bylaw or permitting function. It is only when regulation takes away virtually all incidents of private ownership that the regulation will be found to be improper.

These “regulatory takings” or regulatory expropriations are few and far between in Canada. Although we hear about successfully argued “takings” cases in the U.S. Courts, in Canada a court has never found land use regulation to result in a regulatory expropriation. See Mariner Real Estate Ltd v Nova Scotia (Attorney General) 1999 CanLII 7241 (NSCA) for an excellent discussion of this area of law and Canadian Pacific Railway Co v Vancouver (City) [2006] 1 SCR 227, 2006 SCC 5 for the most recent Supreme Court of Canada discussion in the land use context. Courts have awarded compensation for loss of mineral rights upon the creation of a park (R v Tener, [1985] 1 SCR 533; Casamiro Resource Corp v British Columbia (Attorney General), 1991 CanLII 211 (BCCA)) or for the removal of all economic viability including goodwill (Manitoba Fisheries Ltd v The Queen, [1979] 1 SCR 101).

Returning to the context of water and contrary to some international trends in water law, with the Water Sustainability Act the B.C. legislature has explicitly adopted this “no compensation”

principle (s 121), and created a variety of ways to adapt water entitlements as hydrology and the natural environment changes.

The “no compensation” language reads, in part:

 Except as otherwise provided in this Act or by regulation, no compensation is payable by, and no legal proceedings may be commenced or maintained against, the government or any other person for or in relation to loss or damages arising from an effect on… rights under a licence or use approval…resulting under the provisions of this Act, the regulations or an order from…the change in precedence of water rights, a restriction or prohibition on the exercise of rights, or a change or the imposition of new terms and conditions on an approval (s 121).

There are, of course, two exceptions to this no compensation for changes to water rights rule. Cabinet may make regulations respecting the payment of compensation by the government (s 134), and if a water sustainability plan submitted to the minster recommends a significant change in respect of a licence or drilling authorization, the plan must contain a detailed proposal recommending responsibility for compensating the licensee or drilling authorization holder (s 74(2) – (3)).

While these exceptions have the ability to considerably weaken the flexibility with which water reallocation and reduction in water use will occur, this “no compensation” principle is correct if we apply our high tolerance in Canadian law for regulation. If fully applied this new approach could allow B.C. to take an adaptive approach to water management that recognizes hydrological and environmental changes over time. Like regulation in the land use context, water licensees will be required to get used to water regulation in the public interest that may change water entitlements based on ecosystem needs as we adapt to a new normal of climatic fluctuations. As uncomfortable as uncertainty of rights are to us in law, the Act brings a refreshing approach to future climatic unpredictability. Most productive will be the watershed-specific conversations that will result in unique water sharing arrangements and a balancing of interests when flows wane.

Deborah Curran is Hakai Professor in Environmental Law and Sustainability at the Faculty of Law and the Environmental Law Centre, University of Victoria. She presented a seminar at the University of Calgary Faculty of Law in March 2014 entitled “Can B.C.’s New Water Sustainability Act Plug the Leaks?”

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Challenging the Farm Work Exclusions in the Employment Standards Code

Tue, 05/27/2014 - 10:00am

By: Graham Martinelli and Andrew Lau

PDF Version: Challenging the Farm Work Exclusions in the Employment Standards Code

Legislation commented on:  Employment Standards Code, RSA 2000, c E-9

Editor’s Note

This is the fourth and final post in the series written by students in Law 696: Constitutional Clinical in the winter term of 2014.  For the other posts see here, here and here.).

Introduction

In 2014, an adolescent (age 12-14)working in the food industry in Alberta is restricted from participating in any work involving a deep fryer in a kitchen because deep fryers are deemed to be too unsafe for adolescents to operate (Employment Standards Regulations, Alta Reg 14/1997, s 51(a)).  Regardless of the task engaged in, adolescents working in the food industry must be accompanied by an adult older than 18 years old whenever they work (Employment Standards Regulations, s 53(3)(b)). Yet, if that same child, or their younger sibling, worked on a farm instead of in a kitchen there would be no similar restrictions on the conditions of their employment. Farm children of any age younger than 15 can operate dangerous heavy equipment without adult supervision, and the laws of Alberta do almost nothing to regulate this scenario.

Our task in this semester’s Constitutional Law Clinical program at the University of Calgary Faculty of Law was to challenge the farm worker exclusions present in the Employment Standards Code, RSA 2000, c E-9 (the “ESC”) which result in several absurdities including the one outlined above.

