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The South China Sea Award and the Vienna Convention on the Law of Treaties

Tue, 08/02/2016 - 10:00am

By: Nigel Bankes

PDF Version: The South China Sea Award and the Vienna Convention on the Law of Treaties

Decision Commented On: Award on the Merits of the Annex VII Tribunal, In the Matter of the South China Sea Arbitration, The Republic of the Philippines v The People’s Republic of China, 12 July 2016

The Annex VII Tribunal in the South China Sea Arbitration handed down its decision on the merits in the dispute between the Philippines and China on 12 July 2016. The dispute between the parties involves China’s extensive maritime claims in the South China Sea (many within the context of China’s so-called nine dash line); claims in relation to fishing activities by Chinese flagged vessels; and claims in relation to China’s dredging and construction activities associated with reclamation activities on a series of maritime features in the South China Sea. The Tribunal ruled in favour of the Philippines on almost all issues in its 479 page unanimous and comprehensive decision. There are already a number of posts on the Award; see, for example the useful first thoughts offered by Doug Guilfoyle on the blog of the European Journal of International Law.

Introduction

This post examines the Tribunal’s approach to some of the interpretive issues raised in the course of its decision on the merits. For the last nine months or so I have been examining the interpretive approaches of the three main types of tribunal that may have jurisdiction to consider disputes under section 2 of Part XV of the Law of the Sea Convention (LOSC) (Compulsory Procedures Entailing Binding Decisions). The three types of tribunals are: (1) ad hoc arbitral tribunals under Annex VII of LOSC, (2) the International Tribunal of the Law of the Sea (ITLOS), and (3) the International Court of Justice (the ICJ). As part of that research, one line of inquiry was to examine how closely the different tribunals adhere to the interpretive approach demanded by Articles 31 and 32 of the Vienna Convention on the Law of Treaties (VCLT). I am also interested in the question of whether it is possible to identify distinctive interpretive approaches as between the different types of tribunals (see Joost Pauwelyn and Manfred Elsig, “The Politics of Treaty Interpretation: Variation and Explanations Across International Tribunals” in J Dunoff and M Pollack, eds, International Law and International Relations: Taking Stock (Cambridge: Cambridge University Press, 2013) 445). One of my hypotheses is that one might expect “new” tribunals (e.g. ITLOS) and tribunals where jurisdiction is contested (and especially to the point of non-appearance as in Arctic Sunrise (Jurisdiction and Merits) and South China Sea) to be particularly concerned to establish and maintain their legitimacy. This might lead them not only to extend all possible procedural protections to the non-appearing party (which was certainly the case here), but also to hew closely to the interpretive rules of the VCLT insofar as they demand, whether by treaty or by custom, a particular methodological approach to the exercise of treaty interpretation.

Until this Award my general assessment was that it was very difficult to discern any difference in the manner in which any of these three types of tribunals applied articles 31 and 32 of the VCLT. Of course, all three types of tribunals refer from time to time to these articles of the VCLT (both in majority and separate opinions) and in some very few cases (e.g. ITLOS, Sea Bed Disputes Chamber, Advisory Opinion on the Area, esp at paras 57 et seq.) somewhat systematically, but there was certainly no consistent self-conscious practice of applying the provisions and no consistency of practice within any of the three categories of tribunal. To take but one example, this same Annex VII Tribunal in its Award on Jurisdiction and Admissibility only refers to the VCLT at paras 176 and 182 in the context of emphasising that while the Tribunal could have no jurisdiction with respect to an alleged breach of the Convention on Biological Diversity (CBD) it could resort to the CBD (applying article 31(3)(c) of the VCLT) for assistance in interpreting articles 192 and 194 of LOSC. The arbitral award in the modern era dealing with law of the sea issues which (until this Award) perhaps most systematically applied the VCLT interpretative rules was the non-Annex VII ad hoc arbitral award in Filleting in the Gulf of St. Lawrence (La Bretagne (Canada\France) Arbitration) (the official French version is available here, an English translation is reproduced in (1986) 82 ILR 590).

In this post I will comment on the manner in which this Annex VII Tribunal approached the interpretive issues with which it had to grapple, and in particular its interpretation of article 121, dealing with the Regime of Islands. It is, I think, the most sophisticated example of the application of the VCLT rules to the Law of the Sea Convention that we have seen to date. That this should be so is hardly surprising since the interpretation and application of this article was the lynchpin on which the tribunal’s jurisdiction and thus its substantive rulings on the merits turned. For the sake of completeness I will also comment on the manner in which the Tribunal applied other articles of the VCLT in the course of its award.

Treaty Interpretation and the Preservation of Historic Rights

The Tribunal first refers to articles 31 and 32 of the VCLT in the context of the Philippines’ Submissions 1 and 2. In these submissions the Philippines sought to have the Tribunal declare that China could claim no maritime entitlements beyond those accorded by LOSC and that any claims of historic rights, including those related to the nine dash line that extended beyond rights accorded by LOSC were without lawful effect. The principal interpretive issue therefore (at para 234(a)) (all subsequent paragraph references in square brackets as follows [234(a)]) was whether there was any room to contend that the provisions of the LOSC, and in particular those dealing the exclusive economic zone (EEZ) and continental shelf, allowed for the preservation of historic rights (as opposed to title) to extended maritime zones that were at variance with those provisions.

The Tribunal began by acknowledging that the text of the Convention did not expressly address the issue with the result that the question for the Tribunal was “whether the Convention nevertheless intended the continued operation of such historic rights, such that China’s claims should be considered not incompatible with the Convention.” [239] The Tribunal concluded that such claims of historic rights (as distinct from historic bays and title) did not survive the adoption of the Convention. In reaching that conclusion the Tribunal referred to both “the text and context of the Convention” (implicitly but not explicitly recalling the language of article 31 of the VCLT) and then the supplementary means of interpretation (and here explicitly referring to article 32 of the VCLT).

As for the text and context, the Tribunal referred to the main EEZ provisions of LOSC (articles 56, 58 & 62) pointing both to the language of exclusivity and noting that these provisions expressly address the circumstances in which other states might have access to the living resources of the EEZ as well as the degree of respect to be accorded to habitual fishing practices. Based on this the Tribunal concluded “as a matter of the text alone” that [243]

… the Convention is clear in according sovereign rights to the living and non-living resources of the exclusive economic zone to the coastal State alone. The notion of sovereign rights over living and non-living resources is generally incompatible with another State having historic rights to the same resources, in particular if such historic rights are considered exclusive, as China’s claim to historic rights appears to be. Furthermore, the Tribunal considers that, as a matter of ordinary interpretation, the (a) express inclusion of an article setting out the rights of other States and (b) attention given to the rights of other States in the allocation of any excess catch preclude the possibility that the Convention intended for other States to have rights in the exclusive economic zone in excess of those specified.

The text of the LOSC continental shelf provisions (article 77) equally, and even more so, confirmed the exclusive nature of the rights of the coastal state.

Moving from text to context (and thus still within the framework of article 31, VCLT) the Tribunal concluded that various provisions of the LOSC confirmed that the “system of maritime zones created by the Convention was intended to be comprehensive and cover any area of the sea or seabed.” This was:

… apparent in the Preamble, which notes the intention to settle “all issues relating to the law of the sea” and emphasises the desirability of establishing “a legal order for the seas.” The same objective of limiting exceptions to the Convention to the greatest extent possible is also evident in Article 309, which provides that “[n]o reservations or exceptions may be made to this Convention unless expressly permitted by other articles of this Convention.” [245]

All of this led to the conclusion that any claims by China to historic rights (as opposed to rights based upon China’s own EEZ and shelf) to living or non-living resources within the exclusive zones of the Philippines were inconsistent with the Convention:

The Convention does not include any express provisions preserving or protecting historic rights that are at variance with the Convention. On the contrary, the Convention supersedes earlier rights and agreements to the extent of any incompatibility. The Convention is comprehensive in setting out the nature of the exclusive economic zone and continental shelf and the rights of other States within those zones. China’s claim to historic rights is not compatible with these provisions. [246]

For the Tribunal that was all clear enough; there was no ambiguity here that required it to have recourse to the supplementary means of interpretation but, given “the sensitivity of the matters at issue in these proceedings, the Tribunal considers it warranted to recall the origin of and purpose behind the Convention’s provisions on the exclusive economic zone and continental shelf.” [247] Under the rubric of article 32 the Tribunal then referred to the general background to the Third UN Conference on the Law of the Sea to emphasise that the EEZ emerged as a compromise between the claims to greater control by coastal states and the interests of long distance fishing states. The rights accorded were deliberately framed as exclusive rights and not just as preferential rights [250 – 251]. Furthermore, the Convention was a consensus package and while some reservations to the dispute settlement scheme were permissible, a state:

… is not entitled to except itself from the system of compulsory settlement generally. In the Tribunal’s view, the prohibition on reservations is informative of the Convention’s approach to historic rights. It is simply inconceivable that the drafters of the Convention could have gone to such lengths to forge a consensus text and to prohibit any but a few express reservations while, at the same time, anticipating that the resulting Convention would be subordinate to broad claims of historic rights. [254]

While this was evidently a reasonably systematic application of the methodology prescribed by the VCLT for discerning the intentions of the parties, the Tribunal’s discussion of the interpretation of article 121 is even more so, and certainly much more searching and detailed, taking up close to 30 pages of text.

Treaty Interpretation and Article 121

The critical interpretive issue within article 121 related to paragraph (3) which provides that “[r]ocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf.” Having quoted that paragraph the Tribunal immediately referenced articles 31 and 32 of the VCLT as follows [476 & 477]:

  1. In order to interpret this provision, the Tribunal must apply the provisions of the Vienna Convention on the Law of Treaties. The general rule of interpretation is set out in Article 31 of the Vienna Convention and provides that a treaty “shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.” Further, “any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation” shall be taken into account. Pursuant to Article 32 of the Vienna Convention, as supplementary means of interpretation, recourse may be had to the preparatory work of the treaty to confirm its meaning, or determine the meaning when it is otherwise ambiguous, obscure, or leads to a manifestly absurd or unreasonable result.
  1. In approaching the interpretation of Article 121, the Tribunal will separately review the text, its context, the object and purpose of the Convention, and the travaux préparatoires, before setting out the conclusions that, in the Tribunal’s view, follow with respect to the meaning of the provision. (References omitted.)

Under the heading of text the Tribunal examined the component words and phrases of article 121(3). Using this approach, and with frequent reference to the Oxford English Dictionary, or the Shorter Oxford, the Tribunal concluded that the word rock did not import any geological or geomorphological criteria and thus a rock for the purposes of article 121(3) need not necessarily be composed of “rock” but might for example, consistent with dictionary definitions, be composed of coral or clays [479 – 482]. As for “cannot” (as in “cannot sustain”), this word refers to the capacity to sustain rather than whether or not the subject feature does in fact sustain habitation or economic life; however the historical fact (or not) of human habitation would clearly be relevant evidence in any such inquiry [483 – 484]. “Sustain” in its ordinary meaning has a number of components: support of essentials, a temporal (continuing element) and a sense of a minimal standard [485 – 487]; similarly, the term “habitation” implies a “non-transient presence of persons … in a settled manner” and “persons” rather than an individual because “humans need company and community over sustained periods of time” [488 – 492]. The Tribunal preferred a disjunctive reading of the word “or” thus recognizing that a feature that could sustain either human habitation or an economic life of its own would be entitled to both an EEZ and a continental shelf [493 – 497]. Finally, the combination of “economic” and “life” suggested a community activity, a level of viability and ongoing activity, while “of their own” indicated that the feature (or an associated group of features) must “have the ability to support an independent economic life, without relying predominantly on the infusion of outside resources or serving purely as an object for extractive activities, without the involvement of a local population.” [500] And in making that assessment the Tribunal was firmly of the view that it could not consider economic activity associated with a possible EEZ or shelf since that would be circular. [502]

The Tribunal summed up its textual assessment in a number of propositions [504] but also acknowledged that there remained uncertainties [505], especially with respect to the degree of economic activity which might suffice. With that acknowledgement the Tribunal turned to context and the objects and purposes of the Convention (all part of article 31, VCLT).

“Context” for the Tribunal required it to recognize that rocks and fully entitled islands are part of a classifications system of different maritime features in the Convention. Thus, it was important to consider how the rock/island categories fit within this scheme as well as the provisions of the Convention which refer to other objects within this classification scheme including low-tide elevations (article 13) and submerged features. Furthermore, since classification as a rock serves to deny that feature EEZ and shelf entitlements, it was also important to assess this categorization system in light of the purpose of these entitlements, and especially the introduction of the EEZ [509].

Consideration of the classification system for marine features as a whole led the Tribunal [508 – 511] to emphasise that the classification of all features within the system must be based on natural conditions drawing upon the best available evidence; and, just as a low tide elevation or a submerged maritime feature could not be turned into an island via human intervention, neither could a rock be turned into an island via human intervention. As for the link between article 121(3) as a provision of limitation or disentitlement and the purpose of the EEZ zone, the Tribunal delved [512 – 520] into the travaux to emphasise that the EEZ was created to benefit the peoples and communities of coastal states and that article 121(3), which precluded barren rocks from any entitlement to an EEZ, was part of the balancing of interests (coastal states vs distant water fishing fleets referred to earlier). This in turn led the Tribunal to opine that the quality of habitation demanded before a feature might avoid classification as a rock should be “habitation of a feature by a settled group or community for whom the feature is a home.” [520]

While the Tribunal necessarily reached beyond the text of article 121(3) to identify the purpose of the EEZ (as part of ascertaining and assessing context), the Tribunal also went on to consider the travaux more systematically for the “light it sheds on the purpose of the provision itself” (i.e. article 121(3)) [521]. The Tribunal’s review of the background to article 121(3) extended as far back as a British Imperial Conference of 1923 while recognizing that the entitlements associated with maritime features assumed far heightened significance with the expansion of the maritime claims of coastal states and the recognition of a common heritage area [522 – 529]. The Tribunal noted that paragraph (3) emerged as part of the compromise that was part of the Informal Single Negotiating Text (1975). While there is no detailed record of the elements of the compromise the Tribunal considered that the record would support the following conclusions [535 – 537, references to the detailed travaux omitted]:

  1. First, Article 121(3) is a provision of limitation. It imposes two conditions that can disqualify high-tide features from generating vast maritime spaces. These conditions were introduced with the object and purpose of preventing encroachment on the international seabed reserved for the common heritage of mankind and of avoiding the inequitable distribution of maritime spaces under national jurisdiction. …
  1. Second, the definitions in Article 121(3) were not discussed in isolation, but were frequently discussed in the context of other aspects of the Convention. These included: (a) the introduction of an exclusive economic zone, (b) the purpose of the exclusive economic zone in securing the benefit of maritime resources for the population of the coastal State, (c) the question of islands under foreign domination or colonial dependence, (d) the introduction of the international seabed area (the common heritage of mankind), (e) the protection of the interests of archipelagic States, (f) the role of islands in maritime delimitation, and (g) concerns about the potential for artificial installations to generate maritime zones.
  1. Third, the drafters accepted that there are diverse high-tide features: vast and tiny; barren and lush; rocky and sandy; isolated and proximate; densely and sparsely populated, or not populated at all. Many States considered that criteria such as surface area, population size, and proximity to other land might be useful in deciding whether a high-tide feature should be a fully entitled island. But the negotiating history clearly demonstrates the difficulty in setting, in the abstract, bright-line rules for all cases. Proposals to introduce specific criteria were considered, but consistently rejected. Against such attempts at precision, the drafters clearly favoured the language of the compromise reflected in Article 121(3).

Ultimately, acknowledged the Tribunal, size could not be dispositive of a feature’s status “although size may correlate to the availability of water, food, living space, and resources for an economic life”.

In the end, the Tribunal’s analysis of text, content, object and purpose, and the drafting history of article 121(3) led it to some nine conclusions which I reproduce here in slightly abbreviated form [540-548]:

  1. First, … the word “rock” does not limit the provision to features composed of solid rock. The geological and geomorphological characteristics of a high-tide feature are not relevant to its classification pursuant to Article 121(3).
  1. Second, the status of a feature is to be determined on the basis of its natural capacity, without external additions or modifications intended to increase its capacity to sustain human habitation or an economic life of its own.
  1. Third, with respect to “human habitation”, the critical factor is the non-transient character of the inhabitation, such that the inhabitants can fairly be said to constitute the natural population of the feature, for whose benefit the resources of the exclusive economic zone were seen to merit protection. The term “human habitation” should be understood to involve the inhabitation of the feature by a stable community of people for whom the feature constitutes a home and on which they can remain. Such a community need not necessarily be large, and in remote atolls a few individuals or family groups could well suffice. Periodic or habitual residence on a feature by a nomadic people could also constitute habitation …. An indigenous population would obviously suffice, but also non-indigenous inhabitation could meet this criterion if the intent of the population was truly to reside in and make their lives on the islands in question.
  1. Fourth, the term “economic life of their own” is linked to the requirement of human habitation, and the two will in most instances go hand in hand. Article 121(3) does not refer to a feature having economic value, but to sustaining “economic life”. The Tribunal considers that the “economic life” in question will ordinarily be the life and livelihoods of the human population inhabiting and making its home on a maritime feature or group of features. Additionally, Article 121(3) makes clear that the economic life in question must pertain to the feature as “of its own”. Economic life, therefore, must be oriented around the feature itself and not focused solely on the waters or seabed of the surrounding territorial sea. Economic activity that is entirely dependent on external resources or devoted to using a feature as an object for extractive activities without the involvement of a local population would also fall inherently short with respect to this necessary link to the feature itself. Extractive economic activity to harvest the natural resources of a feature for the benefit of a population elsewhere certainly constitutes the exploitation of resources for economic gain, but it cannot reasonably be considered to constitute the economic life of an island as its own.
  1. Fifth, the text of Article 121(3) is disjunctive, such that the ability to sustain either human habitation or an economic life of its own would suffice to entitle a high-tide feature to an exclusive economic zone and continental shelf. However, as a practical matter, the Tribunal considers that a maritime feature will ordinarily only possess an economic life of its own if it is also inhabited by a stable human community. One exception to that view should be noted for the case of populations sustaining themselves through a network of related maritime features. The Tribunal does not believe that maritime features can or should be considered in an atomized fashion. A population that is able to inhabit an area only by making use of multiple maritime features does not fail to inhabit the feature on the grounds that its habitation is not sustained by a single feature individually. Likewise, a population whose livelihood and economic life extends across a constellation of maritime features is not disabled from recognising that such features possess an economic life of their own merely because not all of the features are directly inhabited.
  1. Sixth, Article 121(3) is concerned with the capacity of a maritime feature to sustain human habitation or an economic life of its own, not with whether the feature is presently, or has been, inhabited or home to economic life. The capacity of a feature is necessarily an objective criterion. …
  1. Seventh, the capacity of a feature to sustain human habitation or an economic life of its own must be assessed on a case-by-case basis. … The Tribunal considers that the principal factors that contribute to the natural capacity of a feature can be identified. These would include the presence of water, food, and shelter in sufficient quantities to enable a group of persons to live on the feature for an indeterminate period of time. …
  1. Eighth, the Tribunal considers that the capacity of a feature should be assessed with due regard to the potential for a group of small island features to collectively sustain human habitation and economic life. On the one hand, the requirement in Article 121(3) that the feature itself sustain human habitation or economic life clearly excludes a dependence on external supply. A feature that is only capable of sustaining habitation through the continued delivery of supplies from outside does not meet the requirements of Article 121(3). … At the same time, the Tribunal is conscious that remote island populations often make use of a number of islands, sometimes spread over significant distances, for sustenance and livelihoods. … [P]rovided that such islands collectively form part of a network that sustains human habitation in keeping with the traditional lifestyle of the peoples in question, the Tribunal would not equate the role of multiple islands in this manner with external supply. Nor would the local use of nearby resources as part of the livelihood of the community equate to the arrival of distant economic interests aimed at extracting natural resources.
  1. Ninth, in light of the Tribunal’s conclusions on the interpretation of Article 121(3), evidence of the objective, physical conditions on a particular feature can only take the Tribunal so far in its task. In the Tribunal’s view, evidence of physical conditions will ordinarily suffice only to classify features that clearly fall within one category or the other. If a feature is entirely barren of vegetation and lacks drinkable water and the foodstuffs necessary even for basic survival, it will be apparent that it also lacks the capacity to sustain human habitation. The opposite conclusion could likewise be reached where the physical characteristics of a large feature make it definitively habitable. The Tribunal considers, however, that evidence of physical conditions is insufficient for features that fall close to the line. It will be difficult, if not impossible, to determine from the physical characteristics of a feature alone where the capacity merely to keep people alive ends and the capacity to sustain settled habitation by a human community begins.

This will particularly be the case as the relevant threshold may differ from one feature to another.

The Tribunal continued with some evidentiary observations, noting that historical use will likely provide the most reliable evidence as to the capacity of features and that “a purely official or military population, serviced from the outside, does not constitute evidence that a feature is capable of sustaining human habitation.” [550]

That was not quite the end of the Tribunal’s efforts to apply articles 31 and 32 of the VCLT since article 31(3) also refers to subsequent practice amounting to an agreement. But here the Tribunal observed (following the jurisprudence of the ICJ and that of the WTO’s Appellate Body), that the threshold for establishing an agreement on interpretation derived from state practice is high, and in this case there was no evidence of such an agreement that would lead the Tribunal to diverge from the interpretation that it had already settled on and recorded in the above nine propositions or conclusions. [552]

The Tribunal then went on to apply these propositions to the various maritime features with respect to which the Philippines sought declarations (including the Spratly Islands “as a whole”) concluding that none of the high tide features in the Spratly Islands were capable of sustaining human habitation or a life of their own [626]; the same conclusion prevailed with respect to other contested high tide features including the Scarborough Shoal and other reef features [643 – 646]. As a result, none of these features could generate an EEZ or a continental shelf thereby justifying the further conclusion that there could be no overlapping maritime entitlements as between China and the Philippines that would have precluded the Tribunal from exercising its jurisdiction pursuant to China’s declaration under article 298(1)(a).

In sum, this Award represents a sophisticated application of the interpretive rules of the VCLT to the construction of article 121(3). One gap in the Tribunal’s reasoning is that while it identifies both the EEZ and the shelf provisions of LOSC as part of the interpretive context for article 121(3), in the end it only analyzes the EEZ provisions. It is not clear that including the shelf provisions in the analysis would have changed the conclusions. The principal difference between the two sets of provisions is that while LOSC undoubtedly created or crystallized the concept of an EEZ, the doctrine of the continental shelf was already part of customary international law long before the Third Law of the Sea Conference began.

Article 33: Multiple Language Versions of LOSC

In addition to articles 31 and 32, the Tribunal also referred to article 33, the third and final provision in section 3, of Part III of the VCLT. Article 33 deals with treaties like LOSC which are concluded in multiple language versions and provides that where a comparison of the different authentic texts discloses a difference of meaning, the interpreter should adopt the meaning “which best reconciles the texts, having regard to the object and purpose of the treaty …”. There has been little consideration of article 33 in the context of LOSC although there is some discussion of the multiple language versions of LOSC in the ITLOS, Sea Bed Disputes Chamber, Advisory Opinion on the Area, esp at paras 57 et seq and in several separate opinions of ITLOS judges in prompt release proceedings where the issue has been the proper interpretation of the term “reasonable bond” in Article 73(2) (“garantie suffisante” in French).

The Tribunal considered the applicability of this provision as part of interpreting the scope of China’s declaration under article 298(1)(a). The Philippines took the view that article 298(1)(a) could only serve to allow a state to opt out of compulsory dispute resolution with respect to disputes concerning “historic bays or titles” to the extent that such disputes were delimitation disputes. The Tribunal acknowledged that the English text might be somewhat ambiguous but concluded [215 – 216] that the non-English texts supported the broader interpretation to the effect that a state could exclude compulsory jurisdiction to all disputes involve historic bays or titles; regardless of whether the dispute involved an issue of delimitation.

Other VCLT Issues: Article 26

In addition to the interpretation provisions of the VCLT the Tribunal also had cause to refer to article 26 (good faith performance) and article 30 (successive treaties relating to the same subject matter). The Tribunal relied on article 26 as part of its discussion of the Philippines’ request that the Tribunal rule that China was in breach of its obligations not to aggravate or extend the dispute between the parties once the Philippines had commenced its action. While LOSC does not specifically address this duty (other than in the context of a provisional measures order and the Philippines had made no such application) the Tribunal concluded that such a duty could be derived from consistent judicial practice [1168] but was also supported by article 26 of the VCLT. The Tribunal put the point this way [1171]:

… such a duty [i.e. the duty not to aggravate or extend a dispute] is inherent in the central role of good faith in the international legal relations between States. Article 26 of the Vienna Convention on the Law of Treaties recognises this when it provides that “[e]very treaty in force is binding upon the parties to it and must be performed by them in good faith.” This obligation is no less applicable to the provisions of a treaty relating to dispute settlement. Where a treaty provides for the compulsory settlement of disputes, the good faith performance of the treaty requires the cooperation of the parties with the applicable procedure. Compulsory settlement is also premised on the notion that the final result will be binding on the parties and implemented by them as a resolution of their dispute. The very purpose of dispute settlement procedures would be frustrated by actions by any party that had the effect of aggravating or extending the dispute, thereby rendering it less amenable to settlement.

Other VCLT Issues: Article 30

No less interesting was the Tribunal’s discussion of article 30. The Tribunal referred to article 30 as part of its assessment of whether or not historic rights could survive the adoption of LOSC. Article 30 of the VCLT deals with the relationship between successive treaties dealing with the same subject matter. Paragraph 2 of that article sets up a presumption to the effect that a later treaty will ordinarily prevail over an earlier treaty unless the later treaty stipulates that it is subject to that earlier treaty.

The Tribunal took the view that article 311 of LOSC and article 30 of the VCLT were parallel provisions each of which contemplated that a later treaty would prevail over an earlier treaty. That however was not precisely the issue before the Tribunal since the Tribunal was not faced with a scenario of competing treaty texts but rather a potential conflict between a claim based on state practice and a treaty text (LOSC) that implicitly (as already noted above, there was no explicit provision) extinguished claims of historic rights. Nevertheless the Tribunal was clearly of the view that both article 311 of LOSC and article 30 of the VCLT should be read as addressing both conflicts between agreements and conflicts between older customary claims and more recent treaties. As already noted above, the Tribunal was firmly of the view that claims of historic rights could not have survived the adoption of LOSC.

This blog will be cross-posted on the JCLOS Blog, the blog of the K.G. Jebsen Centre for the Law of the Sea, the University of Tromsø.

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Oral Promises of Land and Controversial Issues in the Doctrine of Part Performance

Fri, 07/29/2016 - 10:00am

By: Jonnette Watson Hamilton

PDF Version: Oral Promises of Land and Controversial Issues in the Doctrine of Part Performance

Case Commented On: Jordan v Skwarek, 2016 ABQB 380 (CanLII)

As Master John T. Prowse noted, the facts of this case are not unusual: “A family member, often a son, works on a family farm on the understanding that he will inherit it when the owner, typically his father or grandfather, dies. If he does not inherit the farm the son brings a claim for the farm, or in the alternative a claim for compensation based on the doctrine of unjust enrichment” (at para 2). As in similar cases, the understanding in this case appeared to be unenforceable because it was an unwritten one and therefore did not meet the requirements of section 4 of the Statute of Frauds. The decision is interesting because it points to disagreements among the Canadian courts of appeal about the correct test for part performance, what that test demands, and what evidence may be relied upon to prove acts of part performance to get around the requirements of section 4 of the Statute of Frauds.

Facts

The family farm at issue in this case was near Nanton, Alberta. It was initially owned by the mother’s father, and then by the mother’s mother, and now by the mother, the defendant Esther Skwarek. Her son, the plaintiff Glenn Jordan, worked on the family farm for more than 30 years. Mr. Jordon alleged that he had the following unwritten understanding, first with his grandfather, then with his grandmother, and finally with his mother:

1) He would rent the farm on a crop share basis, 2/3 to him and 1/3 to them. While the crop input expenses were borne in the same 2/3 to 1/3 ratio while his grandfather was alive, after his grandmother inherited the farm and moved into town to live with his mother, he agreed to pay all the crop input expenses in return for living in the farm house for free.

2) He would ultimately be given ownership of the farm.

Mr. Jordan also acquired his own nearby 480-acre farm in 1987. He had begun work on a residence for himself on that farm in 2009.

When Mr. Jordan’s mother asked him to sign a lease for the family farm in 2013, contrary to the unwritten understanding, he left the family farm and sued his mother for enforcement of the unwritten understanding or, in the alternative, for unjust enrichment. His mother applied for summary dismissal of both of her son’s claims. Mr. Jordan relied upon the doctrine of part performance to exclude the operation of the Statute of Frauds and allow him to enforce the unwritten understanding.

