University of Calgary
UofC Navigation

Ablawg

Subscribe to Ablawg feed
Updated: 2 hours 47 min ago

To Be (Justified) or Not To Be: That is (Still) the Question

Wed, 03/12/2014 - 10:00am

By: Martin Olszynski

PDF Version: To Be (Justified) or Not To Be: That is (Still) the Question

Document commented on: Decision Statement Issued under Section 54 of the Canadian Environmental Assessment Act, 2012, SC 2012, c19, for Taseko’s proposed New Prosperity Mine Project

A couple of weeks ago, the federal Minister of the Environment, Leona Aglukkaq, released another highly anticipated “decision statement” pursuant to section 54 of the Canadian Environmental Assessment Act, 2012 (CEAA 2012), this time regarding Taseko’s New Prosperity Mine project. Most readers will know that this was Taseko’s second attempt to secure federal approval for its proposed mine and that the federal review panel that conducted the second environmental assessment (EA) concluded that, like the original Prosperity project, it too was likely to result in significant adverse environmental effects (SAEEs) (for more on the panel’s report, see my previous post here). As with Shell’s Jackpine Oil Sands Mine expansion project and Enbridge’s Northern Gateway Pipeline project, this meant that New Prosperity could only proceed if the Governor in Council (GiC) (which is to say, Cabinet) concluded that these SAEEs were “justified in the circumstances” (section 53). Unlike Jackpine (and probably Northern Gateway), however, the GiC has apparently concluded that New Prosperity’s SAEEs are not justified.  I use the term “apparently” here because, as in Jackpine, there is no explanation or rationale contained in the decision statement as to how or why the GiC reached this result.

In a previous post on Jackpine, I suggested that the failure to provide reasons as to why a project’s SAEEs are justified in the circumstances was contrary to basic principles of environmental law – and EA law in particular – and that it undermined the process of political accountability that this aspect of CEAA, 2012 (a holdover from the original CEAA, 1992) was intended to create. Following the release of the New Prosperity decision statement, or perhaps more precisely following an entertaining but ultimately futile round of speculation as to what might explain these different results in the Twitterverse (more on this later), I resolved to look further into the issue.

I began my journey with the Hansard: those official reports of debates in Parliament that Ruth Sullivan tells me can be useful when interpreting statutes (Sullivan, Statutory Interpretation, Essentials of Canadian Law (Concord: Irwin Law, 1997) at 199).  Although I won’t pretend to have reviewed all of it (recalling that the relevant debates come not from the recent (2012) omnibus budget legislation, of which there is scant substantive discussion by design, but rather from CEAA, 1992, of which there are approximately two years’ worth), what I did find essentially confirmed my previous post.

The debate on March 16, 1992, is especially illuminating.  On that day, Parliamentarians were discussing an amendment proposed by the opposition Liberals that would have explicitly tied the justification provision, which was described as an “immense loophole,” to the goal of sustainable development (i.e. “…justified in the circumstances because the project contributes to the goal of sustainable development”). Although the amendment was ultimately defeated, the Progressive Conservative government’s response is revealing.  According to the Hon. Mr. Lee Clark, then Parliamentary Secretary to the Minister of the Environment, the same result is essentially achieved if one considers the purpose section of the Act, which then (and now) included encouraging federal authorities “to take actions that promote sustainable development” (CEAA, 2012, section 4).  Although Mr. Clark admitted to no formal legal training, he was more or less correct when he stated “that which follows in the bill as direct result is governed by the purposes of the bill” (Commons Debates, p 8301).  Indeed, the then-Minister of Environment apparently committed “to ensuring that decisions under this clause are made within the principles of sustainable development” (ibid).

Opposition concerns would also be addressed by the addition of a provision that gave the Minister the power to issue guidance as to when a project would be “justified in the circumstances.”  That’s right, there was then – as there is now – authority in the CEAA regime to provide some clarity and certainty to the justification exercise.  For CEAA, 2012, the relevant provision is section 86:

86. (1) For the purposes of this Act, the Minister may

(a) issue guidelines and codes of practice respecting the application of this Act and, without limiting the generality of the foregoing, establish criteria to determine whether a designated project…is likely to cause significant adverse environmental effects or whether such effects are justified in the circumstances;…

(Emphasis added).

For the government of the day, “to go further than that… to establish the direct legal connection [between justification and sustainable development] would be to give the courts more of a role in the definition of the term “sustainable development” than we would think is advisable.”  (Commons Debates, p 8302).  Here, then, is the core of the matter. Giving judges a direct and relatively objective benchmark against which to test justification decisions would push accountability into the courts, whereas the government preferred political accountability. For Mr. Clark, it was “clear that politicians, elected representatives, are in the best position to accept this responsibility today, rather than to pass the buck, the responsibility, on to the courts.  In doing so, we are accepting a system whereby we are giving that responsibility to those who are accountable.” (ibid).

So what does all of this mean? At the very least, pressure ought to now be put on Ms. Aglukkaq to exercise her authority pursuant to section 86 and establish the criteria for determining when a project’s SAEEs are (or are not) going to be considered justified in the circumstances. All sides, and perhaps especially industry, would benefit from knowing the test against which projects will be judged at the outset.

In the meantime, I note that the Athabasca Chipewyan First Nation, in their legal challenge to Jackpine, have raised the justification issue, and specifically the government’s failure to provide any reasons or explanation.  The ACFN’s approach is entirely consistent with both the above analysis and my previous post. While it is clear that Parliament ultimately chose against an overtly substantive judicial role in the review of justification decisions, it does not follow that there is no role for the judiciary whatsoever.  Questions of statutory interpretation remain, including whether this part of CEAA, 2012, requires some form of reasons or explanation and the role, if any, of sustainable development (and the other purpose provisions) in framing that exercise. These are questions of law with respect to which the Minister should be accorded no deference (see Canada (Fisheries and Oceans) v David Suzuki Foundation, 2012 FCA 40).

As I have previously stated and in light also of the Hansard, the current Minister’s interpretation – that no reasons are required – seems untenable. I am reinforced in my view when I consider that previously mentioned round of speculation on Twitter with respect to Jackpine and New Prosperity. One commentator suggested that staunch Aboriginal opposition was the deciding factor (which doesn’t totally square with the Jackpine outcome), while another suggested that New Prosperity was essentially a pawn to be sacrificed in the larger pipeline war being waged in British Columbia. The Prime Minister, for his part, expressed concern for “the long-term destruction of (the local water system),” but Jackpine will be far more destructive on that front (resulting in the loss of approximately 8500 ha of wetlands).  The only real distinguishing factor, it seems, is that Jackpine is an oil sands project, of which the federal government is a staunch supporter.

What this speculation suggests is that the issue here may be even more basic than enabling political accountability or securing adherence to CEAA’s environmental aspirations. Rather, it may be about ensuring that the legislation is not being misused or applied in an arbitrary and capricious manner, much as was the case in the foundational Roncarelli v Duplessis, 1959 CanLII 50 (SCC). In that case, the citation of which appears to be on the rise in the environmental law context generally (see here and here), the defendant Minister revoked Mr. Roncarelli’s liquor license because of the latter’s use of his restaurant’s profits to bail out Quebec’s then much prosecuted Jehovah’s Witnesses.  The Supreme Court of Canada made clear that:

[140] In public regulation of this sort there is no such thing as absolute and untrammeled “discretion”, that is that action can be taken on any ground or for any reason that can be suggested to the mind of the administrator; no legislative Act can, without express language, be taken to contemplate an unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute. Fraud and corruption in the Commission may not be mentioned in such statutes but they are always implied as exceptions. “Discretion” necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate; and any clear departure from its lines or objects is just as objectionable as fraud or corruption.

If CEAA, 2012 is the kind of “public regulation” to which the above quotation applies, and in my view it clearly is, it follows that Cabinet must provide some reasons or explanation for its decisions.  Bearing in mind also the very significant private interest at stake in such decisions, it is arguable that the failure to provide any reasons violates proponents’ procedural rights as well, something Taseko may wish to consider in its own legal challenge (the merits of which otherwise seem dubious, but that is a subject for a future post).

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

Bill C-22 and the Proposed Regime for the Development of Transboundary Oil and Gas Pools and Fields

Tue, 03/11/2014 - 10:00am

By: Nigel Bankes

PDF Version: Bill C-22 and the Proposed Regime for the Development of Transboundary Oil and Gas Pools and Fields

Proposed legislation commented on: Bill C-22, An Act respecting Canada’s offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts (Energy Safety and Security Act), Second Session, Forty-first Parliament, 62 Elizabeth II, 2013-2014

Bill C-15, An Act to replace the Northwest Territories Act to implement certain provisions of the Northwest Territories Lands and Resources Devolution Agreement and to repeal or make amendments to the Territorial Lands Act, the Northwest Territories Waters Act, the Mackenzie Valley Resource Management Act, other Acts and certain orders and   regulations, (Northwest Territories Act), Second Session, Forty-first Parliament, 62 Elizabeth II, 2013-2014. And see the coordination provision in s 118 of Bill C-22 coordinating the entry into force of the two statutes.

My colleague Martin Olszyinski has commented on one aspect of Bill C-22 here. This post analyses the provisions of Bill C-22 which aim to establish a regime for the development of transboundary oil and gas pools and fields. It refers more cursorily to the “straddling resource” provisions of Bill C-15. The relevant provisions in both Bills take the form of amendments to the Canada Oil and Gas Operations Act, RSC 1985, c. O-7 (COGOA). This post begins by describing the problem that Bill C-22 seeks to address and then examines the proposed regime. But first, two preliminary comments.

The proposed regime is very complex, especially when read together with the existing compulsory unitization provisions of COGOA. Much of the complexity results from the fact that in the future we will have two distinct unitization regimes for the federal lands covered by Bill C-22: one regime will apply to pools that are transboundary, the other, the existing regime, will apply to all other pools found entirely on the federal lands covered by this legislation. As if this were not enough, a third regime for the compulsory unitization of “straddling deposits” will apply within the Inuvialuit Settlement Region once the Northwest Territories devolution legislation, Bill 15, enters into force. The Bill 15 regime is a considerable improvement on the regime proposed by Bill C-22 and one wonders why greater efforts were not made to harmonize these different regimes.

Many of the concepts in the legislation (both Bill C-22 and even more clearly the case for Bill C-15) are drawn from the Agreement between Canada and the French Republic Relating to the Exploration and Exploitation of Transboundary Hydrocarbon Fields (2005). This Agreement, which has yet to enter into force, is designed to deal with the problem of transboundary fields that may be created as a result of the extraordinary delimitation created by the 1992 Award of the Court of Arbitration for the Delimitation of Maritime Areas between Canada and France delimiting the maritime areas pertaining to each state in the area around the French Islands of St. Pierre and Miquelon in that part of the Atlantic Ocean lying due south of Newfoundland. However, the provisions in this Bill do not apply to these particular federal lands. That is because the federal lands subject to the Canada/France treaty are subject to the Newfoundland (and perhaps the Nova Scotia) offshore accord legislation rather than COGOA. The transboundary provisions of Bill C-22 discussed here do not amend the parallel provisions in the Accord statutes: the Canada-Newfoundland Atlantic Accord Implementation Act, SC 1987, c 3 and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implemetaion Act, SC 1988, c 28. Further amendments to these two statutes would be required in order to allow Canada to properly meet its obligations under the Canada/France treaty when it enters into force.

A. The problem

The problem of oil and gas deposits that straddle political boundaries is well understood in both national law and international law. In addition, there is extensive treaty practice on the subject. The general consensus seems to be that the rule of capture does not apply as between states and thus that states should seek to reach agreement on apportionment and unitization before allowing production to commence from a transboundary field. There is very little practice within Canada across jurisdictional boundaries in relation to these issues and it is thus perhaps more difficult to assess whether the rule of capture (which certainly applies as between adjoining owners of private land in Canada) also applies across jurisdictional boundaries within Canada.

B. The proposed  regime

The proposed regime is introduced by way of amendments to Part II, Production Arrangements, of COGOA under the heading in Bill C-22 of “Modernizing Canada’s Offshore Oil and Gas Operations Regime.”

1. The area of application of COGOA

COGOA applies to two categories of lands. First, it applies to lands in the northern territories for which there has been no devolution of oil and gas interests. Thus, COGOA does not apply to Yukon or the so-called adjacent area since devolution to Yukon has already occurred: see Yukon Act, SC 2002, c 7. It does apply to lands within Nunavut and the Northwest Territories although devolution of oil and gas interest to the NWT is in the works and should be effective as soon as April 1, 2014, see here and Bill 15. The devolution legislation will cause COGOA to be inapplicable to the land areas of the NWT. This tells us that the scope of these COGOA provisions will be reduced over time although it may be some long time before we see devolution of oil and gas interests to Nunavut. However, it bears emphasising that unlike the federal oil and gas leasing legislation, Canada Petroleum Resources Act (CPRA), RSC 1985, c 36 (2d Supp), COGOA is a law of general application and as such applies to all lands in the applicable territories i.e. not just to federal oil and gas interests but also to oil and gas interests in aboriginal lands under the terms of modern land claim agreements (e.g. the Inuvialuit Agreement). Second, COGOA applies to offshore areas within the NWT (post-April 1) as well as those submarine areas not within a province or territory and which are not subject to either of the two east coast Accord statutes.

2. Definitions

a. The definition of transboundary pools and fields

Bill C-22 defines this combination of words as follows:

‘transboundary’ means, in relation to a pool, extending beyond the National Energy Board’s jurisdiction under this Act (i.e. COGOA) or, in relation to a field underlain only (sic) by one or more such pools

b. The definition of regulator

The term “regulator” is defined as meaning a provincial government or regulator or a federal-provincial regulator with administrative responsibility for the exploration or exploitation of oil and gas in an area adjoining the perimeter. It is evident that the regulator (I will generally use the term “relevant regulator” or “adjacent regulator”) is the counter party to the National Energy Board.

3. The identification and delineation of transboundary pools or fields

The legislation (s 48.11) will require the National Energy Board to provide the adjacent regulator with prescribed information relevant to the determination of whether a pool is a transboundary pool whenever an exploratory well (as defined in the CPRA) is drilled within the perimeter area and under the jurisdiction of the NEB. The amendments define the perimeter as an area within 20 km of the boundaries of the Northwest Territories or Nunavut or that is within 10 nautical miles of the seaward (sic) limit of the submarine areas referred to in paragraph 3(b) of the Act. These submarine areas are described as those areas that are “not within a province” or the adjoining area, as defined in section 2 of the Yukon Act but which are within the internal waters of Canada, the territorial sea of Canada or the continental shelf of Canada.

If the NEB reaches the conclusion that a pool exists it must so notify the provincial regulator as soon as possible indicating, in addition, whether it believes the pool to be a transboundary pool (s 48.12(3)). Where the Board is unable to make this determination it must so notify the provincial regulator no later than one year after receiving data from the drilling of a third well on the same geological feature. In both cases the Board must provide the Minister and its provincial counterpart with the reasons for its determination and opinion (s 48.12(4)).

Where the two regulators agree that a pool exists they “shall jointly determine whether that pool is transboundary and, if so, they shall jointly delineate its boundaries” (s 48.14(1)). If they are unable to reach agreement on any of those three matters (whether a pool exists, whether it is transboundary, or its delineation) then either party (no later than 180 days after the issuance of the notice) may “refer the matter to an expert”.

4. Approval of work and benefits plans in relation to transboundary pools or fields

Under s 5.1 of COGOA no development of a field may occur without an approved development plan. The new s 5.1(8) of COGOA provides that the NEB shall not approve a development plan for work or activity in respect of a transboundary pool or field that is the subject of a joint exploitation agreement unless the appropriate regulator has agreed to its contents. Any disagreement about the contents of the plan may be referred by either the appropriate regulator or the Minister (on the NEB’s behalf) for expert determination (s 5.1(9)).

There is a parallel procedure prescribing and requiring approvals for benefits plans (s 5.2).

5. Joint Exploitation Agreements

The Minister and the appropriate regulator may enter into “a joint exploitation” agreement (JEA) providing for the development of a transboundary pool or field as a single unit. Once that has happened, the pool or field “may only be developed as a single field” and as such can only be developed under the terms of a unit agreement (UA) and a unit operating agreement (UOA) that has been approved under s 48.2. The terms of such agreements are further prescribed by s 40. In the event of a conflict between the terms of the JEA and the terms of the UA or the UOA the terms of the JEA shall prevail (s 48.17).

6. Where no joint exploitation agreement

Where the Minister and the appropriate regulator have been unable to reach agreement on the terms of a JEA but a federal “interest owner” (i.e. a party with a share in a production licence issued under the CPRA) (note that this would not apply to a party with a production interest on, say, Inuvialuit lands) has indicated that it intends to proceed to production from a transboundary field or pool then the Minister shall notify the appropriate regulator as soon as possible (s 48.18(1)). If the parties are still unable to reach agreement after 180 days (or sooner if both agree) either the Minister or the appropriate regulator may “refer the matter to an expert to determine the particulars of the agreement” (s 48.18(3)).