The ESC is one of several pieces of Alberta labour and employment legislation that exclude farm workers from several of their key provisions (for posts on other exclusions see here, here and here.).  We have divided the ESC exclusions relating to farm workers into three categories for the purposes of our analysis: Pay and Vacation exclusions (Part 2, Divisions 4-6 of the ESC), Hours of Work exclusions (Part 2, Division 2 of the ESC), and the aforementioned Child Labour exclusions (Part 2, Division 9 of the ESC).  These exclusions can all be challenged under s 7 and s 15 of the Canadian Charter of Rights and Freedoms (the Charter).

Information on the Government of Alberta’s likely justifications for these exclusions is sparse given the dearth of records of legislative debates (Hansard) from the time period in which they were originally written and the general lack of ESC-specific debates in the time period where we do have good Hansard records.  Nonetheless, from the information we do have, the exclusions appear to place farms, and family farms in particular, in a privileged position due to their key role in Alberta’s economic history.  As such, the legislative purpose behind the exclusions appears to be the dual goals of reduction of economic and administrative costs, as well as increasing access to labour for farm owners.

Section 7

Section 7 protects the “right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.” While there are some arguments to be made under the other s 7 rights, the strongest arguments will likely emerge from the right to security of the person.  If evidence can be lead to show that the exclusions lead to an increased likelihood of harm to farm workers then it is likely that a prima facie breach of security of the person would exist.  The Hours of Work and Child Labour exclusions will likely provide evidence favourable to reaching these conclusions.  Precedent in this area suggests that the harm suffered does not have to be particularly burdensome (see Chaoulli v Quebec, 2005 SCC 35 at para 105; Canada v PHS Community Services Society, 2011 SCC 44 at para 93).  It is also noteworthy that the same precedent can be used to support a breach of right to life as well if the evidence compiled is strong enough to mount such a claim.

Section 7 is qualified by the requirement that violations of rights are acceptable if they are in accordance with the principles of fundamental justice.  In this regard there are strong arguments that the Hours of Work and Child Labour exclusions are either arbitrary or overbroad, and depending on the evidence disproportionate (for definitions of these principles see Canada (Attorney General) v Bedford, 2013 SCC 72). The strongest arguments are as follows:

Arbitrariness – Children lack the capacity to safely and competently carry out much of the work farm workers need to do, so excluding them from protection under the ESC does not meaningfully meet the objectives of increasing access to labour nor meaningfully decrease costs.

Overbreadth – All of the exclusions are targeted at the ‘unique’ nature of farm work, which is usually justified as relating to seasonal busy periods such as the harvest or calving.  That the exclusions apply to work outside these busy periods is clear evidence of their overbreadth.  The exclusions also appear to target the ‘family farm’ but are also operative for feedlots with hundreds of employees – this is again clearly overbroad.

Disproportionality – If there is strong evidence that injury and mortality rates amongst farm workers (both children and adults) are significantly worse than those of protected workers, then this will offer a compelling argument that the exclusions are disproportionate.  If children are getting killed or maimed as a result of the exclusions then it will be exceedingly difficult for the government to argue that this harm to individuals is a proportionate price to pay for minor financial relief to farm owners.

If the violation of farm workers’ rights to life or security of the person are found to be arbitrary, overbroad, or grossly disproportionate, the violations will be contrary to the principles of fundamental justice, resulting in a breach of s 7 of the Charter.

Section 15

Section 15(1) of the Charter provides that “Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability”.  In R v Kapp , 2008 SCC 41 at para 17, the Supreme Court set out the most recent version of the test to determine whether a law violates s 15. In order for the court to find that a law (or part of a law) violates s 15, the claimant must show that the challenged law (1) creates a distinction based on an enumerated or analogous ground, and (2) creates a disadvantage by perpetuating prejudice or stereotyping. Both components of the test must be satisfied to establish that a law violates s 15.

The first step of the test requires the claimant to show that they received differential treatment under the challenged law, and that the differential treatment was a result of the claimant belonging to a group that exhibits at least one of the characteristics set out in s 15 (race, national or ethnic origin, colour, etc.) or a characteristic that is analogous to them. The ESC excludes workers from key portions of the Act based on their employment on a farm or ranch.