This post will focus on the doctrine of part performance and ignore the unjust enrichment claim. I will first discuss the case and its application of the doctrine of part performance. Then I will comment on three aspects of that doctrine that appear to be unsettled in Canada among different courts of appeal.

The Statute of Frauds  

The first basis on which the mother asked the court to summarily dismiss her son’s claim was the Statute of Frauds: An Act for the prevention of frauds and perjuries, 29 Charles II, c 3 (1677, UK). In Jordan v Skwarek, section 4 was the relevant provision of that statute, and its relevant portions read as follows:

No action shall be brought whereby to charge … upon any contract or sale of landsunless the Agreement upon which Action shall be brought or some Memorandum or Note thereof shall be in writing and signed by the party to be charged therewith… (emphasis added).

Section 4 of the Statute of Frauds basically requires that a contract involving land be in writing and be signed by the party to be sued. Unless both requirements are fulfilled, the contract is not enforceable.

The purpose of the 339-year-old Statute of Frauds was to eliminate the fraud and perjury in proving claims to land that was widespread in England in the 17th century. Most Canadian provinces have re-enacted the Statute of Frauds. A number of provinces have relatively recently affirmed the continued relevance of the statute and recommended retention of the requirements for writing for contracts for the sale of interests in land. See, for example, Manitoba’s Report on the Statute of Frauds at 26, Alberta’s The Statute of Frauds and Related Legislation at 2, and Saskatchewan’s The Statute of Frauds: Report to the Minister at 4. In Alberta, it is the original English statute of 1677 that is in force.

Mr. Jordan agreed that section 4 of the Statute of Frauds applied to the unwritten understanding to give him ownership of the farm. However, he said his claim to the farm was enforceable because of the doctrine of part performance.

The Doctrine of Part Performance

The doctrine of part performance is an exception to section 4 the Statute of Frauds. Shortly after the statute was enacted in the 17th century, the courts of equity decided that they would not permit the statute to be used to commit injustice. In other words, “[i]f one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid he will not then be allowed to turn around and assert that the agreement is unenforceable”: Steadman v Steadman, [1976] AC 536 at 540 (HL).

Section 4 of the Statute of Frauds is not easy to get around, however. The doctrine of part performance requires two things. The first is detrimental reliance by the party wishing to enforce the contract. The second is acts of part performance which, to use the oft-quoted formulation of Lord Selborne in the House of Lords decision in Maddison v Alderson (1883) 8 AC 467 at 479 (HL), “must be unequivocally, and in their own nature, referable to some such agreement as alleged”.

Proof of detrimental reliance is usually not too difficult to establish. In this case, Master Prowse found that detrimental reliance was too complicated and fact-specific to be determined except by a trial. This was the only point on which Master Prowse held that the mother’s application failed (at para 15).

The second part, the “unequivocally referable” test, can be demanding. I write “can be” because there is quite a lot of disagreement in Canada today about what Maddison v Alderson requires to meet the test that the acts “must be unequivocally, and in their own nature, referable to some such agreement as alleged.” I will return to the controversies about the meaning of that test later in this post. Suffice to say that in this case, Master Prowse adopted (at para 11) the interpretation of Lord Selborne’s words that was summarized in one paragraph by the Alberta Court of Appeal in B & R Development Corp v. Trail South Developments Inc2012 ABCA 351 (CanLII) at para 35:

To invoke the doctrine of part performance, the party claiming to have performed a valid contract must demonstrate: (1) detrimental reliance and (2) that the acts of part performance sufficiently indicate the existence of the alleged contract such that the party alleging the agreement is permitted to adduce evidence of the oral agreement: Erie Sand & Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709 (CanLII), 312 D.L.R. (4th) 111 at para 79. Acts of part performance must be “unequivocally” referable to the alleged oral agreement: Erie at para 32; Deglman v. Guaranty Trust Co. of Canada, 1954 CanLII 2 (SCC), [1954] S.C.R. 725 at 733, [1954] 3 D.L.R. 785 (S.C.C.).

Unfortunately, in B & R Development Corp the Alberta Court of Appeal did not address its mind to the controversies surrounding the test for part performance and Lord Selborne’s requirement that the acts “must be unequivocally, and in their own nature, referable to some such agreement as alleged.” Part performance was only one of several issues in B & R Development Corp (discussed in only 6 of 80 paragraphs) and the test for applying the doctrine did not seem to be questioned. The better precedent, given its grappling with conflicting authorities, would have been the Alberta Court of Appeal decision in Haan v Haan, 2015 ABCA 395 (CanLII) — a decision released five months before Jordan v Skwarek was heard.

In any event, by relying on B & R Development Corp, Master Prowse adopted the strictest and most demanding interpretation of Lord Selborne’s “unequivocally referable” test. Master Prowse required that the acts of part performance relied upon by Mr. Jordan to prove the existence of the unwritten understanding he alleged be “unequivocally referable to the promise that he would ultimately receive the farm” (at para 16). Mr. Jordan’s acts had to be “part performance of an agreement to acquire the farm” (at para 18). In other words, it was not enough if Mr. Jordan’s deeds proved the existence of an agreement dealing with the land. Under this interpretation of the test, Mr. Jordan’s actions had to prove the exact contract that he alleged: the transfer of the ownership of the farm to him.

That version of the test has been called “overly stringent” (Mountain v Mountain Estate, 2012 ONCA 806 (CanLII), [2012] OJ No 5452, at para 88). After all, as is noted in Snell’s Principles of Equity, 27th edition (1973) at 587, “few acts of performance point exclusively to a particular contract, least of all a multi-term contract.” Not surprisingly, Mr. Jordan failed to show that the doctrine of part performance applied to his actions to allow him to exclude the operation of section 4 of the Statute of Frauds.

Only Mr. Jordan’s acts were scrutinized. His farming expenditures were held to be “just as consistent with the acts of a long time tenant” (at para 21), his capital and maintenance expenditures for the home were held to be “equally consistent” — i.e., not “unequivocal” — with a long term tenancy as with a prospective home owner (at para 23). Because the unwritten understanding that Mr. Jordan was trying to prove was what Snell’s called a “multi-term contract” ? in this case including a lease of the farm, as well as a promise to transfer ownership ? it is not surprising that his deeds looked like those of a long-term tenant as much as they looked like those of a prospective owner. He was both under the terms of the alleged agreement.

But matters were much worse than equivocal in Master Prowse’s estimation. He found it “extremely significant” that when Mr. Jordan left his mother’s farm in 2012 “the outbuildings were no longer usable and the farm house was tired and worn” (at para 25). His farming, capital and maintenance expenditures — which, over his 30 years on the land, included things like drilling two new water wells, adding new plumbing and sewer lines and weeping tile, and replacing the hot water tank and roof and fireplace — were judged to have “resulted in no residual benefit to the land.” After initially characterizing the farm house as “tired and worn” while acknowledging that it could have been brought back into service with relatively minor expenditures (at para 25), Master Prowse concluded that by the time Mr. Jordan left the farm in 2013 “the outbuildings were unusable, and the farm house was uninhabitable” (at para 29). Just what these points had to do with whether the acts were referable to an agreement to convey the farm to him was not said. Neither was the age of the outbuildings or the farm house noted or whether it was reasonable for a future owner (and especially one with a new house on a nearby farm) to have maintained them considered. The context and circumstances of Mr. Jordan’s deeds were not discussed.

Result

In the end, the mother’s application for summary dismissal of both of her son’s claims — for part performance and for unjust enrichment — succeeded. Her success was abetted by the fact the test for summary judgment was changed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 SCR 87 in order to allow for quicker dispositions of cases. Instead of the old test of “discloses no triable issue,” courts now decide whether there is a meritorious issue that genuinely requires a trial or whether the claim or defence is so compelling that the likelihood it will succeed is very high: Whitecourt Power Limited Partnership v. Elliott Turbomachinery Canada Inc.2015 ABCA 252 (CanLII) at para 9. Because there was no real dispute about the facts in this case, aside from whether or not the unwritten understanding existed, Master Prowse decided that a trial was not required to decide that Mr. Jordan’s claims had no merit and his mother’s defences were highly likely to succeed.

Comments on the Test for Part Performance

There appears to be at least three contentious aspects of the test for part performance within Canada. The first is whether to abandon the traditional test set out in Maddison v Alderson in favour of the more liberal test later adopted by the House of Lords in Steadman v Steadman. The second concerns the interpretation to be given to the Maddison v Alderson test and, specifically, to the requirement that the acts of part performance “must be unequivocally, and in their own nature, referable to some such agreement as alleged.” The third is whether the acts of part performance must be the acts of the plaintiff, or whether the acts of the defendant can be relied upon as well.

1) Maddison v Alderson or Steadman v Steadman?

The House of Lords reconsidered its formulation of the test for part performance in Maddison v Alderson in the 1974 case of Steadman v Steadman, [1976] AC 536 (HL). The test from Maddison v Alderson requires that the acts of part performance “be unequivocally, and in their own nature, referable to some such agreement as alleged” (at 479 per Lord Selborne; at 491 per Lord Fitzgerald). Even more explicitly, an act “must have relation to the one agreement relied upon, and no other” (at 485 per Lord O’Hagen).

In Steadman v Steadman (at 546 per Lord Reid; at 553 per Viscount Dilhorne; at 559-62 per Lord Simon of Glaisdale; at 569 per Lord Salmon), the House of Lords relied upon the judgment of Upton LJ in Kingswood Estate Co v Anderson, [1963] 2 QB 169 and his adoption of the following rule from Fry on Specific Performance, 6th ed, at page 278:

The true principle, however, of the operation of acts of part performance seems only to require that the acts in question be such as must be referred to some contract, and may be referred to the alleged one; that they prove the existence of some contract, and are consistent with the contract alleged.

The Steadman v Steadman test is much less demanding and easier to satisfy than the test in Maddison v Alderson.

Whether the correct test in Canada is from Maddison v Alderson or Steadman v Steadman is an open question because the Supreme Court of Canada has not directly confronted it. The Supreme Court has disapproved of the formulation in an earlier edition of Fry on Specific Performance on which the test in Steadman v Steadman is based. They have also adopted aspects of Steadman v Steadman that are related to the purpose of the doctrine, its historical development, and the relevance of payment as an act of part performance. However, the highest court has not directed its focus on the test for part performance since Steadman v Steadman was decided in 1974.

There are three important Supreme Court of Canada cases dealing with part performance or oral contracts dealing with land: McNeil v Corbett (1907), 1907 CanLII 45 (SCC), 39 SCR 608; Deglman v Brunet Estate, 1954 CanLII 2 (SCC), [1954] SCR 725; and Hill v. Nova Scotia (Attorney General), 1997 CanLII 401, [1997] 1 SCR 69. Of these three, the leading case, which included a thorough review of Maddison v Alderson, is Deglman. The adoption of the stricter Maddison v Alderson test in both McNeil v Corbett and Deglman is unambiguous. Indeed, in Deglman, the test articulated in Fry on Specific Performance and quoted above was urged upon the Supreme Court and specifically rejected by the majority: Deglman at 733 (per Cartwright J). Instead, the majority relied upon the articulation of the test in McNeil v. Corbett at 611-12, which demanded “acts unequivocally referable in their own nature to some dealing with the land which is alleged to have been the subject of the agreement sued upon”, explaining that meant there has to be something in the nature of the acts which bears the necessary relation to the interest in land said to have been the subject of the agreement.

In Hill the Supreme Court relied upon Steadman v Steadman for a number of principles. They relied upon it for a statement of the purpose of the Statute of Frauds (at 558). They also quoted from Steadman v Steadman (at 558) for a history of the evolution of the doctrine of part performance. However, the Court did not comment on Steadman v Steadman’s consideration of the test from Maddison v Alderson or its adoption of a more liberal test. No test was articulated in Hill.

Because the Supreme Court of Canada has yet to expressly consider and choose between the different tests in Maddison v Alderson and Steadman v Steadman, cases from different provinces disagree on which of those two House of Lords cases represents the law in Canada. As Professor Joseph T Robertson noted, in his Discussion Paper on the Statute of Frauds, 1677 (St. John’s, Nfld: Newfoundland Law Reform Commission, 1991) at page 22, “ambiguity provides the basis on which trial and appellate courts in each province can reformulate the proper test without disregarding the principle of stare decisis.” Twenty-five years later, his assessment appears to continue to be accurate.

At least three provincial courts of appeal have looked favourably on the more lenient test. The Steadman v Steadman test was acknowledged as “the leading authority” by the British Columbia Court of Appeal in Currie v Thomas, 1985 CanLII 769 (BCCA) at para 28, but without reference to the prior Supreme Court of Canada decisions. However, British Columbia’s Law and Equity Act, RSBC 1996, c 253, s 59(3) has subsequently replaced the doctrine of part performance with a new statute-based test. The Saskatchewan Court of Appeal has also favoured the Steadman v Steadman test, but only in the most general of terms, without actually articulating or applying a test. They indicated in Bell, Sokalski and Ross v Guaranty Trust Company of Canada, Prudential Trust Company Limited, Ashland Oil Canada Limited and Ashland Oil and Gas Limited, 1984 CanLII 2422 (SK CA) at para 3 that “Deglman must be read in the light of the comprehensive judgment of the House of Lords in Steadman v. Steadman . . .”, and in Tiringer v. Tiringer, 1998 CanLII 12304 (SK CA) at para 2, that, had the Statute of Frauds applied, “the principles articulated in Steadman v. Steadman, [1974] 2 All E.R. 977 (H.L.) are apposite to this case.” Finally, the Court of Appeal in Newfoundland and Labrador more recently canvassed the competing tests in King v. Cleary, 2014 NLCA 33 (CanLII) and approved the trial court’s adoption of the test in Steadman v Steadman.

In contrast, most Canadian courts of appeal have seen themselves bound by the Supreme Court of Canada decision in Deglman. The courts of appeal in Nova Scotia and Alberta have recently reiterated that the test in Maddison v Alderson is still the leading authority, based on Deglman. For example, the Nova Scotia Court of Appeal in Brekka v. 101252 P.E.I. Inc., 2015 NSCA 73 (CanLII) at para 32, upheld the trial judge’s application of the stricter Maddison v Alderson test as reflecting the current law in that province.

Over the past 15 years the Alberta Court of Appeal has twice opined at length on the test for the doctrine of part performance. The first time was in 2002 in Booth v. Knibb Developments Ltd., 2002 ABCA 180 (CanLII) at paras 19 and 25, where the Court of Appeal affirmed that “[t]he leading decision on the doctrine of part performance is Maddison v. Alderson …” and that “[n]o lesser standard will suffice.” They held that the acts had to be “unequivocally referable to the oral contract alleged by the Booths” (at para 28) and noted that the acts relied upon “cannot be said to be referable to a contract for purchase and sale and nothing else” (at para 29).

In 2015, the Alberta Court of Appeal reaffirmed its commitment to the test in Maddison v Alderson in Haan v Haan, 2015 ABCA 395 (CanLII). They stated that “part performance must be ‘unequivocally’ related to the alleged contract” (at para 11; see also para 15). They quoted with approval from both McNeil v Corbett and Deglman and their adoption of the test in Maddison v Alderman (at paras 12-13). McNeil v Corbett was relied upon for requiring “acts unequivocally referable in their own nature to some dealing with the land which is alleged to have been the subject of the agreement” (at para 12, quoting McNeil v Corbett at 611-12). They also quoted a passage from Deglman, which quoted with approval from In re Meston, Meston v Gray, 1925 CanLII 179 (SK CA), [1925] 4 DLR 887 at 888, explaining “…[t]he acts performed must speak for themselves, and must point unmistakably to a contract affecting the ownership or tenure of the land, and to nothing else.” (at para 13) Therefore, in Alberta there is no question that the “unequivocally referable” test from Madison v Alderson is the authoritative test, given its adoption after detailed discussion of the law in both Booth and Haan.

The Ontario Court of Appeal stands apart. In Erie Sand & Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709 (CanLII), it adopted what it called the “Deglman test” ? referring to the majority judgment of Cartwright J in Deglman ? and rejected what it calls the “Rand test” from Deglman. It stated that the Rand test is the stringent one, requiring the acts to be referable only to the alleged contract and no other (at paras 86 and 92, citing Deglman at 728). The Ontario Court of Appeal read the Deglman test as requiring only that the acts be referable to “some dealing with the land” (at paras 87 and 92, citing Deglman at 733 and its reliance on quotes from McNeil v Corbett). The Ontario Court of Appeal therefore appears to follow the Maddison v Alderson test by referring to the majority judgment in Deglman, but by only requiring that the acts of part performance be referable to “some dealing with the land”, they seem to be adopting a test that is even more lenient than that in Steadman v Steadman (lacking the requirement that the acts be consistent with the alleged contract).

In the more recent Mountain v Mountain Estate, 2012 ONCA 806 (CanLII), [2012] OJ No 5452, the trial judge had required acts “that are only consistent with part performance of the alleged contract” (at para 53). The Ontario Court of Appeal stated (at para 82) that Erie Sand & Gravel had been clear that the acts need not be referable only to the contract alleged. They only had to be “unequivocally referable in their own nature to some dealing with the land”. (at para 82)

The Ontario Court of Appeal therefore appears to follow the Maddison v Alderson test by adopting Cartwright J’s majority judgment in Deglman, but their understanding of that test is very different from that of the Alberta Court of Appeal. Indeed, the test in Ontario appears to be even more lenient than the test in Steadman v Steadman, as I will discuss in the next section.

2) Interpreting Maddison v Alderson’s “unequivocally referable to … some such contract as alleged”

It appears from the Canadian case law that there are three ways to interpret the Maddison v Alderson requirement that the acts of part performance must be “referable to some such agreement as alleged.” One requires the acts of part performance to be unequivocally referable to the exact contract alleged. The second requires them to be referable to the type of contract alleged. The third merely requires them to be referable to a contract related to the land at issue.

The first — the most demanding and the one used by Master Prowse in Jordan v Skwarek — requires that the acts be referable to the exact contract that the plaintiff alleges. As we saw when it was applied in Jordan v Skwarek, it is almost impossible to fulfill, especially given the alleged multi-term contract in that case. The first interpretation ? referable to the exact contract alleged ? is the traditional understanding of Maddison v Alderson. It appears to be the one adopted by the Alberta Court of Appeal in B & R Development Corp at para 35, requiring the acts to “sufficiently indicate the existence of the alleged contract” and to be “’unequivocally’ referable to the alleged oral agreement” (emphasis added).

The second possibility is that the acts must be referable to the type of contract the plaintiff alleges (e.g., a sale, a lease, an easement, etc). That seems to be the test adopted by the Alberta Court of Appeal in both Booth and Haan. Booth at para 27 relied upon Cartwright’s judgment in Deglman at 734 which they characterized as “clearly” setting out the test and interpreting “some such agreement as that alleged” as follows:

In order to exclude the operation of the Statute of Frauds, the part performance relied upon must be unequivocally referable to the contract asserted. The acts performed must speak for themselves, and must point unmistakably to a contract affecting the ownership or the tenure of the land, and to nothing else. (emphasis added by Alberta Court of Appeal)

The Alberta Court of Appeal went into more detail on this aspect of the test very recently in Haan at paras 14-15, confirming their interpretation in Booth. There the Court specified that “the claimant has to prove that the part performance was “unequivocally” related to the very type of contract alleged. Part performance that is “consistent with” several different types of contractual arrangement is insufficient” (Haan, at para 15). How specific does that “type” have to be? Haan answers this question with an example: “Thus, for example, the test is not met if the part performance is equally consistent with a transfer of ownership, a lease for a term of years, or a loan with the land given as security.” Those three examples are all examples of “some dealing with the land” but they make it clear that is not enough: the type of contract has to be unequivocally referenced by the acts. Although this understanding of the Maddison v Alderson test is less strict than the first, it is quite likely that, had Master Prowse adopted this interpretation in Jordan v Skwarek, Mr. Jordan’s claim would still have failed due to the multi-term nature of the contract that he alleged.

A third possible interpretation is that the acts must be referable to a contract dealing with the relevant piece of land, based on the Ontario Court of Appeal case in Erie Sand & Gravel. This interpretation is arguably even more liberal than the test in Steadman v Steadman, which not only demanded that the acts indicate some contract between the parties, but also required they be consistent with the oral contract alleged. It is certainly no more demanding.

In Erie Sand and Gravel Ltd, the Ontario Court of Appeal considered the test set out by Cartwright J in Deglman at some length. They held (at para 94) that the majority in Deglman at 732-33 required only that the acts be referable to “some dealing with the land.” This interpretation was re-affirmed in Mountain v Mountain Estate at para 82, where the Ontario Court of Appeal held that the “the acts of part performance need not be ‘referable only to the contract alleged’ [but rather] the test as established by the majority judgment of Cartwright J. in Deglman … is that it is sufficient if the acts are ‘unequivocally referable in their own nature to some dealing with the land’. The Ontario Court of Appeal emphasized “some dealing with the land.” There is nothing to tie “some dealing with the land” to the type of contract, although it must be tied to the land in issue. The Court then broke the test down into two steps: “the first step is to determine whether the acts of part performance are connected to the land” (at para 89), and the second step is to determine if the conduct, in and of itself, indicates that there had been “some dealing with the land”. (at para 90)

It therefore appears that the test for part performance is more demanding in the province of Alberta than in Ontario. Ontario merely requires that the acts point to a contract concerning the land in dispute. Alberta requires that they refer to the type of contract alleged. But neither is as demanding as the test applied in Jordan v Skwarek, which required the acts of part performance refer to the exact contract alleged.

3) Whose acts? The plaintiff’s only or acts of both the plaintiff and the defendant? 

Prior to 1997 it was agreed that the acts relied on must be the acts of the plaintiff. Indeed, the requirement that the acts be those of the party who relied on the existence of the contract to his or her detriment is usually tied to the purpose of the doctrine of part performance; see, for example, Steadman v Steadman at 558 (per Lord Simon of Glaisdale). However, the Supreme Court decision in Hill v. Nova Scotia considered the acts of the defendant. They did so without noting that what they were doing appeared to change the law. Indeed, in Hill (at 558), the Supreme Court’s only statement of the law ? a quote from Steadman v Steadman ? required the acts be those of the plaintiff. The concluding words of that quote are: “the ‘part’ performance being that of the party who had, to the knowledge of the other party, acted to his detriment in carrying out irremediably his own obligations (or some significant part of them) under the otherwise unenforceable contract”. The Court therefore stated one principle and applied a different one. One has to wonder whether this was done per incuriam.

Nonetheless, the Ontario Court of Appeal has taken the Supreme Court’s actual reliance on the acts of the defendant to be a change in the law. In Erie Sand & Gravel, they concluded (at para 75) that “given the decision of the Supreme Court in Hill, it is now settled law in Canada that the acts of both parties to an alleged oral agreement may be considered when a court is called on to determine if sufficient acts of part performance take an alleged agreement outside the operation of the Statute of Frauds.” The Court offered additional reasons, beyond the precedent in Hill, for taking this position (at paras 76-79), but it did assert that the law was settled on this point by Hill.

The Ontario Court of Appeal’s position that the acts of part performance can be those of both the plaintiff and the defendant was re-asserted more recently. In Mountain v Mountain Estate, the trial judge had required that the acts be those of the plaintiff and the Ontario Court of Appeal held that that he erred in doing so (at paras 79 and 81).

The position is different in Alberta, however. In Booth, the trial judge had considered only the acts of the plaintiff when determining if the test has been met and the Court of Appeal did not find this to be an error (Booth, at paras 31, 39). Indeed, in Wasylyshyn v. Wasylyshyn, 2008 ABQB 39 (CanLII) at para 40, Justice E.A. Marshall explicitly interpreted Booth to require that the acts relied upon be carried out by the plaintiff.

Therefore, despite the Ontario Court of Appeal’s insistence that the new principle of law was settled by the Supreme Court in Hill, the Alberta Court of Appeal appears to differ.

Conclusion

In conclusion, it should be noted that there is no uncertainty in the Alberta Court of Appeal’s understanding and application of the doctrine of part performance, based on the authority of Booth and Haan. The same could be said about the Ontario Court of Appeal, based on Erie Sand & Gravel and Mountain v Mountain Estate. They both seem quite certain in their statements of the law. But those two courts of appeal ? and others more briefly mentioned ? are not in agreement with each other, and the principles for application of this equitable doctrine vary depending on which province hears the case for enforcement of an oral promise with respect to land. It will take another Supreme Court of Canada decision – hopefully one conscious of the controversies this time ? to harmonize the law.

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Attorney General Argues That Backdoor Amendment to PPAs was Unlawful

Tue, 07/26/2016 - 10:00am

By: Nigel Bankes

PDF Version: Attorney General Argues That Backdoor Amendment to PPAs was Unlawful

Matter Commented On: Originating Application for Declaratory Relief and Judicial Review, filed by the Attorney General, July 25, 2016

The origins of the Power Purchase Arrangements (PPAs) “termination” saga are discussed in detail in a previous post and readers may wish to refer to that post for the necessary background. In an interesting development the Attorney General has commenced an application seeking a declaration that the amendments that were made to the PPAs after the public review process conducted by the then Alberta Energy and Utilities Board (AEUB) had concluded are unlawful. The crucial amendment was to a clause in the PPA which allows the buyer to transfer responsibility for the PPA to the Balancing Pool when a change of law makes the PPA not just unprofitable but “more unprofitable”. In my previous post I suggested that

It is evident that this clarification which was “attached to and forming part of each PPA” considerably enhances the power of the buyer to terminate without liability. On its face it seems to suggest that even if market conditions are the principal cause for the unprofitability of the PPA from the buyer’s perspective, then any change of law, however small, which makes the PPA just that bit more unprofitable allows the buyer to terminate. This hardly seems to be a commercially reasonable conclusion – let alone the “obvious” intent of all of those interested in the structure of the PPAs. Nevertheless, the AEUB under the terms of Order U2000-190 did endorse the IAT’s conclusions.

The Attorney General has now taken the extra step and alleges that the AEUB exceeded its authority in approving the amendment and also followed an incorrect procedure; and that therefore the amendments are unlawful. Although late in the day this is a powerful argument since if the province can kick-out the amendment, PPA buyers will have a much harder time establishing that it is the province’s price on carbon that renders the PPAs unprofitable – rather than market conditions more generally. The Attorney General is also taking the view that the Regulations approving the PPAs were unlawful – perhaps because she is concerned that if she only attacks the AEUB decision then she will be found to be out of time because of the limitation period in the AEUB’s statute (see Alberta Energy and Utilities Board Act, RSA 2000, c. A-17, s.26, now repealed). However, if the Regulations are void ab initio (as the application argues) then it would seem that the PPAs themselves are also unlawful – which perhaps proves too much, and will, to say the least, require a lot of unravelling!

The Attorney General is also taking a run at the Balancing Pool’s (BP) decision to accept Enmax’s notice to terminate. The BP made that decision on January 27, 2016 (and it is the only PPA the termination of which the BP has to date accepted) so the AG has filed this application just within the time limits established by the Rules of Court. In essence the AG argues that the BP wrongly proceeded on the basis of the PPA arrangements as amended (as above); but in the alternative argues that the BP unreasonably looked at profitability only over the remaining term of the PPA, unreasonably based its decision on prices at a single point in time, and unreasonably failed to inquire as to whether unprofitability was self-induced (the argument here is that Enmax is in part responsible for low power prices by commissioning the 800 MW Shepard facility). The precise basis on which the BP proceeded may not be completely known, but to address that the AG is demanding that the BP produce the record. A “win” on these latter arguments will not be a complete victory because it will merely require that the BP makes its decision afresh. For this reason alone the much more significant claim made in these proceedings is the claim that the amendment was unlawful.

This will no doubt be one of the more complex and high profile judicial review proceedings ever heard in the province – and the stakes are high. The province has selected Joe Arvay from Vancouver\Victoria as its lead lawyer for its application, one of the best constitutional and administrative lawyers in the country. That is no doubt a very good choice, but I suspect that there would have been few major law firms in Alberta with expertise in this area who would not already have been conflicted out. The respondents listed in the application (in addition to Enmax and the BP) include various ATCO companies, TransCanada Energy, Capital Power, Alberta Power, and the Utilities Commission (as the successor to the AEUB).

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Throwing the Dog a Bone: A Historical and Policy Critique of the Supreme Court’s Bestiality Ruling

Mon, 07/25/2016 - 10:00am

By: Joshua Sealy-Harrington and Evan Choate

PDF version: Throwing the Dog a Bone: A Historical and Policy Critique of the Supreme Court’s Bestiality Ruling

Case Commented On: R v DLW, 2016 SCC 22 (CanLII)

In R v DLW, 2016 SCC 22 the Supreme Court of Canada split on whether the criminal offence of bestiality requires “penetration.” The majority judgment held that bestiality requires penetration and, on that basis, held that a dog licking a vagina is not bestiality. In contrast, the dissenting judgment held that bestiality does not require penetration and, accordingly, held that a dog licking a vagina is bestiality. In this post, we first summarize the factual and legislative background in DLW and the reasons of the majority and dissenting judgments. Second, we critique the majority judgment for: (1) its unpersuasive reliance on judicial deference; and (2) its overstated claim that “buggery” (the precursor to bestiality) had a clear meaning. Lastly, we critique both the majority and dissenting judgments for their reliance on: (1) imprecise sexual terms which fail to bring clarity to bestiality law; and (2) an unimaginative privileging of cisgender, procreative heterosexuality that perpetuates harmfully conservative understandings of human sexuality.