7. Unit and Unit Operating Agreements and Compulsory Unitization

The general COGOA regime (s 37) contemplates: (1) voluntary unitization, (2) unitization upon the order of the Oil and Gas Committee on the recommendation of the Chief Conservation Officer (CCO) of the NEB, and (3) unitization by order of the Committee on the basis of an application by working interest owners representing 65% of the tract interests within the area of the proposed unitization.

As to the first, voluntary unitization under the general COGOA regime requires only that a copy of any unit agreement be filed with the CCO of the NEB (s 37(1)). In addition, the Minister may enter into such an agreement (as the holder of a relevant royalty interest) (s 37(2)).

As to the second, s 38 provides that the CCO may seek an order requiring the relevant working interest owners (no mention of royalty owners) to enter into a unit agreement and unit operating agreement where necessary to prevent waste. The application is to be made to “the Committee” which, following a hearing, may make the order sought provided that it is of the opinion that unitized operation would prevent waste (s.38(3)).

Provision is made for the Committee in ss 6 – 13 of COGOA. The Committee is an expert committee with broad powers to conduct inquiries and appeals as provided for under the Act. Its orders may be made an order of the Federal Court.

And finally, as to the third, s 39 anticipates the working interest holders making an application to the Minister who refers the matter to the Committee (s 39(2)). The Committee, following a hearing, may make an order giving binding effect to the proposed unit agreement and unit operating agreement provided that it is satisfied inter alia that the proposed arrangement (s 41(2)(b)) “would accomplish the more efficient or more economical production of oil or gas or both from the unitized zone”.

The proposed amendments change this regime with respect to transboundary pools and fields in a number of ways. First, with respect to voluntary unitization arrangements, the proposed regime is not simply a notification and filing regime, it is an approval regime which extends to both the unitization agreement and the operating agreement: both must be “jointly approved” by the Minister and the appropriate regulator (s 48.2). Second, in the event that the working interest owners cannot reach agreement on the term of unitization 65% of the working interest owners may apply for a unitization order, but in this case the matter is to be referred to expert determination rather than to the Committee. And finally it is unclear whether the CCO – driven unitization on the basis of waste is available at all; although perhaps the better view is that this aspect of the general regime is inconsistent with the overall transboundary regime and would certainly present a problem of conflicting forums – i.e. the Committee or the expert procedure.

The main difference between the Committee procedure and the expert procedure is that the Committee is a standing Committee appointed by the federal ministers while the expert procedure is an ad hoc arrangement with the responsibility for appointments, the appointments being shared between the Minister and the relevant regulator. Both procedures allow for the resulting unitization order to be revisited but both provide that the original tract participations factors will not be subject to change (s 45 and s 48.25).

8. The expert  procedure

a. Triggering the expert procedure

It is clear from the above that there may be resort to the expert procedure in a number of different circumstances. In the order prescribed by the Act these circumstances are as follows:

1. Referral by either the federal minister (on behalf of the NEB) or the appropriate regulator in the event that the parties cannot agree on the terms of a development plan in relation to any proposed work or activity in a transboundary pool or field that is the subject of a joint exploitation agreement (s 5.1(8) & (9)).

2. Referral by either the federal minister or the appropriate regulator in the event that the parties cannot agree on the terms of a benefits plan in relation to any proposed work or activity in a transboundary pool or field that is the subject of a joint      exploitation agreement (s 5.2(8) & (9)).

3. Referral by either the NEB or the appropriate regulator in the event that the parties cannot agree whether a pool exists, whether the pool is transboundary or its delimitation (s 48.14(2)).

4. Referral by either the Minister or the appropriate regulator in the event that the parties cannot agree on the terms of joint exploitation agreement in relation to a transboundary pool (s 48.18(2).

5. Referral by the Minister and the appropriate regulator on the application of working interest owners owning at least 65% of the interests in a unitization agreement for a unitization order (s 48.21).

6. Referral by the Minister and the appropriate regulator on the application any working interest owner subject to a unitization order (s 48.24) for an amendment to the order.

It will be observed that on the federal side in some cases referral is by the NEB, in other cases by the Minister, and in still other cases by both the Minister and the appropriate regulator.

b. The appointment of an expert

Where the parties (and note that the parties will vary based upon who may be entitled to make the referral) cannot agree on the appointment of a single expert each shall appoint one member. Those members so appointed shall agree upon the appointment of a chairperson in default of which the Chief Justice of the Federal Court is to make the appointment (s 48.27(3)). The statute is silent as to what happens in the event that one party fails to appoint its expert. Regardless of the appointing party, the expert is to be “impartial and independent, and have knowledge or experience relative to the subject of disagreement between the parties” (s 48.27(4)). The expert’s decision is “final and binding on all parties specified in the decision” from the date specified in the decision, subject to any opportunity for judicial review (s 48.27(7)).

c. The procedure to be followed by the expert

s 48.22(1)), much like the procedure prescribed for the Committee under s 41(1)). The subsequent language of s 48.22 does not track the language of s 41(1) and seems unnecessarily convoluted.

C. Some observations

The Bill C-22 amendments are tremendously complex and need to be read together with the Bill C-15 amendments that result from the devolution of resources to the Northwest Territories. Together these amendments create no less than three regimes that address the problem of compulsory unitization on federal lands in the north. It is a challenging task to establish the precise area of application for each of the different regimes even if we assume that devolution to the NWT will go ahead and that both Bill C-22 and Bill C-15 will enter into force at approximately the same time. Take for example, a discovery of a straddling deposit in the Beaufort Sea. If the deposit straddles the Inuvialuit Settlement Region (ISR) and an offshore area in the Northwest Territories the straddling deposit and unitization rules of Bill C-15 will apply. If the deposit straddles the ISR and the Yukon adjoining area it would appear as if the transboundary pool provisions and unitization provisions of Bill C-22 apply. And if the pool simply straddles different federal production licences in the Beaufort Sea offshore, then it would seem that the current COGOA unitization rules apply.

Of the three regimes the Bill C-15 regime seems the most modern and the most in line with modern unitization practices which assume that governments should be able to require unitization where deposits straddle either political boundaries or licence boundaries. It seems odd to me that the federal officials who have drafted these complex arrangements did not take this opportunity to establish a uniform regime and in particular to modernize the current COGOA provisions on compulsory unitization which can only be triggered if the proposal is supported by two-thirds of the relevant interest owners.

The Bill C-22 regime is strangely unilateral and non-reciprocal. One of the interesting features of the legislative scheme is that it confers powers on adjacent regulators without imposing a requirement of reciprocity on them. Thus Yukon is entitled to notice and to trigger the expert determination procedure in one of the examples noted above but there is no reciprocal obligation imposed on Yukon. While there may be both political and legal constraints on the federal government in legislating for reciprocity it is clear that the obligations assumed by the NEB for example might be made conditional on the adjacent jurisdiction adopting similar measures. After all reciprocity is the basis of all international straddling deposit agreements.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

What is the Legal Effect of an Unenforceable Agreement in an Unjust Enrichment Claim?

Tue, 03/04/2014 - 9:00am

By: Jonnette Watson Hamilton

PDF Version: What is the Legal Effect of an Unenforceable Agreement in an Unjust Enrichment Claim?

Case commented on: Lemoine v Griffith, 2014 ABCA 46

The recent decision of the Alberta Court of Appeal in Lemoine v Griffith is interesting for what it tells us, in the context of a claim of unjust enrichment, about the legal effects of a prenuptial agreement that was both found and admitted to be unenforceable because of undue influence and a lack of independent legal advice. According to the majority, Justices Ronald Berger and Clifton O’Brien, once the trial judge found the agreement unenforceable for those reasons — and the appellant abandoned his challenge to that finding — the prenuptial agreement was not a factor in either supplying a juristic reason for any enrichment or evidence of the parties’ intentions. However, despite the fact that the unenforceability of the prenuptial agreement was not an issue, in his dissent Justice Frans Slatter would have overturned the finding of undue influence, holding (at para 103) that the “trial judgment cannot stand.”  While that is not the only point of disagreement between the majority and the dissent, it is the point that I will focus on in this comment.

Facts

The couple in this case, James Griffith and Constance May Lemoine, began cohabiting in 1995. They became engaged shortly thereafter, but never married. Four years into the relationship, in 1999, they entered into a prenuptial agreement which stated that it would apply whether or not they married. The couple had a son in 2001, and a child of Lemoine’s from a previous relationship was also a member of the family. The relationship between Lemoine and Griffith lasted for 14 years, until the couple’s separation in 2009. During their cohabitation, Griffith was primarily a farmer, initially as part of the Griffith Farms partnership with his father, although Griffith’s wealth was mainly due to his buying and selling of land. Lemoine assumed the major role in domestic matters, while also contributing to the farm operations and, in 2006, opening her own western wear store.

There is much more that can be said about the couple’s relationship and the property of one or the other or both of them, but I want to focus on the facts surrounding the drafting and execution of what I will refer to as the prenuptial agreement (in preference to the court’s use of matrimonial property agreement, which suggests the couple did marry and were governed by the Matrimonial Property Act, RSA 2000, c M-8, s. 37). That prenuptial agreement set up a “separation of property” regime. It protected each of the party’s assets from the other, even providing that Lemoine would not become entitled to share in any increase in the value of Griffith’s assets or in any property acquired by him during their cohabitation. Almost all of the evidence concerning the prenuptial agreement was given by Lemoine, but her evidence was uncontradicted by Griffith and the two lawyers involved and it was accepted by the trial judge.

The prenuptial agreement arose following the remarriage of Griffith’s father in 1998. According to the trial judge, Justice S.L. Hunt McDonald, in Lemoine v Griffith, 2012 ABQB 685 at paras 36-46, Lemoine was advised that the Partnership Agreement for Griffith Farms contained a clause wherein the parties agreed to “enter into a pre-marriage contract with any perspective [sic] spouse providing for, in part, the protection of the partnership assets herein.” It was not disputed that Lemoine orally agreed to sign a contract with Griffiths in order to protect his father’s interest in Griffith Farms.

The facts which formed the basis of the undue influence allegation were the following. Lemoine testified that she was told that she had to sign the prenuptial agreement or else Griffith’s father would make her move out of the farm house which she had occupied with Griffith and the children for 4 ½ years and which was located on the father’s land. Lemoine never saw a draft of the prenuptial agreement before attending with Griffith at the office of his lawyer, Robert Young, to execute the agreement. Both Griffith and Lemoine sat in Young’s office while he read through and explained the prenuptial agreement to them and Young had Lemoine initial the bottom right hand corner of each page as he read it aloud to them. Griffith then signed the prenuptial agreement in Lemoine’s presence.

Then Young called in another lawyer, Gerald Quigley, to meet with Lemoine for the purpose of providing independent legal advice. While Lemoine met with Quigley, Griffith waited in Young’s waiting room. Quigley asked Lemoine if she understood what she was signing and she confirmed to him that she did because Young had just read the document to her. Quigley then had her sign the prenuptial agreement. Quigley did not explain the agreement to her or its consequences for her. He witnessed her signature and then signed a Certificate of Independent Legal Advice and a Matrimonial Property Act Certificate. The whole interaction between Lemoine and Quigley took no more than 10 or 15 minutes, according to Lemoine. She was never billed for Quigley’s legal services. Instead his fees were paid by Griffith as disbursements in Young’s statement of account. The total amount of the disbursement for Quigley’s services was $75. Quigley testified that his hourly rate at the time was $120 to $250. As a result, the trial judge found that the amount he charged reflected a total time commitment of 18 to 30 minutes.

Law

Lemoine’s action included an unjust enrichment claim, as well as requests for support. It is necessary to set out the elements of a claim for unjust enrichment briefly in order to identify the points where the existence of a prenuptial agreement might be relevant.

The property rights of cohabiting parties are governed by the common law of unjust enrichment, most recently synthesized by the Supreme Court of Canada in Kerr v Baranow, 2011 SCC 10 (CanLII). That decision set out the elements of an unjust enrichment claim as follows (at paras 36-45):

(a) whether the defendant has been enriched by the plaintiff, with the plaintiff needing to show that he or she gave something to the defendant which the defendant received and retained;

(b) whether the plaintiff has suffered a corresponding deprivation, with the plaintiff needing to show that the defendant has been enriched and that the enrichment corresponds to a deprivation which the plaintiff has suffered; and

(c) the absence of a juristic reason for the benefit and corresponding detriment, i.e., proof that “there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case” (at para 40).

There is a two-step analysis for the third element, the absence of juristic reason:

[43] The first step of the juristic reason analysis applies the established categories of juristic reasons [e.g., a contract, a disposition of law, a donative intent]; in their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether recovery should be denied.

At the remedy stage, Kerr recognized the traditional two bases of recovery — a claim for the provision of unpaid services and a claim for contribution to the acquisition, improvement, maintenance or preservation of a specific property — and added a third basis for recovery for situations where the parties were engaged in a “joint family venture” (at paras. 57-60). If a joint family venture is identified, then the appropriate remedy is a monetary award that is a share of the increase in wealth over the course of the relationship. Joint family ventures are identified by looking at the relationship and, within it, mutual effort, economic integration, actual intent, and priority of the family (at paras 87-100). It is the “actual intent” aspect of the joint family venture that might make an agreement relevant, this time at the remedy stage.

Thus, a prenuptial agreement can have two roles in an unjust enrichment claim, either as a juristic reason justifying any enrichment or as an indication of the parties’ actual intention affecting whether there was a joint family venture entitling the claimant to a share of the increase in wealth.

Queen’s Bench Decision

At trial, Justice Hunt McDonald found that the prenuptial agreement was tainted by undue influence. She pointed (at para 134) to the fact that Lemoine was told the agreement was only about the partnership, told she would have to leave the farm if she did not sign, never received an advance copy of the agreement to review, was taken to Griffith’s lawyers’ offices where his lawyer went through the agreement in Griffith’s presence, and was “sent off with a complete stranger who spent approximately 15 minutes with her before she signed the agreement.”

Once the party to an agreement who is challenging it proves that circumstances amounting to undue influence surrounded the execution of the agreement, it is up to the party trying to have the agreement enforced to try to remove that taint. That is usually done by showing that the party challenging the agreement entered into it voluntarily and with a full understanding of his or her legal position and the effect of the agreement on their legal position. Proving they had access to, and took advantage of, independent legal advice is one way to prove voluntariness, knowledge and understanding. As the Alberta Court of Appeal stated in Corbeil v Bebris (1993), 105 DLR (4th) 759, 141 AR 215, 49 RFL (3d) 77:

[13] The function of the advice, in that context, is to remove a taint that, left unremoved, might, according to contract or equity law, invalidate the contract. Judges cannot therefore simply say that an agreement is unenforceable for lack of independent legal advice. At the very least, they must first find a taint.

Both Griffith and Lemoine had called expert evidence as to the standard of care applicable to a lawyer retained to provide independent legal advice on an agreement of this nature in 1999. Lemoine called Lonnie Balbi, QC, and Griffith called Wendy Best, QC, both well-known Calgary family law lawyers. Justice Hunt McDonald decided (at para 108) that Quigley did not meet the standard of care articulated by either expert. She found he fell short on both the “independent” requirement and the “legal advice” requirement.

Justice Hunt McDonald concluded (at para 141) “Mr. Quigley was chosen, briefed and paid by [Griffith] and his lawyers. There was nothing ‘independent’ at all in his services.” To reach this conclusion she relied upon (at paras 137-141) the fact that Lemoine did not retain Quigley’s services, that Quigley was presented to Griffith’s lawyer in his office, that Quigley did not open a file for Lemoine, that Quigley sent his statement of account to Griffith’s lawyer, and that Griffith paid Quigley’s account.

In considering whether legal advice was given, Justice Hunt McDonald determined (at paras 108 and 142-43) that, because Quigley spent only 18 to 30 minutes in total on the matter, he could not have made sure that Lemoine knew what she was signing, what she was giving up, and what her options were, in addition to discussing the agreement with Young and reviewing the agreement, in the time available. She suggested that the independent legal advice that was required in this context, following a finding of undue influence, mandated that Quigley provide Lemoine with legal advice about the implications of the prenuptial agreement by citing (at para 144) the Alberta Court of Appeal decision in Corbeil v. Bebris (at para 12):

But I distinguish attendance on execution from advice about the wisdom of entering into the agreement. The term “independent legal advice” has a very specific meaning in law. The duty of advising counsel has been summarized in Halsbury’s Laws of England, Fourth Edition, Vol. 18, Para. 343, at p.157:

The duty of the independent adviser is not merely to satisfy himself that the donor understands the effect of and wishes to make the gift, but to protect the donor from himself as well as from the influence of the donee. A solicitor who is called upon to advise the donor must satisfy himself that the gift is one that is right and proper in all the circumstances of the case, and if he cannot so satisfy himself he should advise his client not to proceed.