Although agricultural workers are clearly subject to differential treatment under the ESC, the basis for that differential treatment does not fit within any of the characteristics listed in s 15 of the Charter. Therefore, a key challenge to successfully arguing that the ESC violates s 15 is successfully arguing that the statute makes a distinction based on a ground analogous to the listed characteristics. There are at least two possible grounds that can be put forward as analogous grounds. The first is the ground of ‘occupational status as an agricultural worker’. Since the ESC explicitly contemplates that employees on farms and ranches should receive less protection under the statute, this is the most obvious analogous ground we can argue. The second analogous ground that can be argued for is the ground of ‘immigration status as a temporary foreign worker’.

As noted in the posts on the other statutes, the main difficulty with arguing a s 15 violation on the basis of occupational status as an agricultural worker is establishing that such a characteristic is an analogous ground. The Supreme Court in Corbiere v. Canada, [1999] 2 SCR 203, stated that an analogous ground is one that is based on “a personal characteristic that is immutable or changeable only at unacceptable cost to personal identity”, and is “based on characteristics that we cannot change or that the government has no legitimate interest in expecting us to change to receive equal treatment under the law” (at para 13). There have been several previous cases in which occupational status has been argued to be an analogous ground, but the argument has never been successful. However, the Supreme Court in Baier v. Alberta, 2007 SCC 31, when deciding against the claimant’s s 15 challenge, stated that it could not find any basis for finding that occupational status is an analogous ground “on the evidence presented in [that] case”, suggesting that such an argument could be successful in the future, if sufficient evidence was presented (at para 64). In her concurring opinion in Dunmore v. Ontario, 2001 SCC 94, Justice L’Heureux Dubé stated that “there is no reason why an occupational status cannot, in the right circumstances, identify a protected group.”  She found that the occupational status of agricultural workers constituted an analogous ground, since the government had no legitimate interest in expecting agricultural workers to change their employment status to obtain equal treatment, and due to their poor socioeconomic circumstances agricultural workers could change their occupation only at great cost (at paras 166-169). From these cases, it looks as if the chances for successfully arguing that occupational status as an agricultural worker should be included as an analogous ground may succeed with strong evidence.

It will be easier to successfully argue that immigration status as a temporary foreign worker (“TFW”) is an analogous ground, given the similarities of the group with non-citizens, which the Supreme Court has already accepted as an analogous ground in Andrews v Law Society of British Columbia, [1989] 1 SCR 143. As the ESC does not explicitly set apart TFWs for differential treatment, it will be more challenging to show that the statute actually makes a distinction based on this ground. In order to satisfy the first step of the Kapp test, we must show that TFWs are disproportionately disadvantaged by the exclusions in the ESC when compared with workers who are not TFWs. It can argued that the exclusions in the ESC interact with the disadvantages that TFWs already experience, resulting in adverse effects that are more severe than what non-TFW workers experience. For example, many TFWs are prohibited from working for other employers during their stay in Canada unless they go through a lengthy process to obtain a new Labour Market Opinion (see Temporary Foreign Workers: A Guide for Employees). This means that many TFWs are afraid to ‘rock the boat’ for fear of being fired and unable to find alternative employment, or worse, deported (the recent Tim Hortons scandal is illustrative). When combined with the reduced protections under the ESC, TFWs working as agricultural workers are in a difficult place indeed.

If the first step of the Kapp test can be satisfied on either of the above grounds, the second step may be satisfied fairly easily. To pass the second step, we must show that the ESC creates a disadvantage by perpetuating prejudice or stereotyping. The Supreme Court in Kapp set out four “contextual factors” to assist in identifying such discriminatory attitudes (2008 SCC 41 at para 19). These factors are the: (1) pre-existing disadvantage of the claimant group, (2) degree of correspondence between the differential treatment and the claimant group’s actual circumstances, (3) whether the law has an ameliorative purpose or effect, and (4) nature of the interest affected. More recently, a majority of the Court in Quebec (Attorney General) v A, 2013 SCC 5, suggested that perpetuation of disadvantage may be sufficient to meet the second step of this test without proof of stereotyping or prejudice (see para 327 per Abella J), though in a concurring judgment Chief Justice McLachlin relied on the contextual factors.