BACKGROUND

Before discussing the majority and dissenting judgments in DLW and our concerns with respect to those judgments, we briefly discuss two areas of background, namely:

1. the facts in DLW; and

2. the bestiality offence’s history.

In particular, establishing these two pieces of background at the outset facilitates a tidy summary of the judgments since the facts (which do not involve penetration by or of an animal) and the bestiality provision’s history, are central to both judgments.

Facts

The facts in DLW relate to a step-father and his two step-daughters whom he sexually abused over the course of 10 years (at para 5).

This step-father’s sexual abuse gradually progressed in severity as his step-daughters grew in age:

1. 12 – Fondling: By the time they reached the age of 12, he sexually fondled them (at para 5).

2. 14 – Sex: By the time they reached the age of 14, he forced them to engage in oral sex and sexual intercourse, and encouraged them to perform sex acts with each other (at para 5).

3. 15/16 – Bestiality?: By the time the older step-daughter reached the age of 15 or 16, he attempted to make the family dog have intercourse with her, and when that failed, he spread peanut butter on her vagina for the dog to lick off (at paras 5–6).

Critically, the sexual activity between the family dog and the older step-daughter did not involve penetration. This absence of penetration was central to the split at the Supreme Court in respect of whether the act that transpired—a dog licking a vagina—qualifies as “bestiality”.

To be clear, whether the step-father was ultimately incarcerated did not depend on whether a dog licking a vagina constitutes bestiality. Indeed, the step-father was convicted for “numerous other sexual offences” against his step-daughters, and was sentenced to 14 years in prison for those offences. The bestiality conviction, which was the subject of the DLW appeal, only impacted whether the step-father was sentenced to a further 2 years in prison as a result of the sexual activity he orchestrated between the family dog and his oldest step-daughter (at para 5).

Bestiality Offence History

An instructive definition of bestiality has never been provided by any of the statutes that have prohibited it since its genesis as a criminal offence in 1869 (at para 128). Instead, those statutes have simply prohibited acts described by vague phrases relating to “buggery with an animal” or “bestiality”, neither of which explain whether penetration is a required element of the offence (see para 43).

As a consequence, despite multiple amendments the bestiality provision has failed to provide clarity with respect to bestiality’s definition. Rather, it began and remains a statutorily undefined sexual crime, involving some form of sexual activity between humans and animals.

Still, two historical amendments to the bestiality provision provide subtle insights into its meaning:

1. The “1955 Amendments” – Adding Bestiality: In 1955, the Criminal Code was amended, with the English version of the buggery provision changing from “buggery, either with a human being or with any other living creature” to “buggery or bestiality”, and the French version remaining unchanged and continuing to prohibit “sodomie” and “bestialité” (at paras 72–74).

2. The “1988 Amendments” – Separating/Expanding Bestiality: In 1988, the Criminal Code was amended again, separating buggery (now, anal intercourse) and bestiality into distinct provisions (Criminal Code sections 159 and 160, respectively), and expanding the scope of the bestiality provision by including as criminal offences compelling another to commit bestiality and committing bestiality in the presence of a child (at paras 102–03).

(Collectively, the “Key Amendments”).

With the facts from DLW and history of the bestiality offence established, the Supreme Court judgment may now be discussed with greater ease.

SUPREME COURT JUDGMENTS

The Supreme Court issued two judgments in DLW:

1. the majority judgment authored by Justice Cromwell and concurred in by Chief Justice McLachlin and Justices Moldaver, Karakatsanis, Côté, and Brown, which held that bestiality requires penetration (the “Majority”); and

2. the dissenting judgment authored by Justice Abella, which held that bestiality does not require penetration (the “Dissent”).

Majority: Bestiality Requires Penetration

The Majority held that bestiality requires penetration (at para 4). As a consequence, the Majority acquitted the step-father (of bestiality, not the other offences) because the sexual activity at issue—a dog licking his step-daughter’s vagina—did not involve penetration (at paras 123–24).

The Majority reached this conclusion relying on the principle that if a word has a well-understood legal meaning, it should be given that meaning when used in a statute (at para 20). In consequence, the Majority held that Parliament’s use of the word “bestiality” in the 1955 Amendments should be interpreted as matching bestiality’s historical meaning, which required penetration (at para 99).

Given the above logic, the Majority’s reasoning involved two inquiries:

1. The “Historical Inquiry”: whether bestiality historically required penetration before the Key Amendments; and

2. The “Contemporary Inquiry”: whether bestiality requires penetration today, after the Key Amendments.

With respect to the Historical Inquiry, the Majority held that the relevant statutes predating the Key Amendments all required penetration, namely:

1. the 1861 English The Offences against the Person Act (at paras 29–30); and

2. the 1892 Canadian Criminal Code (at para 47).

With respect to the Contemporary Inquiry, the Majority held that neither of the Key Amendments signalled the unambiguous intent needed to substantively modify criminal law (see paras 54–56) that Parliament sought to remove penetration as a requirement of bestiality. Specifically, the Majority held that:

1. The 1955 Amendments did not remove the penetration requirement. Arguably, the change to the English version of the Criminal Code (changing “buggery with an animal” to “bestiality”) could be interpreted, in isolation, as making substantive changes to the scope of bestiality. But the French version (“bestialité”) remained the same throughout, demonstrating that no substantive revision could have been intended (at paras 79–80) and that the change to the English version alone was a “benign housekeeping” exercise merely seeking greater consistency between the English and French versions of the Criminal Code (at paras 95–96).

2. The 1988 Amendments also did not remove the penetration requirement. These amendments included a “virtually complete overhaul” of various sexual offences with no similar change to the bestiality provision. The only change to the bestiality provision involved expanding it to include compelling another to commit bestiality and committing bestiality in the presence of a child. The continued use of the word “bestiality” in these new provisions in no way signalled Parliamentary intent to remove penetration as a requirement of bestiality (at para 116).

By combining these two holdings—(1) bestiality historically requiring penetration; and (2) Parliament never changing that requirement—the Majority held that bestiality still requires penetration and, accordingly, acquitted the step-father of bestiality (at paras 123–24).

Dissent: Bestiality Does Not Require Penetration

The Dissent reached the opposite conclusion of the Majority, and held that bestiality does not require penetration (at para 127). As a consequence, the Dissent would have convicted the step-father (at para 153) because the sexual activity at issue—a dog licking his step-daughter’s vagina—need not involve penetration to qualify as bestiality.

The Dissent disagreed with the Majority about both of the key inquiries mentioned above.

With respect to the Historical Inquiry, the Dissent held that it was “far from clear,” particularly given the scarcity of cases dealing with bestiality, that penetration was required before the Key Amendments (at paras 134–35). Specifically, the Dissent noted that while penetration between a human and animal may have been sufficient to prove bestiality, it is unclear that penetration was necessary to prove bestiality (at para 135).

With respect to the Contemporary Inquiry, the Dissent held that, after the Key Amendments, penetration was not required for bestiality (at para 127). The Dissent admitted that “a good case can be made” for the Majority’s interpretation that bestiality retained penetration as a requirement following the Key Amendments (at para 126)—that is, assuming that penetration was ever a requirement (at paras 134–35). However, the Dissent had “a great deal of difficulty” accepting that Parliament “forgot to bring the offence out of the Middle Ages” and retained the penetration requirement (at para 126). Specifically, the Dissent held that:

1. If bestiality historically required penetration, the 1955 Amendments removed that requirement. First, by separating bestiality and buggery the 1955 Amendments permitted bestiality to abandon constituent elements—like penetration—related to buggery (at para 136). Similarly, the Dissent held that changing the English version from only prohibiting “buggery” to prohibiting “bestiality and buggery” shows that Parliament intended the two terms to have distinct meanings with possibly only buggery requiring penetration (at para 143; emphasis in original). Second, the 1955 Amendments enhanced protections for animals under the Criminal Code, reflecting an increased recognition of animal welfare, and further signalling Parliament’s intent to approach the bestiality offence more broadly (at para 141). In particular, the 1955 Amendments broadened the scope of the animal cruelty offence from “cattle, poultry, dog, domestic animal or bird, or wild animal or bird in captivity” to all birds and animals (at paras 140 and 142). The Dissent reasoned that it would be inconsistent for Parliament to expand the animal cruelty offence to include all birds and animals, but to limit the bestiality offence to those animals whose anatomy permitted penetration (at para 142).

2. If bestiality historically required penetration, the 1988 Amendments confirmed Parliament’s intent—initially signalled in the 1955 Amendments—to remove the penetration requirement from bestiality. First, the 1988 Amendments placed “buggery” and “bestiality” into separate provisions, confirming Parliament’s intent to treat them as two separate offences (at para 144), such that bestiality no longer had to share buggery’s penetration requirement. Second, the 1988 Amendments expanded the bestiality offence in a manner inconsistent with retaining the penetration requirement. For example, the bestiality offence was expanded to include committing bestiality in the presence of a child, and it would be absurd to think that Parliament sought to prevent children from being exposed to sexual activity with animals only when that sexual activity involves penetration (at paras 146–47). Third, the 1988 Amendments introduced multiple new offences directed at protecting minors from sexual abuse that were also inconsistent with retaining the penetration requirement for bestiality. For example, the new sexual exploitation offence did not require penetration, making it “anomalous” to require penetration when such exploitation happens to involve an animal (at para 148).

COMMENTARY

Lisa Silver posted a doctrinal commentary on the Supreme Court’s divide with respect to statutory interpretation. In this post, we will instead provide commentary on other aspects of the judgments, namely:

1. The Majority’s unpersuasive reliance on judicial deference as the basis for a narrow interpretation of bestiality; and

2. Various flaws in the Court’s interpretation of sexual terminology that reflect a series of erroneous and harmful ideas about the nature of sexuality and sexual practice.

Judicial Restraint: How Is “Interpreting” Bestiality Different from “Expanding” It?

The Majority’s reasoning is predicated on the principle that “changes to the scope of criminal liability must be made by Parliament” (at para 3). However, in our view, justifying a narrow interpretation of bestiality based on this principle is legally unpersuasive for two reasons:

1. Changes to the scope of criminal liability are inherent to the Court’s role of interpreting the Criminal Code, and accordingly, such changes are an unavoidable consequence of judicial interpretation. For example, in R v JA, 2011 SCC 28 the Court held that de facto consensual sexual activity constitutes sexual assault if one partner is deliberately unconscious (at para 3). By holding that an entire category of sexual activity which is consensual in fact is non-consensual in law, the Court, in effect, expanded the scope of criminal liability. If one were to respond that the Court did not “expand” criminal liability in JA but rather merely “interpreted” the meaning of consent, then Justice Abella’s holding that bestiality does not require penetration should similarly constitute a mere “interpretation” of the meaning of bestiality. Given the lack of clarity in the original terms in the law, all possible “interpretations” of the law will necessarily change its scope.

2. The Court has admitted in previous cases to unilaterally expanding the scope of criminal liability, thus contradicting its claim in DLW that such changes are impermissible. Specifically, in R v Jobidon, [1991] 2 SCR 714 the Court held that, during a consensual fistfight, an accused cannot rely on the Criminal Code defence of consent if bodily harm is intended and caused (at 766; see also Professor Sankoff’s video blog on DLW at 6:38–9:01). In our view, a coherent framework for how the philosophy of judicial restraint predictably limits the scope of legitimate judicial interpretation is lacking. Absent such a framework, judicial interpretations relying on judicial restraint are unpersuasive as they are functionally discretionary.

Sexual Terminology: The Court’s Flawed Interpretation of Sexuality

In addition to the legal problems with the Court’s standards of “interpretation,” there are a number of significant issues with their interpretations themselves. In our view, the judgments of the Court (i.e. both the Majority and Dissent) inadequately interpret sexual terminology in three ways:

1. Persisting current ambiguity: The terms used by the Court to clarify the ambiguity of the term “bestiality”—“penetration” and “sexual intercourse”—retain much of the ambiguity of the original term, and fail to achieve the Court’s goal of outlining predictable boundaries of “bestiality.”

2. Disregarded historical ambiguity: We agree with the Dissent that the terms “sodomy,” “buggery,” and “carnal knowledge” on which the Majority’s definition of “bestiality” depends do not have the historically specific definition that the Majority attributes to them, and are instead tied to sets of sexual mores which change not only over time but among people.

3. Difficulty of specifying forms of sexual expression: The Court claims to conduct an objective analysis of sexual terminology, but its analysis actually reflects a conservative philosophy that validates the naturalness of certain forms of sexuality over others. In consequence, the Court implicitly legislates sexual mores and, in turn, codifies conservative sexual norms about gender roles and propriety that police the behaviour and expression of Canadians without recourse to any demonstrable harm.

1. What is “Penetration?”: Persisting Current Ambiguity

The Court seeks to clarify the ambiguity of “bestiality” by limiting the set of potential acts it indicates to those involving “penetration” (and, interchangeably, “sexual intercourse”). Both the Majority and the Dissent simply assume that “penetration” and “sexual intercourse” themselves have well-understood legal meanings. Both opinions concur, no doubt to the surprise of many women, that penetration is “physically impossible” for “more than half the population” (see para 27 of the Majority and para 149 of the Dissent)—presumably the female half, who by this logic (and to Freud’s posthumous glee) seem to have no physical attributes beyond the absence of a penis. The biggest problem with such a specification is its limited imagination with respect to the potential diversity of meanings that “penetration” and “sexual intercourse” make available to enterprising Canadians. Many possible cross-species sex acts are either not definitively accounted for by the judgment or accounted for in ways the Court is unlikely to have intended. As a result, the Court merely defers the ambiguity created by the term “bestiality” to new terms that share its lack of clarity. To correct for the ambiguity generated by the substitution of one set of euphemisms for another, the next few paragraphs do not contain any euphemisms.

Throughout the Majority we are told that there are essentially two options for any given prospective penetrator: “vaginal” (sometimes “coital”) or “anal” (at paras 49, 89, and 91). While this seems specific enough, it is insufficient for defining bestiality. For instance, there is not a single bird, reptile, or amphibian that possesses either a vagina or an anus. Instead, these animals (and some mammals too) possess a single orifice called a cloaca. As it currently stands, the Supreme Court has seemingly ruled that Canada’s bestiality laws permit the penetration of ostriches, crocodiles, tortoises, two-toed amphiumas, and anything else without an anthropomorphic genital configuration.

If we assume that the Court intends for bestiality laws to prohibit sexual interaction between humans and more than just a small subset of vertebrates, we might reasonably amend this definition to include something like “any orifice fulfilling the general function of a vagina or an anus.” While this is better than the definition provided by the Court, its lopsided insistence on a gendered paradigm for penetration still leaves some legal grey areas for the enterprising penetrator. For instance, penetrative acts such as “sounding” (the penetration of a urethra) are genitally based but only ambiguously addressed by the ruling. Even if we assume that the Court means to prevent Canadians from penetrating golden moles, frogs, and parakeets (which is not obvious as the judgment stands), there are still unresolved questions that demand answers. Is it currently legal for Canadians to penetrate an elephant’s penis? Do we deem all intersex Canadians to have a vagina-for-legal-purposes, or are we fine with them being penetrated by as many willing animals as they can find? The fact is that the majority of potential penetrative acts involving animals simply do not fit within the missionary heterosexual paradigm that seems to limit the Court’s imagination.

Even more problematic than their heteronormative, anthropocentric fixation on vaginas and anuses, the Court fails to address what is being used to penetrate the vaginas and anuses in question. Presumably the Court assumes this is obvious, but there are, indeed, a wide range of potential means of penetration belying this assumption. At one point, and only one point, a translated French text informs us that there must be penetration “by the male organ” (at para 89). The bizarre conclusion flowing from this is that the Court is fine with Canadians engaging in brachioanal penetration (commonly known as “fisting”) with a donkey, or inserting an elongated clitoris into a rabbit’s vagina. Similarly, it would seem that a Canadian would be prohibited from inserting an entire garter snake into their rectum if and only if the snake was male and the person in question was therefore also, technically, being penetrated by a “male organ.”

While the Court never specifies, we can safely assume from the heteronormative paradigm active throughout the judgments that “male organ” refers to male genitals, but, even with this assumption, some ambiguity remains. Most animals, including humans, do not just have a single reproductive “male organ.” We are left wondering if it is, for instance, legal for a Canadian to “penetrate” a dog’s anus with their testicles as long as their penis remains outside. We imagine the Court would not convict a Canadian of bestiality for rubbing the tip of their penis between a cat’s labia, but how deeply must they penetrate the cat in order for it to count? Is foreskin sufficiently a part of the penis to count? The fact that the court imagines a kind of abstract Lacanian phallus as the single-use tool for all acts of penetration is an insufficient specification of the ranges of ways in which actual penises can be employed, the variety of sexual organs that males possess, and the variety of means of penetration at the disposal of each and every Canadian, regardless of their genital endowments. If the Court means to replace non-specific, antiquated terminology in the Criminal Code, there is no point doing so by half-measures.

2. What Was “Buggery?”: Disregarded Historical Ambiguity

The claim that the Majority reflects the original intent of buggery laws is the main object of Justice Abella’s dissent, which gives a persuasive account of the capaciousness of historical understandings of “buggery,” “sodomy,” and “carnal knowledge”—which tended, broadly, to include all non-procreative sex acts. This is, interestingly, the same understanding of “sodomy” implicit in the Supreme Court of the United States’ rulings in Bowers v Hardwick, 478 US 186 (1986), and Lawrence v Texas, 539 US 558 (2003), both of which seem to interpret sodomy as including oral sex between gay men. In her dissent, Justice Abella also provides a good analysis of how best to interpret the distinct lack of actual case law for bestiality, which appears to have been prosecuted only a few times per century, and even then only opportunistically. In our view, the reasonable response to this lack of authorities is to err on the side of breadth rather than allowing a tiny number of examples to stand in for the totality of sexual experience envisioned by an offence whose ambiguity is “self-evident” (see para 138).

In addition to the Dissent’s historical analysis, many of the Majority’s own authorities appear to only demonstrate that “penetration” is sufficient for bestiality, not necessary, as it asserts (see Dissent, at para 135). For example, the Majority’s most prominent recurring example is an 1828 statute specifying “that ‘actual Emission of Seed’ was not an essential element of the offence, and further that ‘carnal Knowledge’ would be ‘deemed complete upon Proof of Penetration only’” (at para 28). However, contrary to the Majority’s interpretation (which holds that the “only” at the end of the quote implies that penetration is necessary), in our view, the “only” is more sensibly interpreted as ‘without the additional need to prove ejaculation.’ Indeed, that is precisely the clarification made by specifying that ‘actual Emission of Seed’ is not a required element of the offence. Rather than supporting the relatively strong claim that penetration alone counts as “carnal knowledge,” the statute is making the much weaker, common sense claim that penetration is sufficient to constitute carnal knowledge, regardless of whether ejaculation occurs.

That sodomy would be defined through certain ‘sufficient’ examples rather than ‘necessary’ requirements is consistent with the nature of sodomy as an offence, which is inherently elastic and, by design, less exhaustive than we typically expect modern legal statutes to be. Indeed, people have been confused about the meaning of sodomy from the start. Samuel Pepys, a seventeenth-century English Member of Parliament, famously wrote in his diary “blessed be God, I do not to this day know what is the meaning of this sin, nor which is the agent, nor which the patient” (Pepys, Samuel. The Diary of Samuel Pepys. Ed. Robert Latham and William Matthews. Volume 4. London, 1971 at 209–10). If a prominent Member of Parliament during the era of the law’s most stringent enforcement had no idea what it meant, it seems doubtful that the term actually possessed the universal common meaning the Majority asserts.

In sum, it is likely that sodomy and buggery lacked the universal clarity claimed by the Majority. As the Dissent observes, sodomy and buggery “emerged in full moral force from the Church’s hegemonic jurisdiction over sexual offences and its abhorrence for non-procreative sexual acts, which were condemned as being ‘unnatural’” (at para 132). In other words, the origins of sodomy were based on a moral proscription of certain forms of sexuality associated with broad ecclesiastical categories of sin like Lust rather than specific sets of acts. Sodomy was a category used to mark all illicit sexual practices, and was indexed against a wildly variable set of mores. Even during the sixteenth century, puritan reformers would have understood sodomy as something vastly different from catholic monarchs such as Mary I, who actually repealed Henry VIII’s 1533 statute after her coronation in 1553. Legal historian William Eskridge writes that “the vagueness of the crime against nature, and its central role in this normative regime, rendered it elastic and mobile, so that it might include other non-procreative sexual activities” (Eskridge, William N., Jr. Dishonorable Passions: Sodomy Laws in America 18612003. New York: Viking, 2008 at 2). Similarly, historian Jonathan Goldberg sums up the scholarly consensus in writing that “sodomy […] identifies neither persons nor acts with any coherence or specificity. This is one reason why the term can be mobilized—precisely because it is incapable of exact definition” (Goldberg, Jonathan. “Sodomy in the New World: Anthropologies Old and New.” Social Text 29 (1991) at 46). Accordingly, sodomy does not, and has not, ever just meant “penetration” for the simple reason that it has always been a paradigmatically vague term. In their historical use, “sodomy” and “buggery” mark the relation of any given act to a prevailing set of attitudes toward sexuality in general. As a consequence, they are not, and have never been, consistent over time in the way that would support the definition advanced by the Majority.

3. What is “Sex?”: Difficulty of Specifying Forms of Sexual Expression

The Court purports to objectively delineate the scope of prohibited sexual activity with animals. But, to the contrary, this claim to objectivity masks a conservative sexual rhetoric that does not take into account the myriad ways that sexuality is actually experienced. The only neutral or objective definition of sex, a purely biological one such as “acts resulting in reproduction,” would exclude all forms bestiality entirely. Like pornography, the designation of “bestiality” requires subjective evaluation; you know it when you see it.

The Majority’s claim to articulate a “well-understood legal meaning” for bestiality relies on at least five related assumptions (at para 48):

1. that the Court both can and does know what Henry VIII, noted bigamist and religious zealot, was picturing (probably the appropriation of church assets by prosecuting monks, actually) when he banned sodomy in 1533 (at para 27);

2. that they know what members of the British Parliament were picturing in 1828 when they used the term “carnal Knowledge” (at para 28);

3. that they know what “any lawyer who was asked in 1892” was picturing when they said “buggery” (at para 48);

4. that they know what everyone pictures today when they hear the terms “penetration” or “sexual intercourse” (see above, they do not); and

5. that all of these actors are picturing the same thing.

As we have demonstrated, none of these assumptions hold. There is no single definition of any of these terms for the Majority to parse in a way that preserves its assumed mandate “not to change the elements of crimes in ways that seem to them to better suit the circumstances of a particular case” (at para 3). Sexual terminology always depends on the circumstances of particular cases. The ambiguity surrounding the term “bestiality” is not simply a consequence of Henry VIII forgetting to be more specific in laying out his sodomy statutes. Rather, such ambiguity is inherent to the issue of legislating sexuality in general.

The Court’s assumption that greater clarity is achieved by substituting “bestiality” with “intercourse” stems from the idea that sex is a certain, specifiable thing rather than an attitude that may or may not be associated with a given act. You cannot know precisely which acts constituted sex because it is different for everybody, and social ideas about what constitutes sexuality change over time. Some things we do with our genitals are not sexual, and we do some sexual things without using our genitals at all. Cleaning a house can be sexual, and digitally penetrating an anus can be nonsexual. There is no specifiable set of acts that are always sex to all people, including coitus.

Every time you interpret a sexual term you are making a judgment about the domain of possible activities that it encompasses. Failing to specify the precise boundaries of what that judgment includes—especially when you assume that these boundaries are obvious—reinforces harmful cultural hierarchies of gendered and sexual expression in which the fictions of a natural, normative, cisgender heterosexuality are institutionalized and perpetuated. We recognize that, for greater certainty, the law must strive for as much clarity and predictability as possible. But pretending that terms like “penetration” and “intercourse” achieve that clarity is not the means to do so, and admitting the subjectivity inherent to sexual terms does not undermine the Court’s objective of striving for clarity in the criminal law. Rather, it introduces the nuance necessary to adequately explore law’s intersection with sexual expression.

Insisting on the intelligibility of a term like “sexual intercourse” reinforces the pernicious conservative notion that non-procreative sexuality, such as homosexuality, is a “deviation” from the eternal, natural truth of procreative heterosexuality. These are the same attitudes that lead to views like homosexuality being a newfangled “lifestyle” that sexual perverts cooked up in the late 60’s and the rest of society is now obliged to tolerate. To be clear, tangible harm follows from the perpetuation of dismissive attitudes towards “alternative” sexual practices and orientations (especially when those attitudes are disseminated from Canada’s highest court). For example, this same attitude is present in the shockingly homophobic Republican party platform, which, among other things, expresses support for the idea that gay people might be “converted” back to an original, natural heterosexuality, from which homosexuality is really just a kind of misdirection. Similarly, the harmful insistence on specifying gender on government identification, the opposition to commonsense protections of transgender rights, and the increasingly vitriolic arguments over segregated washrooms, all stem from such an insistence on the reality of a sexual order that is purportedly destabilized by what are perceived to be “new” forms of sexual expression and identity.

Absent the sorts of concrete notions of harm around which we build laws like sexual harassment laws, animal abuse laws, and child abuse laws, it seems strange to be attempting to legislate sexuality at all. If, as the majority alleges, “there were (and still are) other provisions in the Criminal Code which may serve to protect children (and others) from sexual activity that does not necessarily involve penetration” (at para 116), then surely we also have laws to protect these same actors from sexual activity that does involve penetration. If it is redundant in one instance, then it is unclear why it is not redundant in the other. Though no one was arguing to strike down bestiality laws in this case, so far as we can see, there is no reason to uphold sexual prohibitions divorced from harm other than the belief in a transparent and legible sexuality that, frankly, does not exist. Even further, though it is beyond the scope of this post, we would argue that any law limiting sexual expression without a foundation in tangible harm unnecessarily restricts sexual liberty and relies on the outdated and pernicious notion that an orderly society can only be achieved through prohibitions that, in origin and substance, impose conservative sexual limitations on fulfilling expressions of sexual autonomy.

CONCLUSION

Despite the Court’s recent ruling in DLW, bestiality law in Canada remains at least partially inscrutable. Although we now know that Man’s Best Friend (with benefits) may legally lick genitals, we remain uncertain about how far our relationships can legally develop with some of Man’s Other Good Friends, like emus and pythons. In the end, “Bestiality” retains the imprecision of expressions like “Netflix & Chill”—little more than a euphemism that captures an undefined set of acts.

The judicial deference that the Majority bases its decision on is flawed. That deference, in this context, depends on the pretence that sexual terms have readily objective, transhistorical meanings. In other words, the Court’s ability to limit its role to ascertaining Parliamentary intent depends on the terms Parliament uses to express this intent remaining stable across time and among people. In this case, the Majority was so confident about buggery’s established meaning—both through time and among people—that it: (1) makes the surprising claim that “any lawyer who was asked in 1892 whether the offence of buggery with an animal required penetration would have replied in the affirmative” (at para 48); and (2) holds that this understanding of buggery persisted for decades and was retained by Parliament in 1955. However, as we have shown, these stabilities are absent with buggery. Without those stabilities, the Court cannot adhere to its own principles of statutory interpretation.

Further, the Court’s reasoning reinforces the pernicious belief in the supremacy of “traditional” sexual identities. In particular, the Court’s assumption that “penetration” and “intercourse” are clear objective terms reflects conservative sexual attitudes which prioritize procreative, heterosexual, and cisgender understandings of sexuality. While we recognize the historical limitations placed on the Court when ruling on such a “centuries old” offence (at para 126), its understanding of sexuality need not be “centuries old” as well. Indeed, if it recognizes the limited intelligibility of one set of terms, why cling to another, equally limited vocabulary?

Ultimately, we hope that when the Court next explores bestiality (and other sexual offences), it acknowledges the complexities of these offences’ histories, while advancing an understanding of sexuality that is inclusive of diverse sexual practices, and recognizes the “evolving social landscape” always necessarily informing contemporary sexual practice (at para 127). We do not claim that the Court need necessarily adopt a maximally inclusive understanding of sexuality whenever it delineates the scope of criminal law. Rather, we claim that accurately deferring to Parliament, even when interpreting potentially conservative legislation, requires a more nuanced understanding of the elasticity of sexual terminology and sexuality in general. That such an understanding would have been helpful here is amply attested to by the absurdity of the scenarios the judgment fails to account for, as well as the incredulity of media coverage about the judgment (see for example, “Most animal sex acts not against Canada’s bestiality law: court”; “Most bestiality is legal, declares Canada’s Supreme Court”; and “Canada’s Ridiculous Ruling That Oral Sex with Animals Is Legal Shows Need for New Bestiality Laws”).