Justice Hunt McDonald therefore concluded that Lemoine did not receive independent legal advice in connection with her execution of the prenuptial agreement. Her expectations for independent legal advice in the context of a finding of undue influence seem quite modest in comparison to the Alberta Court of Appeal’s decision in Webb v. Birkett, 2011 ABCA 13 (CanLII), which places very high demands on lawyers in family law matters, as does the Law Society of Alberta in “Giving Independent Legal Advice.” It has often been acknowledged that in cases of undue influence, independent legal advice requires informed advice about the nature and consequences of an agreement: e.g., Wright v. Carter (1902), 87 L.T. 624 at paras 57-58, Brosseau v Brosseau, [1990] 2 WWR 34, 100 AR 15 (ABCA) at paras 22-23.

As a result of her findings on undue influence and independent legal advice, Justice Hunt McDonald found the prenuptial agreement could not provide a juristic reason to justify the enrichment that benefited Griffith. Lemoine was therefore entitled to make a claim for a division of the property in his name. She awarded Lemoine a 30 percent share of the increase in Griffith’s net worth over the 14 years they cohabited, based on her contribution to the joint family venture, which amounted to just over $915,000.

Grounds of Appeal

Griffith originally challenged, as one of three grounds of appeal, Justice Hunt McDonald’s failure to find that the prenuptial agreement was either a binding legal contract or compelling evidence of the parties’ intentions and as such a juristic reason to deny, or limit, Lemoine’s recovery. However, when the appeal was heard, Griffith did not contest her finding that the agreement was unenforceable due to undue influence. The majority characterize this decision (at para 22) as “understandable.”  Nevertheless, Griffith still argued that the unenforceable prenuptial agreement should have been taken into account in determining the parties’ intent with respect to the division of property upon separation.

Court of Appeal Decision

The majority decision

In their decision, Justices Ronald Berger and Clifton O’Brien first dealt with the issue of whether the prenuptial agreement represented the intentions of the parties regarding a property division, notwithstanding that the agreement was found to be unenforceable due to undue influence.

Griffith’s argument was that the subjective intent of cohabiting parties may be relevant to whether there is a joint family venture, or, if there is one, to its scope.  Therefore, the trial judge erred in law by failing to give the prenuptial agreement significant weight because, even if it was unenforceable, it reflected the parties’ intentions about property division.  He relied upon Kuehn v Kuehn, 2012 ABCA 67 (CanLII), for this argument. In Kuehn, the trial judge ignored an unenforceable prenuptial agreement for the purposes of property division. On appeal, however, the Court of Appeal held that an unenforceable agreement could still be relevant to the distribution of matrimonial property and pointed to section 8(g) of the Matrimonial Property Act which requires the terms of an oral or written agreement between the spouses be taken into consideration in dividing the matrimonial property, relying on its earlier judgment in Corbeil v Bebris.

The majority in Griffith v Lemoine easily distinguished Kuehn and Corbeil v Bebris because the agreements in the latter two cases were unenforceable since they did not comply with the formal requirements set out in the Matrimonial Property Act. That Act does not apply to unmarried couples. More importantly, the problem with the agreement in this case was undue influence, not the formalities of execution. The majority therefore concluded (at para 28) that because Lemoine did not sign the prenuptial agreement of her own free will, it could not be relied upon to provide evidence of her true intentions or expectations.

The only evidence of Lemoine’s true intent that the majority found relevant (at paras 30-31) was her intent to protect the Griffith Farms partnership and Griffith’s father from any claims that she might have. The Griffith Farms partnership, however, only leased the farm lands owned by Griffith. Lemoine’s intent was therefore irrelevant to the division of the increase in value of the lands owned by Griffith.

The majority summarized its conclusions on the legal effect of the unenforceable prenuptial agreement as follows:

[32] We conclude, therefore, that the [prenuptial agreement] cannot be relied upon to show (a) that the parties did not intend to enter into a joint family venture, (b) that they intended to exclude certain property from an existing joint family venture, or (c) that there was a juristic reason for Mr. Griffith to retain the benefits of Ms. Lemoine’s contribution to the joint enterprise.

For the majority, the answer to the question posed in the title to this post — “What is the Legal Effect of an Unenforceable Agreement in an Unjust Enrichment Claim?” — is that it has none.

The dissent

The most interesting aspect of this case is the dissent by Justice Frans Slatter.

The foundation of Justice Slatter’s dissent appears to be based upon the concept of autonomy and the role he sees it playing in whether parties marry or cohabit and whether they enter into property agreements or not. Near the start of his lengthy opinion (twice as long as that of the majority), he notes (at para 73) the Matrimonial Property Act has excluded cohabiting couples from its regime, and the distinction between married and unmarried couples when it comes to property division on the breakdown of relationships was most recently upheld by the Supreme Court of Canada in Quebec (Attorney General) v. A, 2013 SCC 5. Throughout his opinion he returns many times (at paras 75, 77, 116, 119, 123, 127) to his point that the law in Alberta makes a clear distinction between married and unmarried couples and therefore the law of unjust enrichment should not replicate the presumptions applicable to the sharing of property mandated by the Matrimonial Property Act. He asserts that matrimonial property law — by which he appears to mean property regimes governing both married and unmarried or cohabiting couples — assumes the autonomy of the spouses:

[78] The law assumes that the spouses have the free will, intelligence, and capacity to decide a) to marry or not marry, and to cohabitate or not cohabitate, and b) to decide what matrimonial property regime will apply to their relationship.

Autonomy did figure prominently in the decision of Justice LeBel in Quebec (Attorney General) v. A, but Justice LeBel was not in the majority when he  relied on the concept of autonomy to  determine that treating married and unmarried couples differently in connection with property divisions on the breakdown of relationships was not a violation of equality rights. And it is true that in Kerr v Baranow the Supreme Court of Canada allowed for “due consideration of the autonomy of the parties” (at para 41) at the second step of the third stage of the unjust enrichment analysis, if the case fell outside of existing categories. However, Justice Slatter does not confine his use of autonomy one step in his unjust enrichment analysis. Instead, it appears to be the foundation of his entire opinion. It is the heart of the section in his opinion headed “Spousal Property Division” (at paras 68-79), which follows immediately after his summary of the facts, the lower court decision and the standard of review and it therefore sets the stage for his analysis of the division of property in this case.

With respect to the grounds of appeal, like the majority, Justice Slatter deals with the impact of the prenuptial agreement first (at paras 82-103). But Justice Slatter first looks at the prenuptial agreement in the context of whether it offers a juristic reason justifying any enrichment. He acknowledges that Griffith “unexpectedly abandoned” his reliance on the prenuptial agreement during oral argument (at para 86) and did not contest the unenforceability of the agreement on the basis of undue influence (at para 91). Nevertheless, Justice Slatter reviews the trial judge’s reasons for finding undue influence (at paras 84-91) and finds them to be wanting. He critiques her reasons on the following bases:

    • Her mistaken view that courts are entitled to interfere with contracts (at paras 84-86)
    • Her inclusion of misrepresentation about, or ignorance of, the contents of the prenuptial agreement as a factor in finding undue influence (at para 87)
    • Her use of the nature of the relationship as giving rise to a presumption of undue influence, on the basis such a presumption would undermine the parties’ autonomy (at para 88)
    • Her use of the fact Lemoine was told she would have to leave the farm if she did not sign to find actual undue influence, on the basis that refusing to be in a relationship without an agreement is both normal and an exercise of autonomy (at paras 89-90)

In his critique, Justice Slatter therefore undermines every reason the trial judge gave for finding undue influence. He then goes on to critique her finding that there was no consideration for the prenuptial agreement (at paras 94-97) and her failure to give effect to the recital in the agreement that said it was to apply whether they got married or not (at para 98).

On the independent legal advice issue, Justice Slatter says very little. Of course, because the prenuptial agreement is not tainted by undue influence, in his opinion, independent legal advice is not needed to save it.

Still, what he does have to say about independent legal advice is intriguing. In his summary of his analysis of the abandoned ground of appeal (at para 102), he states “Further unfairness arises from the court having “gone behind” the statutory certificate attached to the agreement; whether this is permissible as a matter of law was not argued.” This sentence does not refer to Quigley’s Certificate of Independent Advice, but to his Matrimonial Property Act Certificate. That is the only “statutory certificate”. Why this is the relevant document when the Matrimonial Property Act is not applicable is not addressed. Neither is the fact that a Matrimonial Property Act Certificate under section 38 of the Matrimonial Property Act is not “independent legal advice” in the sense of advice about the wisdom of entering into an agreement: Brosseau v Brosseau, [1990] 2 WWR 34, 100 AR 15 (CA), Corbeil v Bebris (1993), 141 AR 215 (CA), Hanson v Hanson, 2009 ABCA 222 at para 12, Tardif v Campbell, 2008 ABQB 776 at para 25, Cope v Hill, 2005 ABQB 625 at paras 209-210.  Justice Slatter’s only comment on the challenge to the independence of the legal advice Lemoine received is found in the same paragraph:

So far as [Griffith] knew, the appellant had complied fully with the law. He had no way of knowing whether the privileged advice provided by the lawyer who signed the certificate of independent advice was adequate, or the circumstances under which it was given. It is unfair, 13 years later, to advise him that the agreement is unenforceable.

Although Justice Slatter concludes otherwise, Griffith did have knowledge of most of the circumstances the trial judge relied upon when finding the independent advice was not “independent” because Griffith was present for all but 15 minutes and paid the bill for the advice.

With his reference to “13 years later,” Justice Slatter seems to be suggesting some sort of time limitation for a challenge to independent advice or to a Matrimonial Property Certificate . Or perhaps he is suggesting that the independence or the sufficiency of independent legal advice can never be challenged so long as the spouse not receiving the advice is not in the room for the actual execution of the agreement by the spouse receiving the independent legal advice.

One might compare this opinion to his 10-year-old decision in Hearn v. Hearn, 2004 ABQB 75. That was a case where a settlement including property, custody, access and support provisions was challenged on the ground of duress, despite a Certificate of Independent Advice. Justice Slatter noted (at para 57) in that case that the effect of such certificates, which have no statutory authority, had not received much judicial consideration. He quoted from Corbeil v. Bebris which held that any party is free to attack an agreement on the ground it was unenforceable at law (e.g., unconscionable) despite a Certificate under section 38 of the Matrimonial Property Act and a Certificate of Independent Legal Advice. He noted that ruling was inconsistent with the effect given certificates under the Guarantees Acknowledgement Act, RSA 2000, c G-11. While conceding that section 5 of that statute makes its certificates “conclusive” and the Matrimonial Property Act does not,  he thought that certificates in the family law context should also be taken at face value (at para 58), or at least negate non est factum and duress defences, based on their wording (at para 59). He also noted that Certificates of Acknowledgment under the Dower Act, RSA 2000, c D-15, were held to be conclusive in Senstad v Makus, [1978] 2 SCR 44 at 60.  In the end, he was willing to see the occasional agreement that was in fact tainted by duress be enforced: “That would be an unfortunate circumstance, but it must be weighed against the advantages of bringing finality to the resolution of disputes and upholding the enforceability to settlement agreements” (at para 63).

Because a Certificate of Independent Legal Advice cannot be confined to defences of duress or non est factum, as can a Certificate under section 38 of the Matrimonial Property Act, it would seem that Justice Slatter may well be of the view in that a Certificate of Independent Advice can never be challenged, no matter the reason and no matter its lack of a statutory basis.

Were it not for the fact that the other three judges who heard the matter disagreed with Justice Slatter, one also might be forgiven for thinking that Griffith made a big mistake in dropping his challenge to the enforceability of the prenuptial agreement. In fact, Justice Slatter appears to forget that the “correctness” of the trial judge’s decision about the unenforceability of the prenuptial agreement is not an issue before him, seemingly disregarding the autonomy of the parties to abandon grounds of appeal.

What about a role for the prenuptial agreement in determining the existence and scope of a “joint family venture”, a role that the majority did consider? Looking at the “actual intent” element of this analysis, Justice Slatter refers to Lemoine’s intent to disclaim an interest in the Griffith Farms partnership assets (at para 115), as did the majority judgment (at paras 30-31). But the majority went on to note that the partnership only leased the lands in which Lemoine claimed an interest. Justice Slatter does not mention the fact the lands were leased. Because the land was listed in the partnership agreement that was appended to the unenforceable prenuptial agreement, Justice Slatter appears (at paras 115-116) to see a clear intent to exclude the farming assets and to see those farming assets as including Griffith’s ownership interest in the lands.

The entire discussion about “actual intent” is very short and not very clear. This reinforces the appearance that Justice Slatter’s focus is on the prenuptial agreement as a juristic reason for any enrichment. It appears to be on this basis that he concludes that the “trial judgment cannot stand” (at para 103), a conclusion stated in the summary to his discussion of the role of the agreement as a juristic reason for any unjust enrichment. This, however, is the ground of appeal that was abandoned: Griffith was no longer contesting the trial judge’s finding that the prenuptial agreement was unenforceable due to undue influence.  How it can be the basis of a conclusion that the “trial judgment cannot stand” is not addressed.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

 

Law Society of Alberta Responds on TWU Law School Issue

Mon, 03/03/2014 - 9:30am

By: Jennifer Koshan

PDF Version: Law Society of Alberta Responds on TWU Law School Issue

Back in February we posted a letter sent by signatories from the University of Calgary and University of Alberta law schools to the Law Society of Alberta concerning the process for approval of Trinity Western University (TWU)’s proposed new law school and the admission of TWU graduates as students at law in Alberta. We asked the Law Society to reconsider its delegation of decision making power to the Federation of Law Societies, or in the alternative, to work together with other Canadian law societies to consider amending the approval criteria to address the issues raised by TWU Law School and its Community Covenant. We received a response from Law Society of Alberta President Kevin Feth QC late last week. The letter: 

    • explains the rationale for the Law Society’s delegation to the Federation, focusing on the importance of national standards, mobility and the public interest
    • suggests the authority for that delegation lies in section 37(3) of the Legal Profession Act, RSA      2000, c L-8.
    • indicates that the Law Society communicated to the Federation and Canadian law societies in January “that a review of the existing criteria by the Federation is advisable”, including the possibility of a non-discrimination provision (though the Law Society takes no position on such a provision at this time),
    • reiterates  that the consultation on approval criteria should be national in scope,  and encourages our group to make submissions if and when the Federation  reviews the criteria.

A copy of the Law Society’s letter is available here.

With this letter, the Law Society of Alberta has distanced itself from the approaches taken by law societies in British Columbia, Ontario and Nova Scotia. In these provinces, law societies did not delegate decision making on accreditation to the Federation, and they are all holding public consultations to inform their decisions. People in Alberta who are concerned about the issues surrounding TWU Law School will have to await a review of the approval criteria by the Federation.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

Oral Argument Hints That Supreme Court May Trim Back U.S. Industrial Source Greenhouse Gas Regulations

Wed, 02/26/2014 - 9:00am

By: James Coleman

PDF Version:Oral Argument Hints That Supreme Court May Trim Back U.S. Industrial Source Greenhouse Gas Regulations

Report commented on: Oral argument in Utility Air Regulatory Group v. Environmental Protection Agency (EPA)

On Monday the U.S. Supreme Court heard oral argument in Utility Air Regulatory Group v. Environmental Protection Agency (EPA), in which petitioners challenged the EPA’s “Prevention of Significant Deterioration” (PSD) regulations for stationary industrial sources of greenhouse gases. These regulations, finalized in 2010, require sources that emit over 100,000 tons of greenhouse gases to obtain a PSD permit and adopt the “best available control technology” for every pollutant that they emit, including greenhouse gases. These regulations have been closely watched in Canada, especially given Prime Minister Harper’s suggestion that he would like Canada to move in tandem with U.S. greenhouse gas regulation.

The oral argument provided few surprises: it was as complex as expected in this case of arcane statutory interpretation. As described below, the argument did hint, however, that the Supreme Court might adopt a compromise position, holding that 1) industrial sources cannot be required to obtain a PSD permit purely on the basis of their greenhouse gas emissions, but 2) can be required to adopt best available control technology for their greenhouse gas emissions if they need a PSD permit anyway due to their emissions of other pollutants. This ruling would likely have little impact on EPA’s broader agenda on greenhouse gas emissions.

The argument follows from the U.S. Supreme Court’s landmark decision in Massachusetts v. EPA, 127 SCt 1438, a 2007 case in which the Supreme Court held that greenhouse gases were a pollutant under the general terminology of the U.S. Clean Air Act. Relying on this decision, EPA has adopted greenhouse gas standards for new cars and trucks. It has also proposed greenhouse gas standards for new coal and natural gas power plants. And it is due to propose standards for existing coal and gas plants at some point this summer. This case, however, concerns a separate set of standards, adopted under the Clean Air Act’s catch-all for industrial sources, the Prevention of Significant Deterioration (PSD) requirement that requires state and local permitting agencies to ensure that new major sources adopt the “Best Available Control Technology.” Petitioners made clear in oral argument that they are not challenging EPA’s rules for cars, or its proposed rules for individual source categories such as power plants. Instead, they challenge only EPA’s PSD catch-all.