Regarding the first factor, the fact that agricultural workers have been excluded from employment standards, workplace safety, workers’ compensation, and labour statutes since the early 20th century is clear evidence of pre-existing disadvantage (see The Labour Welfare Act, SA 1943, c 5, s 3; The Hours of Work Act, SA 1936; The Workmen’s Compensation Act, SA 1908, c 12, s 2). These exclusions have persisted despite the fact that the agricultural industry has a higher workplace injury rate than most other sectors, which further establishes that agricultural workers have experienced long-time disadvantage in Alberta (see Occupational Injuries and Diseases in Alberta). The pre-existing disadvantages experienced by TFWs have already been discussed above, and are equally applicable here. The perpetuation of historic disadvantage by the ESC exclusions may be sufficient to establish a violation of s 15.

As for the second factor, there is arguably little correspondence between the differential treatment and the claimant group’s actual characteristics. The typical justification for the exclusion of agricultural workers is that the unique nature of agricultural work (i.e. its seasonal and weather-dependent nature) requires that employees work longer hours in order to make harvest deadlines. Another common justification is that it would be too economically burdensome for small farms to comply with employment standards and similar legislation. The problem with this reasoning is that it is contradicted by real-life experience. For example, after Ontario was required to include agricultural workers in its labour relations legislation in Dunmore, farms in Ontario did not experience a significant, sustained decline in their net income, which is what one would expect if the nature of the agricultural industry required agricultural workers to be excluded (see Statistics Canada Table 002-0053). Additionally, other seasonal, weather-dependent sectors such as the construction industry are able to fulfill labour needs by simply hiring more workers.

The third factor is not particularly relevant here, as the exclusions of the ESC are not aimed at ameliorating some disadvantage experienced by a specific group, and also do not have such an effect.

The final factor also weighs in favour of finding that the ESC creates a disadvantage by perpetuating prejudice and stereotypes, as the effects of the exclusions are quite severe. The exclusions deny to agricultural workers basic employment rights that many Canadians possess and take for granted. The rights affected by the exclusions are also of high societal significance. It would not be a reach to presume that most Canadians would be appalled to hear that the ESC allows for practices such as employing children under 15 to work over 12 hours a day with no holidays or vacation, even during school hours.  The effects are also severe on temporary foreign workers, whose rights and avenues of recourse are already limited even without the exclusions in the ESC.

In summary, if it can be shown that the ESC creates a distinction based on the ground of ‘occupational status as agricultural worker’ or ‘immigration status as temporary foreign worker’, then there is a good chance that the exclusions in the ESC of agricultural workers from various protections will be found to violate s 15 of the Charter.

 Section 1

In Bedford, McLachlin CJ stated that the question to be asked in a s1 analysis is, “whether the negative impact of a law on the rights of individuals is proportionate to the pressing and substantial goal of the law in furthering the public interest” (at para 125).  Whether a law is reasonable and demonstrably justified in a free and democratic society is determined by its adherence to the test arising from R v. Oakes, [1986] 1 SCR 103 at 138-139.  Professor Hogg has distilled the original judgment into four criteria that that a law must satisfy in order to be saved by s 1:

1)      A Sufficiently Important Objective: The law must pursue an objective that is sufficiently important to justify limiting a Charter right

2)      Rational Connection: The law must be rationally connected to the objective

3)      Least Drastic Means: The law must impair the right no more than is (“reasonably”) necessary to accomplish the objective.

4)      Proportionate Effect: The law must not have a disproportionately severe effect on the persons to whom it applies. (Peter W Hogg, Constitutional Law of Canada, 5th ed, ch 38 at 18 citing Oakes at paras 138-139; see also Dunmore at para 56)

It should also be noted that there is some indication that no violation of a principle of fundamental justice found under a s7 analysis could ever be saved by a s1 application, but as of yet this remains uncertain (Hogg, ch 47 at 4). In Bedford, McLachlin CJ seems to address this uncertainty by contrasting the purposes of the principles of fundamental justice and s1.  She contends that s7 deals with the impugned law’s impact on individuals while s1 does the same in relation to the public interest (at para 125).

With all due respect to the Chief Justice, this distinction does not make sense in application.  That a law has a sufficiently important objective, is rationally connected to its objective, and accomplishes its goal in the least drastic manner are not significantly affected by a distinction between the individual interest and the public interest.  Further, a s1 disproportionality analysis can only be made in reference to proven evidence of harm to an individual so the distinction the Chief Justice outlined would have minimal impact here as well. What this means practically for a lawyer alleging a s7 breach and denying a s1 defense is that the arguments and evidence led will be virtually identical for both.