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The Deductibility of Legal Fees Incurred in Child Support Proceedings and Section 15 of the Charter

Fri, 07/22/2016 - 10:00am

By: Kyle Gardiner

 PDF Version:The Deductibility of Legal Fees Incurred in Child Support Proceedings and Section 15 of the Charter

Case commented on: Grenon v. Canada, 2016 FCA 4 (CanLII), leave to appeal dismissed, 2016 CanLII 41074 (SCC)

On June 30th, 2016, the Supreme Court of Canada denied leave to appeal in the case of Grenon v. Canada, 2016 FCA 4 (CanLII), which was heard in Calgary at both trial and on appeal. The Appellant Grenon was seeking to challenge certain aspects of tax law and policy under section 15 of the Canadian Charter of Rights and Freedoms. The Supreme Court of Canada has only heard two previous challenges to tax law based on the equality rights guarantee in section 15 of the Charter. In Symes v. Canada, [1993] 4 SCR 695, 1993 CanLII 55, a challenge based on the inability to deduct childcare expenses as business expenses was unsuccessful. In Thibaudeau v. Canada, [1995] 2 SCR 627, 1995 CanLII 99, a provision requiring custodial parents to include child support payments in their income was also found not to violate section 15. It has been 21 years since the Supreme Court of Canada last heard an equality challenge to tax law. This post will focus on the missed opportunities resulting from the Supreme Court’s refusal to hear the Grenon appeal and some of the issues that have arisen in the past 20 years which it could have confronted.

After receiving a Shea Nerland Calnan LLP Research Fellowship in Tax Law, my research this summer for Professors Jennifer Koshan, Jonnette Watson Hamilton, and Saul Templeton involves analysis of the nearly 250 cases where section 15 Charter challenges have been brought to various aspects of tax law and policy since October of 1995. As mentioned, none of these challenges have succeeded in reaching the Supreme Court, now including Grenon v. Canada. Since Thibaudeau, the analytical approach to section 15 claims has been “continually reinvented” by the Court as Jennifer Koshan and Jonnette Watson Hamilton point out here. The section 15 framework’s ambiguities that have manifested since Thibaudeau are in need of clarification by the Supreme Court.

Facts

Mr. Grenon and his former spouse separated in 1998. They had two children who were minors at the time of separation. Mr. Grenon incurred legal expenses in proceedings contesting the amount of child support to be paid to his ex-wife. Mr. Grenon asked the Minister of National Revenue to adjust his 1999 income tax return to allow for a deduction of $11,816.21. This request was denied. When Mr. Grenon filed his 2000 income tax return, he deducted $165,187.70 for legal expenses incurred with respect to the child support proceedings. After the Minister denied this deduction as well, Mr. Grenon appealed the denial of those deductions to the Tax Court of Canada (2014 TCC 265 (CanLII)) and then to the Federal Court of Appeal (2016 FCA 4 (CanLII)).

Law

There are three legislative provisions that have the combined effect of allowing the deduction of legal fees and costs incurred by a taxpayer (Ms. Grenon in this case) in obtaining, enforcing or varying child support payments, and simultaneously denying the deduction of the expenses incurred by taxpayers who pay child support (Mr. Grenon in this case).

Rennie J.A. summarized these provisions in the Federal Court of Appeal decision (at para 3):

Paragraph 18(1)(a) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp)) (ITA) allows a taxpayer to deduct an expense if it “was made or incurred for the purpose of gaining or producing income from the business or property.” Subsection 248(1) defines property as including “a right of any kind whatever, a share or a chose in action.” To round out the legislation in issue, section 60 prescribes certain expenses which, in addition to those that fall within the ambit of paragraph 18(1)(a), are also permissible deductions.

“Property” in section 248(1) has been interpreted to include the right to receive child support. In Nadeau v. M.N.R., 2003 FCA 400 (CanLII), Noël J.A. noted (at para 28) that “the right to support is ‘property’ under the Act…and it is hard to dissociate this ‘property’ from the income which flows from the exercise of this right.”

The Statutory Interpretation Argument

Mr. Grenon made two arguments. Prior to making his Charter argument, he advanced a statutory interpretation argument submitting that he was entitled to deduct his legal fees because they were incurred for the purpose of gaining or producing income from property. As part of the settlement of the family law proceedings, Ms. Grenon agreed that she would reimburse Mr. Grenon when he spent money for the benefit of the children that she was otherwise required to spend under the terms of their agreement. Mr. Grenon submitted that this right to reimbursement was “property” within the meaning of section 248(1) of the ITA (at para 9, TCC). If this argument that “legal expenses incurred to resist a demand for child support…serve to increase or preserve his income” (at para 25) had been accepted, Grenon would have been able to deduct his legal expenses because those expenses would have then been incurred to gain or produce income, as required by paragraph 18(1)(a) of the Income Tax Act.

At the Federal Court of Appeal (at para 24), Rennie J.A. relied on Nadeau. Because Mr. Grenon had neither a right to child support nor a stream of income stemming from a property interest, and because his legal expenses were not incurred to “gain or produce” income from business or property, his argument was rejected (at para 26).

This result of allowing a child support recipient to deduct legal expenses and not permitting a payor to do so for the same proceeding is based on an odd and antiquated characterization of child support payments (as income from property in the hands of the recipient) that can have the effect of being unfair to payors. Mr. Grenon’s counsel characterized Nadeau as standing for the proposition that “child support payments are income from property, not because of any current logical basis for reaching that conclusion, but rather because the system has treated them as being income from property for so long that it is no longer feasible to treat them in any other manner” (at para 18, TCC). In the Tax Court of Canada decision, Graham J. stated that he was “sympathetic to this characterization of Nadeau,” and perhaps would have reconsidered that case if he were not bound by its reasoning (at para 18).

In my view, if the tax system has “effectively read in to section 60 of the Act a paragraph that permits recipients of child support to deduct their legal fees irrespective of whether those fees are actually laid out to earn income from property,” as Graham J. suggests it has (at para 18 TCC), the Supreme Court could have considered overruling Nadeau on this basis. Updating what seems to be outdated jurisprudence with no logical foundation could have lent some much needed clarification to the issue of whether or not child support recipients should be entitled to the deduction. This potential for clarification is one of the opportunities missed by the Supreme Court of Canada in their denial of Grenon’s leave to appeal.

The Section 15 Charter Argument

Turning to Mr. Grenon’s section 15 argument, he laid the evidentiary groundwork for this claim at the Tax Court of Canada level. At trial he made substantially the same Charter argument as was made at the Federal Court of Appeal. Graham J. had reviewed the expert evidence submitted by Mr. Grenon with a likely appeal in mind (at para 18 TCC). Unfortunately for Mr. Grenon though, the expert evidence was largely found to be less than robust and in some instances, biased. The most troublesome testimony came from Professor Paul Millar, an assistant professor of Criminology and Criminal Justice at Nipissing University. Taking Professor Millar’s report “with a significant grain of salt” (at para 21 TCC), Graham J. found that Professor Millar “cited studies performed by others without drawing my attention to various weaknesses of those studies, made significant logical leaps in his own report without clearly highlighting them for me, used the term “custody” to mean different things in different parts of his report” (at para 21 TCC).

While Graham J. was unable to give weight to much of the evidence introduced by Mr. Grenon, he did accept (at para 25 TCC) what would become a crucial piece of evidence on appeal, a Department of Justice statistic that 92.8% of child support payors are men.

Mr. Grenon argued that child support payors and payees are treated differently under the Income Tax Act, and that this distinction results in discrimination on the basis of sex and family status in violation of his section 15 Charter rights. For this argument to succeed, Mr. Grenon was required to show, as articulated by the Supreme Court in Withler v Canada (Attorney General), 2011 SCC 12 (CanLII), first, that the law in question created a distinction based on a ground enumerated in section 15 (i.e. sex), or a ground analogous thereto (i.e. family status). Second, Mr. Grenon was also required to show that this distinction created a disadvantage by perpetuating prejudice or stereotyping (Withler at para 54). Withler, the leading Supreme Court of Canada case on section 15 at the time, provided the framework for analysis used by the trial judge (at para 12, TCC) and the Federal Court of Appeal (at para 32).

The Federal Court of Appeal considered Mr. Grenon’s claim both as a claim of direct discrimination and adverse effects discrimination. Dealing first with the direct discrimination claim, the Federal Court of Appeal did not apply the Withler test for discrimination upon the ground of family status, as was advanced by Mr. Grenon (at para 6). Instead, the analysis proceeded on the basis of “those who have income from property”, the distinction drawn in the challenged provisions (at para 34). Because the foundation of this distinction was “the nature and source of income and the means of which it is produced” (at para 34) the distinction was not based on an enumerated or analogous ground. Mr. Grenon’s direct discrimination argument therefore failed.

The ITA provisions at issue were also characterized by the Federal Court of Appeal as “neutral on their face” (at para 33). Because laws which are facially neutral may “unintentionally have a disproportionate or adverse effect on a group or individual” (at para 36), the Federal Court of Appeal proceeded, where the trial judge did not, to consider “whether the provisions of the ITA, while not directly discriminating on the basis of gender and family status, did so indirectly and unintentionally” (at para 36).

For the adverse effects discrimination argument, the grounds of discrimination the Court used for analysis were sex and family status. For Mr. Grenon to have succeeded here, he was required to show that the cumulative effect of paragraph 18(1)(a) and the definition of property in subsection 248(1) limited his ability to deduct legal expenses on the basis of a personal characteristic, albeit indirectly. Rennie J.A. found that the provisions of the ITA at issue “affect men far more than they do women” (at para 38). Nevertheless, Grenon’s Charter argument failed “because it confound[ed] the underlying social circumstances with the consequences of the law” (at para 43).
I would suggest that Rennie J.A.’s assertion (at para 42) that paragraph 18(1)(a) of the ITA “does not affect men differently than women” illustrates the failure of the court to apply the concept of adverse effects discrimination. He writes, in the next two sentences, that “[w]omen payees are affected in the same manner and to the same extent as male payees. The impact of the law is, in terms of its effect, neutral” (at para 42). By switching focus to women payees and male payees, the Court is no longer proceeding with an analysis of adverse effects discrimination, the appropriate ground for which would be sex. Instead of focusing on substantive equality, which ought to be the goal of section 15 (see Withler, at para 2), a formal equality analysis is what results. Any chance of adverse effects discrimination being found is effectively derailed when the analysis switches (at para 42) to those who are similarly situated, as male and female payees purportedly are.

Consequently, Grenon v Canada becomes yet another case in which a claim for adverse effects discrimination was unsuccessful. For a thorough discussion of the Supreme Court’s approach to adverse effects discrimination under section 15 of the Charter, see Jonnette Watson Hamilton and Jennifer Koshan’s paper on the topic here. The adverse effects analysis in Grenon purportedly failed for causal-connection reasons, with Rennie J.A. stating that “while it is true that virtually all payors are men, and that it is mostly men that are denied the deduction, it is not a consequence of the legislation. There is no nexus between what the ITA requires and the consequence” (at para 39, FCA).

Beth Symes faced a similar challenge in Symes v Canada, where she was unable to prove a causal connection between the effect of section 63 of the ITA and the costs of childcare that women incur. Her challenge was similarly dismissed, Iacobucci J. stating that “[i]n order to demonstrate a distinction between the sexes within an adverse effects analysis, one therefore needs to prove that section 63 disproportionately limits the deduction with respect to actual expenses incurred by women” (at para 142). Like Grenon, she was unable to demonstrate a nexus between the legislation and the consequence. If an admissible finding that 92.8% of payors are men is not enough to support a successful finding of adverse effects discrimination, what would be? A useful clarification that the Supreme Court could have made if it had granted leave is the extent of the causal connection required between provisions of the ITA and the adverse impact it has on a particular group in order to make out an adverse effects discrimination claim.

Furthermore, the test for discrimination has been repeatedly modified since Symes and Thibaudeau, as alluded to earlier in this post. The framework was recently changed again with the decisions of Quebec (Attorney General) v. A, 2013 SCC 5 (CanLII) and Kahkewistahaw First Nation v Taypotat, 2015 SCC 30 (CanLII). In these cases, it appears that the Supreme Court has shifted its definition of discrimination from the perpetuation of prejudice and stereotyping (see Withler at para 37) to the perpetuation of disadvantage. As Abella J. wrote in Quebec v A (at para 325), prejudice and stereotyping should be seen simply as “two of the indicia” relevant to whether there is a violation of substantive equality. The focus now appears to be on disadvantage. In Taypotat, the Court also seemed to suggest that the claimant must belong to a historically disadvantaged group in order to mount a successful discrimination claim (Taypotat at para 21). That is, a finding of discrimination seems to require proof of the law’s perpetuation of that historic disadvantage for the group in question.

If proof of historical disadvantage is required for a finding of discrimination, one must ask if men could ever mount a successful claim. Because it seems unlikely that men, as a group, would ever be convincingly characterized as historically disadvantaged in a general way, Grenon is a case where the Supreme Court could have clarified if the test has in fact changed to require proof of historical disadvantage or not. Limiting section 15 claimants to those who are historically disadvantaged would also raise questions about previous cases such as Trociuk v. British Columbia (Attorney General), 2003 SCC 34 (CanLII). In that case, a male complainant successfully argued that sections of the British Columbia Vital Statistics Act that allowed for the permanent exclusion of his particulars from his child’s birth certificate violated his section 15 equality rights, without a need to prove that he was a member of a historically disadvantaged group.

Graham J. did discuss, to a limited extent, one stereotype that may be active in the tax provisions challenged by Grenon: “the classic “deadbeat dad” stereotype” (at para 36, TCC). The context in which this stereotype was mentioned involved a discussion of the tax system, not the section 15 test for discrimination. Section 15’s analytical framework still includes stereotyping as one way to prove discrimination, but the “deadbeat-dad” stereotype is unique because it pertains to a non-disadvantaged group, namely men. The Grenon case would have been an ideal opportunity for the Supreme Court to clarify if use of such a stereotype, applied to a non-historically disadvantaged group, would have been enough to satisfy the test for discrimination under section 15.

Concerns About the State of the Law

It is worth pointing out that in addition to the Charter issues I have discussed here, Graham J. discussed some of his concerns about the current state of the law (para 33 TCC). In his view, “there are serious inequities that can arise when child support recipients are permitted to deduct the legal fees that they have laid out to establish child support payments and child support payors are not permitted the same deduction” (at para 33, TCC).

Whatever policy objective may exist to justify this outcome, it would not be, as Graham J. lamented (at para 33, TCC) “to give a financial break to the party with the greater financial need,” because a child support recipient with greater than 60% access will still receive the deduction even if she earns substantially more income than the payor. The objective could not be to “ensure the financial security of the children” because children in any case would benefit more from having both parents receive the deduction. The objective could also not be to “ensure access to justice because the subsidy is given to one parent and denied to the other regardless of their individual financial resources.” These are but some of the inequities that Graham J. indicated are “aching to be addressed by Parliament” (at para 33, TCC).

The Supreme Court’s refusal to hear Grenon’s appeal means that a number of issues will continue to need clarification. I confined my discussion here almost exclusively to Charter issues, but there are many others raised by the facts of this case that the Supreme Court could have addressed. Until such time, a great number of individuals will continue to be affected by them.

Research for this blog post was made possible by a generous fellowship received from Shea Nerland Law. For more information on the projects funded by this fellowship, click here.

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Costs to the Respondent: Discouraging Habeas Corpus Applications

Tue, 07/19/2016 - 11:22am

By: Amy Matychuk

PDF Version: Costs to the Respondent: Discouraging Habeas Corpus Applications

Case Commented On: Voisey v Canada (Attorney General), 2016 ABQB 316 (CanLII)

In Voisey v Canada (Attorney General), 2016 ABQB 316, Justice Crighton of the Alberta Court of Queen’s Bench rejected an application for habeas corpus and awarded $1000 in costs to the respondent. Mr. Voisey, a federal prison inmate, tested positive for drug use and was subsequently involuntarily transferred from a minimum to a medium security prison. He challenged the transfer based on several grounds, alleging it violated sections 1, 7, 12 and 15 of the Charter (at para 10), it was unreasonable because he was not violent, it was based on unproven suspicion, and he should have received the least restrictive measures possible (at para 20). The court found that all his claims were meritless, though it did acknowledge that a few of them met the minimum threshold of being “legitimate grounds” for claiming his reclassification was arbitrary. The court concluded, following Justice Shelley in Rain v Canada (Parole Board)2015 ABQB 747 that the respondent “incurred significant expenditure for no valid purpose. That makes this a case where a substantial cost award is justified.” (at para 34) It awarded $1000 in costs against Mr. Voisey, to be paid in $5 increments out of his biweekly paycheques of $15, and the remainder to be payable immediately upon his release.

This case raises questions about the fairness and effectiveness of awarding costs against self-represented inmates on unsuccessful habeas corpus applications. Should a self-represented inmate be responsible for costs when he brings an unintentionally ill-conceived challenge against a decision affecting his liberty? Should the rules for costs apply where liberty, not money, is at stake? Or should inmates, as Mr. Voisey himself put it, “not be forced to pay costs for enforcing [their] rights” (at para 29)? Will a costs award against an inmate be effective at discouraging other inmates from making unmeritorious applications? Although Justice Crighton applied the Alberta Rules of Court and relied on precedent in awarding costs against Mr. Voisey, the unusually high amount of costs cannot be completely explained using the Rules and case law. It is possible that the higher amount is due to Mr. Voisey’s conduct in court. However, even if this is true, it is not clear that costs awards are a fair or effective way to deal with vexatious self-represented inmates on unsuccessful habeas corpus applications because the rules of costs contemplate represented litigants, not self-represented ones.

In a civil action involving a represented litigant where money, not liberty, was at issue, the court’s award of costs in Voisey would have been entirely reasonable. The Alberta Rules of Court, Alta Reg 124/2010 direct that the successful party to an application is entitled to a costs award against the unsuccessful party (Rule 10.29(1)). The Rules outline the criteria the Court may consider when contemplating a costs award. These include “the conduct of a party that tended to shorten the action,” conduct by either party that “lengthened or delayed the action,” as well as whether an application or some part of it was “unnecessary, improper or a mistake” (Rule 10.33 1(f), (2)(a), and (2)(d)). Justice Crighton noted that the Rules also contemplate an increased award of costs in complex matters (at para 31; Schedule C, Column 1, s 8 of the Rules). Aspects of Mr. Voisey’s conduct certainly meet these criteria. He submitted “voluminous” and “not particularly well focused” materials (at para 31). The unfocused nature of his application presumably prolonged the amount of time the Court and the Respondent required to properly understand his complaint, and so may have lengthened the action as in Rule 10.33 (1)(f) and (2)(a). The extraneous portions of his “meritless” (at para 34) application were also unnecessary, as in Rule (2)(d). Although Mr. Voisey’s conduct meets criteria in the Rules that justify a higher costs award, he is in a situation where his liberty is at stake and he has very few legal resources at his disposal. As a self-represented litigant, he cannot be expected to draft materials with the same clarity as a lawyer, and so applying the Rules to him as they would be applied to a represented litigant seems unfair.

However, it is important to note that Justice Crighton’s decision did not only follow the Alberta Rules of Court, but also relied on Alberta precedent for awarding costs against an unsuccessful self-represented habeas corpus applicant. Even so, the costs awarded in Voisey exceed the costs awarded in the preceding case, Rain. In Rain v Canada, the inmate was ordered to pay $500 in costs after the court declined jurisdiction and found Mr. Rain’s application was neither reasoned nor well argued. But Rain can be distinguished from Voisey. The Rain court declined jurisdiction because there were other avenues of resolution and there was no deprivation of liberty. Conversely, the Voisey court took jurisdiction and held that Mr. Voisey’s transfer from a minimum to a medium security facility did constitute a deprivation of liberty. Although Justice Crighton ruled that Mr. Voisey’s application was “entirely unsuccessful,” she found some of his grounds for the complaint legitimate, though weak (at para 32). Mr. Voisey’s claim met more of the criteria required for a successful habeas corpus application than did Mr. Rain’s. Yet Mr. Voisey was ordered to pay double Mr. Rain’s costs. Given that parts of Mr. Voisey’s claim were legitimate, the higher costs award may be due to the aspects of his conduct that were objectionable under the Alberta Rules of Court. But as discussed above, the Rules are not designed for people like Mr. Voisey who challenge a limitation on their liberty without representation.

In New Brunswick, where the Rules of Court (NB Reg 82-73, Rule 59.02) outline similar criteria for a costs award, courts also order costs against self-represented inmates who unsuccessfully apply for habeas corpus. However, even this precedent does not fully explain the high costs award in Voisey. Two of the NB cases do mention aspects of the applicants’ conduct, but they do not expressly link the nature of the conduct to the costs. Firstly, in Wood v Canada (Atlantic Institution)2014 NBQB 135 (Wood) the court held that there was no deprivation of liberty but that the inmate did raise legitimate grounds for his complaint, and costs were $750. The Wood court noted, “the applicant conducted himself in a respectful manner and mounted thoughtful arguments” (at para 67). Secondly, in Bird v Canada (National Parole Board), 2007 NBQB 96 (Bird) the court declined jurisdiction because the inmate had not exhausted alternative remedies, and costs were $950. The applicant in Bird asked for a number of strange forms of relief that could be characterized as improper (Rule 59.02(g)), such as “change of name, relief from taxation, forgiveness from God, title to land, title to and the right to occupy the Rodd Inn” (at para 31). Lastly, in Cain v. Canada (Attorney General), 2011 NBQB 47 (Cain) the court declined jurisdiction, and costs were $1000. The Cain court did not discuss whether or not the applicant’s conduct affected the costs award. In contrast to all of these, the court in Voisey not only took jurisdiction over the case but ruled that there was a deprivation of liberty and some grounds for the complaint were legitimate. In other words, Mr. Voisey’s argument was better than in any of the cases above, but the costs ordered against him were the same amount as in Cain, where the court declined to even take jurisdiction. Therefore, even in comparison to NB cases, $1000 still seems an unusually high award of costs.

It seems likely that Mr. Voisey received a higher costs award partially due to aspects of his conduct: his application was difficult to read, and his arguments were generally weak. If this is true, the question becomes whether or not imposing costs on inmates for ill-conceived habeas corpus applications is an effective way to discourage further unmeritorious actions. Understandably, courts wish to deal with as few badly drafted applications as possible. As the court in Wood notes, habeas corpus applications have a wide scope of review, which means there is very little disincentive for inmates to challenge administrative decisions affecting their liberty (at para 66). The threat of costs, from the court’s perspective, may be the only thing keeping habeas corpus applications to a manageable number. Indeed, in a normal civil action, the purpose of a costs award is to discourage vexatious litigation. The threat of being financially penalized should make those without a good argument think twice about wasting the court’s time and taxpayers’ money.

However, the logic of discouraging vexatious litigation through costs may not apply to inmates. First, inmates may not be aware of the way courts react to meritless habeas corpus applications. Their access to information is limited to whatever materials are available in prison libraries, and they cannot use the Internet or read CanLII. They are typical of self-represented litigants in that they struggle to navigate a complicated, unfamiliar procedural forum; their conduct may not reflect a desire to be vexatious, just an unfamiliarity with the legal system. Second, even if inmates did have access to cases, courts often use language that is difficult for a layperson to comprehend. Many inmates have not completed high school and do not have the skills necessary to wade through legal jargon. Even simple phrases such as “costs to the respondents” are opaque and confusing for those unfamiliar with legal language; to the untrained reader, it is not even clear whether the phrase means the respondents must pay costs or will be receiving costs. Third, inmates who must represent themselves because they cannot afford a lawyer have no way of knowing how to formulate and write a good habeas corpus application, and the steepest of costs awards will not help to enlighten them. Last, most civil proceedings involve situations where money, rather than liberty, is at stake. Using a costs award to discourage unnecessary litigation over money between represented parties is one thing, but using a costs award to discourage a habeas corpus claim involving a self-represented litigant amounts to financially penalizing Mr. Voisey’s attempted enforcement of his own human rights, which seems unnecessarily severe.

Another factor that should perhaps give courts pause about awarding costs against inmates is their severely reduced ability to pay. Indeed, Mr. Voisey advised the court that he earns $15 every two weeks, and now he must pay costs at a rate of $5 out of each paycheque: 1/3 of his entire income. In addition, the remainder of his costs will be payable immediately upon his release. Prison inmates often experience poverty, so it is unlikely he currently has the funds to pay the rest of his costs or will have them when he is released at the end of his 34-month sentence. In order to pay the rest of his costs, he will need to find a job—another difficult task for a recently released inmate because of the stigma of a criminal record. By reducing his current income and requiring him to pay the remainder of his debt immediately upon release, this costs award may prevent Mr. Voisey and other inmates in similar situations from successfully reintegrating into society and may also make them more likely to reoffend.

Justice Crighton’s decision to award $1000 in costs to the respondent cannot be fully explained either by reference to the Alberta Rules of Court or to case law in Alberta and New Brunswick. The decision as to costs seems targeted to discourage habeas corpus litigation that uses court time ineffectively. But given the importance of the liberty interest at stake, inmates’ lack of access to information and representation, and inmates’ doubtful capacity to actually pay a costs award, perhaps costs are not an effective way of discouraging frivolous habeas corpus applications. A more effective solution would be to ensure that inmates are able to access representation so that they are not responsible for drafting their own documents. If inmates had access to legal counsel, they would be able to both protect their liberty when necessary and refrain from burdening the court with vexatious litigation, enforcing their rights while also ensuring that only coherent complaints receive time in court.

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Will the Flurry of New Wind Energy Projects Face a Storm of Opposition?

Mon, 07/18/2016 - 10:00am

By: Jeremy Barretto

PDF Version: Will the Flurry of New Wind Energy Projects Face a Storm of Opposition?

Decision Commented On: AUC Decision 3329-D01-2016, E.ON Climate & Renewables Canada Ltd., Applications for the Construction and Operation of the Grizzly Bear Creek Wind Power Project, May 19, 2016.

According to Alberta’s Climate Leadership Plan, renewable sources are expected to account for up to 30% of the province’s electricity generation by 2030—approximately triple today’s renewable generation. The provincial government is developing a competitive process to bring new renewable generation capacity to the grid, based on reports from an expert panel and the Alberta Electric System Operator. The first competition will be in Q4 2016.

As I’ve previously written, wind projects will likely obtain most government financial incentives, provided that such incentives are offered through a competitive auction for utility-scale renewable energy projects. That’s because upfront costs for wind energy projects are typically lower than other forms of renewable energy. The rapid development of wind energy in Ontario and recent Alberta decisions foreshadow potential vigorous opposition, and key process differences, for the anticipated flurry of new wind energy projects.

Seven years ago Ontario’s Green Energy Act, SO 2009 c 12 was introduced to increase renewable energy production, encourage energy efficiency and create green jobs. In Ontario most renewable energy projects must apply for and receive a Renewable Energy Approval (REA) from the Director, Ministry of the Environment and Climate Change (Ontario Regulation 359/09). Certain concerns can be raised by members of the general public in relation to a REA by appealing to the independent and quasi-judicial Environmental Review Tribunal (ERT). Before the ERT, appellants must establish that engaging in the renewable energy project, as approved, would result in serious harm to human health or serious and irreversible harm to plant life, animal life or the natural environment (see section 142.1 of the Environmental Protection Act, RSO 1990 c E.19). If the ERT makes such a determination it may revoke or alter the decision of the Director.

The Green Energy Act led to the rapid development of wind projects in populated rural areas. Residents in the vicinity of proposed wind projects in Ontario raised noise, health or environmental-related objections to some projects. For example, among the first ERT appeals of a wind project was Erickson v. Director, Ministry of the Environment, ERT Decision 10-121/10-122 (July 18, 2011). The appellants sought to have the REA for the Kent Breeze Project revoked on the basis that the project would cause serious harm to human health. The appellants raised numerous health concerns related to noise emitted from the proposed wind turbines, including noise annoyance and purported related symptoms such as insomnia, headache and dizziness. The ERT stated that, while there were legitimate concerns and uncertainties about the effects of wind turbines on human health, it could not conclude that the project as approved would cause serious harm to human health.

Alberta has decades of experience with wind energy, Canada’s first commercial wind farm was installed at Cowley Ridge in southern Alberta in 1993. The Alberta Utilities Commission (AUC or Commission) is the province’s independent, quasi-judicial electricity regulator. The Commission more recently considered a variety of health and related objections to proposed wind projects that previously appeared Ontario. The primary trigger for an AUC hearing occurs when a landowner, or other rights-holder, within close proximity to a proposed project objects to its AUC application. A number of Alberta wind projects have been approved by the AUC but are not yet built, awaiting details such as certainty regarding government policies or interconnections.