EPA’s argument is simple: the Clean Air Act requires PSD regulation for sources of “any air pollutant” and Massachusetts v. EPA said that a greenhouse gas is a pollutant. Furthermore, the Clean Air Act language for PSD is the same as the language EPA used for the car rules and the power plant rules that the petitioners are not disputing.

But there’s a catch. The Clean Air Act requires a PSD permit from any new source that emits over 250 tons of “any air pollutant.” That threshold makes sense for pollutants like lead and sulfur dioxide, but far too many sources emit that level of greenhouse gases, so EPA raised the level to 100,000 tons to avoid regulating hundreds of thousands of sources, which EPA acknowledges would be absurd.

Petitioners argue that, rather that re-write the statutory thresholds, EPA should not have included greenhouse gases in its PSD program. They say “any air pollutant” can mean different things in different parts of the act. It may be hard to imagine that Congress used the same word to mean different things in different places, but it’s even harder to imagine that Congress used the word “250” to mean “100,000.”

That left three arguments at play in Monday’s arguments:

1) The government defended its entire regulation: sources that emit over 100,000 tons of greenhouse gases need a PSD permit, and a PSD permit requires the “best available control technology” for greenhouse gases.

2) Industry argued the opposite: emitting greenhouse gases cannot trigger a need for a PSD permit, and even if an industrial source needs a PSD permit because it emits other pollutants, it should not have to adopt “best available control technology” for greenhouse gases. That is, greenhouse gases are not included in the PSD program at all.

3) The Justices spent most of their time pressing both sides why they should not adopt some version of a compromise suggested by one petitioner and a dissenting circuit court judge: emitting greenhouse gases cannot trigger a PSD permit, but if a source needs a permit, it must adopt the best available control technology for greenhouse gases.

This compromise would not rely on altering the 250-ton threshold set by the statute. Justice Kennedy, the swing-vote, noted that the government had not cited any case that would allow that type of statutory re-write. At the same time, the compromise would force the biggest industrial facilities, which need a PSD permit anyway, to adopt best available control technology for greenhouse gases. Professor Jody Freeman, President Obama’s Counselor for Energy and Climate Change, recently suggested that perhaps EPA should have adopted this approach from the beginning to avoid the risk of Supreme Court reversal.

Both petitioners and the government tried to suggest that this fallback was inadequate. This was difficult for the petitioners, given that one of the petitioners had proposed that fallback. And Justice Kennedy, the presumed swing-vote, emphasized that he was looking for an argument that followed “both the result and the reasoning” of Massachusetts v. EPA, which stressed the possible benefits of greenhouse gas regulation.

But the government also had a difficult time explaining why it could not accept the proposed compromise. Nearly all sources that emit 100,000 tons of greenhouse gases emit over 250 tons of some other pollutant, so they would require a PSD permit in any case. (And, under the compromise, this would mean they must adopt best available control technology for greenhouse gases.) The only sources that would be excluded, under the compromise, would be the few sources that emit threshold levels of greenhouse gases, but not any other pollutant. EPA estimated that its regulation would cover 86% of greenhouse gases emitted by facilities over the statutory threshold, whereas the compromise would cover 83%. Justices Ginsburg, Roberts, Breyer, and Sotomayor all mentioned this distinction, suggesting that there was very little difference between the government’s position and the proposed compromise.

On the other hand, Chief Justice Roberts, another potential swing-vote, noted that this compromise might require two definitions of “pollutant” within the statutory section on PSD: one definition for the kind of pollutant that triggers the need for a permit, and another definition for the kind of pollutant that must be controlled with the best available technology. Even if it is okay to have one definition for cars and another for PSD, it is somewhat troubling to have inconsistent definitions within the PSD program itself.

The government added a final wrinkle to the compromise suggestions. Justice Sotomayor, who seemed friendly to the government, asked the government if it must lose, how it would like to lose. (See pages 67-72 of the oral argument transcript.) In answer, Solicitor General Donald Verrilli suggested that “pollutant” should still include all greenhouse gases except carbon dioxide, which is the most common greenhouse gas, and the reason that EPA changed the threshold. This is a particularly complex suggestion, and has already earned a critique from Resources For the Future’s Nathan Richardson.

In sum, oral argument suggests that there is some appetite for a compromise among the Supreme Court’s swing votes, and even among some of the government’s supporters. But, as usual, there are too many factors at play for a firm prediction.

________________

Two disclaimers:

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

2)      I have omitted some details of the regulations and the petitioners’ arguments to avoid belaboring an already complex argument.

A version of this post originally appeared on James Coleman’s blog Energy Law Prof.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

 

More Uncertainty on the Test for Discrimination under Human Rights Legislation

Mon, 02/24/2014 - 9:00am

By: Jennifer Koshan

PDF Version: More Uncertainty on the Test for Discrimination under Human Rights Legislation

Case commented on: Bish v Elk Valley Coal Corporation, 2013 ABQB 756

I have written previous posts on ABlawg critiquing the influence of section 15 of the Charter in creating an overly onerous approach to the test for discrimination under human rights legislation in Alberta (see here and here). In late December, another human rights decision showing this influence was released in Bish v Elk Valley Coal Corporation. Unfortunately, Justice Peter Michalyshyn of the Alberta Court of Queen’s Bench gave short shrift to recent developments out of the Supreme Court of Canada on the appropriate test for discrimination. He also declined to follow the Supreme Court’s recent pronouncements on the appropriate standard of review in this context. The Bish case is now under appeal, and one has to hope that the Alberta Court of Appeal will provide some consistency with recent Supreme Court decisions in its appeal decision.

Like the Wright case that was the subject of one of my earlier posts in this area (Wright v College and Association of Registered Nurses of Alberta (Appeals Committee), 2012 ABCA 267), Bish is a case involving a claim of discrimination on the basis of an addiction-related disability in a unionized workplace. Ian Stewart was an employee at Elk Valley Coal Corporation. Elk Valley had an Alcohol and Drug Policy which provided that employees “with a dependency or addiction” could proactively seek rehabilitation without disciplinary consequences; however if they did not do so and had a workplace accident related to drug or alcohol use they could not escape discipline or termination. Stewart was involved in a workplace accident when the loader truck he was operating hit another vehicle. His drug test came back positive for cocaine, and he admitted to using the drug on his days off. He told Elk Valley that he did not believe he had a problem with drugs until after the accident; he then realized he was addicted to cocaine. Stewart’s employment was terminated, and his union filed a human rights complaint arguing a breach of section 7 of the Alberta Human Rights Act (AHRA), RSA 2000, c A-25.5, which protects against discrimination in the employment context on a number of grounds, including disability.

At the Alberta Human Rights Tribunal, expert evidence was called by both the union and employer on the scope of Stewart’s addiction.  According to Justice Michalyshyn’s summary of that evidence (at para 59), “Both experts … agreed Stewart was to some extent in denial (although of what there appeared to be some disagreement – Stewart’s expert suggested he was squarely in denial of his addiction, whereas Elk Valley’s expert appeared to allow only that he was in denial of the effects of drug use on his job-related performance…). In any event, on the evidence the Tribunal concluded that to “some degree” Stewart may have been in denial.”

The Tribunal accepted that Stewart had an addiction-related disability. However, it concluded that Stewart “was not fired because of his disability, but rather because of his failure to stop using drugs, failure to stop being impaired in the workplace and failing to disclose his drug use” (Bish v Elk Valley Coal Corporation, 2012 AHRC 7 at para 120). The Tribunal found that there was no causal connection between the termination and Stewart’s disability, and that there was no evidence of stereotyping or arbitrary treatment of Stewart. In the alternative, even if the termination was discriminatory, the employer’s conduct was justified in that it could not accommodate Stewart’s disability without undermining the deterrent effect of the Alcohol and Drug Policy (see 2013 ABQB 756 at paras 8-9).

The union’s appeal focused on two grounds: the Tribunal’s definition and application of the test for discrimination, and the Tribunal’s erroneous legal and factual findings concerning accommodation. The union argued that the standard of review for both questions was correctness, while Elk Valley and the Human Rights Commission (which appeared only on the standard of review issue) argued reasonableness.

Justice Michalyshyn cited (at para 14) a number of authorities which held that the question of whether a policy is discriminatory is a question of law requiring a correctness standard of review: Alberta (Minister of Human Resources and Employment) v Weller, 2006 ABCA 235 at para 20; Lockerbie & Hole Industrial Inc. v Alberta (Human Rights and Citizenship Commission, Director), 2011 ABCA 3 at paras 8-10; and Alberta (Human Rights and Citizenship Commission) v Kellogg Brown & Root (Canada) Company, 2007 ABCA 426 at paras 16-28.  He acknowledged that in a more recent decision of the Supreme Court, Canada (Canadian Human Rights Commission) v Canada (Attorney General) (“Mowat”), 2011 SCC 53 at paras 23-24, the Court indicated that “not all questions of general law entrusted to the Tribunal rise to the level of issues of central importance to the legal system or fall outside the adjudicator’s specialized area of expertise” and that “if the issue relates to the interpretation and application of its own statute, is within its expertise and does not raise issues of general legal importance, the standard of reasonableness will generally apply and the Tribunal will be entitled to deference.” In Mowat the Court held that the question of whether legal costs may be awarded under the Canadian Human Rights Act should be reviewed on a standard of reasonableness. Similarly, in Saskatchewan (Human Rights Commission) v Whatcott, 2013 SCC 11, the Court applied a standard of reasonableness when reviewing the decision of a human rights tribunal on a question related to the interpretation of a substantive provision of its home statute.

In spite of the decisions in Mowat and Whatcott, Justice Michalyshyn found that correctness was the applicable standard of review for the question regarding the definition and application of the test for discrimination (at para 23). He relied on the fact that in cases decided after Mowat, the Alberta Court of Appeal continued to hold that a correctness standard was appropriate for questions about the test for discrimination and its application (see Lund v Boissoin, 2012 ABCA 300 and Lethbridge Regional Police Service v Lethbridge Police Assn, 2013 ABCA 47). The Court rejected the Commission’s arguments that those cases should be distinguished because they involved different sections of the AHRA (Lund) and an arbitration decision rather than a decision of the Alberta Human Rights Tribunal (Lethbridge Police Assn). The Court also decided, without giving reasons, not to place weight on an even more recent decision, Walsh v. Mobil Oil Canada, 2013 ABCA 238, where the Court of Appeal held that questions concerning damages under the AHRA should be reviewed on a standard of reasonableness. Justice Michalyshyn seemed particularly persuaded by the Court of Appeal’s reliance on Rogers Communications Inc. v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 in Lethbridge Police Assn for the point “that human rights issues may be decided by a number of tribunals and that where a number of tribunals have concurrent jurisdiction over an issue, consistency requires that review be conducted on a correctness standard” (Bish at para 20, citing Lethbridge Police Assn at para 28).

Although the finding that correctness was the appropriate standard of review for the test for discrimination favoured the union’s position, the application of that standard did not. Justice Michalyshyn found that the Tribunal did not err in its articulation or application of the test for discrimination.

The union made several arguments here (at para 27):

a.         The Tribunal applied an incorrect legal test to the Appellant’s addiction disability

b.         The Tribunal failed to find a causal connection or nexus between the Appellant’s disability and termination

c.         The Tribunal incorrectly inferred that Elk Valley’s lack of intention to discriminate was relevant

d.         The Tribunal considered risk to safety at the prima facie discrimination stage

e.         The Tribunal failed to recognize a “clear case” of adverse effect discrimination.

Though the test for discrimination is never clearly articulated in Justice Michalyshyn’s decision, there is some reference to a three element test (at para 29), suggesting that the basic test the Court had in mind was as follows:

(1)   does the complainant have a characteristic protected from discrimination; (2) did the complainant experience an adverse impact with respect to their employment; and (3) was the protected characteristic a factor in the adverse impact?

 (see e.g. Moore v British Columbia (Education), 2012 SCC 61 (CanLII), [2012] 3 SCR 360 at para 33).

The union’s first argument focused on the misapplication of the third element of the test, where it alleged that the Tribunal imposed too rigorous a burden for employees with addiction-related disabilities. Justice Michalyshyn rejected this argument, noting that the Tribunal’s references to addictions were simply its characterization of the relevant disability (at para 30).

The Court also dismissed the union’s second argument that the Tribunal’s rejection of a causal connection between Stewart’s disability and his termination was incorrect. The Court declined to accept the union’s argument that “any connection between the disability and the adverse treatment is sufficient for a finding of prima facie discrimination”, preferring the employer’s position that “the test for prima facie discrimination includes some consideration of whether that adverse treatment was based on stereotypical or arbitrary assumptions” (at paras 36, 38). The Court relied on the Wright case as support for this approach, noting that in turn, the Court of Appeal in Wright had followed the Supreme Court decisions in McGill University Health Centre (Montreal General Hospital) v Syndicat des employes de l’Hopital General de Montreal, 2007 SCC 4 and Honda Canada Inc. v Keays, 2008 SCC 39. As for the union’s argument that the Supreme Court’s more recent decision in Moore did not support a reliance on stereotyping and arbitrariness, Justice Michalyshyn noted that “Moore does not mention McGill or Keays … There is no debate in Moore around arbitrary or stereotypical assumptions forming part of the prima facie discrimination stage of the analysis” (at para 47).  Furthermore, “Coming after Moore is Quebec (Attorney General) v. A. 2013 SCC 5…, a decision more in line with Elk Valley’s position, and one which fails to mention Moore at all” (at para 47).

This is another aspect of the Bish decision that I take issue with. I have expressed regret in past posts that the Supreme Court did not explicitly acknowledge the uncertainties about the proper approach to discrimination in Moore and tackle the debate head on (see e.g. here). Nevertheless, the Court did apply the traditional prima facie test for discrimination in Moore and did not seem to require proof of stereotyping or arbitrariness (though it did make a few offhand references to “arbitrary discrimination”, which I have critiqued elsewhere). Appellate courts in other jurisdictions have taken Moore to signal a return to the traditional prima facie approach to discrimination, free from considerations of stereotyping and arbitrariness (see e.g. Peel Law Association v Pieters, 2013 ONCA 396 at para 55).

Proof of stereotypical or arbitrary assumptions is especially difficult to show in cases involving adverse effects discrimination, where the employer’s rules or policies are neutral on their face but have an adverse impact on particular employees in ways that are connected to, for example, their disabilities. This is evident from the facts of Bish, where the Court noted that Stewart’s addiction had not been recognized by anyone at the time of the accident (at para 45). Stereotyping and arbitrariness were virtually impossible to prove in that context. But if the employer’s Alcohol and Drug Policy nevertheless had an adverse impact on Stewart in a way that had some connection to his disability, that should have been sufficient to meet the prima facie test for discrimination. The Tribunal’s decision was arguably incorrect on this basis.

The Court’s brief mention of Quebec v A in Bish is also problematic. Quebec v A was a case involving equality rights under section 15 of the Charter, not human rights legislation. The uncertainties about the proper test for discrimination in the human rights context flow in large part from debate about the extent to which the Charter should influence that context, so it is inappropriate to simply rely on a Charter case without some analysis. Moreover, five out of nine justices in Quebec v A – the majority on the section 15 issue – indicated that stereotyping (and its counterpart, prejudice) were not required elements under the Charter test for discrimination (see 2013 SCC 5 at paras 327 (Abella J), 385 (Deschamps J), and 418 (McLachlin CJ), though see also here, where Jonnette Watson Hamilton and I note some ambiguity in McLachlin CJ’s reasons). The section 15 majority justices relied in part on the fact that stereotyping and prejudice reflect intentional attitudes, whereas the Charter protects against both intentional and unintentional discrimination (as does human rights legislation – see Ont. Human Rights Comm. v Simpsons-Sears, [1985] 2 SCR 536 (“O’Malley”)). Contrary to Justice Michalyshyn’s statement about the implications of the case, Quebec v A could therefore be seen to support the union’s argument that the Tribunal applied an incorrect test for discrimination in Bish.

A related issue was raised in the union’s third argument – that the Tribunal seemed to infer that intent to discriminate was a necessary element of the test. The Court also dismissed this argument, stating that it was “unable to agree that the Tribunal was preoccupied with intent at all, or to the exclusion of adverse effects” (at para 48).

The union’s fourth argument, that the Tribunal incorrectly considered safety issues at the discrimination stage rather than at the justification stage, was similarly rejected. According to Justice Michalyshyn, “it was appropriate for the Tribunal to consider, at the prima facie discrimination stage of the analysis, the drug policy context of the appellant’s employment, why for example such concerns may be rationally connected to the impugned treatment in question, and therefore not arbitrary or based on stereotypes” (at para 50). This conclusion does follow from the finding that stereotyping and arbitrariness are properly part of the discrimination analysis, but it also shows the problems with that finding – complainants must answer justificatory types of arguments at the discrimination stage, which is a far cry from a prima facie approach to discrimination (see e.g. Lincoln v. Bay Ferries Ltd., 2004 FCA 204 at para 22).  A majority of the Supreme Court in Quebec v A similarly found that consideration of the government’s objectives should not be imported into the discrimination analysis under the Charter (see 2013 SCC 5 at paras 334-337 (Abella J), 384 (Deschamps J) and 429-431 (McLachlin CJ)).