An application of the facts to the s1 test returns a generally favourable result.  In Dunmore the Supreme Court of Canada recognized the protection of the family farm as a sufficiently important objective so we are unlikely to be successful arguing to the contrary.  Rational connection can be rebutted in the case of the Child Labour exclusions on the basis that children offer no cost savings as compared with an adult in the context of filing an employment role, but generally the exclusions appear to be rationally connected with their objective.  The least drastic means analysis will provide strong opportunity for argument.  The exclusions could target busy periods specifically, or set minimum work age and alternative education options for child workers.  The disproportionality analysis will depend on the severity of the evidence of harm that we will be able to gather; the greater the evidence of harm, the greater the likelihood that the exclusions will be found to be disproportionate.

International Law

The Charter-based arguments above may be further strengthened by Canada’s obligations in the international sphere. Although international treaties and conventions may not be strictly binding on Canada, the Courts may nevertheless be influenced by international law when interpreting whether a statute violates the Constitution (see e.g. Baker v Canada, [1999] 2 SCR 917 at 70).

Article 10(3) of the International Covenant on Economic, Social, and Cultural Rights, which Canada has signed and ratified, states that, “[s]tates should … set age limits below which the paid employment of child labour should be prohibited and punishable by law” (16 December 1966, 993 UNTS 3, Art 10(3)).  The exclusions in the ESC violate Article 10 by allowing children of any age to work on farms and ranches. However, the word “should” in Article 10 may dampen the urgency of the provision.

Article 32 of the Convention on the Rights of the Child, another convention that Canada has ratified, uses more obligatory language, explicitly stating that state parties must “recognize the right of the child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral or social development” (20 November, 1989, 1577 UNTS 3, Art 32). The Convention goes on to oblige states to enact legislation and take other administrative, social, and educational measures to provide for a minimum age (or ages) for employment, appropriate regulations for work hours and conditions, and for effective measures to enforce the above. Again, the exclusions in the ESC clearly contravene this international convention by failing to regulate the hours, work conditions, or minimum age for children employed as farm workers.

Conclusion

There are several opportunities to challenge the ESC exclusions based on a breach of Charter rights.  In particular, there are reasonable arguments to be made in the context of security of the person providing that sufficient evidence of harm can be admitted.  Challenges raised in the context of the Child Labour exclusions should be particularly compelling, as the exclusions seem to be poorly and overly simplistic attempts to address the legislative objective as defined herein.  Depending on the evidence of harm that can be gathered, there is potential to strike this exclusion altogether based on s 7.  Likewise, the Pay and Vacation exclusions, and the Hours of Work exclusions appear to be too broadly constructed to survive close judicial scrutiny.

There is also a fairly solid case to be made that the exclusionary provisions in the ESC violate s 15 of the Charter so long as we can establish occupational status as an agricultural worker as an analogous ground, or show that the exclusions have a disproportionately adverse effect on temporary foreign workers. Given the existing jurisprudence, strong, cogent evidence will be required to successfully argue for the inclusion of occupational status as an agricultural worker as an analogous ground. However, cases like Baier and the concurrence in Dunmore suggest that such an endeavor is not altogether impossible. Showing that agricultural workers are disproportionately affected by the exclusionary provisions in the ESC is somewhat less challenging, but will still require strong evidence to be successful.

If successful, these arguments would support the conclusion that the exclusions of agricultural workers from the ESC should be struck down under s 52 of the Constitution Act, 1982.

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What is “Advice”? Supreme Court Exempts Policy Options from Access to Information Request

Mon, 05/26/2014 - 10:04am

By: Sarah Burton 

Case commented on: John Doe v Ontario (Finance), 2014 SCC 36 (CanLII)

In this case, the Supreme Court of Canada considered whether certain government documents constituted “advice” under the Freedom of Information and Protection of Privacy Act, RSO 1990, c F.31, thus exempting them from disclosure in an access to information request. In making this determination, the Court balanced two competing and important policy interests: the public’s interest in accessing government information, and the government’s interest of obtaining full and frank opinions from public servants. The Court claimed that its decision to protect public service candour was compelled by principles of statutory interpretation. A detailed examination of the case demonstrates that the judgment, while defensible, was actually less inevitable than the Court would like us to believe.