In Alberta, the AUC conducts the initial regulatory review of applications for new power generation plants and issues approvals. Under its legislation, the Commission must consider whether construction or operation of the proposed power plant is in the public interest, having regard to the social and economic effects of the plant and the effect of the plant on the environment (see section 17 of the Alberta Utilities Commission Act, SA 2007, c A-37.2). The Commission’s public interest determination involves a broad consideration of potential burdens and benefits of the project. This stands in contrast to the ERT’s narrower review of a REA based on serious health or environmental harms. Appeals of AUC decisions to the Alberta Court of Appeal are limited to issues of law or jurisdiction (see section 29 of the Alberta Utilities Commission Act, SA 2007, c A-37.2). This means that the initial AUC approval will typically involve a robust regulatory review of various project-related issues with limited avenues of appeal.

To determine whether a project is in the public interest, the Commission considers and balances the adverse and beneficial impacts of the project. In its previous Bull Creek Wind Project decision (AUC Decision 2014-040), the Commission said that a project will largely be in the public interest if the applications are in compliance with existing provincial health, environmental and other regulatory standards, in addition to the public benefits outweighing negative impacts.

The AUC hearing for the Grizzly Bear Creek Project, proposed by E.ON Climate & Renewables Canada Ltd., was conducted over two weeks in April 2016. It involved several interveners, including approximately 30 landowners who formed the Grizzly Bear Coulee Protection Group (GBCPG) to object to the project. On May 19, 2016, the AUC approved the project, with conditions, pursuant to the Hydro and Electric Energy Act, RSA 2000 c H-6.

The Commission deferred to environmental standards in its Grizzly Bear decision. The AUC stated that sign-off by Alberta Environment and Parks (AEP), which was previously obtained by the applicant, indicates that the impact to the environment, and specifically to wetlands, was acceptable to AEP. The Commission stated that it considers sign-off from AEP to be strong evidence that the project’s environmental effects will be acceptable.

In response to intervener concerns regarding noise related to the Grizzly Bear project, the Commission concluded that the results of the applicant’s noise assessment were reasonable and consistent with the requirements set out in the AUC’s own Rule 012. This rule applies to construction and operation noise from wind turbine facilities and requires that noise be within a permissible cumulative level (rather than a project-level only), including existing and approved third-party facilities. In the AUC’s view, the permissible sound level in Rule 012 is consistent with the World Health Organization guidelines.

The proponent and GBCPG’s experts disagreed on whether the permissible sound levels under Rule 012 would be protective of health. The AUC found that the evidence presented did not support the proposition that audible, low-frequency noise and infrasound from the proposed project will result in health effects. Furthermore, the Commission was satisfied that adherence to Rule 012 and the project’s nighttime permissible sound level will protect nearby residents from sleep disturbance and other potential health effects that could be related to turbine noise.

There are important differences between the ERT and AUC evidentiary processes. The Ontario ERT requires that experts be qualified by the Tribunal before their opinion evidence can be admitted. The ERT typically hears evidence from individual witnesses, with a focus on health, noise and environmental issues. The AUC assigns the appropriate weight to a witness’ opinion evidence and has not qualified expert witnesses in several recent facility hearings. The AUC formalized its practice of forgoing expert witness qualification in Bulletin 2016-07.

In its Grizzly Bear decision, the AUC said that if a witness provides evidence in areas outside his or her area of expertise this evidence is given the weight of a lay witness rather than the weight of an expert (citing its Heartland Transmission Project, AUC Decision 2011-436). Witnesses appear before the AUC as a panel, including representatives from the proponent, and these panels can cover a broad range of issues (e.g. health, noise, environmental, property valuation and public engagement, etc.). For the Grizzly Bear hearing, nine witnesses appeared for the proponent and the GBCPG put up eight landowners and five experts as witnesses.

The AUC’s consideration of a broad range of issues under its statutory public interest mandate means that wind developers may need to hire numerous experts to address any concerns raised by interveners in the regulatory process. Proponents may also be responsible for the reasonable costs of a local intervener’s participation (including legal counsel, expert witnesses and reasonable personal expenditures). The Grizzly Bear decision suggests that in response to objections to wind energy projects the AUC will: (i) give deference to existing standards (such as AEP sign-off); (ii) rely on its own Rule 012 as mitigation against noise and health-related concerns; (iii) consider a broad range of issues and evidence raised by intervenors; and (iv) potentially conduct multi-week hearings with large witness panels for both the applicant and intervenors.

It remains to be seen whether the AUC’s vigorous hearing process will result in public confidence in its decisions and avoid a groundswell of opposition and appeals against new wind energy developments.

Cassandra Richards provided research assistance for this article.

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The Probative Value of Technological Evidence

Fri, 07/15/2016 - 10:00am

By: Lisa Silver

PDF Version: The Probative Value of Technological Evidence

Case Commented On: R v Didechko, 2016 ABQB 376 (CanLII)

“After a while circumstantial evidence can be overwhelming!” remarked Madame Justice Germaine in the recent Alberta Queen’s Bench decision, R v Didechko, (2016 ABQB 376, para 86). In this case, Germaine J infers guilt on charges of failing to report an accident where death ensues pursuant to s. 252(1.3) and obstruct justice pursuant to s. 139(2) from the circumstantial technological evidence advanced by the Crown prosecutor. The use of such technological evidence, global positioning or GPS and telecommunications cell tower usage, is not unique. Rather what is singular is the evidential purpose for which it is proffered by the Crown as the only evidence available to establish the required factual connection between the accused and the crime. This case is a portent of the future as technological advancements make it possible, and necessary, to use such technological evidence for the investigation and successful prosecution of crime. Didechko is a persuasive example of a “smart” prosecution wherein the Crown utilizes all the evidentiary tools available to create a cohesive and, ultimately, unassailable prosecution. It is also a wake-up call for all those in the legal system to be mindful of the potential effects of technological advances in building a legally cogent case.

In order to appreciate the intelligence of this prosecution, we must review the facts as potential evidence at trial. At the core, Didechko is factually simple. In the early morning hours of October 14, 2012, the eighteen-year-old victim, Faith Jackson, is hit by a motor vehicle. Two firefighters, who by happenstance were nearby when the collision occurred and observed the event, provide immediate assistance but to no avail as Ms. Jackson soon succumbs to her injuries at the hospital. Later that day, the police find a damaged motor vehicle at the side of a road. Using the vehicle identification number, the police can easily establish ownership by a car dealership. Thus far, the investigation uncovers facts which, at trial, can be easily established through witnesses (i.e. the manager of the dealership) and/or documentary evidence. These facts, when tendered into evidence by the Crown, are an example of direct evidence, which, if believed, resolves an issue without any drawing of inferences by the trier of fact. Typically, direct evidence is given by eyewitnesses to an event or issue, such as in this case, the observations of the firefighters who saw the incident unfold.

However, finding a damaged vehicle does not end the matter. In order to establish Mr. Didechko’s legal responsibility the Crown must prove, beyond a reasonable doubt, two vital factual connections: that the abandoned vehicle was the vehicle involved in the fatality and if so, that Mr. Didechko was in care and control of that vehicle at the relevant time. There must be a nexus between the prohibited conduct (the unreported collision) and the person accused of the crime. In terms of the first matter of proof, identity of the vehicle, Mr. Didechko’s counsel, through an agreed statement of fact filed pursuant to s. 655 of the Criminal Code, admitted it was the involved vehicle. That leaves the crucial issue of identity of the driver as the main issue at trial.

Upon further investigation, the facts reveal that at the relevant time, the abandoned and damaged car, which was the dealership’s demonstration vehicle, was signed out by Mr. Didechko. This can be proven by both direct evidence and by Mr. Didechko’s own admission to the police. But this evidence is still not enough to connect Mr. Didechko to the incident as he reported the vehicle stolen during the relevant time period. In other words, According to Mr. Didechko, he was not in possession of the vehicle when Ms. Jackson was killed. According to his police statement, he was asleep at his father’s home at the time of the incident. However, he gave the police a number of contradictory statements regarding when, where, and how the vehicle was taken. There is also evidence, from video recordings and witnesses, that Mr. Didechko attended a number of bars that evening and consumed alcohol. The police now have a possible motive for Mr. Didechko to mislead the investigators regarding his involvement in the hit and run. But how to prove this in court? The direct evidence at hand is not enough to attribute legal responsibility to Mr. Didechko for the fatal collision. It is suspicious but lacks probative value.

A decade ago a Crown prosecutor faced with this dilemma would determine that there was no reasonable likelihood of conviction and withdraw the charges. A decade ago, the police investigators would agree, having exhausted their investigative techniques. But the situation is different now. In Didechko, the police dig deeper and access information that normally lies hidden: the technological footprint of a person’s daily life. As we make our daily rounds, technology follows us. Our smart phones and computers record our contacts, our thought patterns, and our location. Our cars convey us through the City with technology recording the places we go and the speed at which we do it. This information is there waiting to be mined. In the Didechko case, the police mined this information but it is the Crown prosecutor who turned the data into a persuasive narrative and probative evidence of identity.

The Crown thus weaves an overwhelming case by piecing together seemingly disparate evidence, much of which is circumstantial evidence, from which a trier of fact can draw reasonable inferences. The cell phone transmissions provide the location of Mr. Didechko at the relevant time and place, both at and near the scene of the incident and at and near the location where the motor vehicle was abandoned. It establishes the falsity of Mr. Didechko’s statement that he was sleeping at his father’s home at the time. This evidence ties Mr. Didechko to the vehicle as the vehicle’s GPS traces the path of the incident. Evidence of the people he contacts during and after the incident is available through cell phone records, which also connect him to the incident and to the vehicle. For example, Justice Germaine draws an inference from a timely conversation between Mr. Didechko and his brother (based on cell phone records) as the vehicle returns to the scene (based on both GPS from the vehicle and cell tower positions) where the fatally injured Faith Jackson lies. Presumably, according to Germaine J, Mr. Didechko does so in order to assess the state of his jeopardy and the next steps he will take escape criminal liability.

To establish these technological facts, the Crown does not merely rely on the records and data but calls experts to explain GPS and the cell phone system to establish accuracy and reliability of the evidence. It should be mentioned that the defence fully canvasses the admissibility of the technological evidence in a previous application (see R v Didechko, 2015 ABQB 642). The Crown then builds the case further by explaining the interplay of these technologies and creating an exhibit mapping the connections between the cell towers and the use of the cell phone and as connected to the positioning of the motor vehicle. Again, weaving the circumstantial evidence into proof beyond a reasonable doubt. A final piece of evidence emanating from a text message sent by Mr. Didechko some two hours after the incident neatly sums up the case: “something bad happened sry” (at para 73). It should finally be noted that this same technology also assists the accused in his acquittal of dangerous driving causing death pursuant to s. 249(4) as the GPS evidence could not conclusively show he was driving in a manner dangerous to the public.

The use of GPS and cell phone tower evidence at trial is not novel. For instance, GPS evidence is used in Fisheries Act prosecutions, such as in R v Fraser, 2012 NSPC 55. Such evidence is also used in criminal prosecutions to establish a conspiracy or a common purpose to commit an offence such as in R v Crawford, 2013 BCSC 932. It has also been used to assist in assessing the credibility of witnesses in a “he said/she said” sexual assault allegation, such as in R v Aulakh, 2012 BCCA 340. Rather, what is novel in the Didecheko case is the utilization of this technological evidence as a combined narrative on the ultimate issue of guilt or innocence. Justice Germaine at para 30 of the decision suggests that “modern technology has changed the way in which police investigate crime.” I would change that sentiment only slightly to suggest that modern technology has significantly changed the legal landscape and we, as members of the legal community, must be ready to embrace it.

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Justice In a Timely Manner: The New Framework for Trial Within a Reasonable Time

Thu, 07/14/2016 - 10:00am

By: Drew Yewchuk 

PDF Version: Justice In a Timely Manner: The New Framework for Trial Within a Reasonable Time

Cases Commented On: R v Jordan, 2016 SCC 27 (CanLII); R v Williamson, 2016 SCC 28 (CanLII)

I recently posted a comment on a Supreme Court of Canada decision, R v Vassell, 2016 SCC 26 (CanLII), involving section 11(b) of the Charter, which guarantees the right of any person charged with an offence to be tried within a reasonable time. On July 8, 2016, the Supreme Court of Canada decided two more appeals on section 11(b) of the Charter. In a five-four split in R v Jordan, 2016 SCC 27 (CanLII), the majority overturned the framework for calculating unreasonable delay that was established in R v Morin, [1992] 1 SCR 771 (CanLII). The new framework is simpler, and establishes presumptive ceilings for unreasonable delay (minus defence delays) between charges being laid and the end of trial. The new ceilings are 18 months for charges going to trial in provincial court, and 30 months for charges going to superior court. (Jordan, at para 49) This is a significant change to section 11(b) jurisprudence, and both the majority and concurring judgments acknowledge it as such (Jordan, majority at paras 134-137, concurring at para 302). Moreover, the concurring justices only concur as to the outcome of Jordan – they propose a less radical departure from Morin and fundamentally disagree regarding the proper framework to be applied. This post explores the reasons provided by the majority for this change, as well as the application of the majority and alternative frameworks in Jordan and the companion case of R v Williamson, 2016 SCC 28 (CanLII).

The New Framework

The majority decision (Justices Moldaver, Karakatsanis, and Brown writing) includes a summary of the new framework (at para 105). The first step is to determine the length of delays caused by the defence and subtract those delays from consideration. Then whether or not the ceiling has been passed determines who has the burden of proof. When the accused has waited for trial less than the prescribed ceiling (18 months for provincial court, 30 months for superior court), the burden is on the defence to show the delay was unreasonable. The defence must lead evidence that they took steps to speed the proceedings, and that the case took markedly longer than it should have. Once the ceiling has been passed, the burden shifts to the Crown, and the Crown must show that exceptional circumstances beyond its control caused the otherwise unreasonable delay in order to avoid a section 11(b) violation. A flexible approach must be taken for cases already in the system. (at para 105)

The majority justifies its new framework by describing the problems with the old framework. First, it was highly unpredictable and flexible, leading to a proliferation of section 11(b) applications. (at para 32) Second, the role of prejudice to the accused was unclear and subjective. (at para 33) Third, it could only be applied retrospectively, and did not effectively encourage parties to avoid delay. (at paras 34-35) Finally, the framework was unduly complex, inefficient, and increasingly tolerant of delays. (at para 37) The majority remarks that this old framework – developed to discourage delay – has instead become a source of delay and a burden on the already over-burdened judicial system. (at paras 38-39)

The concurring justices (Justice Cromwell writing) recognize that section 11(b) jurisprudence is troubled, but would have made only modest adjustments to the section 11 (b) framework. (at para 145) The concurring justices give extensive reasons for their opposition to the change. They believe the new framework groundlessly attaches a particular number of months to the determination of a reasonable time (at para 225-266) in a manner that oversteps the function of the Court (at para 267-273), without evidence on the record to have selected the particular ceilings for delay that were chosen by the majority (at para 274-281), and at significant risk of causing a large number of judicial stays for cases already in the system (at paras 282-284). The concurring justices describe the transitional approach suggested by the majority as creating a Charter amnesty’ (at para 287) for the Crown – unfairly denying those currently in the system from equal protection of their section 11 (b) rights.

The Approach of the Concurring Justices

I do not intend to discuss at length the modifications to the old framework suggested by the concurring justices, but as a quick review this is the procedure they suggest for analyzing a section 11 (b) issue (summarized from paras 159 – 212):

(A) Is an unreasonable delay inquiry justified?

(B) What is a reasonable time for the disposition of a case like this one?

(1) Institutional delay

(2) The inherent time requirements of the case

(3) Conclusion on objectively reasonable time requirements

(C) How much of the delay that actually occurred counts against the state?

(1) Delay attributable to the accused

(2) Extraordinary and unavoidable delays that should not count against the state

(D) Was the delay that counts against the state unreasonable?

(1) Can the delay beyond what would have been reasonable be justified?

(2) The role of prejudice in the analysis

(3) Extraordinary reasons for the delay

(4) Are there especially strong societal interests in the prosecution on the merits of the case?

One serious difficulty in previous cases has been steps (B1) & (B2). The concurring justices say this about that portion of the analysis:

The reasonable inherent time requirements are concerned with identifying a reasonable period to get a case similar in nature to the one before the court ready for trial and to complete the trial. The inherent time requirements are not determined, for instance, with reference to the actual availability of particular counsel and court, but rather they are determined by an objective estimation. The other element, the acceptable period of institutional delay, is the amount of time reasonably required for the court to be ready to hear the case once the parties are ready to proceed… (at para 183)

As trial dates need to be obtained months in advance, most counsel obtain a trial date and then work at a pace that have them prepared by that trial date. In that situation the inherent and institutional delay periods consistent largely of the same actual time periods. Finding the appropriate length for inherent delay requires a court to determine how much delay is inherent to the nature of the case absent any institutional delay – a bizarre what-if situation. Trying to decide what is inherent delay and what is an institutional delay (either at the Crown’s office, or at the courts) is a gordian knot–and the concurring decision makes a note of this problem.

On occasion, the elements of institutional and inherent requirements have been intermingled in the application of the s. 11(b) framework such as in considering periods of time during which both counsel and the court are unavailable: see e.g. C. Ruby, “Trial Within a Reasonable Time Under Section 11(b): The Ontario Court of Appeal Disconnects from the Supreme Court” (2013), 2 C.R. 7th 91, at p. 94, citing Morin, at p. 793. The short answer to this question of overlap, however, is that, on the objective determination of how much time the case should reasonably take, the two periods are distinct. (at para 182)

This clarification, in my opinion, does not remove the difficulty in the analysis. The knowledge that the two time periods are conceptually distinct does not help to distinguish them in practice.

The concurring justices claim “This straightforward framework does not attempt to gloss over the inherent complexity of determining what delays are unreasonable”. (at para 216) While this analysis might not gloss over complexity, it seems a little odd to spend 53 paragraphs attempting to clarify a 30-year-old analysis and conclude by calling it straightforward. Whatever virtues or failings the new approach will turn out to have, it appears to provide a much clearer framework and a faster analysis.

The Application of the Frameworks

In Jordan the appellant was charged with drug trafficking offences and the total time from charges being laid to the conclusion of his trial (at which he was convicted) was 49.5 months (at paras 7-12). Both the BC Supreme Court and the BC Court of Appeal found the accused’s section 11(b) rights were not infringed. The majority of the Supreme Court applies the new framework and the concurring justices apply their revised version of the old framework, but both hold that the Court of Appeal erred primarily in giving less weight to institutional delay than to delay caused by the Crown (at para 132, 246-247).

In the second decision, R v Williamson, 2016 SCC 28 (CanLII), the Court arrives at different conclusions. The appellant was charged with historical sexual offences against a minor (at para 3) and waited 35 months for trial (at para 12). The Ontario Supreme Court found no infringement of section 11(b) primarily because there was not significant prejudice to the appellant during the delay, and proceeded to convict the appellant (at paras 13-14). The Ontario Court of Appeal decided that the prejudice to the appellant was serious, the defence had been diligent in moving the case forward, and the delay was unreasonably long. The Court of Appeal entered a stay of the proceedings (at para 17).

The majority of the Supreme Court in Williamson (made up of the same five Justices who formed the majority in Jordan: Justices Abella, Moldaver, Karakatsanis, Côté, and Brown) apply the new framework developed in Jordan and, rejecting the conviction or the seriousness of the offence as considerations under section 11(b), the majority agrees with the Ontario Court of Appeal and upholds the stay of proceedings for unreasonable delay (at paras 31-39). Chief Justice McLachlin applies the revised old framework set out by the concurring justices in Jordan and concludes the Court of Appeal did not err, concurring with the majority in the result. The remaining Justices (Cromwell, Wagner, and Gascon, with Cromwell writing) also apply the revised old framework, but determine that the delay was not clearly unreasonable enough to overcome the public interest in a decision on the merits. The dissent concludes that it would bring more disrepute to the administration of justice to stay the charges, and would have restored the conviction. (at paras 80-86)

Why Does the Court Change Direction?

What is perhaps most interesting in these two decisions is how assertive the majority is in overturning precedent by replacing the Morin framework. This is an example of the living tree of constitutional interpretation not just growing, but responding to a concern with the judicial system –specifically the culture of delay that seems to be consuming the Canadian legal system. Recognizing that the old approach was not effectively dealing with the Charter right to trial within a reasonable time, the majority departs from their earlier precedents. (at para 45)

The majority recognizes concerns about the old framework and the culture of delay it contributed to, and determines that there are compelling reasons to depart from precedent here. (at para 45, citing R v Henry, 2005 SCC 76 (CanLII)) The Supreme Court has made similar explicit changes to frameworks in the past, notably when revising the framework for the standard of review in administrative law in Dunsmuir v New Brunswick, 2008 SCC 9 (CanLII), and for the Charter section 13 right against self-crimination in R v Henry, 2005 SCC 76 (CanLII). What is noteworthy is that the change in frameworks was largely motivated by the majority’s dissatisfaction with the Morin framework’s inability to address that a “culture of complacency towards delay has emerged in the criminal justice system…”(at para 40) As the majority states:

[44] The intervener Attorney General of Alberta submits that a change in courtroom culture is needed. This submission echoes former Chief Justice Lamer’s two decades-old call for participants in the justice system to “find ways to retain a fair process . . . that can achieve practical results in a reasonable time and at reasonable expense” (“The Role of Judges”, remarks to the Empire Club of Canada, 1995 (online)).

[45] We agree. And, along with other participants in the justice system, this Court has a role to play in changing courtroom culture and facilitating a more efficient criminal justice system, thereby protecting the right to trial within a reasonable time. We accept Mr. Jordan’s invitation — which was echoed by the Criminal Lawyers’ Association (Ontario), the British Columbia Civil Liberties Association, and Mr. Williamson in the companion appeal of R. v. Williamson, 2016 SCC 28 (CanLII) — to revise the s. 11(b) analysis. While departing from a precedent of this Court “is a step not to be lightly undertaken” (Ontario (Attorney General) v. Fraser, 2011 SCC 20 (CanLII), [2011] 2 S.C.R. 3, at para. 56), as we have explained, “there are compelling reasons to do so” (R. v. Henry, 2005 SCC 76 (CanLII), [2005] 3 S.C.R. 609, at para. 44).

It is not the legal tests for Charter rights that define those rights, as it was put in R v Big M Drug Mart Ltd., [1985] 1 SCR 295, 1985 CanLII 69 at para 116 “The meaning of a right or freedom guaranteed by the Charter [i]s to be ascertained by an analysis of the purpose of such a guarantee; it [i]s to be understood, in other words, in the light of the interests it [i]s meant to protect.” When the legal tests fail to effectively protect those interests, the Court reserves the power to restructure the test in a manner that will. Time will tell how effectively the new framework for section 11(b) will protect the right to trial within a reasonable time, but it is reassuring to see that the Supreme Court of Canada has not become complacent or formalistic in its defence of the Charter rights of Canadians.

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The Standard of Patent Unreasonableness Lives On

Mon, 07/11/2016 - 10:00am

By: Shaun Fluker

PDF Version: The Standard of Patent Unreasonableness Lives On

Case Commented On: British Columbia (Workers’ Compensation Appeal Tribunal) v Fraser Health Authority, 2016 SCC 25 (CanLII)

In its recent British Columbia (Workers’ Compensation Appeal Tribunal) v Fraser Health Authority, 2016 SCC 25 decision, the Supreme Court of Canada engages in a review of a tribunal decision which emanates from British Columbia. From the perspective of administrative law jurisprudence, what is noteworthy about this decision is that the Supreme Court applies the standard of patent unreasonableness in its review. Yes that’s right – this is the same standard of review which was shown the door by the Supremes in Dunsmuir. This decision reminds us that the standard of patent unreasonableness lives on in judicial review where a legislature has preserved it under a statute, as is the case in British Columbia with sections 58 and 59 of the Administrative Tribunals Act, SBC 2004 c 45, but offers nothing explicit on how this fits into general principles of administrative law.

The appellants in this case are technicians employed at a hospital laboratory who were diagnosed with breast cancer and sought benefits under the Workers Compensation Act,    RSBC 1996 c 492 on the basis that the cancer is an occupational disease. Their claim was denied at the first instance by the Workers’ Compensation Board which found there was insufficient evidence to conclude their employment as a lab technician had a causal role in the development of breast cancer (at para 13). The appellants successfully appealed this Board ruling to the Workers Compensation Appeal Tribunal which found the breast cancer is an occupational disease on the basis of the evidence before it and the application of policy that requires the evidence to establish a ‘causative significance’ between the employment activity and the illness (at paras 14, 15). The Fraser Health Authority then successfully obtained judicial review of this Tribunal decision at both the British Columbia Supreme Court and the British Columbia Court of Appeal. Both levels of the British Columbia courts essentially held the Tribunal erred by ignoring or disregarding the expert evidence concluding there is no scientific basis to causally link the incidence of breast cancer to the appellants’ employment in the laboratory (at paras 19 – 24).

The majority decision (the court split 6 – 1) at the Supreme Court of Canada is written by Justice Russell Brown. Justice Brown begins the analysis by characterizing the causation issue as a question of fact, upon which the Tribunal’s finding of causation should not be overturned unless it is patently unreasonable. This standard of patent unreasonableness is prescribed in this case by the combination of sections 254 and 255 of the Workers Compensation Act which amount to a strong privative clause by stating (1) the Tribunal has exclusive jurisdiction to hear and determine all questions of fact, law and discretion arising in an appeal under the Act and (2) that the Tribunal’s decision is final and not subject to review by any court, as well as section 58 of the Administrative Tribunals Act (in particular subsection (2)(a)) which provides as follows:

58(1) If the Act under which the application arises contains or incorporates a privative clause, relative to the courts the tribunal must be considered to be an expert tribunal in relation to all matters over which it has exclusive jurisdiction.

(2) In a judicial review proceeding relating to expert tribunals under subsection (1)

(a) a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable,

(b) questions about the application of common law rules of natural justice and procedural fairness must be decided having regard to whether, in all of the circumstances, the tribunal acted fairly, and

(c) for all matters other than those identified in paragraphs (a) and (b), the standard of review to be applied to the tribunal’s decision is correctness.

(3) For the purposes of subsection (2) (a), a discretionary decision is patently unreasonable if the discretion

(a) is exercised arbitrarily or in bad faith,

(b) is exercised for an improper purpose,

(c) is based entirely or predominantly on irrelevant factors, or

(d) fails to take statutory requirements into account.

British Columbia’s umbrella-style Administrative Tribunals Act is similar to Alberta’s Administrative Procedures and Jurisdiction Act, RSA 2000 c A-3, however the legislation in British Columbia has much more depth in terms of its provisions relating to practice and procedure of administrative tribunals as well as prescribing the standard applicable in a judicial review of a tribunal decision.

So patent unreasonableness as a standard of review lives on where it is designated by statute, despite the Supreme Court’s Dunsmuir v New Brunswick, 2008 SCC 9 decision which proclaimed only correctness and reasonableness as available standards in judicial review. This anomaly was directly at issue before the Supreme Court early after Dunsmuir in its Canada (Citizenship and Immigration) v Khosa, 2009 SCC 12 decision. The majority of the Court in Khosa upheld the standard of patent unreasonableness in that case, but stated this standard must be read in the context of general administrative law principles developed in the common law:

In cases where the legislature has enacted judicial review legislation, an analysis of that legislation is the first order of business. Our Court had earlier affirmed that, within constitutional limits, Parliament may by legislation specify a particular standard of review: see R. v. Owen, 2003 SCC 33 (CanLII), [2003] 1 S.C.R. 779. Nevertheless, the intended scope of judicial review legislation is to be interpreted in accordance with the usual rule that the terms of a statute are to be read purposefully in light of its text, context and objectives.

Generally speaking, most if not all judicial review statutes are drafted against the background of the common law of judicial review. Even the more comprehensive among them, such as the British Columbia Administrative Tribunals Act, S.B.C. 2004, c. 45, can only sensibly be interpreted in the common law context because, for example, it provides in s. 58(2)(a) that “a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable”. The expression “patently unreasonable” did not spring unassisted from the mind of the legislator. It was obviously intended to be understood in the context of the common law jurisprudence, although a number of indicia of patent unreasonableness are given in s. 58(3). Despite Dunsmuir, “patent unreasonableness” will live on in British Columbia, but the content of the expression, and the precise degree of deference it commands in the diverse circumstances of a large provincial administration, will necessarily continue to be calibrated according to general principles of administrative law. That said, of course, the legislature in s. 58 was and is directing the B.C. courts to afford administrators a high degree of deference on issues of fact, and effect must be given to this clearly expressed legislative intention. (Khosa at paras 18, 19)

Justice Rothstein wrote a spirited dissent on this point in Khosa (at paras 69 – 137), disagreeing that the common law should always be read into the application of a legislated standard of review.