As for the union’s fifth argument, Justice Michalyshyn found that he had already dealt with the “adverse effects” point elsewhere (at para 51). Overall, the union’s arguments regarding the test for discrimination were all rejected, even though a correctness standard was said to apply.

On the second ground of appeal, concerning the justification stage of analysis, the Court found that reasonableness was the appropriate standard of review, since this ground involved questions of mixed fact and law (at paras 24-25). Interestingly though, while this standard should have favoured the employer, the Court held that the Tribunal’s approach to accommodation was not reasonable.

The burden at the justification stage of analysis is on the employer, who must prove:

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

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

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

(British Columbia (Public Service Employee Relations Commission) v British Columbia Government and Service Employees’ Union (B.C.G.S.E.U.) (Meiorin Grievance), 1999 CanLII 652 (SCC), [1999] 3 SCR 3 at para 54).

The union took issue with the Tribunal’s approach to the third stage of this inquiry, arguing that it was unreasonable to find that the employer had shown accommodation of Stewart would create undue hardship.  The employer argued that nothing except termination following a workplace accident would fulfill the deterrent effect of the Alcohol and Drug Policy, and that employees with addiction-related disabilities were “amply accommodated” by the provision of assistance if they sought help (at para 57). According to Justice Michalyshyn, “The flaw in the argument … is the absence of any evidence that Stewart knew, on or before the date of the accident in question, that he needed treatment under the Policy. Evidence of his addiction came only after the fact” (at para 58). Stewart thus had no basis for requesting accommodation before the accident. As noted by the Court, “The ameliorative provisions relied on by the employer do little if anything for … drug users who only later come to realize they were addicted to drugs” (at para 61, emphasis in original). Nor could the Policy have a deterrent effect on individuals such as Stewart who were unaware of their addictions (at para 63). The Tribunal thus erred in finding that “Stewart had the capacity to request accommodation during his employment and chose not to do so” (at para 65).

The Court’s holding on the accommodation issue creates an incoherence (if not a Catch 22) with its finding on the discrimination issue. How can it be that addiction was not a factor in the adverse treatment received by Stewart – i.e. his termination was essentially the result of his choice to use drugs – yet he could not seek accommodation because of his lack of awareness of what was later shown to be an addiction? This incoherence is further proof of the problems with an approach to discrimination that places a burden on the complainant to prove stereotyping or arbitrariness on the part of the employer, even in adverse effects cases.  If the evidence establishes that the employer did not fulfill its duty to accommodate the employee, it is contrary to the remedial purpose of human rights legislation to use a test for discrimination that prevents that finding from carrying the day. That is the whole point of adopting a prima facie approach to discrimination, which the Supreme Court did back in the 1980s in O’Malley and recently reaffirmed (albeit implicitly) in Moore. Let us hope that the Court of Appeal reaffirms that approach in Alberta when the Bish case comes before it.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

Remembering Professor George Anastaplo

Fri, 02/21/2014 - 9:30am

By: Maureen T. Duffy

PDF Version: Remembering Professor George Anastaplo

Since I have become a law professor, I often find myself remembering my own law school experiences, as comparisons are unavoidable. Because I teach Constitutional Law, I have been reminded recently of my own time as a Constitutional Law student in a class taught by Professor George Anastaplo at Loyola University Chicago School of Law. I have been planning for some time to write to him to tell him that I am now teaching Constitutional Law in Canada, and to thank him for inspiring me.

Sadly, I just learned that I will not be able to do so. Professor Anastaplo passed away last week.

He was a truly remarkable man, who is well known in my hometown of Chicago and beyond. Much is likely to be written about him in the weeks to come, and I would not try to eulogize him here.

It occurs to me, though, that Professor Anastaplo provided an unusual example of dedication to constitutional values, which certainly resonates today, and which applies equally in Canada and in the United States. Although he was a prolific scholar and a truly unique teacher, he is most widely known for what he did before becoming a professor.

Professor Anastaplo sought admission to the Illinois Bar during the McCarthy Era. He was denied admission, based on some of his stated views on constitutional principles, and on his refusal to answer questions about his political affiliations and religious beliefs, including whether he was a member of the Communist Party. His refusal was based on his belief that requiring potential lawyers to answer such questions violated their constitutional rights to free speech and free association. After he was refused admission, he sued, and the case ultimately came before the Supreme Court of the United States, in the case of In re Anastaplo, 366 U.S. 82 (1961). Professor Anastaplo litigated the case himself and ultimately lost in a 5-4 decision. He never was admitted to the Bar, in later years by his own choice, but he became famous for his courageous defense of constitutional rights at great personal cost, and in the face of the oppressive McCarthy Era.

Although Professor Anastaplo lost the Supreme Court case, Justice Hugo Black wrote a powerful dissent, in which he said about him, among other things:

[T]he entire course of his life, as disclosed by the record, has been one of devotion and service to his country — first, in his willingness to defend its security at the risk of his own life in time of war and, later in his willingness to defend its freedoms at the risk of his professional career in time of peace. The one and only time in which he has come into conflict with the Government is when he refused to answer the questions put to him by the Committee about his beliefs and associations. And I think the record clearly shows that conflict resulted, not from any fear on Anastaplo’s part to divulge his own political activities, but from a sincere, and in my judgment correct, conviction that the preservation of this country’s freedom depends upon adherence to our Bill of Rights. The very most that can fairly be said against Anastaplo’s position in this entire matter is that he took too much of the responsibility of preserving that freedom upon himself.

[The record] shows not only that Anastaplo has followed a high moral, ethical and patriotic course in all of the activities of his life, but also that he combines these more common virtues with the uncommon virtue of courage to stand by his principles at any cost. It is such men as these who have most greatly honored the profession of the law …

Justice Black felt so strongly about this dissent that he requested that parts of it be read at his funeral.

Professor Anastaplo died at the age of 88, and he continued teaching through the Fall 2013 term. I remember a friendly, smiling, soft-spoken man who had no qualms about stating his view, or about challenging his students on the most provocative issues. He continued, throughout his career, to hold steady to his beliefs in the primacy of fundamental rights, recently, for example, criticizing the U.S. Government for its use of drones to kill terrorism suspects. He has had a significant influence on me, and on so many others, through his teachings, his writings, and his courageous personal example.

I wish I could have told him that. He will be missed.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

Unlawful Delay in the Preparation of Recovery Strategies under SARA and New Questions about Northern Gateway

Wed, 02/19/2014 - 9:00am

By: Shaun Fluker

PDF Version: Unlawful Delay in the Preparation of Recovery Strategies under SARA and New Questions about Northern Gateway

Case commented on: Western Canada Wilderness Committee v Canada (Fisheries and Oceans), 2014 FC 148

 The federal government is failing to adhere to legislated timeframes for implementing recovery strategies under the Species at Risk Act, SC 2002, c 29 (SARA). In Western Canada Wilderness Committee v Canada (Fisheries and Oceans), 2014 FC 148, the Federal Court has declared this to be unlawful conduct by the Minister of Fisheries and Oceans and the Minister of the Environment in relation to 4 species at risk: the pacific northwest humpback whale; marbled murrelet; woodland caribou (southern population); and Nechako river white sturgeon. Readers may recall that I referred to these proceedings in my recent post concerning the Northern Gateway pipeline recommendation. The failure by the Ministers to adhere to SARA timelines was never in dispute here, the argument of the parties and the decision by the Honourable Madam Justice Mactavish instead focuses on the legal consequences this failure.

The obligation to prepare and finalize recovery strategies for species listed as endangered or threatened under SARA and the timeframe in which this occurs is set out in sections 37 to 44 of SARA. Simply put, section 37(1) states that the relevant Minister must prepare a recovery strategy. The recovery strategy is an essential step towards engaging the legal protections given by SARA to listed species at risk, including the identification of critical habitat.  Depending on certain circumstances, the Minister has up to 4 years to publish a proposed recovery strategy (SARA, section 42). Once a proposed recovery strategy is published, SARA provides for a 60 day comment period and stipulates that a final recovery strategy be published 30 days thereafter (SARA, section 43). Justice Mactavish notes these timelines expired between 2007 and 2009 for the 4 species in question here (at paras 23-33).

The record before the Court demonstrated that recovery planning work had been done for these species, but that recovery strategies were not formally proposed for a variety of reasons, including a desire by the Ministers to consult with stakeholders, organizational capacity shortcomings, and challenges in properly identifying critical habitat (at paras 49-55). The evidence before the Court indicated that express decisions were made by federal officials to delay proposed recovery strategies even after SARA timelines had passed (at para 75). This decision also continues the recent trend of the Federal Court to observe the precautionary principle stated in section 38 of SARA that the preparation of a recovery strategy should not be postponed for a lack of full scientific certainty (at paras 71-73).

Justice Mactavish acknowledges an appreciation for the complexities of recovery planning under SARA, but she rules that none of the explanations offered by the Ministers provide lawful justification for the failure to meet SARA timelines. What I think is more noteworthy than the ruling itself are the statements made along the way. I’ve already noted the reference to the precautionary principle. Justice Mactavish also observes that the failure to post a recovery strategy significantly limits the application of SARA protection for species at risk, particularly against harm to critical habitat from industrial activity (at paras 56-60). Northern Gateway is very much in the picture here and many would add this proposed new project to the list of reasons why recovery planning for these 4 species was delayed.  Justice Mactavish reminds us that the rule of law ensures that government officials comply with their SARA obligations. My colleagues Professor Bankes and Professor Olszynski have previously commented on similar statements by the Federal Court in SARA cases (see here and here).  While Justice Mactavish does not reach back to the 17th century Bill of Rights as Mainville JA does in Canada (Fisheries and Oceans) v David Suzuki Foundation, 2012 FCA 40 (at paras 71-100), Justice Mactavish does find support (at paras 66, 90-92) in the remarkable dissenting opinion of Alberta Court of Appeal Chief Justice Fraser in Reece v Edmonton (City), 2011 ABCA 238. As an aside, it is nice to see Fraser CJA’s dissent receive some attention in the SARA jurisprudence.

One of the arguments by the Ministers here was that declaratory relief is not available to the applicants because there is no longer a dispute. In the time which elapsed between the application for judicial review in September 2012 and the hearing of argument before the Court federal officials had in fact published the proposed recovery strategies in question.  Justice Mactavish rejects this argument, citing the discretionary power of the Court to issue declaratory relief where appropriate, and finds the rule of law demands such relief is warranted here (at paras 65-66). In addition to the findings throughout her judgment that I’ve already noted, Justice Mactavish observes that federal officials have failed to comply with SARA recovery strategy timelines for another 167 listed species at risk (at para 85).The words chosen by Justice Mactavish to conclude her ruling suggest that the objective of SARA also had considerable influence here:

To state the obvious, the Species at Risk Act was enacted because some wildlife species in Canada are at risk. As the applicants note, many are in a race against the clock as increased pressure is put on their critical habitat, and their ultimate survival may be at stake.

The timelines contained in the Act reflect the clearly articulated will of Parliament that recovery strategies be developed for species at risk in a timely fashion, recognizing that there is indeed urgency in these matters. Compliance with the statutory timelines is critical to the proper implementation of the Parliamentary scheme for the protection of species at risk (at paras 100-101)

(Emphasis in original)

Accordingly, Justice Mactavish declares that the Ministers acted unlawfully in failing to post proposed recovery strategies for the pacific northwest humpback whale, marbled murrelet, woodland caribou (southern population), and Nechako river white sturgeon, within the timelines prescribed by SARA. The Court retained jurisdiction to hear submissions, if necessary, on compliance with final recovery strategy timelines for 3 of these 4 species (the final recovery strategy for the humpback whale has been published).

As I noted above, the Northern Gateway pipeline is lurking about in these proceedings. One very large question that remains is whether this declaration will have any legal effect on the Northern Gateway regulatory process. Recall that these 4 species and their habitat will be affected by the pipeline and its associated activities. The joint review panel concluded there would be no significant adverse effects on these species at risk, but did so in the absence of recovery strategies, a critical component of protecting species at risk under SARA. The absence of these recovery strategies in the regulatory process is the result of conduct that has now been declared contrary to law. Had the federal government complied with the law, these recovery strategies would have been placed before the Northern Gateway panel. Does the law require the panel to consider the content of these recovery strategies in its report? Can the Governor in Council lawfully make a decision on whether the Northern Gateway pipeline can go ahead when the recommendation before it is based on an incomplete record and fails to take into account these recovery strategies?

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

 

Summary of Papers and Proceedings from a Workshop on Key Issues in the Design of Carbon Management Policies and Regulations in Alberta, Calgary, January 27 & 28th, 2014

Tue, 02/18/2014 - 9:00am

By: Nigel Bankes and Elizabeth Wilman, Workshop Co-Chairs

PDF Version: Summary of Papers and Proceedings from a Workshop on Key Issues in the Design of Carbon Management Policies and Regulations in Alberta, Calgary, January 27 & 28th, 2014

Regulation commented on: Specified Gas Emitters Regulation, Alta. Reg. 139/2007

Background and Format

Largely because of its role as a global energy supplier, Alberta is the largest emitter of greenhouse gases among the Canadian provinces. In 2007 Alberta passed the Specified Gas Emitters Regulation (SGER), Alta. Reg. 139/2007, which is due for renewal in 2014. The purpose of the workshop, Key Issues in the Design of Carbon Management Policies and Regulations, was to provide input to Alberta Environment and Sustainable Resource Development (AESRD) to assist in updating and revising the Regulation.

After consultation with an Advisory Committee, consisting of Jaclyn LaBerge (Trans Canada), J.P. Jepp (Shell), Don Wharton (TransAlta), Heather Carmichael and Justin Wheler (Government of Alberta), Janet Peace (Center for Climate and Energy Solutions), Nathan Maycher (Conoco Phillips), Tom Goddard (Government of Alberta), Andrew Leach (University of Alberta), Keith Driver (The Prasino Group) and Matt Horne (Pembina Institute), it was decided that the workshop would focus on: what can be learned from the current regulatory framework;  international experience relating to offsets; the use of the Climate Change and Emissions Management Fund; the treatment of cogeneration;  and overarching issues related to Alberta’s role as a producer of both energy and greenhouse gas emissions.

The workshop papers were preceded by remarks from the keynote speaker, the Honourable Robin Campbell, Minister of Environment and Sustainable Resource Development.  Following the Minister’s remarks, Justin Wheler (Climate Change Specialist, Regulation and Mitigation, AESRD) gave a presentation on the first six years of the SGER. Then five commissioned papers were presented and discussed.

    • Carbon revenue:  Recycling versus Technology Incentives
      • Authors: Marissa Beck, Ph.D. Program in Global Governance, Basillie School of International Affairs, Wilfrid Laurier University, and Randall Wigle, Professor, Basillie School of International Affairs and School of Business and Economics, Wilfrid Laurier University
      • Presenter: Randall Wigle
      • Discussant: Len Coad, Director, Centre for Natural Resources, Canada West Foundation
    • Offsets: Lessons Learned from the Clean Development Mechanism
      • Author and Presenter: Janet Peace, VP, Markets and Business Strategy, Center for Climate and Energy Solutions
      • Discussant: Keith Driver, Managing Partner, The Prasino Group
    • Cogeneration and Carbon Management
      • Author and Presenter: Paula McGarrigle, Managing Director, Solas Energy Consulting
      • Discussant: Michal Moore, Area Director, Energy and Environmental Policy, School of Public Policy, University of Calgary
    • Advancing the Integrity of the Climate Change and Regulatory System in Alberta
      • Author and Presenter: Christine Schuh, President, le-ef.com Consulting Corp
      • Discussant: Oliver Bussler, Director, Sustainable Development, TransAlta
    • Leave it in the Ground?: Incorporating the Social Cost of Carbon into Unconventional      Fossil Fuel Development.
      • Authors: Andrew Leach, Enbridge Professor of Energy Policy, Alberta School of Business, and Branko Boskovic, Alberta School of Business, University of Alberta
      • Presenter: Andrew Leach
      • Discussant: Simon Dyer, Director, Alberta and the North, Pembina Institute

Keynote Address (Honourable Robin Campbell, Minister of Environment and Sustainable Resource Development) (available here)

The Minister’s remarks concentrated on the goals of any changes to the Regulations, and on possible changes. The goals included: future regulatory stability, flexibility, short and long term emission reductions across industries, and working with other jurisdictions. Reflecting these goals, possible changes include: lowering the regulatory threshold to include smaller emitters, using differential emission intensity reduction targets for different categories of emitters, raising the levy, and enhancing collaboration with other jurisdictions, particularly in the area of offset supply.