Factual Background

The Ministry of Finance (the Ministry) amended a provision of the Corporations Tax Act, RSO 1990, c C-40 that eliminated a loophole for tax haven corporations. The law was partially retroactive. A tax lawyer (John Doe) made a request pursuant to the Ontario Freedom of Information and Protection of Privacy Act, RSO 1990, c F-31 (FIPPA) regarding the amendment – and particularly its retroactivity. Pursuant to this request, the Ministry located several drafts of a policy option paper (the Policy Options). The Policy Options examined possible effective dates for the relevant amendments, and indicated which options were undesirable. It also made a statement from which the author’s recommendation could easily be inferred (para 5). One of the options was eventually enacted (para 6).

The Ministry refused to provide the Policy Options to John Doe, claiming that they constituted advice to the government from a public servant. Pursuant to s 13(1) of the FIPPA, a public servants’ advice or recommendations can be exempted from disclosure:

13 (1) [Advice to government] A head may refuse to disclose a record where the disclosure would reveal advice or recommendations of a public servant, any other person employed in the service of an institution or a consultant retained by an institution.

The Information and Privacy Commissioner (IPC) held that the Policy Options were not advice, and ought to be disclosed. The IPC reached this conclusion after determining that, in order to constitute “advice”, the Policy Options must:

  • suggest a course of action to be accepted or rejected by the person being advised; and
  • have been communicated to a decision maker (para 8).

There was no clear evidence that the Policy Options were provided to anyone.

The Ministry brought an unsuccessful application for judicial review, and appealed that dismissal to the Ontario Court of Appeal.

The Court of Appeal found that the IPC’s decision was unreasonable. In its view, there was no need to prove that information was communicated to a final decision maker in order to constitute advice. Moreover, there was no need to show a single course of action was recommended (para 14). These restrictions, in the Court of Appeal’s view, would strips 13 of any real meaning (para 15, citing with approval the reasoning in Ontario (Finance) v. Ontario (Information and Privacy Commissioner) 2012 ONCA 125 at para 29).

The Supreme Court of Canada’s Decision

The Supreme Court of Canada agreed with the Ontario Court of Appeal — the IPC’s decision was unreasonable. Justice Rothstein grounded the Court’s unanimous decision in principles of statutory interpretation. He conducted a detailed examination of s. 13’s text, the context of the information request, the FIPPA’s legislative history, and the purpose of the s. 13(1) exemption.

Section 13’s Text

Section 13(1) of the FIPPA exempts a public servant’s “advice or recommendations” from disclosure. While “advice” and “recommendations” are not defined in the FIPPA, common sense dictates that the words be given distinct meanings, lest they be redundant (para 24).

The IPC adjudicator held that, to constitute “recommendations or advice” the document must suggest a “course of action that will ultimately be accepted or rejected by the person being advised” (para 23). While Rothstein J. agreed that this definition encompassed recommendations, he held that advice was a broader term. Because the IPC adjudicator failed to consider and apply a distinct definition for advice, it was unreasonable (para 24).

The Context of the Complaint

Rothstein J. then considered whether policy options were likely considered advice by legislative drafters.

He noted that, while policy options vary greatly in content, they typically provide more than objective data — they filter information, provide an “evaluative analysis” and sometimes (like the present case) provide guidance on the desirability of the listed options (para 26).

With that backdrop, Rothstein J. made several inferences about the nature of policy options, and their interaction with the FIPPA.

First, he noted that a federal case dealing with a similarly worded section of federal legislation (the Access to Information Act, RSC 1985, c A-1) found policy options to constitute advice (see: 3430901 Canada Inc. v. Canada (Minister of Industry), 2001 FCA 254 at paras 61-64 [Telezone]).

Second, he was influenced by s 13(2) of the FIPPA, which provides a list of documents that must be produced, whether or not they constituted “advice” or “recommendations” under s 13(1). To Rothstein J., s 13(2) demonstrated that legislative drafters knew that the word “advice” was open to very broad construction (para 29). Policy options were not on s 13(2) list – a fact that was “telling” in Rothstein J.’s view (para 33).

Finally, s 13(3) of the FIPPA held that disclosure could not be refused where the head of an institution publicly cited the record as the basis for reaching a decision. The Policy Options were not cited publicly. Rothstein J. extrapolated that, where an institution did not publicly cite a record as the basis for reaching a decision, it could not be compelled (para 34).

Legislative History of the FIPPA

The claimant relied on the Williams Commission Report (the report upon which the FIPPA was based) to demonstrate that policy options were not intended to fall within the scope of “advice” under s. 13(1) of the FIPPA (para 36).