There is no sign of this debate over standard of review in Fraser Health Authority, as both Justice Brown for the majority and Madame Justice Suzanne Côté in dissent agree on the test for patent unreasonableness in this case by referring to pre-Dunsmuir jurisprudence: the Tribunal’s decision on causation will be patently unreasonable if it is based on no evidence or the evidence before it, viewed reasonably, is incapable of supporting the Tribunal’s findings in question (at paras 30, 48).

The divide between the majority and the dissent in Fraser Health Authority is essentially over whether there was evidence to support the Tribunal’s finding on causation, and the majority judgment seems much more deferential to the Tribunal in this regard than the dissent. Justice Brown observes how the Tribunal dealt with the expert evidence before it, and its finding that such evidence demonstrates the appellants were exposed to carcinogens in the workplace and have a statistically elevated incidence for breast cancer (at paras 31 – 35). Justice Brown concludes this evidence provides adequate support for the Tribunal ruling that cancer is an occupational disease here, and accordingly the Tribunal’s decision is not patently unreasonable even in the face of expert opinion that the evidence is insufficient to establish scientific conclusions to support an association between the workplace and cancer (at paras 37 – 39). Justice Côté, in dissent, held there was no evidence capable of supporting the Tribunal’s finding on causation and she was troubled by the Tribunal’s apparent disregard for the uncontested evidence that no scientific causal link exists between the workplace and the development of cancer (at paras 50 – 75). For Justice Côté, the Tribunal’s decision strayed into the ‘wilderness’ of mere speculation (at para 79). So while there is no disagreement on the test for patent unreasonableness there is significant divergence between the majority and dissent over the application of the standard in this case, with Justice Brown implementing a much more deferential sense of the standard than did Madame Justice Côté or the lower courts in British Columbia.

My final word on this decision goes back to the legislated standard of review. I find it strange that a legislature can lawfully prescribe the applicable standard for judicial review, when that standard is supposed to be the mechanism developed and employed by the Court to reconcile the fundamental tension in judicial review between policing the exercise of administrative power to ensure it respects the Rule of Law and, at the same time, ensuring such review is respectful of the legislative intention to grant such administrative power to a tribunal in the first instance. How is it that there can be any such reconciliation if the legislature dictates the level of review? The discussion that this fundamental incongruence should attract seems to have ended with Khosa – there is nothing written here in Fraser Health Authority and the Supreme Court passed on another opportunity back in 2011 with British Columbia (Workers’ Compensation Board) v Figliola, 2011 SCC 52. Yet the majority here in Fraser Health Authority seems to be sending a relatively strong message on judicial deference, without getting into the details of how this is ‘calibrated’ into the general principles of administrative law (to borrow from the majority in Khosa) which have developed under Dunsmuir. This is surely one of those fissures in the jurisprudence of administrative law worthy of deeper investigation.

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Knock-for-Knock Decision Affirmed by Court of Queen’s Bench

Fri, 07/08/2016 - 10:00am

By: Nigel Bankes

PDF Version: Knock-for-Knock Decision Affirmed by Court of Queen’s Bench

Case Commented On: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2016 ABQB 365 (CanLII)

This matter, involving the interpretation of a standard form drilling contract, originally came on before Master Prowse as an application for summary judgement by Precision, the drilling contractor. My post on the Master Prowse’ decision, 2015 ABQB 433, is here and my post on Master Prowse’s further judgement, 2015 ABQB 649, on the “interest clause as penalty” issue is here. Both decisions favoured Precision, and Yangarra appealed both. In this decision Justice E.C. Wilson dismissed both appeals and affirmed Master Prowse’s decisions largely by quoting extensively from the learned Master’s reasons.

The only new argument before the Court was based on Bhasin v Hrynew, 2014 SCC 71 (CanLII) and to the effect that there was an implied contractual term of honesty and good faith which Precision had breached. But, just as the Court rejected Yangarra’s argument based on fraudulent misrepresentation on the basis that there was no evidence to support the claim, so too did it reject (at paras 38 – 39) Yangarra’s claims based upon this head:

[38]           Next, Yangarra submits in its more recent claim that Precision breached its contractual duties of honesty and good faith in the execution of this contract which warrants the matter proceeding to trial. I disagree.

[39]           This claim of a lack of honesty and good faith really translates into a claim of dishonesty or bad faith which is simply another way of describing its complaint regarding fraudulent misrepresentation and, respectfully, is dismissed for the same reasons, ie the absence of credible evidence to support the claim.

As a result Justice Wilson did not have to rule on (at para 31) “the theoretical possibility of contracting out of the duty of honest performance” (Bhasin at paras 77, 78, 80 & 81).

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Change of Operator: Norcen v Oakwood of no Application in the Case of a Bankruptcy

Thu, 07/07/2016 - 10:00am

By: Nigel Bankes

PDF Version: Change of Operator: Norcen v Oakwood of no Application in the Case of a Bankruptcy

Case Commented On: Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363 (CanLII)

This case involves the 2007 version of the CAPL Operating Agreement as well as a construction, ownership and operation agreement for a battery (COO Agreement). In his judgment Justice Alan Macleod enforced the immediate replacement provisions of the operating agreement in favour of a co-owner (Eagle Energy Inc.) and against the purchaser of the assets (Forent Energy Ltd.) from the receiver\manager appointed under under s 243 of the Bankruptcy and Insolvency Act, RSC 1985, c B-3. The Order of the Court appointing the Receiver provided that

No Exercise of Rights or Remedies

9. All rights and remedies (including, without limitation, set-off rights) against the Debtors, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court…

Eagle relied on the following provisions from CAPL 2007 and the COO Agreement:

CAPL 2007

2.02     Replacement of Operator

A         Immediate Replacement– The Parties acknowledge that the Operator’s ability to fulfill its duties and obligations for the Parties’ benefit is largely dependent on its ongoing financial viability and that the Operator may not seek relief at law, in equity or under the Regulations to prevent its replacement in accordance with this Subclause. The Operator will be replaced immediately after service of notice from Non-Operator to the other Parties to such effect if:

a)     the Operator becomes bankrupt or insolvent, commits or suffers any act of bankruptcy or insolvency, is placed in receivership or seeks debtor relief protection under applicable legislation (including theBankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)), and it will be deemed to be insolvent for this purpose if it is unable to pay its debts as they fall due in the usual course of business or if it does not have sufficient assets to satisfy its cumulative liabilities in full;

Any such notice from a Non- Operator must be a bona fide notice that specifies the basis for replacement under this Subclause and includes verifiable evidence substantiating that basis in reasonable detail. Subject to the restrictions in Subclause 2.06B on the appointment of a successor Operator, the Party with the largest Working Interest will then act as Interim Operator on the same basis as in Subclause 2.06D, unless the Parties have otherwise appointed a successor Operator under Clause 2.06.

COO Agreement

3.03 Operator shall immediately cease to be Operator in the circumstance described in Subclauses (a) and (b) below and in all circumstances described on this Clause a replacement. Operator appointed pursuant to Clause 304 if:

(a) Operator becomes bankrupt or insolvent, commits or suffers any act of bankruptcy or insolvency, is placed in receivership or a receiver/manager or person filling that role is appointed with respect to its property…

3.04 (a) Upon Operator resigning or otherwise ceasing to be Operator and until a replacement Operator being appointed, the Owner with the largest Facility Participation… shall automatically become the Interim Operator

Eagle notified the Receiver (appointed pursuant to an application of February 16, 2016) that the above provisions were triggered and of its intention to assume the operatorship. The Receiver responded by letter of February 29, 2016 indicating that Eagle’s notice was stayed by virtue of paragraph 9 of the Court Order (above). Both Eagle and Forent submitted bids to the Receiver to acquire the relevant properties. Eagle and the Receiver reached an understanding following a meeting and conversation that the Receiver would not purport to convey the operatorship as part of the sale of the properties if the successful bidder were any other than Eagle.

Forent was the successful bidder and the Receiver applied for approval of the sale and a vesting order. Following an intervention by Eagle the Vesting Order was granted subject to Eagle’s right to assert its claim to assume operatorship of the relevant properties. This judgment is the adjudication of that claim. In the course of finding for Eagle Justice Macleod stated as follows (at paras 18 – 23):

[18]           Had Eagle pursued its right to be Operator at the time of the granting of the Receivership Order or soon thereafter, I can think of no reason why this Court would not have acceded to Eagle’s request to lift the stay and grant a declaration with respect to both the wells and the Battery.

[19]           The stay was granted incidental to the appointment of the Receiver to permit for orderly realization and distribution. Eagle’s right to operate, however, arises under a contract which pre-dates the receivership. Also, there is no reason to interfere with the contractual rights of Eagle which are not subject to the security of Bumper’s creditors.

[20]           This is not a situation such as the one facing this Court in Norcen Energy Resources Ltd v Oakwood Petroleums Ltd (1988), 1988 CanLII 3560 (AB QB), 92 AR 81 (ABQB), 63 Alta LR (2d) 361 . In that case s 11 of the Companies Creditor’s Arrangement Act, RSC 1970, c C-25  (CCAA) was at issue. Section 11 gives very broad powers to the Court in situations where arrangements involving compromise can be utilized to rescue insolvent companies. The CCAA has proved to be an extraordinarily flexible Act. The Act has been used effectively to give debtors respite from creditors in order to allow the stakeholders to negotiate a proposal for continuing the business, rather than allowing the business to fall into bankruptcy. Here, the issue is not Bumper’s survival but the realization on its assets.

Justice Macleod went on to conclude that Eagle had not slept on its rights but had acted reasonably in light of the Receiver’s stated position and had “negotiated a deal” with the Receiver that was designed to protect its position. Forent could not have any reasonable expectation that it was purchasing the operatorship. In these circumstances it would, in Justice Macleod’s view “be unfair to deprive Eagle of its clear contractual right to be Operator of both the wells and battery. To do so would be tantamount to appropriating Eagle’s right for the benefit of Bumper’s creditors.” (at para 23) The stay was lifted nunc pro tunc and a declaration issued to the effect that “Eagle is entitled to operate both the wells and Battery in question. It is also directed that the Receiver and others, including Forent, transmit to Eagle all accounts, licences etc. which are reasonably necessary for Eagle to succeed Bumper as Operator under both of the agreements.” (at para 27)

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The Forest of Delays

Wed, 07/06/2016 - 10:00am

By: Drew Yewchuk

PDF Version: The Forest of Delays

Case Commented On: R v Vassell 2016 SCC 26 (CanLII)

Section 11(b) of the Canadian Charter of Rights and Freedoms, guarantees that any person charged with an offence has the right to be tried within a reasonable time. In R v Vassell 2016 SCC 26 (CanLII) the Supreme Court of Canada reiterated that the Crown is responsible to deliver on this right. The approach that had been developing in Alberta courts was that the right would only be violated where the actions of the Crown caused excessive delay – institutional delays and delays caused by anything other than Crown actions were considered neutral or less important and did not trigger section 11(b). The Supreme Court in Vassell rejects this approach: the Crown is responsible for bringing the accused to trial within a reasonable time and therefore for all delays, regardless of their cause, trigger section 11(b) unless the accused explicitly or implicitly waives their right to be tried within a reasonable time.

Facts

The accused was charged on April 11, 2011, and convicted of one count of possession of cocaine for the purpose of trafficking contrary to section 5(2) of the Controlled Drugs and Substances Act, SC 1996 c 19 on April 22, 2014. The Alberta Court of Appeal had found that atno time did the accused waive his rights under section 11(b), and he was not responsible for any of the delay. (R v Vassell 2015 ABCA 409 at paras 1-2) The delay was caused by several factors, including the decision of the Crown to try the accused along with six other individuals (Vassell CA at para 3), strategies undertaken by his co-accused (Vassell CA at para 45), the Crown prosecutor unexpectedly had to attend a funeral (Vassell SCC at para 9), and a very late decision to call expert evidence –evidence that was ultimately not called (Vassell SCC at para 11). The appeal came to the Supreme Court as of right from a dissent by Justice O’Ferrall of the Alberta Court of Appeal.

The Decision

Justice Moldaver wrote the judgment of the Supreme Court, and expressed general agreement with Justice O’Ferrall on the section 11(b) issues. (Vassell SCC at para 2). Other arguments had been raised in the lower courts, but were not addressed in the Supreme Court decision. The core of Justice O’Ferrall’s dissenting opinion on the section 11(b) issue was that:

…the Crown must bear some responsibility for delay where it results from a failure to apprehend the parameters of the case in a timely fashion.

In the end, the appellant waited three years for a three-day trial. This should not have happened. While the Crown’s conduct of the prosecution certainly did not reach the point of bad faith, had the Crown a better grasp of its case against these various accused, before it decided to proceed against them together on a joint indictment, the time to trial would have been much more reasonable. Furthermore, if the Crown’s failure to properly apprehend its case against these individuals resulted from a lack of prosecutorial resources, this was, nevertheless, a failure for which the Crown must bear responsibility in the context of determining whether the delay in this case was unreasonable.(Vassell CA at paras 53-54)

At the Supreme Court Justice Moldaver stated the issue this way:

…a more proactive stance on the Crown’s part was required. In fulfilling its obligation to bring all accused to trial within a reasonable time, the Crown cannot close its eyes to the circumstances of an accused who has done everything possible to move the matter along, only to be held hostage by his or her co-accused and the inability of the system to provide earlier dates. (Vassell SCC at para 7)

The delay in this case was ultimately the result of the Crown decision to try seven individuals at once, and while the Crown was entitled to proceed in this manner, the Crown was also responsible for ensuring that this decision did not infringe the right of the accused to trial within a reasonable time. The Crown is ultimately responsible for any delays not caused by or waived by the accused (Justice O’Ferrall, Vassell CA at 54).

To explain the importance of this decision, consider as examples two recent Alberta cases that preceded the Supreme Court’s Vassell decision that demonstrate trends in section 11(b) jurisprudence. In R v Chang 2016 ABQB 297 (CanLII) and R v Warring 2016 ABQB 236 (CanLII) the court categorized each period of delay, and separated from consideration those for which the crown was responsible and those which the crown was not responsible for (Chang at paras 70-101, Warring at paras 113-171). Both Chang and Warring cite R v Panousis 2003 ABCA 294 (CanLII) for the principal that the Crown “is in no way compelled to explain its procedural choices” (Chang at para 94, Warring at para 158). Both cases also say that inherent time requirements “are neutral in the s. 11(b) reasonableness assessment and do not count against the Crown or the accused”. These elements of the section 11(b) analysis are likely incorrect after the Supreme Court’s decision here in Vassell. However I note that neither Chang nor Warring turned on these points, and it is not clear that the Supreme Court’s Vassell decision would have altered the outcomes of those cases. The Vassell decision appears to alter the trends in section 11(b) jurisprudence to diminish the duty of the Crown to provide a trial within a reasonable time and to engage in an extensive categorization of delay periods that avoids considering the length of the delays as a whole.

Conclusion

The Supreme Court reiterates a point from R v Godin 2009 SCC 26 (CanLII) that when courts are considering whether there has been a breach of section 11(b) they “must be careful not to miss the forest for the trees.” (at para 3) I expect this decision will lead to two changes in decisions regarding section 11(b). First, courts will keep in mind that the Crown has a duty to provide the accused with a trial within a reasonable time, and second, the decisions regarding section11(b) breaches will hopefully include a less technical accounting of time. These changes are relatively minor course corrections, but by cautioning against the diminishing of Crown responsibility and excessive technicality, the Supreme Court has acted to protect the relevancy and strength of the section 11(b) right to trial within a reasonable time.

As a final point, the clarification that the Crown is responsible for ensuring the accused receives a trial within a reasonable time makes the lack of judicial resources in Alberta a more serious problem. The lack of judges in Alberta lengthens the delays involved in obtaining trial dates. To re-iterate a common theme on this blog: the vacancies on the superior courts are a serious problem for our justice system, and Alberta needs a full complement of judges to properly protect both the public and the rights of the accused.

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Northern Gateway: Federal Court of Appeal Applies Wrong CEAA Provisions and Unwittingly Affirms Regressiveness of 2012 Budget Bills

Tue, 07/05/2016 - 10:00am

By: Martin Olszynski

PDF Version: Northern Gateway: Federal Court of Appeal Applies Wrong CEAA Provisions and Unwittingly Affirms Regressiveness of 2012 Budget Bills

Case Commented On: Gitxaala Nation v. Canada, 2016 FCA 187 

On June 20, 2016, the Federal Court of Appeal released its much anticipated decision in the Northern Gateway legal saga (for a list of previous ABlawg posts, going as far back as 2012, see here). The Court quashed the Governor-in-Council (i.e. Cabinet) Order directing the National Energy Board (the Board) to issue a certificate of public convenience and necessity to Northern Gateway on the basis that the federal government did not fulfill its duty to consult. My colleague Sharon Mascher is preparing a blog post on that part of the decision. In this post, I focus on the Court’s approach to the Canadian Environmental Assessment Act, 2012, SC 2012, c 19, s 52 and its dismissal, in essentially a single paragraph (para 125), of all of the substantive challenges to the Joint Review Panel’s report. As further discussed below, the Court appears to have applied the wrong provisions of the CEAA, 2012, with considerable implications for both the substantive challenges to the JRP report as well as Cabinet’s determination that Northern Gateway’s significant adverse environmental effects are “justified in the circumstances” (CEAA, 2012 subs 52(4)). It is nevertheless important to consider the Court’s approach because the provisions that it did apply are applicable to Kinder Morgan’s TransMountain Pipeline review and TransCanada’s Energy East project.

The Court’s Approach to CEAA, 2012 Sections 29 – 31

The Court set out its analysis and understanding of the CEAA, 2012 regime, and its interplay with the relevant provisions of the National Energy Board Act, RSC 1985, c N-7 at paras 92 – 127. With respect to CEAA, 2012, the Court focused on sections 29 – 31, which are the sections that would normally apply to the Board when it is the “responsible authority” (s 15) for a project listed on the Regulations Designating Physical Activities, SOR/2012-147 (in this case, a pipeline). As noted by the Court, these provisions require the Board, as part of its duties pursuant to the NEB Act, to submit to Cabinet an environmental assessment report. They also contemplate some potential back and forth between the Board and Cabinet in terms of the sufficiency of the former’s environmental assessment report: Cabinet can ask the Board to reconsider any of its recommendations. Of particular importance to the Court here, subsections 29(3) and 30(5) state that except where sent back for reconsideration, the Board’s environmental assessment reports are “final and conclusive”. In light of these provisions, the Court concluded that there can be no direct legal challenge to the Joint Review Panel’s report:

[125] In the matter before us, several parties brought applications for judicial review against the Report of the Joint Review Panel. Within this legislative scheme, those applications for judicial review did not lie. No decisions about legal or practical interests had been made. Under this legislative scheme, as set out above, any deficiency in the Report of the Joint Review Panel was to be considered only by the Governor in Council, not this Court. It follows that these applications for judicial review should be dismissed. (Emphasis added)

This conclusion is problematic for several reasons, including the difficulty of vesting in Cabinet the authority to determine whether or not an environmental assessment report is adequate and conforms to legislative requirements when it was governments’ poor track record of disclosing and considering environmental effects that was the impetus for such legislation in the first place (see Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC) at paras 1 and 2). I also have concerns with the Court’s approach to the “final and conclusive” language in sections 29 and 30, which I discuss further below. The biggest problem, however, is that these sections are not actually applicable to Northern Gateway.

Northern Gateway as a CEAA, 2012 s 38 Panel Review

Those following Northern Gateway through the regulatory process will recall that it was initially subject to JRP review under the original Canadian Environmental Assessment Act SC 1992, c 37. Bills C-38 and 45, the infamous budget bills of 2012, were brought into force after that review was already underway, such that the Minister of the Environment had to amend the original agreement establishing the JRP. Of particular importance is the following:

AND WHEREAS pursuant to section 126 of the Canadian Environmental Assessment Act, 2012, the assessment by the joint review panel is continued under the process established under the Canadian Environmental Assessment Act, 2012 as if it had been referred to a review panel under section 38 of the Canadian Environmental Assessment Act, 2012 and the Agreement is considered to have been entered into by the Federal Minister of the Environment and the Board under section 40 of that Act… (Emphasis added)

Consequently and with respect, sections 29 – 31, which refer to the Board in its capacity as a responsible authority, have no application to the Northern Gateway application or litigation. Rather, Northern Gateway involves the relatively straightforward application of the panel review provisions of CEAA, 2012, provisions that are substantially unchanged from the original CEAA and that have been applied – and judicially reviewed – numerous times. The most important of these is section 43, which sets out a panel’s duties and which, for what it’s worth, does not include the “final and conclusive” language of those other provisions:

43 (1) A review panel must, in accordance with its terms of reference,

(a) conduct an environmental assessment of the designated project;

(b) ensure that the information that it uses when conducting the environmental assessment is made available to the public;

(c) hold hearings in a manner that offers any interested party an opportunity to participate in the environmental assessment;

(d) prepare a report with respect to the environmental assessment that sets out

(i) the review panel’s rationale, conclusions and recommendations, including any mitigation measures and follow-up program, and

(ii) a summary of any comments received from the public, including interested parties;

(e) submit the report with respect to the environmental assessment to the Minister; and

(f) on the Minister’s request, clarify any of the conclusions and recommendations set out in its report with respect to the environmental assessment

Once submitted, the standard decision-making provisions of CEAA, 2012 apply (sections 52 – 54). To reiterate, while I don’t agree with the Court’s wholly unprecedented analysis that under sections 29 – 31 environmental assessment plays “a much attenuated role” relative to other federal decision-making regimes (para 123), those sections simply don’t apply. Instead, the Court should have reviewed the Northern Gateway JRP report as it has reviewed numerous panel reports previously, including Pembina Institute for Appropriate Development v. Canada (Attorney General), 2008 FC 302 and Ontario Power Generation Inc v Greenpeace Canada, 2015 FCA 186.

Reviewing the Governor in Council’s (Cabinet’s) Decision

As noted by the Court (at para 129), several of the parties sought to apply its recent decision in Council of the Innu of Ekuanitshit v. Canada (Attorney General), 2014 FCA 189, which I blogged about here, as setting out the applicable legal framework for challenging Cabinet decision-making following a CEAA panel report (at para 40, citing para 76 of the trial judge’s reasons), as well as the applicable approach to the standard of review, which the Court summarized as follows:

[44] Therefore, in my view, the judge correctly found that deference was owed to the decisions made pursuant to [the relevant provisions under the old CEAA], but that a reviewing court must ensure that the exercise of power delegated by Parliament remains within the bounds established by the statutory scheme. (Emphasis added)

Because it focused on the wrong provisions of CEAA, 2012 (an error that first appears in para 46 of the decision), the Court in Northern Gateway distinguished Ekuanitshit and chose not to follow it (at paras 132 – 140). In addition to what it erroneously thought were two very different legislative regimes, however, the Court also appears to be of the view that Cabinet approval of a massive hydroelectric dam found likely to result in significant adverse environmental effects (as in Ekuanitshit) is fundamentally different than the approval of a bitumen pipeline:

[138] The standard of review of the decision of the Governor in Council in Ekuanitshit may make sense where this Court is reviewing a decision by the Governor in Council to approve a decision made by others based on an environmental assessment. The Governor in Council’s decision is based largely on the environmental assessment. A broader range of policy and other diffuse considerations do not bear significantly in the decision…

[139] In the case at bar, however, the Governor in Council’s decision—the Order in Council—is the product of its consideration of recommendations made to it in the report. The decision is not simply a consideration of an environmental assessment. And the recommendations made to the Governor in Council cover much more than matters disclosed by the environmental assessment—instead, a number of matters of a polycentric and diffuse kind.

[140] In conducting its assessment, the Governor in Council has to balance a broad variety of matters, most of which are more properly within the realm of the executive, such as economic, social, cultural, environmental and political matters. It will be recalled that under subsection 52(2), matters such as these must be included in the report that is reviewed by the Governor in Council.

With respect, most decisions to approve major resource projects and especially those found likely to result in significant adverse environmental effects will require a balancing of a “broad variety of matters,” including social, economic, cultural, environmental and political matters (as the Federal Court recognized in Pembina Institute, above, at para 74). Were it otherwise, it is hard to conceive of a basis upon which Shell’s proposed Jackpine oil sands mine expansion, which was also deemed likely to result in significant adverse environmental effects pursuant to CEAA, 2012, could ever have been granted approval (or “justified in the circumstances,” using CEAA, 2012 language). This reality does not lessen Cabinet’s obligation to comply with the statutory requirements set out in CEAA, 2012 (including its subsection 4(2) duty to exercise its powers “in a manner that protects the environment and human health and applies the precautionary principle”) or the courts’ supervisory jurisdiction. On the contrary, the polycentric nature of the exercise underscores the important role of both the Act and the courts in ensuring that environmental concerns are not ignored or marginalized in the face of traditionally predominant considerations (e.g. economic ones).

The foregoing is sufficient, in my view, to cast serious doubt on the cavalier manner in which the Court dismissed the substantive challenges to the Northern Gateway JRP report and Cabinet’s response thereto. The obvious next question is: does it matter? While I would be the first to admit that the Federal Court of Appeal has set a low bar for the substantive review of federal environmental assessments reports, I have to assume that there is some difference between the Court’s direct review of such reports and its review of Cabinet’s assessment of such reports. The Court here accorded Cabinet “the widest margin of appreciation” (at para 155).

Privative Clauses and the Federal Regulatory Review

As noted at the outset, although not applicable in this case, CEAA, 2012 sections 29 – 31 are applicable to the Board’s review of the TransMountain and Energy East pipelines. It seems appropriate, therefore, to spend a bit more time on the Court’s approach to these sections.

In administrative law, the “final and conclusive” wording that seemed to play such an important role in the Court’s analysis is known as a “privative clause,” and a relatively strong one at that. Privative clauses are the legislature’s way of telling the courts to tread lightly (i.e. show deference). As a general rule, Canadian courts acknowledge such clauses and take them into account in establishing the applicable standard of review. Bearing in mind rule of law principles and the separation of powers, however, they have never been interpreted as ousting a reviewing court’s jurisdiction. As the Supreme Court of Canada stated in the (still-current) authority on judicial review, Dunsmuir v. New Brunswick, 2008 SCC 9:

[31] The legislative branch of government cannot remove the judiciary’s power to review actions and decisions of administrative bodies for compliance with the constitutional capacities of the government.  Even a privative clause, which provides a strong indication of legislative intent, cannot be determinative in this respect…

Arguably Northern Gateway is not an example of complete ouster, as a report’s adequacy is still reviewable indirectly through Cabinet’s response to it, but the Court’s analysis (three short paragraphs at 155 – 157) leaves me to wonder whether this is a distinction without a difference.

Finally, if the Court’s approach to sections 29 – 31 is correct (which again, for the various reasons discussed above I doubt), it means that the previous Conservative government’s 2012 omnibus budget bills were even worse than anyone thought. As noted above, leaving Cabinet to determine whether the Board’s environmental assessments are sufficient runs counter to the basic logic behind the legislation and is bound to further undermine public confidence in those assessments. It also means that these provisions should be front and center during the federal government’s upcoming review of environmental and regulatory processes.

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On the DLW Decision and the Meaning of Modernity

Mon, 07/04/2016 - 12:32pm

By: Lisa Silver

PDF Version: On the DLW Decision and the Meaning of Modernity

Case Commented On: R v DLW, 2016 SCC 22 (CanLII)

Despite our common law system, statute law remains a key source of law in Canada. Its importance cannot be underestimated as lawmakers rely on legislation to implement policy on various social and economic issues. In many ways, legislation is reflective of who we are as a society and serves to reinforce our collective values. No other piece of legislation in Canada exemplifies this more than our Criminal Code, RSC 1985, c C-46. Contained in this piece of legislation is conduct we deem as a society to be so abhorrent, so contrary to who we are, that we will punish those who commit these prohibited acts, often through a loss of liberty. Although the concept of codification relieves us from speculating on the substance of criminal behaviour, it carries with it the mystique of interpreting or discerning Parliamentary intent in creating those crimes. As a result, statutory interpretation is often the main issue in criminal cases as judges wrestle with words, meanings, and intentions. This process is vital in criminal law, where a turn of phrase can mean the difference between guilt or innocence. The difficulty lies in dealing with crimes that carry centuries of established meaning, such as murder, assault, and theft. Yet, the crimes so interpreted must remain relevant. In this blog post, I will explore certain aspects of the DLW judgment, 2016 SCC 22, the most recent Supreme Court of Canada decision employing statutory interpretation principles, on the crime of bestiality (section 160 of the Criminal Code). Here, the Court enters into an age old process of interpretation yet does so, seemingly, in the name of modernity. This case highlights the inherent problems in discerning or interpreting value-laden legislation as it then was and then, ultimately, as it needs to be.