During the discussion participants asked about the timing of the government’s decisions and suggested that a white paper would facilitate public discussion of the proposed changes. There was also a question about the future of the carbon price. Would it be raised significantly, and would there be a ladder specifying its longer-term path?

SGER History (Justin Wheler)

Alberta’s Specified Gas Emitters Regulation (SGER) came into effect on July 1, 2007 and expires in September 2014. It covers large final emitters (facilities emitting more than 100 kt CO2 e annually) (LFEs). The regulation is intensity based, requiring a facility to reduce its emissions by 12% of its baseline. A facility’s baseline is historic. For new facilities, reductions are phased in at 2% per year. There is a great deal of flexibility with respect to compliance options. Facilities can undertake onsite reductions. One of the onsite reduction options, cogeneration, is given special treatment. Facilities can purchase and retire offset credits from non-regulated projects. They can purchase and retire emission performance credits (EPCs) from regulated facilities that have been able to reduce emissions intensity beyond the required 12%. Finally, they may pay into the Climate Change and Emissions Management Fund (CCEMF) at a rate of $15 per tonne.

The SGER reduces emissions by an average of 7Mt per year from business as usual. $398 million has been paid into the CCEMF. Of that, $213 million has been allocated to 51 clean technology projects. With leveraging from other sources, the total investment is over $1 billion.  The target emissions intensity reduction declared in Albertans and Climate Change, Taking Action (2002) was a reduction in emissions intensity by 2010 of 12%, or 20 Mt. This target has been realized through reductions under SGER which include EPCs, cogeneration and offsets.

Alberta’s emissions profile shows that LFEs account for more than half of the Province’s emissions.  A variety of sectors are covered. Most sectors exhibit stable emissions, but oil sands emissions are growing. In a Canada wide context, Alberta has the largest and fastest growing CO2 e emissions. Canada is not on target to meet its 2020 Copenhagen emissions target of 612 Mt (an absolute reduction of minus 17% of 2005 emissions by 2020). With current measures, it is projected to be 122 Mt. over target.

The successes of SGER include: significant emission reductions and investments in emission reduction technologies, improved quantification methods and data systems, a functioning offset market, a regulatory assurance system, and successful flexible management of a complex industrial sector.

Possible changes to the SGER include lowering the regulatory threshold, changing the $15 price, changing the intensity target, and tightening or relaxing some of the compliance options. Lowering the regulatory threshold to 50 kt would bring 40% more facilities under the regulation and 16% more emissions.  The 12% intensity reduction target drives the demand for compliance options, and the $15 per tonne price is a major determinant of how expensive they can be.  Because emissions intensity can vary considerably from year to year, the need for compliance options will also change.  Overall, there has been a fairly even mix of compliance options used.  Facility specific historic baselines add flexibility, but require considerable effort to establish.

Cogeneration does not fit well into the SGER, but the policy issues affecting it are not unique. Other facilities have multiple products, and offset projects, such as wind generation projects, also produce credits by displacing other generation and thereby avoiding the emissions associated with more carbon intensive forms of generation. The treatment of cogeneration is based on stand-alone alternatives for the two products, heat and electricity. There is no emissions intensity reduction target for electricity generation associated with cogeneration facilities. Emissions associated with steam generation are calculated as total emissions from the cogeneration facility net of emissions from electricity generation, where the electricity is assumed to be generated from a natural gas combined cycle electricity plant with a greenhouse gas intensity of 0.418 tonnes per MWh. The baseline for heat generation is a conventional boiler operating at 80% efficiency. As a result of this treatment, regulated entities that include cogeneration facilities allow the facility’s emissions intensity to fall below its baseline emissions intensity and generate EPCs.

The conclusion is that SGER is working and achieving real reductions. Investments are being made to achieve future reductions. The Climate Change Strategy renewal and Regulation review is underway. Possible changes are reflected in Minister Campbell’s comments.

Carbon Revenue: Recycling versus Technology Incentives (Marissa Beck and Randall Wigle)

Since its 2007 inception, a $15 per tonne levy paid in to the Climate Change and Emissions Management Fund (CCEMF) has been one of the options for compliance under the SGER. The CCEMF’s purposes are to support the development and applications of new technologies to reduce emissions, and to improve Alberta’s adaptation capabilities. Since 2007, about $400 million has been deposited into the Fund, with about $200 million allocated to projects.

Since any levy or tax on emissions results in revenue flowing to government, in Alberta’s case into the CCEMF, the use of these revenues is an important consideration. This becomes even more salient if changes in the Regulation result in an increase in the levy.

Beck and Wigle first presented the options for the use of carbon revenue. These include the commonly recommended approach of revenue recycling under which revenues from a carbon tax are used to replace revenue lost when other more distorting taxes are reduced.  Other options include the whole range of investments in new technologies, from supporting basic R&D to adoptions subsidies.

Revenue recycling provides what is known as the double dividend from a carbon tax. The first dividend is the carbon emission reduction, the second is that the harm caused by more distorting taxes, such as an income or corporate profits tax, is reduced when those taxes are reduced. For example, income tax reductions could be focused on lower income households, where it is most likely that a reduction in income tax would reduce harm by increasing work incentives and purchasing power.  The benefits of revenue recycling can be substantial.

The benefits of supporting new technology are potentially very large, but can be compromised by the difficulties associated with picking winners, free-riding, and lock-in.  Public investment in R&D should be focused on projects for which the returns to private investors are small. At the other end of the spectrum, adoptions subsidies may not be as effective as suggested by some of their proponents. Education funding for scientists and engineers is another option that is not always considered. Transparency and credibility are important characteristics of funding policies and, because technology development can be a long-term process, so is time consistency in both public sector funding and environmental policies. Funding decisions must both be, and be seen to be, impartial. Finally, a carbon tax should reduce emissions regardless of whether or not the funds are used to support technology. The role of technology support is to complement the emission reducing effect of a carbon tax, not to be a substitute for it.

The CCEMF’s investments seem to have been focused on commercialization and technology push. More emphasis on early R&D would better address free-riding externalities. While the carbon tax itself constitutes a major incentive for adoption, adoption subsidies may still be worthwhile. Finally, revenue recycling, through allowing corporate tax cuts, could positively influence technology investments in the private sector.

The discussant, Len Coad, pointed out that revenue recycling versus technology support should not be viewed as an either/or choice. If we are to manage the changes required, we need to pursue both pathways. With respect to revenue recycling Coad suggested that redistributing the fees paid into the CCEMF by 106 LFEs to all personal or corporate tax-payers has allocation implications that need to be further explored.  British Columbia, which uses revenue recycling, has a much broader based tax, and a broader range of mitigation approaches. While picking winners (or losers) is difficult, Coad suggested that the CCEMC has a clear and careful process to ensure that the decisions it makes are based on scientific evidence, and not on who pays into the fund. The decisions won’t necessarily result in emission reductions. Since the fund grows when emitters can’t find ways to reduce their emissions, a technology fund at least helps to find ways to reduce emissions. Beck and Wigle’s conclusion that the CCEMC has to date focused on demonstration and commercialization technologies, exposes a gap in innovation funding for more basic R&D.

The discussion focused on two issues: access to the CCEMF, and the types of projects funded. A member of the CCEMC Board emphasised that its approach is impartial and that it funds a broad portfolio of projects. Another participant suggested that, while revenue recycling is hard to apply in Alberta given the low revenue cap, it is worth considering as a longer-term strategy. There was a division of opinion in the room as to CCEMC’s application requirements. Some found them very time consuming, expensive and cumbersome. Others took the view that the requirements were no more demanding than for any business proposal seeking financing.

Offsets: Lessons Learned from the Clean Development Mechanism (Janet Peace)

In light of Minister Campbell’s remark that enhanced cooperation with other jurisdictions may well take place in the area of offset supply, the Peace paper on the Clean Development Mechanism (CDM) was very relevant. Offsets schemes provide an incentive to reduce GHG emissions in sectors or countries that are not mandated by regulation to reduce.  The motivation for reduction in an unregulated sector or country is that the reductions can be sold into the regulated sector to offset more costly emission reductions. The regulated sector creates the demand for offsets. The price for offsets, and the quantity supplied into the regulated market, depend on both the demand by the regulated market and the supply from outside that market. Limited demand, combined with a large supply, has caused the recent price for CERs (CDM offsets) to be very low.

While the offsets market may soon be expanded, regulated emitters in Alberta are currently constrained to use offsets generated in Alberta and thus cannot use CERs for compliance purposes. Regardless of their source, offsets need to be of high quality, constituting real, credible reductions. In addition an offset program must not impose unnecessarily high costs on participants (it must be efficient), and participants must have confidence that their investment will pay off.  Peace addressed offset quality, program efficiency and participant confidence in the context of CDM with lessons for Alberta. Her presentation emphasised three themes: credibility, efficiency and certainty.

Offset quality requires a credible baseline. Under the CDM, the project developer identifies the baseline. It is made available for public comment, and then validated by an independent auditor. An important principle in baseline establishment is conservativeness, ensuring that emission reductions relative to the baseline are not overestimated. Once a project is validated, and implemented, a different auditor verifies that the emissions reductions have been attained.

An adequate supply of well-trained auditors is essential, and the incentives for these auditors need to be aligned with the objectives of the CDM.  While the project developer currently retains and pays for the audits one suggestion is that auditors should be hired and paid for by the CDM Board, according to a pre-set fee schedule.

Program efficiency means minimizing the transaction costs associated with CDM projects without diminishing their quality.  Standardization of baseline methodologies and verification procedures promotes efficiency, and aggregating many small projects can also reduce transaction costs (programmatic CDM).

The discussant, Keith Driver, reiterated the importance of rigour in supplying quality offsets, and of efficiency and transparency. He also emphasised the need for harmonization across jurisdictions and the sharing of best practice. The engagement of the unregulated sector, and reducing abatement costs, were both cited as important benefits provided by the inclusion of offsets in a regulatory system. Driver also emphasised that Alberta’s work in developing offset protocols had gone largely unnoticed internationally, perhaps because of the unique features of the SGERs (baseline and credit and emissions intensity).

An issue that was raised in the discussion was that of using indirect emission reductions to create offsets, for example wind generation. This concern extends further into energy efficiency programs that reduce the demand for energy. Offset credits are assessed by specifying standard grid factors. Other issues raised in the discussion included validation and certification. One participant noted that Alberta’s scheme does not make provision for project validation and asked whether this might be changed. Others noted that the absence of governmental certification of offset credits created uncertainty for purchasers as did the risk of retrospective changes in offset protocols. In response Peace suggested that the absence of certification might be a more significant obstacle to investment if the price of carbon increases; it may also be an obstacle in developing linkages with other jurisdictions.

Cogeneration and Carbon Management (McGarrigle)

As pointed out in Justin Wheler’s presentation, cogenerations accounts for a large portion of compliance under Alberta’s SGER. Cogeneration is combined heat and power production (CHP). The SGER defines electricity as a by-product and does not impose an emissions intensity target on the electricity from cogeneration. The growth in cogeneration in Alberta has been driven by three main factors: regulatory changes, reduced cost, and demand growth. The regulatory changes include full retail competition and industrial site designation (ISD) under the Hydro and Electric Energy Act, RSA 2000, c. H-16 which allows sites to be billed for transmission services only on the difference between on-site generation and the on-site load. This reduces the ancillary costs associated with power generation. Federal tax changes allow accelerated capital cost depreciation, and special treatment under the SGER allows cogeneration to generate substantial emission performance credits. The growth of steam assisted gravity drainage (SAGD) in oil sands extraction has increased the demand for both heat and power, and improved the economics of cogeneration. For new capacity, cogeneration has a levelized cost below other power sources, but higher than Alberta’s forward power pool price. While electricity deregulation and ISD designation have had a large impact in promoting cogeneration, the SGER seems not to have had a big influence. An important question raised by this presentation is whether cogeneration is really business-as-usual.

The discussant, Michal Moore, took a broader view of cogeneration. He stressed the related roles of economics, system efficiency, and long-term public policy in motivating cogeneration. He also stressed that the regulatory system needs to promote the integration of cogeneration as part of a carbon strategy. To promote cogeneration you need long-term, predictable, regional public policy.

The question of whether and how to provide credit for cogeneration came up in the discussion. While there is some level of discomfort in the way in which we recognize cogeneration it is clear that cogeneration is less emissions intensive than on-grid power and therefore should be encouraged. This suggests the need for further consideration of the effectiveness and transparency of crediting for cogeneration.

Advancing the Integrity of the Climate Change Act and Regulatory System in Alberta (Christine Schuh)

Schuh views the regulatory system as a management system in which the regulator establishes targets, ways of measuring the degree to which the targets are met, and a process for evaluating, reacting and updating.  The goal of the regulated emitters is compliance with the regulations, and providing the data that documents their compliance. Verification and audits are part of the regulator’s tool kit. Of course, the devil is in the details. Challenges to the existing system include: ensuring that the interests of the intermediaries who construct offset protocols and perform verification are aligned with the regulator; ensuring quality data through things like reviews, audits, accreditation requirements; ways of dealing with the inherent uncertainty in the system, including discounting, holding back or disallowing offsets; fungibility with other systems such as cap and trade;  and baseline determination or additionality  (project level or industry level).

The discussant for the Schuh paper, Oliver Bussler, pointed out that SGER has provided an impetus for the development of expertise in the regulated industries, among consultants, and in government. On the issue of fungibility he speculated on whether the era of economy wide emissions trading systems has passed. There are now a number of different systems (California/ Quebec cap and trade, British Columbia carbon tax, the Regional Greenhouse Gas Initiative), raising the question of which system Alberta might wish to link with.

The discussion of the Schuh paper dealt with validation, training and education and the certification of personnel. On validation Schuh expressed the view that validation is most useful where there is uncertainty as to whether a project complies with the protocol. This becomes less important as projects become more routine. Participants emphasised the need for better training and education and perhaps professional licensing bodies so as to improve the quality of the application of carbon accounting rules and thereby provide assurance to investors and improve the overall level of confidence in the system.

Leave it in the Ground? Incorporating the Social Cost of Carbon into Unconventional Fossil Fuel Development (Andrew Leach and Branko Boskovic)

The Leach and Boskovic paper looked at the influence of the SGER on the decisions of Alberta oil sands producers’ decisions to develop a new project or not. Hence the title “Leave it in the Ground?” The authors find that the current SGER has very little effect on the costs of such projects or on the decision about whether to develop the project. The current SGER only taxes emissions from oil sands production (upstream emissions), not emissions from the downstream combustion of the product. The authors also find that increased stringency of the regulation and/or tax on production emissions would have little effect on the profitability of the oil sands projects.  They include estimates by the U.S. Environmental Protection Agency on the social cost of carbon (SCC). The SCC is presumed to have some legitimacy as a measure of the damages from global warming. They find that the returns to oil sands projects are not greatly affected. In fact, the returns are robust to carbon taxes on production emissions of up to $100 per tonne. Then they include a regulation or tax on combustion emissions of the resulting product applied in another jurisdiction and find impacts of far greater magnitude than the production only tax. This leads them to conclude that if we are worried about the future of oil sands projects, the coverage of carbon tax matters at least as much as the size of the tax. A change in the stringency of the current Alberta framework which only applies to production emissions is unlikely to have much negative influence on oil sands projects. The real carbon risk for oil sands producers lies beyond the province.

The discussant for this paper, Simon Dyer of the Pembina Institute, provided some additional perspectives on the question considering both an SCC tax and other regulatory policies. How are such factors as catastrophic events, extinction of species, or the appropriate intergenerational discount rate, accounted for in the SCC? The SCC may be far too low. Perhaps what we should do is look at what SCC, or what regulations, are required to get on a path such as the IEA 450 scenario (International Energy Agency, World Energy Outlook, 2013). Dyer agrees that oil sands projects are likely to remain profitable under a strengthened SGER, and that it is likely to be stronger global climate policy that will most negatively influence the viability of such projects.

Conclusions

Overall, the papers and proceedings of the Workshop are enlightening with respect to the successes of carbon policies and regulations in Alberta, and the challenges that remain. The successes include emission reductions and investments in new technologies that would otherwise not have occurred, improved measurement and data management systems, development of an offset market, and a functioning regulatory system. There is evidence that the system can be made considerably more stringent, without unduly affecting profits and competitiveness.  However, this should be done in a way that provides a high degree of regulatory certainty for the future. This would mean a timetable for increases in fees and reduction targets so as to provide clear guidance to investors. Increased stringency is likely to mean more revenue for the CCEMF. This raises the questions of whether Alberta should consider revenue recycling as an option, and/or how to allocate support for the various technology fund options as revenue increases.