Rothstein J. was not persuaded, and declined to give the Report anything but “limited weight” (para  36). He adopted this view because:

  •  the wording ultimately selected for s. 13 was not proposed in the Williams Commission Report (paras 36, 37);
  • there was an 8 year gap and a change of government between the Williams Commission Report and the FIPPA (para 38); and
  • the wording of s 13 was substantively similar to the federal Access to Information Act, which was enacted after the Williams Commission Report was published (para 39).

As such, while it was clear the FIPPA was based on the Williams Commission Report, Rothstein J. did not accept that it reflected the scope of s 13(1) (para 39).

 Purpose

Finally, Rothstein J. considered the purpose of the FIPPA, of s 13(1) specifically, and of the competing policy objectives at play. On the one hand, increased transparency in the government is a valid social objective. As such, the FIPPA establishes a presumption of granting access (para 41).

On the other hand, however, s 13(1) exists to protect the ability of public servants to provide full and frank advice. The Williams Commission Report was concerned that failing to exempt public service advice or recommendations risks the candid, complete nature of public service opinions, and the political neutrality (real and perceived) of Canada’s civil service (paras 43, 44).

Rothstein J. accepted that the Williams Commission Report outlined the purpose of s 13(1). He held that those features were essential to the public service, and that the forced disclosure of advice or recommendations “risks introducing actual or perceived partisan considerations into public servants’ participation in the decision-making process” (para 45).

Rothstein J. concluded that including the Policy Options within the meaning of “advice” accorded an appropriate balance between s 13(1) and the FIPPA to preserve an effective public service while providing meaningful access to information (para 46).

Therefore, the Policy Options were advice, and were exempted from disclosure.

Commentary

Rothstein J.’s judgment that the IPC adjudicator’s decision was unreasonable is defensible. Demanding that all “advice” must suggest a single course of action unacceptably conflates the words “advice” and “recommendation” into the same concept. This is redundant and does not accord with principles of statutory interpretation.

In addition, there is no basis to conclude that advice has to be communicated to the final decision maker to be exempted from disclosure. This would create a troubling paradox whereby all drafts of a final opinion would be producible, but the final version itself would be held back. This defeats the entire purpose of the exemption (para 49).

With that said, Rothstein J.’s ultimate conclusion that the Policy Options (and all policy options generally) are “advice” is somewhat less convincing. To explain, Rothstein J. appears to contradict himself when he initially dismisses the Williams Commission Report because its recommendations did not make it into the final draft of s 13(1). However, six paragraphs later, he relies on the Williams Commission Report as providing an accurate description of s 13(1)’s purpose.

Rothstein J. implicitly acknowledges this inconsistency at paragraph 43 of his decision in stating “[a]lthough I would not give the report much weight in defining the scope of s. 13(1), I accept that its discussion of the purpose of s. 13(1) is accurate.” This acknowledgement, however, completely fails to explain why it was appropriate to rely on the Williams Commission Report to explain the purpose of s 13(1) when, as he pointed out, s 13(1) bore no resemblance to the recommendations in that Report.

Secondly, Rothstein J. was influenced by federal legislation and a Federal Court of Appeal judgment that policy options constituted advice under the federal Access to Information Act, RSC 1985, c A-1 (para 28, discussing Telezone).  Later, however, he refused to assign any weight at all to the legislative treatment of policy options in other provinces. Instead, he dismissed this information from other provinces as “not conclusive” (para 40).

And lastly, while Rothstein J. referred to the balancing of interests and the public’s valid need for a transparent government, the vast majority of his discussion is spent defending the candour of the public service and political neutrality.

Rothstein J. did not consider the extent and frequency with which policy options shape the lives of Canadians in meaningful and significant ways. In this case, John Doe had arranged his clients’ tax liability in compliance with the laws in force at the time. The amendments at issue were retroactive. Rothstein J. declined to ask whether the public (and John Doe’s clients) had a right to know why an exceptional amendment was made to render their previously legal activities retroactively illegal.

This decision will undoubtedly affect access to information requests in the future. Policy options, which are commonplace within the civil service, will now likely be withheld from disclosure, despite the fact that they contain relevant information on government initiatives that affect all Canadians. Given these implications, it is important to be aware that while Rothstein J.’s decision may be logically defensible, it was not a foregone conclusion. Indeed, it was much more discretionary than the judgment would lead us to believe.

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