Before we delve into DLW, we must set our general legislative expectations. As mentioned earlier, legislation is based upon sound public policy. Seen in this light, legislation should provide a narrative displaying the objectives and goals the rules contained within their sections. It should provide clarity of purpose with which we can identify. Legislation should be accessible to all, not just in a physical sense, but also intellectually. Moreover, legislation, as a delivery platform, should be flexible and responsive to the societal values it is meant to emulate. However, these expectations seem to dissolve as soon as the ink dries on the paper. In the context of a written document, legislation seems to lose its dynamic quality. Indeed, as suggested by Lord Esher in Sharpe v Wakefield (1888), 22 Q.B.D. 239, at p. 242, “The words of a statute must be construed as they would have been the day after the statute was passed,” meaning that the words have a frozen quality as they encapsulate a moment in time. The key is in knowing what that moment reveals, which is crucial for the proper implementation and application of the legislation.

Although, the courts have entered into the legislative fray since time immemorial, or at least since 1235 when the first Act of the English Parliament was passed (see for example, Statute of Merton, Attorneys in County Court Act, 1235), it is still far from clear how the courts perform this interpretive function. To be sure rules have been fashioned such as the “Plain Meaning Rule,” also known as the “Literal Rule,” or the “Mischief Rule” or even the “Golden Rule.” Just to clarify, that is the other Golden Rule, not the biblical one. In any event, sprinkled liberally between these over-arching rules are specific rules and maxims, usually proposed in Latin, making the whole exercise very structured, formalistic, and confusing. Thankfully, this conundrum was noted by Elmer Driedger, long-time Solicitor for the Attorney-General of Canada and author of the seminal work in the area. In the Construction of Statutes 2nd ed., Toronto, Butterworths, 1983, at 87, Driedger summed up all of the disparate rules into one sentence:

“Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.”

Within the year, in Stubart Investments Ltd v The Queen decision, [1984] 1 SCR 536, the Supreme Court of Canada endorsed this “modern rule.” By 1985, the principle was deemed “oft-quoted” in Vachon v Canada Employment and Immigration Commission, [1985] 2 SCR 417 (at para 48). Despite the Court’s quick embracement of the “modern rule” or “modern principles,” decades later, it is still unclear what this rule encompasses and how “modern” it truly is. This topic is thoroughly canvassed in the fascinating article on the development and use of the “modern principle” authored by Stéphane Beaulac and Pierre-André Côté, entitled “Driedger’s “Modern Principle” at the Supreme Court of Canada: Interpretation, Justification, Legitimization” ((2006) 40 R.J.T. 131. In the paper, Beaulac and Côté persuasively argue that the principle is far from modern, even at the time of its reception by the Court. They posit the principle, as articulated by Driedger in 1983, was simply a rough summary of the main statutory principles in use at the time. Certainly by 2006, the principle was far from “modern” having been in use for years. As an aside, some of these principles can be traced to the thirteen rules of Talmudic textual interpretation, particularly rule twelve, which suggests a contextual interpretation. In any event, the Supreme Court of Canada still confers the moniker, “modern,” to the approach (see R v Borowiec, 2016 SCC 11 at para 18). Its modernity, therefore, appears to be in question.

However, in the spirit of Driedger let us first do a little interpretation on the term “modern.” In the DLW case, “modern” appears to mean “new” as opposed to “old.” Looking at the “grammatical and ordinary sense” of the word “modern,” the Oxford Dictionary, the go-to text for the Supreme Court of Canada (CanLII search found 147 SCC cases referencing the Oxford Dictionary as opposed to a paltry 11 cases for Merriam-Webster), the definition is “relating to the present or recent times as opposed to the remote past” or “characterized by or using the most up-to-date techniques, ideas, or equipment.” Indeed, in Justice Abella’s dissent in DLW, she frames the issue as the new against the old with her newer more “modern” interpretation of the crime as opposed to the majority, written by Justice Cromwell, an old hand at statutory interpretation cases, as the purveyor of the old fashioned, decidedly out of sync with today’s realities.

Abella J accomplishes this new/old dichotomy through her deft use of metaphor directed at the majority decision. The opening paragraph of her dissent utilizes agricultural metaphors of abundance (at para 125) describing the “fertile field” of statutory interpretation with the “routine harvest” of “words and intentions” as “planted” by the lawmakers. This metaphor brings to mind not only quantity but also the longevity of the interpretative technique as she then extends her position that the crime of bestiality must receive a modern interpretation despite the fact it is a “centuries old” crime (at para 126) whose “roots” are “old, deep, and gnarled” (at para 125). Thus an interpretation of the crime, based on tradition as per the majority under Cromwell J, is not a living tree but an ancient inaccessible relic of the past. Cleverly, Abella J’s opening of the issue is an effective foil to Justice Cromwell’s majority where he characterizes bestiality as a “very old” crime in his opening paragraph (at para 1) but one which cannot be made “new” without clear Parliamentary intention and certainly not through judicial intervention. In paragraph 13, Justice Cromwell hands Justice Abella her thematic metaphor by setting out the “root” of the issue as an interplay between common law and statutory intention. A similar technique was used by Justice Karakatsanis, with Justice Abella concurring, in the dissent in the Fearon case, [2014] 3 SCR 621, 2014 SCC 77 (CanLII), wherein Justice Cromwell too authored the majority decision. There, through the deliberate choice of word use, the dissent of Karakatsanis J breathes modernity in stark contrast to Cromwell J’s reliance on traditional legalistic nomenclature (for further discussion on this see, as published on my website, my previous blog entitled A Fresh Look At Fearon: How Language Informs The Law).

In fact, Justice Abella is right: the issue in DLW is very much bound up with the old and the new as the court is faced with the task of defining the meaning of “bestiality” as it relates to a disturbing child sexual abuse case where a family pet was used to molest a child. The “old” or “traditional” view of bestiality, undefined in the Criminal Code but as gleaned through common law, has the requirement for penetration. This definition fails to not only capture the conduct in DLW but also fails, according to Justice Abella’s dissent, on a cultural, social, and public policy level as well. The irony, in the context of interpreting our codified criminal law, is the reliance on the common law conception of the crime. Since its inception in 1892, the Criminal Code has been the only source, with one limited exception, for identifying which conduct should be considered criminal. If conduct is not proscribed in our Code as a crime, then it is not one. In other words, the common law, or those unwritten rules which have developed over time, cannot create a crime. The only exception being the common law offence of contempt of court pursuant to s. 9 of the Criminal Code. Otherwise, only our Parliament under s. 91(27) of the Constitution Act, 1867 has the authority to create criminal law. Nevertheless, the common law is not ignored in the interpretative process. For the majority, the common law remains unchanged by codification and therefore can be equated with Parliamentary intention. To go any further, in the view of the majority, the courts would be creating a “new” crime, which is not within the judicial function. Conversely, for Justice Abella, the common law conception of bestiality reinforces the present need to move beyond it.

In this sense “modern” can also denote more than a chronological time. It can also, according to the Oxford Dictionary, refer to a “current or recent style or trend in art, architecture, or other cultural activity marked by a significant departure from traditional styles and values.” In this definition, looking at legislation as a “cultural activity” in the broadest sense, Justice Abella’s reading of the term proposes a departure from the traditional “modern principles” through the lens of current societal interests as reflected in the present policy decisions behind the creation of crimes. However, in the realm of traditional statutory interpretation, although Parliamentary intention -through the scheme and objectives of the legislation- lends context to the statutory interpretation process, such context does not necessarily include a deep dive into the policy behind the legislation. Certainly, Driedger’s principles do not directly make reference to it. This lack of clarity, according to Beaulac and Côté in their article, has resulted in uneven judicial treatment of policy in statutory interpretation. For instance, in Canadian Broadcasting Corp v SODRAC 2003 Inc, [2015] 3 SCR 615, at paragraph 55 the majority decision written by Justice Rothstein (Cromwell J, among others, concurring) effectively cautions against the dissent’s use of policy considerations in textual interpretation. In that case, Justice Abella, yet again, writes the main dissenting position. The DLW decision, therefore, is just another example of this interpretive tension. However, considering traditional statutory interpretation in discerning Parliamentary intention was reluctant to go beyond the four corners of the document, the now ubiquitous use of Hansard to elucidate on such intention shows how far the court has and can move from tradition towards modernity. This will definitely be a continuing dialogue within the court to watch for in future cases.

So what of the modernity of the principle in use in the DLW case? It has already been established that this principle has been in use for years and, according to Beaulac and Cote, may even be a mere reiteration of what had been in use prior to 1983. However, as Beaulac and Cote also recognize, Driedger’s principle is both a “method of interpretation” and a “framework for justification.” It is that dual nature, which provides an inherent flexibility to the principle, permitting it to discern or interpret even the most profound words found in our rules of law. Its application, as seen through the discourse in the DLW case, cannot be confined by the four corners of a piece of legislation but must permit a deeper analysis involving societal values and purpose to remain meaningful. In short, it requires, a touch of modernity.

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On the Charter, Freedom of Expression, and Scientific Research

Wed, 06/29/2016 - 10:00am

By: Stephen Armstrong

PDF Version: On the Charter, Freedom of Expression, and Scientific Research

Provision Commented On: Section 2(b), Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11

Does section 2(b) of the Canadian Charter of Rights and Freedoms protect the freedom of scientific research? Is conducting an experiment an expressive act? These are important questions as Canadians face a world increasingly dominated by rapid scientific advancement. Recently, the US Senate and the US National Academy of Sciences have each called for greater research into geoengineering (Committee on Geoengineering Climate, National Research Council, Climate Intervention: Carbon Dioxide Removal and Reliable Sequestration (Washington: 2015, The National Academies Press) at 107). Such measures are the harbingers of an age in which humans are acquiring the capability to control the Earth’s climate the way a sculptor shapes his clay. Against this backdrop, the need for governance of geoengineering research at both the international and national levels is clear. However, any state measures to restrict or regulate research in Canada must conform to the supreme law of the land. In this post, I will explore arguments for and against the protection of scientific research under the free expression guarantee contained in the Charter. While strong criticism against inclusion of research as expression exists, I ultimately conclude that the Charter likely protects freedom of scientific research within the freedom of expression guarantee.

Charter Applicability

As a preliminary issue in any Charter analysis it is always necessary to determine whether the impugned action is subject to Charter scrutiny. Legislation is of course subject to the Charter. However, as scientific research stands at the apex of this discussion, decisions made by universities and other arms-length research or fund-granting bodies are also relevant. The question of whether the Charter applies to universities is itself the subject of significant jurisprudence and commentary (See Pridgen v University of Calgary, 2012 ABCA 139, but also see BC Civil Liberties Association v University of Victoria, 2016 BCCA 162, and for ABlawg commentary see here, here, here, and here). The inquiry into applicability of the Charter is an inherently fact driven one. As I aim to discuss freedom of expression and research in a more abstract sense, I have only raised the issue of Charter applicability to flag it for the reader and will now move on.

The Scope of 2(b)

Does scientific research fall within the scope of section 2(b) of the Charter? Section 2(b) reads: “Everyone has the following fundamental freedoms…freedom of thought, belief, opinion and expression…” When interpreting the content of a Charter right it is important to keep in mind that such rights are to be accorded a generous, purposive, and liberal interpretation (Hunter v Southam Inc, [1984] 2 SCR 145 at paras 17-20). The leading case on freedom of expression is Irwin Toy v Quebec (Attorney General), [1989] 1 SCR 927. In a joint decision, then Chief Justice Brian Dickson, with Justices Antonio Lamer and Bertha Wilson, set the scope of the free expression guarantee to encompass all non-violent activity which is intended to convey a meaning (Irwin Toy at paras 42-43). The Court also highlighted the core principles underlying the free expression guarantee, which were described as truth seeking, encouraging participation in social and political decision making, as well as self-fulfillment and human flourishing (Irwin Toy at para 54).

Note that the Irwin Toy definition of expression merely requires the intention to convey meaning, which is different from a requirement that someone else actually receives and understands the meaning. This point has been reaffirmed in subsequent cases, and the law is clear that a claimant alleging an infringement of their right to freedom of expression need not show the act of expression actually conveyed a message to anyone. The intention to convey meaning is the key (Canadian Broadcasting Corp v Canada (Attorney General) 2011 SCC 2 at para 34 and R v Sharpe 2001 SCC 2 at para 108). Another point of interest is that expression includes more than the spoken or written word. Expression includes the arts, physical acts or gestures, and may even include such mundane acts as parking a car (Irwin Toy at paras 42-43). In conclusion, expression includes all non-violent activities intended to convey a meaning.

Application of the Law: Is Research Expressive?

Applying the law to the issue of scientific research, the question becomes whether research or experimentation is expressive. In the US and Canada this issue has been the subject of a lively academic debate among legal scholars. Before diving into that debate, it is necessary to provide a rough definition of “scientific research”. One overly wordy definition emphasizes that scientific research is “the systematic collection or generation of empirical data…and the utilization of unbiased and rigorous modes of testing, analysis, and evaluation to draw inferences and conclusions about those data” (Barry P. McDonald, “Government Regulation or Other ‘Abridgements’ of Scientific Research: The Proper Scope of Judicial Review Under the First Amendment” (2005) 54 Emory LJ 979 at 989). A more concise definition conceives of science as “knowledge that is testable and refutable” (Report of the Special Rapporteur in the Field of Cultural Rights, Farida Shaheed: The Right to Enjoy the Benefits of Scientific Progress and its Applications, UNHRC, 20th Sess, Agenda Item 3, UN Doc A/HRC/20/26 (2012) 3 at 7). These definitions indicate that science is to be equated with knowledge and scientific research is a means of producing that knowledge.

Is research, the act of producing knowledge, performed with the intention to convey a meaning? Some scholars see the activity of conducting research as intrinsically expressive, equating it to speech, dance, or art, and argue that it is a form of expression deeply intertwined with its meaning to the point where form and content are inseparable (Barbara Billingsley & Timothy Caulfield, “The Regulation of Science and the Charter of Rights: Would a Ban on Non-Reproductive Human Cloning Unjustifiably Violate Freedom of Expression?” (2004) 29 Queen’s LJ 647 at 663-665). A researcher only conducts an experiment for the purpose of obtaining information. It is not a deed devoid of meaning. The act of experimentation produces a recordable result. This result is the meaning intended to be conveyed to the researcher by her act of experimentation. Thus, the argument goes, research is an expressive activity covered under the test laid out in Irwin Toy. In short, this line of reasoning argues that research is inherently expressive and thus falls within section 2(b) of the Charter.

This view has been criticized as ignoring “the fact that inquiry is not itself communication” because “[i]nquiry is aimed at seeking information, not conveying meaning” (Jocelyn Downie, Jennifer Llewellyn & Francoise Baylis”, A Constitutional Defence of the Federal Ban on Human Cloning for Research Purposes” (2005) 31 Queen’s LJ 353 at 361). What this critique boils down to is that, since it is the researcher alone who conducts the experiment and receives the results, the act of experimentation is not expressive. No meaning is conveyed.

With respect, I would argue that this criticism is born of a narrow view of expression that cuts against the grain of the Supreme Court’s jurisprudence on the matter. In Canadian Broadcasting Corp (at para 34), Justice Marie Deschamps, speaking for a united Court, reaffirmed that a section 2(b) claimant does not need to show that the activity actually conveyed a message with a meaning. What must be shown is that the act was performed to convey a meaning. In Sharpe (at paras 107-115), Chief Justice Beverley McLachlin stated plainly that self-created works intended solely for private use by their creator fall within the ambit of section 2(b). It was the constitutional guarantee of free self-expression that moved the Chief Justice to read in a private-use exception to the Criminal Code prohibition on child pornography in Sharpe, which was recently upheld in R v Barabash, 2015 SCC 29. To conclude, the criticism that the act of conducting research is not expressive because a message is not communicated to others appears to be unsupported by authority.

A secondary argument in favour of interpreting research as expressive activity is that, by the very act of choosing and performing a particular research method or research area, a scientist is implicitly signalling to society that she thinks this area is important, needs attention, or is the best way to solve a problem (Billingsley & Caulfield, “Regulation of Science” at 665-667). In the context of geoengineering, merely choosing to conduct atmospheric aerosol injection testing or ocean iron fertilization testing may send the message to decision makers and to the public that the climate change situation is dire.

An obvious criticism of this argument is that a scientist does not choose an area or method of research for the primary purpose of sending a symbolic message to society. Rather, as stated above, such research is performed primarily to produce knowledge. If such implied meanings fell within the scope of section 2(b), there would be no end to the slippage as seemingly all activity would slide down the slope into the scope of freedom of expression. This is a valid criticism, as allowing secondary symbolic meanings to colour the intention of a person’s actions would create an unworkable standard for defining an expressive act. It may be acceptable to acknowledge that a person may perform an act with more than one purpose in mind, however this line of reasoning takes this principle one step too far. Almost anything a person does could arguably have a symbolic meaning. The scope of the free expression guarantee would be expanded to the point where section 2(b) would become meaningless and the only questions to be decided would be whether the impugned government action was justifiable. To conclude, the very act of performing a particular form of research may be symbolically expressive. However, this line of reasoning is open to the valid criticism that it would have a far too expansive effect on the scope of section 2(b).

Two additional lines of argument for including scientific research in the free expression guarantee originate from American scholars. One view is that experimentation is a critical part of the scientific method, which is highly connected to the “market place of ideas” in a historic, structural, and purposive manner (Roy G Speece, Jr & Jennifer Weinzierl, “First Amendment Protection of Experimentation: A Critical Review and Tentative Synthesis/Reconstruction of the Literature” (1998) 8 S Cal Interdisc LJ 185 at 213). The second view, which is similar to the first, posits that experimentation is uniquely facilitative of highly valued thought, and should therefore be protected (Speece & Weinzierl at 218). At their core, both arguments view experimentation as a pre-condition for scientific speech (i.e. communicating the results of scientific research), rather than viewing research itself an expressive act.

The notion that research is an essential pre-condition for the communication of highly valuable expression is intuitively powerful. Chief Justice McLachlin has remarked in obiter that “publishing scientific research is valuable, and prohibitions on it have an impact on the right to free expression in a serious manner” (Canada (Attorney General) v JTI-Macdonald Corp, 2007 SCC 30 at para 52). It is plain and obvious that section 2(b) protects a person’s right to publish scientific information. Keeping in mind that Charter rights are to be accorded a generous, liberal, and purposive interpretation, the purpose of protecting the right to publish scientific information would be undermined if the means (or pre-conditions) by which such information is obtained was not also protected. Therefore, the argument goes, research ought to be a protected form of expression, alongside publishing the results of research. The Chief Justice adopted a similar line of reasoning when she held that even the mere possession of expressive material engages freedom of expression because “the possession of such material allows us to understand the thought of others or consolidate our own thought” (Sharpe at para 25). In its essence this is a pre-condition argument. A right to freedom of expression would be meaningless without also protecting access to the means of expression.

One criticism of the pre-condition argument is that, if the scope of freedom of expression is so broad as to include every necessary pre-condition required for individuals to express themselves, virtually every conceivable action will be covered by the free expression guarantee (Downie, Llewellyn & Baylis, “Human Cloning for Research Purposes” at 361). Perhaps eating food and drinking water will be necessary pre-conditions to expression, as one cannot express oneself if one dies of starvation or dehydration. This is a slippery slope argument which should not be accepted. Research has a historically and logically close facilitative connection to scientific discovery and scientific communication (Speece & Weinzierl, “Protection of Experimentation” at 217). This sets research apart as a uniquely necessary pre-condition and can surely serve as a basis for differentiating everyday human needs from essential pre-conditions required to vindicate the rights and freedoms enshrined in the Charter. The point is likely moot however, as I have argued above that research itself should be considered an expressive act covered under 2(b).

There is also a line of cases in Canada holding that freedom of expression protects listeners as well as speakers (Edmonton Journal v Alberta (Attorney General), 1989 SCC 133 at para 85-86 and Canadian Broadcasting Corp at paras 29-31). Typically, these cases involve the state restricting the ability of the media to access certain public goings-on, such as court proceedings. The reasoning for upholding the media’s right to access is that it protects the public’s right to receive information about pressing matters of the day, particularly concerning public institutions (Edmonton Journal at para 85). Scientific research casts a wide net and doubtless includes information about matters of pressing importance to the public. Stretching this line of reasoning to a novel situation, the journalist who gathers information at a courthouse about a trial and then relays that information to the public may be analogous to the scientist who collects data from an experiment and then communicates the results in a publication. Thus, including research within the scope of the free expression guarantee would protect the public’s right to receive valuable scientific information of pressing importance.

One may also imagine the researcher herself as the “listener”, taking in the information from the experiment, which takes the place of “speaker”. This analogy gains more plausibility depending on the type of research undertaken. If the experiment involves only the researcher interacting with the natural world and interpreting the results, this is more likely distinguishable from the type of listeners imagined in the Edmonton Journal line of cases. However, if the research is of a social nature, perhaps involving interviews with human subjects, there is clearly a person-to-person communication occurring there. In such a case, the argument for distinguishing scientific research from Edmonton Journal loses strength. In conclusion on this point, I acknowledge that this would be a novel application of the “right to listen” line of reasoning and would thus likely stretch the case law beyond where a judge may be willing to take it.

International covenants and human rights obligations to which Canada is a signatory may act as interpretive aids in scoping out the content of a Charter right or freedom (See Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 at paras 69-70 and Saskatchewan Federation of Labour v Saskatchewan, 2015 SCC 4 at paras 64-65, 68-71). Article 27 of the Universal Declaration of Human Rights, GA Res 217 (III)A(1948), states that “everyone has the right to…share in scientific advancement and its benefits”. Article 19 also ensures the right to freedom of expression, including the freedom to “…seek, receive and impart information…”. The same language protecting the seeking of information as expression is included in Article 17 of the International Covenant on Civil and Political Rights, 19 December 1966, 999 UNTS 171 art 17 (entered into force 23 March 1976, accession by Canada 19 May 1976). Article 15 of the International Covenant on Economic, Social, and Cultural Rights, 16 December 1966, 999 UNTS 3 art 15 (entered into force 3 January 1976, accession by Canada 19 May 1976) recognizes the right of everyone to enjoy the benefits of scientific progress and its applications, while also protecting “the freedom indispensable for scientific research and creative activity.” These agreements are not binding in domestic Canadian law, however they do colour the courts’ interpretation of the Charter. These international covenants and declarations point inevitably towards the protection of research and experimentation under the freedom of expression.

Conclusion

Section 2(b) includes in its scope any non-violent activity that is intended to convey a meaning. Research, as a means of seeking out knowledge, may be understood as an inherently expressive activity. Multiple international covenants and declarations prize scientific advancement and research as a right not to be interfered with by the state. Further, a scientist’s choice of experiment may purposefully act as a symbolic message to society. However, this argument may expand the scope of section 2(b) beyond what is practical or desirable. Additionally, research may be seen as a historically connected and logically linked pre-condition to the creation of scientific speech, which is to be cherished and guarded jealously from state interference. Finally, freedom of expression includes a “right to listen” or to receive information, which may include a freedom to generate information (i.e. research results) to be received, though this would be a novel use of the doctrine. Overall, there is ample ground on which to conclude that the scope of section 2(b) likely includes scientific research.

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Access to Justice in Criminal Law

Tue, 06/28/2016 - 10:00am

By: Alice Woolley

PDF Version: Access to Justice in Criminal Law

Case Commented On: R. v Moodie, 2016 ONSC 3469 (CanLII)

The Charter of Rights and Freedoms guarantees everyone the right to retain and instruct counsel on arrest or detention. What do we mean by that? Specifically, do we mean it? Do we mean it for people other than the relatively affluent few?

Canadian governments claim that we do. The vision of Legal Aid Alberta states that it aims for “An Alberta where everyone can access justice and achieve fair and lasting resolutions to their legal issues.” Legal Aid Ontario’s website says that it “provides legal assistance for low-income people”.

Justice Ian Nordheimer isn’t buying it. In a stinging judgment issued on May 26 in R. v. Moodie 2016 ONSC 3469, he stayed charges against Tyrell Moodie pending the provision of state-funded counsel. The charges faced by Mr. Moodie were serious and raised complex legal issues. Justice Nordheimer described the Ontario legal aid guidelines as having no “reasonable relationship to what constitutes poverty in this country” (para 6). He rejected as unrealistic the Crown’s suggested alternatives for Mr. Moodie to raise the funds – a part-time employee at a Boys and Girls club who lives with his mom and is facing a serious drug charge, is not a viable candidate for a bank loan, can legitimately have problems getting another job, and cannot pay for his legal bills with a credit card. Justice Nordheimer acknowledged the legitimate role of the legislature in setting legal aid levels, and even that it could be appropriate in some circumstances for a person to face a criminal trial unrepresented. But a 5-7 day trial, raising complex Charter, evidentiary and severance issues, and with a potential consequence of imprisonment, is not one in which an accused should be unrepresented.

Justice Nordheimer’s decision solves Tyrell Moodie’s lack of counsel problem – subject to appeal. But it reveals a reality that we do not talk about as much as we should, which is that Canadians can face criminal sanctions – even imprisonment – without having the benefit of counsel. And they do so because they are poor. Just not quite poor enough.

Legal aid financial eligibility guidelines ensure that some criminal accused will be unrepresented. Ontario’s guidelines are especially miserly (truly – Scrooge himself would be impressed at the $12K cut-off for a single person) but even in provinces with considerably higher cut-offs – in Alberta $19,653 for a single person – the reality is that many people without the actual financial means to retain counsel will not be eligible for legal aid.

And courts are not necessarily willing to appoint counsel, even for impecunious accused. For example, in R. v. Martin, 2015 NSCA 82 (Can LII), the Nova Scotia Court of Appeal described how Mr. Martin represented himself in defence of 25-26 charges of tax evasion and successfully had the charges dismissed on Charter grounds. That result was reversed on summary conviction appeal, again with Mr. Martin representing himself. Mr. Martin was denied legal aid for the appeal, but the Crown acknowledged he did not have the financial resources to retain a lawyer. Nonetheless, the Court of Appeal did not appoint counsel for him, because the case was not complex, the Court could make a determination and the Crown had a duty to “assist the Court in ensuring that the appellant receives a fair trial” (para 28).

This reality – that poor Canadians go to court without lawyers even when facing criminal charges – means that we need to ask ourselves hard questions about what kind of legal system we really have. A simple understanding of the rule of law requires that people not be subject to legal consequences except where legally justified. And any more complex understanding of the rule of law views a system of fair adjudication – its procedures and systems of argument – as essential for achieving the rule of law, and views lawyers as a necessary part of that system. It is hard to see a criminal accused without a lawyer as having truly had access to the rule of law.

I understand the political realities of legal aid. Creating an effective ad campaign featuring accused tax evaders and drug dealers would defy even Don Draper at his finest. There are many demands on our public finances. I even have my doubts as to whether Justice Nordheimer’s reasons will stand up on appeal – I’m not sure the appellate courts will want to force the expenditure of public funds on not-quite-desperately-indigent criminal accused. But inadequate legal aid funding undermines the rule of law.

And even if we increase legal aid funding – or if we can’t – the time has come to think about other changes.

What about, for example, eliminating the now de facto requirement for a pre-law undergraduate degree? It adds three or four years of costs to law training – both opportunity costs and direct costs. There may be some benefit from it in terms of writing and analytical ability and in general learning-readiness. But is the benefit worth the cost?

What about moving law school – or at least some law schools – out of the universities altogether? Universities maintain – with good reason – that they have an academic mission that precludes their law schools focusing only on producing practicing lawyers. And – not surprisingly! – I agree with the proposition that law faculties contribute to society in ways that go beyond our teaching mandate. But if we need people to obtain inexpensive legal education that allows them to provide inexpensive legal services to low-income people, then we need to create low cost but effective legal education. Over the last twenty years universities may have been effective, but they’ve been anything but low cost, especially in Ontario.

Another option might be to end lawyers’ exclusive right to practice law. If the state will not provide lawyers, and people of modest means cannot afford them, and if ensuring the rule of law requires legal assistance in trials where someone’s liberty is at stake, then non-lawyer legal service providers should be an available alternative

I don’t see any of these ideas as a silver bullet. As I noted, meaningful increases in legal aid are politically difficult if not impossible. Other changes to the procedures and practices of the administration of justice may be required. There are risks as well as benefits in changing legal education or eliminating lawyers’ exclusive right to deliver legal services (although Trevor Farrow and I have some ideas on how to expand the role of non-lawyer legal service providers).

But at the end of the day, I don’t think we have the rule of law that we claim to have. Not having lawyers in court with accused like Mr. Moodie and Mr. Martin undermines my confidence that they get the legal outcomes their cases warrant, or that they enjoy the procedural protections the law must provide. It sickens me to think that that is the case just because they are poor. And right now I’m open to any idea that may bring us closer to the rule of law our system aspires to but fails to achieve more often than it should.