One of the challenges of the Alberta system is that it can be complex and opaque. This makes it difficult to manage and to assess effectiveness. The choice of a baseline and credit system (which focuses on emissions intensity on a facility by facility basis, and makes it necessary to deal with multiple products and indirect emissions), implies complexity. It also invites scrutiny of whether the establishment of project specific baselines reduces the incentive to adopt the most efficient technologies from the outset. The treatment of cogeneration is certainly opaque, and its effectiveness is questionable. Expanding the offset market seems attractive. Acceptance of CERs within the Alberta system may be seen as a contribution to international solidarity and engagement with the global community. Any decision to reduce the 100 Mt regulatory threshold must clearly weigh the benefits of doing so against the regulatory costs.

Regulatory systems in other jurisdictions will affect Alberta at some point. There may be a need for fungibility that will include more than offset markets.  Since most other systems do not have a regulation that is both intensity and facility based, there will be some challenges. Even ignoring fungibility, the fact that Alberta’s fossil energy exports create emissions whenever and wherever they are combusted, will mean that global regulations limiting or taxing combustion emissions will affect Alberta.

Funding for the workshop was provided by Carbon Management Canada. Thanks and acknowledgements to Salimah Janmohamed, Mikaela McQuade and David Poulton for their summaries of the presentations and resulting discussion.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

And Now Some Good News for a Change: The Energy Safety and Security Act

Fri, 02/14/2014 - 9:00am

By: Martin Olszynski

PDF Version: And Now Some Good News for a Change: The Energy Safety and Security Act

Legislation Commented on:  Bill C-22, An Act respecting Canada’s offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts (Energy Safety and Security Act), Second Session, Forty-first Parliament, 62 Elizabeth II, 2013-2014

At the end of last month, while all eyes were fixed on the U.S. State Department’s release of the Final Supplemental Environmental Impact Statement (EIS) for TransCanada’s Keystone XL pipeline (discussed by my colleague Professor James Coleman here), the federal government quietly introduced Bill C-22, the Energy Safety and Security Act (ESSA), for first reading in the House of Commons. Bill C-22 has two parts, the first dealing with offshore oil and gas operations, the second with the liability regime applicable to nuclear incidents. This post focuses on the changes to the offshore liability regime and then briefly considers what ESSA tells us about the development of effective environmental laws and policies in Canada.

The Energy Safety and Security Act: From Laggard to Leapfrog?

It is sometimes suggested in certain matters of national policy, including energy and the environment, that Canada is of necessity a follower, not a leader.  Certainly, this is the view of the current federal government with respect to climate change (for a contrary view, see here).  But Canada’s record as a taker – if not a laggard – in the environmental context goes back at least forty years.  It was just over forty years ago that the United States enacted their endangered species legislation, while Canada’s Species At Risk Act, SC 2002, c 29 (SARA) is barely a decade old. Similarly, the U.S. environmental assessment (EA) legislation, the National Environmental Policy Act, 42 USC 4321 et seq. (pursuant to which Keystone XL was assessed) is widely regarded as the progenitor of all EA laws, including Canada’s.  In the offshore oil and gas liability context, the minutiae of the regimes make generalizations difficult but overall Canada appears late to the game here too; the U.S. Oil Pollution Act (OPA), 33 USC 40, which contains many of the provisions discussed below, was passed over two decades ago (in 1990 following the Exxon Valdez oil spill). As discussed below, however, ESSA represents a rare opportunity for Canada to leap ahead of the U.S. in this context.

Assuming it is passed without major amendment, Part I of ESSA will amend the Canada Oil and Gas Operations Act, RSC 1985, c O-7 (COGOA), the Canada Petroleum Resources Act, RSC 1985, c 36, the Canada-Newfoundland Atlantic Accord Implementation Act, SC 1987, c 3 (CNAAIA), and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, SC 1988, c 28 (CNSOPRIA). As described in a backgrounder prepared by Natural Resources Canada, “[t]he proposed changes focus on four main areas — prevention, response, accountability and transparency — and they help to further strengthen safety and security to prevent incidents and ensure swift response in the unlikely event of a spill.”

This post focuses on accountability, with respect to which ESSA does five principle things:

  1. References the “polluter pays” principle explicitly in legislation;
  2. Maintains and reinforces that liability is unlimited where fault or negligence is proven;
  3. Raises the absolute liability (i.e. where there has been no fault or negligence) to $1 billion from $30 million (Atlantic offshore areas) or $40 million (Arctic);
  4. Establishes a basis for governments to seek environmental damages;
  5. Establishes that authorization holders are liable for the actions of their contractors.

ESSA accomplishes this by amending the relevant liability provisions of the above-noted Acts.  Thus, paragraphs 26(1)(a) and (b) of COGOA will be amended as set out here (underlining is from text of Bill C-22 as found on the Parliament of Canada’s website; see also new paras 167(1)(a) and (b) of the CNSOPRAIA and new paras 162(1)(a) and (b) of the CNAAIA).

Thus, point 2 (unlimited liability in the case of negligence or fault) is maintained through new para. 26(1)(a). Point 3 (increased absolute liability) is achieved through the combined operation of new para. 26(1)(b) and new subs. 26(2.2) (in contrast to the current regime, whereby limits are contained in regulations, subs. 26(2.2) sets out statutory limits (e.g. $1 billion) although a new subs. 26(2.3) will allow these to be amended by regulations).  Point 4 (environmental damages) is achieved through new subpara. 26(1)(a)(iii), which refers to the loss of “non-use value relating to a public resource that is affected by a spill.” (See the new section 26(2) for similar changes with respect to losses caused by debris).  Of all these changes, it is arguably the increases in absolute liability that put ESSA ahead of the U.S. OPA (see §2704).

With respect to point 4, some readers might reasonably be wondering what exactly “non-use value” is, and how those words translate into “a basis for governments to seek environmental damages.” “Non-use value” is a term borrowed from environmental economics to describe environmental values that are derived not from the environment’s actual use (these are unimaginatively referred to as “use value”) but rather from its mere existence. The Supreme Court of Canada actually discussed both of these kinds of value in Canadian Forest Products v. British Columbia, [2004] 2 SCR 74 (at para 138), widely regarded by both academics (see e.g. Jerry V. DeMarco et al., Opening the Door for Common Law Environmental Protection in Canada: The Decision in [Canfor]” (2005) 15(2) J Env L & Prac 233) and the private bar as having “opened the door” to common law liability for environmental damages in Canada:

“Use value” includes the services provided by the ecosystem to human beings, including food sources, water quality and recreational opportunities.  Even if the public are not charged for these services, it may be possible to quantify them economically by observing what the public pays for comparable services on the market.

“Passive use” or “existence” [non-use] value recognizes that a member of the public may be prepared to pay something for the protection of a natural resource, even if he or she never directly uses it.  It includes both the psychological benefit to the public of knowing that the resource is protected, and the option value of being able to use it in the future.

Although the wording could be clearer, it is arguable that COGOA already establishes liability for lost “use values” through its definition of “actual loss or damage,” which subsection 24(3) currently defines as “include[ing] loss of income, including future income, and, with respect to any Aboriginal peoples of Canada, includes loss of hunting, fishing and gathering opportunities.” Thus, ESSA’s primary contribution here is to explicitly expand the scope of environmental liability to include non-use values, the significance of which can be gauged relatively simply by considering that the minimum estimated value of lost non-use values following the Valdez oil spill was $2.8 billion (US) (see Richard T Carson et al, “Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill” (2003) 25:3 Envtl & Resource Econ 257 at 278; there do not appear to be any publicly available estimates of lost non-use values associated with BP’s Deepwater Horizon spill in the Gulf of Mexico, although these too will undoubtedly be substantial).

There are other aspects of the ESSA that are noteworthy, and still others that could be improved.  For example, the U.S. OPA authorizes not only federal and state governments to recover what are referred to there as “natural resources damages”, but also Indian tribes (see §2706(a)(3)). ESSA limits the right to recover non-use values to the federal, provincial and (through operation of s 35 of the Interpretation Act, RSC 1985, c I-21) territorial governments (see new section 26(2.6)), which seems strange in light of the focus, with respect to “actual loss or damage,” on what are essentially Aboriginal use-values, and in light of the fact that several First Nations have Aboriginal title claims in coastal waters (see e.g. Ahousaht Indian Band v. AG of Canada, 2007 BCSC 1162 (CanLII)). The OPA also authorizes the promulgation of regulations with respect to the assessment of damages, compliance with which creates a rebuttable presumption of accuracy in the event of litigation (see § 2707), but no such regulations are contemplated by ESSAESSA also raises the financial capacity requirements of operators, which is to say proof of sufficient financial resources now to pay for any future liability (new subsections 26.1(1) and (2)), but these are limited by the absolute liability caps (new section 26(2.2)) and the National Energy Board “is not required to consider any potential loss of non-use value relating to a public resource that is affected by a spill” when determining those amounts (new subsection 26.1(3)).

Finally, ESSA continues the trend set by the federal government’s 2009 Environmental Enforcement Act, SC 2009, c 14 (EEA), which is to incorporate environmental damages assessment (through the inclusion of the terms “use and non-use value”) into the regulatory offences context, authorizing judges to consider the loss of such values when determining the sentence to be imposed where an offence has been committed (for COGOA, see new subsections 60(3) to (7)). On this front, however, it should be pointed out that five years on and notwithstanding the fact that the EEA amended several of Canada’s more prominent environmental laws, including the Canadian Environmental Protection Act, 1999, SC 1999, c 33, there is still not a single reported decision where environmental damages have been assessed and quantified for the purposes of sentencing (University of Alberta professor and environmental economist Peter Boxall and I have recently prepared a paper on this state of affairs that we will be presenting at the Canadian Institute for Resources Law’s Environmental Law Symposium in Halifax, N.S. next week).

While there are still more aspects of ESSA worth considering (some are discussed here), it seems clear that overall, and in contrast to almost every other piece of federal environmental legislation in the last couple of years, ESSA is a good news story. Below I briefly offer one possible explanation for this outcome, which is also relevant to another recent development in the Canadian environmental law and policy landscape.

The Commissioner of the Environment and Sustainable Development (CESD): Objective Research and Analysis

What does the CESD have to do with ESSA? As it turns out, a lot.  As noted in the NRCan backgrounder cited above, the ESSA’s provisions are intended to “address recommendations from the [CESD] in his fall 2012 report” (Exhibit 2.4 of that report, Canada’s offshore oil and gas absolute liability regime as compared with other countries, is particularly relevant to the discussion above).

The CESD is an environmental watchdog position within the Office of the Auditor General of Canada whose job is to provide parliamentarians with “objective, independent analysis and recommendations on the federal government’s efforts to protect the environment and foster sustainable development.” This is accomplished by conducting performance audits and overseeing an environmental petitions process (for more information on the CESD’s mandate, see here), something that the previous Commissioner, Scott Vaughn, did with exceptional rigour and professionalism for five years until moving on to the International Institute for Sustainable Development last year.  If you want to debate Canada’s environmental record, whether in the classroom or at the pub, then you need to read the CESD’s Reports to Parliament, which include chapters on:

For those readers still not inclined to use these easy-to-follow links but willing to take my word for it (spoiler alert), I am being generous when I say that in most of these areas the federal government’s performance has been less than stellar.  But while such news may not be welcome to the government of the day (you can get a flavor for that here and here), the fact that parliamentarians – and Canadians generally – have access to this kind of information should be.  Just like the Auditor General’s more conventional (and similarly unpopular with sitting governments) financial audits, there can be no accountability and no improvement without such information.

This is not to suggest that the mere existence of such reports automatically leads to better policies and legislation. Such information is merely enabling; it must be acted upon. Herein, then, lies one explanation as to why ESSA is a good news story; unlike the environmental legislation contained in the omnibus budget bills of 2012 (see e.g. this post by Professor Arlene Kwasniak regarding the changes to the Fisheries Act, RSC 1985, c F-14), its provisions are based on objective research and analysis (honorable mentions should also go to the Eighth report of the Standing Senate Committee on Energy, the Environment and Natural Resources, 2010, released shortly after the Deepwater Horizon spill).  ESSA is, in other words, an example of evidence-based policy.

It is for this reason – the invaluable service provided by the CESD – that I couldn’t help notice last week’s announcement regarding the appointment of a new Commissioner.  According to that announcement, Ms. Julie Gelfand will bring a diversity of experience to the position, having served for over fifteen years as president of Nature Canada but also as Chief Advisor at Rio Tinto Canada and Vice-President of Sustainable Development at the Mining Association of Canada (MAC). When asked about how she might approach her new position in a recent interview with soon-to-be-former Postmedia News energy and environment reporter Mike De Souza, Ms. Gelfand talked about bringing different perspectives on environmental sustainability and “as much balance as possible.”  I don’t know how “different perspectives” and “balance” fit within a mandate to provide objective and independent analysis and advice, but I do know that Canadians would not be well-served by a “kinder, gentler” CESD. I can think of countless positive words to describe former Auditor General Sheila Fraser, for example, but those two are not among them.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

 

Accommodation is a Challenging Issue for Employers, Employees and Human Rights Commissions

Thu, 02/13/2014 - 9:20am

By: Linda McKay-Panos

PDF Version: Accommodation is a Challenging Issue for Employers, Employees and Human Rights Commissions

Case commented on: Robinson v Edmonton (City), 2014 ABQB 29

It is perhaps only logical that since physical disability is the most common ground and employment is the most common area for discrimination claims in Alberta, accommodation would be a recurring issue in this context (see Alberta Human Rights Commission, Annual Report 2012-13). Employers (as well as service providers, landlords, etc.) have a duty to accommodate employees who experience discrimination to the point of undue hardship.

Employers’ duties are set out in an interpretive bulletin provided by the Alberta Human Rights Commission (see here). Once it is determined that the request for accommodation falls under the areas and grounds protected under the Alberta Human Rights Act, RSA 2000 c A-25.5, some of the key responsibilities include the following (summarized from the AHRC bulletin reference above):

    • Respecting the dignity of the person requesting the accommodation;
    • Respecting the privacy of the person requesting the accommodation and abiding by applicable privacy legislation;
    • Listening to and considering the needs of the person seeking accommodation and their suggestions for accommodation;
    • Reviewing the medical or other information provided to support the request for accommodation;
    • Being willing to take substantial and meaningful measures to accommodate the needs of the person seeking accommodation;
    • Consulting a human resources officer or lawyer if more information is needed to assess the request;
    • Being flexible and creative when considering and developing options;
    • Discussing the options with the person seeking accommodation;
    • Taking reasonable steps to accommodate the person to the point of undue hardship. If full accommodation is not possible without undue hardship, suggesting options that may partially meet the needs of the person seeking accommodation;
    • Replying to the request for accommodation within a reasonable period of time;
    • Making a formal written agreement with the person seeking accommodation and ensuring that the accommodation is given the chance to work;
    • Providing details that justify any refusal to accommodate because it poses an undue hardship or because of a bona fide (good faith) occupational requirement; and
    • Being willing to review and modify the accommodation agreement if circumstances or needs change and the agreement is no longer working.

The factors that will be considered when determining whether it is an undue hardship to accommodate an employee include the following (also summarized from the above bulletin):

    • Financial costs are so substantial that they would affect productivity or efficiency of the employer;
    • Size and resources of the employer and cost of modifying premises or equipment;
    • Disruption of operations and inconvenience to carrying out essential business;
    • Morale of other employees brought about by the accommodation (e.g., negative impact of increased duties);
    • Substantial interference with rights of other individuals or groups;
    • Ability of employer to relocate employees to other positions on a temporary or permanent basis; and
    • Health and safety concerns.

Accommodation, however, is a two-way process. Employees (as well as service recipients, tenants, etc.) also have duties. Once the person seeking accommodation has determined that the concern falls under the areas and grounds protected by the AHRA, he or she has the following responsibilities (summarized from the bulletin):

    • Informing the employer about the need for accommodation, preferably in writing – explain why accommodation is required, include supporting documents, provide medical information, suggest appropriate accommodation measures, and indicate how long accommodation is required;
    • Allowing the employer a reasonable period of time to reply to the accommodation request;
    • Listening to and considering any reasonable accommodation options proposed by the employer; employees have a duty to accept a reasonable accommodation, even if it is not one that the person prefers;
    • If the employer indicates that there is an undue hardship, requesting the details of the factors that create the undue hardship and provide more information if that would be helpful;
    • Consulting human resources consultant, union representative or lawyer for assistance in determining if the proposed options are reasonable;
    • Once the accommodation is provided, making a formal written agreement;
    • Cooperating to make the agreement work;
    • Advising the employer when accommodation needs have changed and providing necessary medical documentation;
    • Being willing to review and modify the accommodation agreement if the circumstances or needs have changed; and
    • Telling the employer if the need for accommodation has ended.

Thus, communication and ongoing dialogue between employer and employee are very important to effective accommodation.

The recent decision of Robinson demonstrates some of the challenges faced by employers and employees in achieving effective accommodation. Susan Robinson complained that her employer, the City of Edmonton, failed to accommodate her disability, which interfered with her ability to perform her duties as an Edmonton Transit bus driver (2014 ABQB 29, para 1).