This post originally appeared on Slaw.

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“What Were They Thinking?” Condominiums, Oppressive Conduct and Human Rights

Mon, 06/27/2016 - 10:00am

By: Jennifer Koshan

PDF Version: “What Were They Thinking?” Condominiums, Oppressive Conduct and Human Rights

Case commented on: Condominium Corporation No 072 9313 (Trails of Mill Creek) v Schultz, 2016 ABQB 338 (CanLII)

I have commented a couple of times previously on the application of human rights legislation to condominiums (see here and here). In Condominium Corporation No 052 0580 v Alberta (Human Rights Commission), 2016 ABQB 183 (CanLII), Justice Robert Graesser of the Alberta Court Queen’s Bench held that the Alberta Human Rights Act, RSA 2000, c A-25.5 (AHRA), does apply to the relationship between condominium owners and their condominium corporations. There is, however, a caveat. Section 4 of the AHRA protects against discrimination in the context of goods, services and facilities customarily available to the public, but does not list “age” as a protected ground. This means that age discrimination complaints cannot be brought against condominium boards (nor against other service providers or landlords; see section 5 of the AHRA, which excludes age as a protected ground in tenancy relationships). In the condominium context, an alternative remedy exists – section 67 of the Condominium Property Act, RSA 2000, c C-22 (CPA), allows courts to remedy “improper conduct” on the part of condominium corporations, including that which is “oppressive or unfairly prejudicial to or that unfairly disregards the interests of an interested party or a purchaser or a prospective purchaser of a unit” (CPA section 67(1)(a)(v)). The application of this section was at issue in the recent case of Condominium Corporation No 072 9313 (Trails of Mill Creek) v Schultz, 2016 ABQB 338 (CanLII).

Stacey Schultz purchased a condominium unit in the Trails of Mill Creek in 2012, when she was estranged from her husband. Her offer to purchase the unit was conditional on her minor son Brett being permitted to reside with her in this “adults only” building. She was told by a representative of the Developer that “this would not be a problem” (at para 3). In March 2014, the Condominium Board decided that Brett could not live with his mother in the unit, even temporarily, and gave notice that he had to leave by July 6, 2014. The Condominium Bylaws relied upon by the Board provide as follows in section 63:

(b)   A Unit shall not be occupied by a person or persons who have not attained or will not have attained his or her eighteenth (18th) birthday within twelve (12) months of occupancy of the said Unit (hereinafter referred to as “18th birthday”) or by any child/children of the owner who are under the age of eighteen (18).

(c)   Notwithstanding the above paragraph 63(b), a Unit may be occupied by a person who has not attained his or her 18th if the Board authorizes a person to occupy a Unit for specified periods of time for compassionate reasons. The permission granted by the Board may be revoked by a special Resolution at the duly convened meeting of the Corporation. (emphasis added)

Following the Board’s decision, Ms. Schultz tried to sell her unit, and was unsuccessful in spite of using two realtors, lowering her listing price, and accepting two separate offers that fell through. At a meeting in November 2014, under the authority of section 43 of the Bylaws, the Board imposed a fine commencing January 1, 2015 of $250.00 “for every 2 weeks the Bylaw breach continues and the underage occupant remains in the unit.” (at para 5) As noted by Master W.S. Schlosser, “Ms. Schultz was caught between the decision of the board and her legal and moral obligation to her son. There was little more that she could do.” (at para 6) In May 2015, the Board commenced an originating application to the Court of Queen’s Bench to evict Brett and obtain its fines and enforcement costs under section 43 of the Bylaws. Ms. Schultz brought a cross-application under section 67 of the CPA for relief from the Board’s improper conduct.

By the time of Master Schlosser’s hearing of the matter, eviction had become moot, as the condominium unit had been sold. He identified four issues for consideration (at para 12):

1. The ability of the Developer to bind the Condominium Corporation.

2. The nature and the sufficiency of the evidence in support of the originating application;

3. The sufficiency of the Board’s reasons in levying these fines;

4. The role of the Court in reviewing the decision of the properly elected condominium board.

On the first issue, Master Schlosser he cited Condominium Plan No. 931 0520 v Smith, 1999 ABQB 119 (CanLII) for the point that “private arrangements between a Developer and an individual cannot bind the subsequent owners of a Condominium Corporation.” (at para 13) In any event, the Condominium Board’s consent to allow Brett to live in the unit was withdrawn, making the central issue “the propriety of the decision to fine Ms. Schultz for breach of the by-law and the Board’s ability to recover their enforcement costs.” (at para 14)

On the second and third issues, Master Schlosser noted that originating applications are intended to be used when there are no facts in dispute, and the evidence tendered on such applications must be first-hand, direct, and personal rather than based on hearsay (at para 15, citing Alberta Rules of Court, Alta Reg 124/2010, Rules 3.2(2) and 13.18(3)). The Condominium Board’s application was supported by the affidavit of John Krysler, the property manager of the Trails of Mill Creek. Master Schlosser noted that his evidence was that of a bystander rather than coming from first-hand knowledge, and that it did not provide any explanation for the Board’s decision to levy the fines against Ms. Schultz. Although Krysler’s affidavit referenced “observations and complaints made about the underage occupant”, there was no evidence providing details about any incidents of concern regarding Brett (para 18). On the other hand, Ms. Schultz’s affidavit deposed that her son was not causing any nuisance, and her evidence was uncontradicted as to the efforts she had made to sell her unit. Master Schlosser found that it was “not self-evident how a fine could correct Ms. Schultz’s behavior, if that was what was intended.” (at para 18)

Turning to the fourth issue and section 67 of the CPA, Justice Schlosser noted several general principles that apply in the context of this “oppression remedy” (at para 23, citing Leeson v Condo Plan No. 9925923, 2014 ABQB 20 (CanLII) and T. Rotenberg, Condominium Law and Administration, Carswell, vol 2, (Looseleaf), ch 23):

(a)  It is a broad remedy, broadly applied; attempts to narrow its impact and effectiveness should therefore be resisted.

(b)  The purpose of the oppression remedy is to protect the objectively reasonable expectation that caused the relationship to begin or continue.

(c)  Either the cumulative results of the conduct complained of or a specific egregious act ultimately determines whether there is an actionable wrong.

(d)  The court must balance the competing interests of the minority, who are to be treated fairly, with the rights of majority to govern. Only if the minority’s interest is unfairly treated will the courts intervene.

(e)  The selection of a remedy must be sufficient to achieve the desired result. Remedies should not be narrowly limited, and may be granted against individuals in appropriate cases.

Using colourful language in his focus on (b), the reasonable expectations principle, Master Schlosser stated that “a unit owner could reasonably, or legitimately expect that she would not be fined when there would be no useful purpose served by it. Both the by-law about minor persons staying in the complex and the power to levy a fine are discretionary. … The by-laws are not to be treated as a version of legislated inhumanity.” (at para 25) He also noted that although decisions of condominium boards are typically granted considerable deference, “[a]rbitrary decision making cannot immunize the Board from scrutiny by this Court.” (at para 26).

Under the heading “What Were They Thinking”, Master Schlosser reiterated that the Board had provided no reasons for its decision to fine Ms. Schultz, nor any evidence of complaints or issues with respect to her son. The absence of reasons suggested that it was not “a wild assumption” that the Board’s decision was arbitrary; “there is no apparent reason how a fine could correct Ms. Schultz’s behavior or to cause her to do anything other than what she had diligently been doing.” (at para 30) Master Schlosser dismissed the Board’s application for fines and recovery costs and allowed Ms. Schultz’s cross application under section 67 to set aside the fines, with costs payable to her by the Board.

He concluded by setting out a template for how such applications should be decided in the future (at para 35):

1. Apply a reasonable or legitimate expectations analysis to determine the nature of the right or interest affected, and to identify whether there is threshold conduct for the application of section 67(1)(a)(ii)-(v);

2. Consider the nature and the sufficiency of the evidence in support of the application; especially with Rule 13.18(3) in mind;

3. Identify the type of the decision (i.e., whether it involves a question of law like the interpretation of the Condominium Property Act, or a by-law, or an exercise of discretion based on a set of facts). Condominium Boards may be especially in tune with the needs and interest of the unit owners but unless demonstrated, their election gives them no special ability to interpret questions of law. This leads to the fourth question which is to;

4. Consider what level of deference the Court should afford the decision. That is, what standard should be applied: reasonableness, or correctness;

5. If the decision involves an interest that is not trivial, and if the result is not self-evident, the Court should ask whether reasons are necessary and whether the rules of natural justice have been followed.

Commentary

I began this post by noting that “age” is not a protected ground of discrimination under some sections of Alberta’s human rights legislation. Would inclusion of age in the legislation make much of a difference in the kind of case discussed here? It would allow someone in the position of Ms. Schultz to bring a human rights complaint in circumstances where an “adults only” policy was enforced against her and her child – and indeed it would preclude “adults only” policies in the first place (unless they could be justified as “reasonable and justifiable under section 11 of the AHRA). That being said, family status is a protected ground under section 4 of the AHRA, and could have formed the basis of a discrimination claim against the Board. Moreover, the earlier cases on which I blogged both involved adverse treatment by condominium boards against unit owners with disabilities, another protected ground under section 4 of the AHRA, showing that prohibitions against discrimination will not necessarily shield condominium unit owners from discriminatory behaviour by their boards. And although human rights procedures are intended to be relatively accessible – for example many parties are not represented by counsel in hearings before the Alberta Human Rights Tribunal – there is a backlog in processing complaints that may make a human rights route just as challenging as a court application under section 67 of the CPA. There is also the policy question of whether “adults only” condominiums (along with apartments and other goods, services and facilities) are something we wish to continue shielding from the application of human rights legislation. If the AHRA remains unchanged on this basis, at least section 67 of the CPA can provide some relief from the actions of oppressive condominium boards for persons in the position of Ms. Schultz. Master Schlosser has provided a useful template for future cases of this kind.

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From Telecoms to Pipelines: Good News from the Supreme Court of Canada for Pipeline Builders

Fri, 06/24/2016 - 10:00am

By: Nigel Bankes

PDF Version: From Telecoms to Pipelines: Good News from the Supreme Court of Canada for Pipeline Builders

Case commented on: Rogers Communications Inc v Châteauguay (City), 2016 SCC 23 (CanLII)

In this decision the Supreme Court of Canada (unanimous in the result) concluded that the actions of the City of Châteauguay in creating a reserve as to certain real property were directed at frustrating Rogers’ efforts to install an antenna system on property located within the City and were therefore unconstitutional as a measure dealing with the siting of telecommunications infrastructure. The majority found that Châteauguay’s notice of reserve was ultra vires (but also went on to offer an analysis that would have rendered the reserve inapplicable on the basis of the doctrine of interjurisdictional immunity (IJI)). The minority (Justice Gascon) preferred to find for Rogers solely on the basis of IJI.

While this is no doubt an important decision for the telecommunications industry it will almost certainly prove to be more important for the more tightly networked elements of the energy sector and in particular oil and gas pipelines given the highly contentious nature of current proposals to construct new pipelines or expand existing pipelines. For earlier posts on this issue see here (Northern Gateway) and here (Kinder Morgan’s expansion project).

The Facts

Rogers is a federally regulated telecoms provider. It holds a spectrum licence from the federal government which authorizes it to provide services in specified frequency ranges. The licence also obliges Rogers to provide adequate network coverage and to do that it must install and maintain radio stations and antenna systems. Under the federal scheme (Radiocommunication Act, RSC 1985, c R-2) Rogers must enter into an agreement with the relevant property owner for the use of a particular site and secure the federal Minister’s approval for the use of that site. In order to get that approval, a licensee such as Rogers must engage in a consultation process prescribed by Industry Canada which requires the licensee to consult both the public and the relevant land use authority (LUA), in this case Châteauguay. While the goal of the consultation with the LUA is to reach an understanding or agreement, the Minister retains the right to make a final decision in the event of an impasse. A licensee has no right of expropriation. The evidence showed (at para 66) that while telecoms technology did not require the use of any particular site for an antenna “a deviation of 100 or 200 metres from a clearly specified location can prevent the antenna system from effectively meeting the network’s identified needs.”

Rogers secured the right to use what it believed to be a suitable site (the 411 site) but Châteauguay objected on a number of grounds, including a contravention of a by-law and aesthetic and health and safety reasons, and suggested that Rogers consider another site, the 50 site. Further discussions ensued and proposals were exchanged over a two-year period culminating in Châteauguay establishing a reserve over the 410 property and justifying it by reference (at para 22) to concerns related to the interests and well-being of its residents and the development of its territory (at para 22). The reserve served to prohibit all construction for a two-year period and was subsequently renewed for a further two-year period. (at para 2)

Rogers contested the validity of the reserve on both constitutional and municipal/administrative law grounds.

The Majority Decision

The majority (per Wagner and Côté, McLachlin, Abella, Cromwell, Karakatsanis and Brown concurring) concluded (at para 46) that the pith and substance of the impugned measure (the notice of reserve and not the provincial legislation underpinning the reserve) was not the protection of the health and well-being of the residents or the development of the territory but rather the choice of location of radiocommunication infrastructure. The majority felt able to reach this conclusion on the basis of its assessment of the evidence which demonstrated the close connection between the municipality’s actions and Rogers’ proposals. In effect, the majority concluded (but without using the term, see Reference re Upper Churchill Water Rights Reversion Act, [1984] 1 SCR 297) that the notice of reserve and the reasons given in support of the notice were colourable. The majority expressly rejected the suggestion that the notice of reserve had a double aspect. There was no double aspect here, only a notice of reserve dealing with the location of telecommunications infrastructure (at para 51) and any “finding that the siting of radiocommunication infrastructure has a double aspect would imply that both the federal and provincial governments can legislate in this regard, which would contradict the precedent established by the Privy Council in In re Regulation and Control of Radio Communication in Canada [1932] AC 304 to the effect that the federal jurisdiction over the siting of such infrastructure is exclusive.” (at para 52)

That was enough to dispose of the case since the notice of reserve was simply (at para 53) ultra vires. But, unusually, the majority still provided its analysis of the application of Rogers’ alternative argument based on interjurisdictional immunity (IJI). The premise of such an argument is of course that the provincial measure in question is valid (intra vires).

The majority acknowledged, following Canadian Western Bank v. Alberta, 2007 SCC 22 (CanLII), [2007] 2 SCR 3, that IJI should be applied with restraint and in situations already covered by precedent. The majority was of the view that Toronto Corporation v. Bell Telephone Co. of Canada, [1905] AC 52 was authority for the application of IJI since that case suggests (at para 63) that “the siting of telecommunications infrastructure is at the core of the federal power” and (at para 65) that the Court of Appeal erred in this case “in interpreting Bell as meaning that municipalities have a certain degree of control over the determination of the exact location of telecommunications poles.” The majority continued as follows (at paras 66 and 69):

[66] Moreover, the evidence in the record favours a finding that the siting of radiocommunication antenna systems is at the core of the federal power over radiocommunication. It is the appropriate and specific siting of radiocommunication antenna systems that ensures the orderly development and efficient operation of radiocommunication in Canada…

[69] We conclude that the siting of antenna systems is part of the core of the federal power over radiocommunication and that any other conclusion would make it impossible for Parliament to achieve the purpose for which this power was conferred on it. The question therefore becomes whether, in the instant case, the effect of the notice of a reserve served by Châteauguay on the core of this federal power is sufficiently significant for the doctrine of interjurisdictional immunity to apply.

The majority concluded that the notice of reserve “seriously and significantly impaired the core of the federal power over radiocommunication and that this notice served on Rogers was therefore inapplicable by reason of the doctrine of interjurisdictional immunity.” (at para 72) The evidence in support of this was as follows:

[71] In the case at bar, the service of the notice of a reserve prevented Rogers from constructing its antenna system on the property at 411 Boulevard Saint?Francis for two successive two?year periods, and there was no alternative solution to which it could have turned on short notice. Once the resolution authorizing the service of the notice of a reserve had been adopted, Châteauguay’s offer meant that Rogers would have to wait either until the end of the expropriation proceedings with regard to the property at 50 Boulevard Industriel or for a period of approximately seven months before it would be able to construct its installation on the property at 411 Boulevard Saint?Francis. In these circumstances, Rogers was unable to meet its obligation to serve the geographic area in question as required by its spectrum licence. In this sense, the notice of a reserve compromised the orderly development and efficient operation of radiocommunication and impaired the core of the federal power over radiocommunication in Canada.

The passage is worth quoting in its entirety, since it confirms that the IJI test is not “sterilizing” or “paralyzing” and that the more qualified test of impairment may be met by measures which serve to delay, as well as measures that completely frustrate, the attainment of the goal or objective sanctioned by the federal power.

Justice Gascon (Concurring in the Result)

Justice Gascon considered that the appeal should have been resolved on the basis of the doctrine of interjurisdictional immunity rather than on the basis of the pith and substance doctrine. In effect, it seems that Justice Gascon was prepared to take at face value Châteauguay’s representations that it was enacting the reserve (at para 109) “to ensure the harmonious development of the territory of Châteauguay, to allay its residents’ concerns and to protect their health and well?being …”.

In the name of “a flexible approach tailored to the modern conception of federalism, which allows for some overlapping and favours a spirit of co?operation” (at para 93) and an approach that is consistent with the presumption of validity, Justice Gascon clearly favoured a more deferential and “delicate” approach to the assessment of pith and substance than did the majority. Justice Gascon put the point this way at para 106:

[106] In my view, this more nuanced understanding of the effects of the notice of a reserve is in line with a more flexible conception of the pith and substance doctrine that is more consistent with the guiding principles discussed above. I think it would be prudent to approach the application of this doctrine in this way. An overly narrow understanding of the consequences of the measure that is limited to an examination of just one of its effects could lead to the premature conclusion that the measure applies only to the matter so affected, that is, to the siting of radiocommunication towers. By contrast, undertaking the analysis by way of an approach that takes into account the various effects of the notice on Châteauguay’s ability to manage its territory in accordance with its citizens’ expectations favours a more accurate understanding of the matter to which this notice actually applies.

Once again the entire text merits quotation, because implicitly, if not explicitly (see the comments of the majority above on double aspect), the majority must be taken to have rejected this approach. For the majority it is clearly not enough that a provincially authorized entity might have relied on a legitimate provincial objective if it was in fact motivated to frustrate a legitimate federal purpose.

Justice Gascon largely agreed with the majority on the formulation and application of the IJI doctrine but his concluding comments with respect to the question of when the impairment occurred are worth noting (at para 121):

The measure’s intrusion on the core of the power is significant and amounts to an impairment. My colleagues base the impairment on the time during which the notice of a reserve was to be in effect, that is, two consecutive two?year periods. In my opinion, the impairment existed as of the time when the effect of the notice is found to have prevented Rogers from installing its radiocommunication tower on the available site that had been formally approved by the Minister of Industry, given that the federal legislation and the Circular both give the Minister the last word as regards the siting of radiocommunication systems in Canada. Such an obstacle has undesirable and extremely harmful consequences on the orderly development and efficient operation of radiocommunication insofar as Rogers’ activities are concerned.

The Principle of Co-operative Federalism

The decision features an interesting discussion of the idea or principle of co-operative federalism. This was a central plank of Justice Gascon’s judgement. He noted (at para 85) that:

… any application of the constitutional doctrines must take into account the principle of co?operative federalism to which the Court has referred in a number of cases (CWB, at para. 24; Husky Oil Operations Ltd. v. Minister of National Revenue, 1995 CanLII 69 (SCC), [1995] 3 S.C.R. 453, at para. 162; Reference re Employment Insurance Act (Can.), ss. 22 and 23, 2005 SCC 56 (CanLII), [2005] 2 S.C.R. 669, at para. 10). This principle favours, where possible, the operation of statutes enacted by governments at both levels (Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44 (CanLII), [2013] 3 S.C.R. 53, at para. 50, citing General Motors of Canada Ltd. v. City National Leasing, 1989 CanLII 133 (SCC), [1989] 1 S.C.R. 641; CWB, at para. 37). The Court’s adoption of an approach involving concurrent federal and provincial powers, as opposed to applying the outdated concept of “watertight compartments” to establish exclusive jurisdictions, is consistent with this (CWB; Multiple Access Ltd. v. McCutcheon, 1982 CanLII 55 (SCC), [1982] 2 S.C.R. 161; Law Society of British Columbia v. Mangat, 2001 SCC 67 (CanLII), [2001] 3 S.C.R. 113; OPSEU v. Ontario (Attorney General), 1987 CanLII 71 (SCC), [1987] 2 S.C.R. 2).

The majority acknowledged the importance of the principle, recognizing (at para 38) “that when the courts apply the various constitutional doctrines, they must take into account the principle of co?operative federalism, which favours, where possible, the concurrent operation of statutes enacted by governments at both levels …”. But there are limits to the principle which the majority acknowledged at paras 39 and 47:

[39] …. although co?operative federalism has become a principle that the courts have invoked to provide flexibility for the interpretation and application of the constitutional doctrines relating to the division of powers, such as federal paramountcy and interjurisdictional immunity, it can neither override nor modify the division of powers itself. It cannot be seen as imposing limits on the valid exercise of legislative authority…. Nor can it support a finding that an otherwise unconstitutional law is valid.

[47] We agree completely with the flexible and generous approach our colleague advocates … However, flexibility has its limits, and this approach cannot be used to distort a measure’s pith and substance at the risk of restricting significantly an exclusive power granted to Parliament. A finding that a measure such as the one adopted in this case relates in pith and substance to a provincial head of power could encourage municipalities to systematically exercise the federal power to choose where to locate radiocommunication infrastructure while alleging local interests in support of their doing so.

I think that we might anticipate that paragraph 47 will feature prominently in facta filed by counsel acting for federally regulated pipelines. While the Government of Alberta did not intervene in this litigation in support of the federal position, and neither did any pipeline interests, both Edmonton and the likes of TransCanada, Enbridge, and Kinder Morgan should be celebrating this decision. The City of Burnaby may not be so enthusiastic.

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Of Busted Butterflies and the Duty of Good Faith – A Saskatchewan Right of First Refusal Case

Wed, 06/22/2016 - 10:00am

By: Nigel Bankes

PDF Version: Of Busted Butterflies and the Duty of Good Faith – A Saskatchewan Right of First Refusal Case

Case commented on: Northrock Resources v ExxonMobil Canada Energy, 2016 SKQB 188

What is the legal position if N has a right of first refusal (ROFR) in the event that E agrees to sell its interest, unless E’s sale is to an affiliate; E transfers the interest to its wholly owned affiliate, NSCo and C then buys the shares of NSCo. Does the second transaction or the two transactions taken together (known in tax parlance – for reasons that, as with much of tax law, entirely escape me – as a “busted butterfly” trigger N’s ROFR entitlement (perhaps on the basis that E should not be able to do indirectly what it cannot do directly)? Justice Currie of the Saskatchewan Court of Queen’s Bench answered in the negative and as a result dismissed Northrock’s (N’s) claims which sounded in both contract and in tort (inducing breach of contract and conspiracy).

The Facts

ExxonMobil (E) was interested in disposing of certain oil and gas producing assets in Saskatchewan. Some of those assets (the assets at issue here) were subject to a unit agreement and a unit operating agreement as well as another relevant agreement which provided Northrock (N) with a ROFR. In offering the properties for sale through an electronic data room, E indicated that it was interested in entertaining tax effective offers for the assets involving either a sale of the assets or a busted butterfly structured as above, under which E would transfer the assets to a Nova Scotia corporation (NSCo) (E’s affiliate) following which the purchaser would buy the shares in NSCo. Most interested purchasers submitted alternative offers using both structures. E disclosed that the relevant properties were subject to ROFRs. E eventually selected the offer of Crescent Point (C) with the deal to be structured as a busted butterfly. E procured N’s consent to the transfer to NSCo but in giving its consent N indicated that it objected to any transfer of the shares of NSCo to a third party without new ROFR notices. Neither E nor NSCo provided additional ROFR notices to N and the transaction closed with C acquiring the shares of NSCo.

N commenced this action suing E, C, and NSCo, alleging breach of contract, breach of a duty of a good faith, and the torts of inducing breach of contract and conspiracy. N sought a series of remedies including a declaration of trust, specific performance, damages, and punitive damages.

The Judgment

Breach of Contract

Justice Currie concluded that there was no ambiguity in the documents before him. The relevant agreements expressly exempted transfers to an affiliate from the ROFR obligations and did not address any subsequent sale of the shares of that affiliate. The parties could have bargained for such a provision but had not done so, and the Court was not prepared to read any such obligation into the agreements. The same reasoning applied even where N was a successor in interest to the original agreement.

[54] …. an examination of the ROFR provisions reveals that the parties to the agreements did not intend that every circumstance of a party divesting itself of an interest would trigger a ROFR. In negotiating the ROFR provisions they chose which divestitures would be singled out for a restriction on the right of a party to deal with its own property.

[55] The parties have used clear language in the agreements. They said what they intended to say in the agreements, having chosen and identified what they were prepared to agree to. Since the meaning of the parties’ words is clear, this is not a case of that meaning constituting an interpretation that defeats the intentions of the parties. Rather, those clear words communicate the intentions of the parties.

[56] The transaction, structured as it was to involve the transfer of interests to the NSULCs [Nova Scotia unlimited liability corporations] and the sale of the shares of the NSULCs, did not trigger the ROFR provisions of either agreement. ExxonMobil did not breach its agreements with Northrock by failing to provide ROFR notices.

Breach of the Duty of Good Faith

Neither was there a breach of the duty of good faith (and the Court considered this as a separate head rather than as part of the contractual analysis). The case law cited by the court (GATX Corp. v Hawker Siddeley Canada Inc. (1996), 27 BLR (2d) 251 (Ont Ct J), Glimmer Resources Inc. v Exall Resources Ltd. (1997), 35 BLR (2d) 297 (Ont Ct J) and Chase Manhattan Bank of Canada v Sunoma Energy Corp, 2002 ABCA 286, 317 AR 308) established that there might be breach of a duty of good faith in a ROFR context if a transaction were structured for the sole purposes of avoiding triggering a ROFR or (at para 66) “where a party is shown to have lied or misled, thereby breaching the duty of honest performance”, but not when it is structured in such a way for other legitimate reasons such as tax reasons or, in the case of a sale by a receiver, to maximize values. The evidence in the case supported the conclusion that E adopted the busted butterfly structure for tax reasons and was not motivated to elect this structure so as to avoid its ROFR obligations. E’s good faith in making this determination was not compromised by the fact that E’s employee handling the matter sought a series of legal opinions on the general question of whether a butterfly transaction might trigger a ROFR, even though those opinions expressed some uncertainty as to the precise legal position. Justice Currie reasoned as follows (at paras 80 81 & 83):

A decision can be a bona fide business decision, even in the face of some risk or uncertainty. Many business decisions involve risk and uncertainty. They involve weighing the risk and uncertainties. That is the nature of business. The element of uncertainty about the legal opinions does not affect my acceptance of Mr. Graham’s testimony that ROFRs were a detail that did not affect the decision, because the decision was driven by the concern for the tax pools.

In this case, the essence of the decision was that the busted butterfly structure could result in a benefit to ExxonMobil of $29 million, with a negligible related cost.
….

Further, I am not persuaded of the validity of the proposition that a client may bona fide follow legal advice only if that advice ultimately proves correct. Such a proposition is entirely impractical, given the complexities of the law and of the wide range of circumstances to which it applies. Similarly, it strikes me that following legal advice is an indication of, if anything, bona fide conduct rather than the opposite.

Neither was this conclusion affected by evidence in which E’s tax expert acknowledged that the tax advantages that might accrue to E were also not certain.

Finally, the evidence showed that C itself was neutral as to how to structure the deal (although one employee, not the relevant decision-maker, did advert to structuring so as to “circumvent the ROFR” (at para 71)) given that it was organized as a trust but that it was happy to accommodate E’s preference in terms of structure. C was focused on the value of the assets and winning the bidding competition rather than avoiding the ROFR.

Given that there was no breach of the duty of good faith it was unnecessary for the Court to decide (at para 105) whether all the defendants had such a duty or whether such a duty might only be owed by those (E in this case) in a privity relationship.

Tort

Finally, since there was no breach of contract there could be no tort of inducing breach of contract; neither could N establish a conspiracy to deny Northrock its ROFR since, as already held, that was not the predominant purpose of the conduct of the relevant parties and neither was the defendants’ conduct unlawful (since it was not in breach of contract).

Conclusion

The relationship between ROFRs and busted butterflies (or more prosaically inter-affiliate transactions) has long been a source of considerable uncertainty for transactional lawyers in the oil and gas industry. This decision offers some guidance to parties but we need further endorsement from an appellate court in order to deliver any real certainty. Furthermore, the decision does not answer all of the potential questions surrounding the relative weighting of the structuring drivers i.e. the relative importance of ROFR avoidance as a motivating driver versus the importance of other factors which might drive the structuring of the transaction.

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