Ms. Robinson had an environmental disability, in which exposure to fumes, such as diesel fumes or perfumes, caused hives and other reactions. The treatment for these reactions involved the use of antihistamines and this caused drowsiness, which rendered it unsafe for Ms. Robinson to drive a bus (para 3). The City of Edmonton acknowledged that this was a disability and that Ms. Robinson could not work as a bus driver because of the disability.

From 1995 until 2009, Ms. Robinson was frequently absent from work and was on short-term disability at times. Sometimes, her husband, who was a bus driver, worked her shift.  Her disability was accommodated in this way. In the fall of 2009, Ms. Robinson applied to the City’s long-term disability insurer for long-term disability benefits. She was refused. The insurer had obtained information that she had the seniority to drive a LRT (Light Rail Transit), which would limit her exposure to fumes. Once the City knew about this possibility, it set out to consider the arrangements necessary to achieve it (paras 4 to 6).

Although she was advised by the disability management person to see her supervisor, after Ms. Robinson was denied long-term disability, she decided to resign (para 7). There was a conflict in the evidence as to whether Ms. Robinson was aware of the LRT option when she resigned. She admitted that she knew that the LRT option was available before she was denied long-term disability, but argued that once she was denied, she was not advised of the LRT option. She understood that she was being instructed to return to work as a bus driver (para 8). On the other hand, the City argued that Ms. Robinson was instructed to report to her supervisor in order to work out the details regarding training for the LRT option (para 9).

The Human Rights Tribunal held that it was most likely that Ms. Robinson had discussed the LRT option after she was denied long-term disability. This conclusion was consistent with her doctor’s chart notes, the City’s internal documentation and the wording she used in her human rights complaint. Ms. Robinson’s testimony about all of this was unclear (para 10). Her supervisor had advised both Ms. Robinson and her husband that she could appeal the denial of long-term disability (paras 12-13). The Tribunal concluded that this was not a case of a denial of disability or a refusal to accommodate. The City had taken all reasonable steps to accommodate Ms. Robinson (para 16). She had preempted and prevented the City from fulfilling its duty to accommodate any further because she opted out of the process by resigning (para 17).

Ms. Robinson appealed the Tribunal’s dismissal of her complaint to the Alberta Court of Queen’s Bench. She argued that if the City intended to seriously facilitate a trial of the LRT option, it failed to communicate its intention to her, such that she reasonably concluded that she had no option but to resign (paras 19, 25). Ms. Robinson’s counsel argued that the Tribunal had not applied the correct legal principles regarding the employer’s duty to accommodate (para 18).  Justice B.R. Burrows disagreed, and held that these arguments were actually challenges to the Tribunal’s finding of facts. He concluded that, based on a standard of review of either reasonableness or correctness, the Tribunal’s decision was not only reasonable, it was correct (para 25). He dismissed the appeal.

This case demonstrates the role of both parties in effective communication in the accommodation process. It also shows what can occur if the communication breaks down. It is likely with our aging population the issue of accommodation will continue to challenge employers, employees and Human Rights Tribunals.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

The Utilities Commission and the Court are Powerless to Prevent Unjustly Discriminatory Rates; The Fat Lady is Singing – Loudly

Wed, 02/12/2014 - 9:00am

By: Nigel Bankes

PDF Version: The Utilities Commission and the Court are Powerless to Prevent Unjustly Discriminatory Rates; The Fat Lady is Singing – Loudly

Case commented on: Williams Energy (Canada) Inc v Alberta Utilities Commission, 2014 ABCA 51

The Court of Appeal has confirmed that the scheme of the Gas Utilities Act, RSA 2000, c. G-5 (GUA) reserves to the Lieutenant Governor in Council the exclusive authority to determine which gas utilities will be subject to regulation by the Alberta Utilities Commission (AUC). Thus, while the AUC may make declaratory findings that an entity is a gas utility and that the utility is charging unjustly discriminatory rates, such declaratory findings are empty remedies for the customers of that utility unless and until the Lieutenant Governor in Council can be persuaded to make an Order in Council (OC) bringing that utility under full rate regulation.

I have posted on the long-running Ventures pipeline saga before (here) and I refer readers to that previous post for the background to the current proceeding before the Court of Appeal. Essentially the Court had already ruled on all of the above in those previous proceedings. The issue before the Court in this case was whether the Commission had correctly decided whether the AUC might be able to intervene on the basis of a provision in the GUA’s Gas Utilities Exemption Regulation (Alta Reg 53/99) to the effect that no OC would be required in “proceedings under section 36 or 45 of the Act in relation to NOVA Gas Transmission Ltd.”. Of course that was not quite the issue since Williams first had to deal with the standard of review and thus ultimately the question became whether the Commission acted unreasonably in concluding that this provision was inapplicable.

The Commission had decided that this provision was not available in this case since Ventures was not NOVA but an affiliate of NOVA. Justice O’Ferrall, this time referring to his gatekeeper role as a single judge hearing a leave application (see my recent post on another leave decision of Justice O’Ferrall here) granted leave on that question (see 2013 ABCA 146; scroll down to the comment section of the earlier post to see my comment on that leave decision).

In this case the Court concluded that the standard of review was reasonableness and not correctness (at paras 13 – 14). Once that decision was made it was pretty clear what the outcome was going to be. In fact, the Court does little more than quote long passages from the Commission’s decision before adding its own concluding paragraph:

[30]… the construction given to the regulatory provision by the Commission does not, in our opinion, defeat the legislative purpose. The legislative objective may to some fly in the face of earlier sustained findings of discriminatory practice predicated on unreasonable rates. At the end of the day, however, the economic and fiscal considerations were expressly reserved for the executive branch of government, the effect of which limits the exercise by the Commission of its jurisdiction to fix rates. The Commission is prohibited from fixing rates under s. 36 without sanction from the Lieutenant Governor in Council in the form of either an Order in Council or in the form of an exemption as set out in the Gas Utilities Exemption Regulation. It is significant that the Commission has itself requested an Order in Council for the Ventures Pipeline in accordance with s. 5 of the Gas Utilities Act. No such Order in Council has been forthcoming.

This was probably going to be the outcome whatever the standard of review but it is worth questioning whether the standard here should have been correctness rather than reasonableness. There is a strong sense in which this was a true jurisdictional question – since the answer to the question determined whether the AUC had the authority to set just and reasonable rates for this pipeline. In deciding that the standard of review was reasonableness the Court places great weight on its earlier decision in this set of proceedings, TransCanada Pipeline Ventures Ltd. v. Alberta (Energy and Utilities Board) 2008 ABCA 55, where the issue was whether the Ventures Pipeline was a “gas utility”:

[14] This was a “threshold issue” to jurisdiction, yet this Court found at paras. 18 – 20 that the standard of review was reasonableness. It was up to the Commission to decide what was a “gas utility”. Here the issue is what is an “exempt gas utility”. The same result follows: the standard of review is reasonableness.

But it is not clear to me that the two situations really are comparable. The definition of “gas utility” is at the heart of the GUA and the AUC’s jurisdiction. The same cannot be said of this Exemption Regulation which, I am guessing, rarely if ever fell to be interpreted by the Commission.

In any event, this must now be the end of the road for Williams unless it is able to get its Order in Council; but one suspects that if that was going to happen it would already have happened.

The only question now is just what is the fat lady singing? Perhaps I can persuade our blog coordinator Jennifer Koshan to come up with a prize for wittiest answer. Send your entries using the comment function or, if you prefer, directly to ndbankes@ucalgary.ca  We would like to encourage some more reader participation in ABlawg!

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

The More Things Change…. A Post-McKercher Conflicts Case

Tue, 02/11/2014 - 9:00am

By: Alice Woolley

PDF Version: The More Things Change…. A Post-McKercher Conflicts Case

Case Commented on:  MTM Commercial Trust v Statesman Riverside Quays Ltd. 2014 ABQB 16

In his decision in MTM Commercial Trust v Statesman Riverside Quays Ltd. Justice Macleod determined whether Bennett Jones LLP could act for Matco Group, a client of many years, in a dispute with the Statesman Group, for whom Bennett Jones acted on a very limited retainer, and who had been advised that Bennett Jones would act for Matco in the event of a future dispute between the two clients.  Somewhat surprisingly, Justice Macleod held that Bennett Jones could not represent Matco.  In this comment I will suggest that this judgment supports the position I set out in an ABlawg post in 2011, that “in actual cases judges are less concerned with carefully articulating the applicable rules, and more concerned with reaching the right outcome on the facts, all things considered” (The Practice (not theory) of Conflicts of Interest; see also Conflicts of Interest and Good Judgment).

The Judgment                         

Bennett Jones LLP has represented the Matco Group of Companies for many years.  In 2006, Matco entered into a joint venture with the Statesman Group to develop a property in Inglewood.   Matco owned the land, and Statesman was to provide the “building expertise and the interim financing”, as well as credit guarantees (para 8). Along with other arrangements, the two groups created a general partnership in which they each had a 50% interest.  

In 2008 a lien had been filed by a third party, and Bennett Jones represented the general partnership with respect to the building lien issues.  In addition, it filed a defence for the Statesman group (para 5).  Because, however, Bennett Jones had acted for Matco for many years it sent an e-mail to in-house counsel at Statesman “purporting to preserve the Law Firm’s right to act for the Matco group in any disagreement with the Statesman group notwithstanding the acceptance of the retainer” (para 6). The e-mail stated that it was to confirm that in the “unlikely event of disagreement between [Matco] and the Statesman group” Statesman would “take no objection to our continued freedom to act for Matco” (para 6).

Unfortunately, by 2010 relations between the Matco group and Statesman had deteriorated.  After consulting with Bennett Jones in May and June, on June 21, 2010 Matco served a “Notice of Default and Notice of Termination” on the general partner (para 10).  On July 8, 2010 it served an Originating Notice to commence an oppression action (para 10).

Although the law firm had continued to act for Statesman, it did not disclose to Statesman that it was acting against its interests until the service of the Notice of Default and Notice of Retainer.  After that point in time the firm no longer acted for Statesman, and Statesman and Matco embarked on litigation that was  “extremely personal and highly charged emotionally” (para 11).  And as part of that litigation Statesman sought a declaration that the law firm “was in a conflict of interest and an order that it not act for the Matco group” and which also sought damages for breach of fiduciary duty (para 16).  At that point Bennett Jones stepped aside as counsel for Matco in the litigation, but the conflicts action continued, and Bennett Jones sought to have it resolved because were the Court to find that there was no conflict the firm might “be able to act on behalf of the Matco Group notwithstanding that it is itself a party to the litigation” (para 17).

In his judgment Justice Macleod began by reviewing the applicable provisions of the Law Society Code of Conduct.  He then reviewed the common law on conflicts of interest, including the decision by the Supreme Court in Canadian National Railway Co v McKercher LLP, 2013 SCC 39 (which I discussed in an earlier ABlawg post here).  He noted that the judgment affirmed the bright line rule, which prevents a lawyer from representing “one client whose interests are directly adverse to the immediate interests of another current client” (para 30).  He stated that where a firm “acts simultaneously for and against a client in legal matters, this will breach the bright line rule in most cases” (para 31).  He also noted the principle from McKercher that a conflict will not arise “where it will not be reasonable for a client to expect a firm to refrain from acting against it in unrelated matters”, but that this is “the exception” (para 33).

Justice Macleod also noted the cases dealing with advance consent, and the case law which indicates that an advance consent will only be sufficient if it anticipates the type of conflict that later arose.  That law means, he suggested, that one had to consider whether the “generic consent obtained from Statesman” was sufficient to justify Bennett Jones’ later representation of Matco against Statesman in related litigation (para 40).

Justice Macleod held that it did not.  He noted the “unenviable dilemma” of the firm in having a long-term client want to take steps that were adverse to the interests of another client to the point of “eliminating the Statesman Group from the project”, while also being unable to advise the other client of what was going on (para 41).  He also noted that the advance consent could not have led Statesmen to understand that Bennett Jones would be acting for Statesman’s interests in relation to the project, while simultaneously acting “for the Matco Group to effect the elimination of the Statesman Group from that very same project” (para 42).  To do so was a breach of the firm’s duties to Statesman.  As a consequence, the firm was disqualified from acting further in that matter.

Analysis

One of the striking things about Justice Macleod’s judgment is that it spends a significant amount of time summarizing the law governing conflicts of interest, but only two paragraphs discussing the application of that law to the facts of Bennett Jones’ two retainers.  That division means that it is not entirely clear how the legal doctrine cited informs the result.

The decision cites, for example, the lawyer’s duty of candour to a client, but does not say whether or not Bennett Jones violated that duty in not disclosing the pending lawsuit to Statesman.  It cites the bright line conflicts rule from McKercher, which prohibits a lawyer from acting for one client against another, “even if the two mandates are unrelated” [emphasis in original], but does not discuss the significance, if any, from the fact that the matters in this case were related, not unrelated (para 30). It cites the principle that the bright line rule does not apply where it would be unreasonable for a client to expect it to apply, and that such cases are an exception, but does not say how that applies to the expectations of Statesman here.  That is, it does not say that the issue here is that Statesman could reasonably have expected Bennett Jones not to act against it.  It notes that a law firm should not “summarily and unexpectedly drop a client simply in order to avoid conflicts of interests” (para 34) but, again, does not say whether Bennett Jones acted in that way (and given that the firm did not drop the client, it is not obvious why one would have concluded that it did so). Further, the judgment notes the two key decisions on advance consent in conflicts cases, which require that the subsequent retainer be contemplated by the advance consent.  Yet it does not explain why the statement “we do not disqualify ourselves from assisting Matco in what I trust is the unlikely event of disagreement between it and the Statesman group in the future” (para 6) was not sufficient to alert Statesman of the possibility of the type of retainer which Bennett Jones subsequently accepted for Matco.  It is true that the later retainer was very adversarial, but there is no particular reason to expect that a “disagreement” between the parties wouldn’t be adversarial; legal disagreements tend to have that quality.

Ultimately it appears that two things caused problems for Bennett Jones: that it did not tell Statesman that it had taken a retainer from Matco significantly adverse to Statesman’s interests, and the severity of the impact on Statesman of Matco’s allegations in the litigation.  The legal relevance of those principles would perhaps be the violation of the duty of candour, and a reasonable supposition that there is a greater likelihood of a substantial risk on a representation where the two matters are related and highly adversarial.  However, as a matter of law, one also has to note the very limited nature of the prior representation of Statesman, that that representation would almost certainly be overtaken by these subsequent events, that Bennett Jones did not improperly withdraw from that representation, and the unreasonableness of Statesman expecting Bennett Jones not to act for Matco given the clear wording of the advance consent.

Perhaps the key point is this: Bennett Jones could have advised Statesman, or have withdrawn in an orderly fashion from that retainer.  Likely that would not have been the preferred course of action for Matco, but Bennett Jones could also have asked for and obtained consent from Matco for taking those steps.  There was nothing in law to prevent it from taking steps to advise Statesman of what it was doing.  That means that its failure to do so raises some doubt as to the propriety of the firm’s conduct.  And, as noted at the outset, doubt as to propriety tends to be highly significant in predicting the outcome in a conflicts case.  If the law firm has acted in an up front and candid way, then it is likely to avoid problems, even if its conduct might be considered a conflict of interest on a strict application of the law.  Conversely, if there is any sense that the firm has not been up front and candid, it will run into problems, even if it has a reasonable argument that it is not in a conflict.

The unfortunate thing for the firm here is that in many ways it had been candid with Statesman.  Its e-mail regarding the advance consent was pretty blunt as to what it was trying to do.  But the lesson may be that there is very little judicial tolerance for an absence of candour in situations of conflict; a little bit of candour won’t do.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

Pushing Back, Lock[e], Stock and Barrel on the Availability of Summary Judgment in Oil and Gas Lease Cases

Mon, 02/10/2014 - 9:00am

By: Nigel Bankes

PDF Version: Pushing Back, Lock[e], Stock and Barrel on the Availability of Summary Judgment in Oil and Gas Lease Cases

Case commented on: P. Burns Resources Limited v Locke, Stock and Barrel Company Ltd., 2014 ABCA 40 

This decision of the Court of Appeal confirms that it will be a rare case in which the lessor of an oil and gas lease will be able to obtain summary judgment on the validity of the lease during its secondary term, especially where the third proviso offers a number of circumstances in which “time shall not be counted” against the lessee. In this case the third proviso read as follows:

[I]f at any time after the expiration of the said term production of the leased substances has ceased and the Lessee shall have commenced further drilling or working operations within ninety (90) days after the cessation of said production, then this Lease shall remain in force so long as any drilling or working operations are prosecuted with no cessation of more than ninety (90) consecutive days, and if such drilling or working operations result in the production of the leased substances or any of them, so long thereafter as the leased substances or any of them are produced from the said lands, provided further that notwithstanding anything hereinbefore contained or implied to the contrary, if drilling or working operations are interrupted or suspended as the result of any cause whatsoever beyond the Lessee’s reasonable control or if any well on the said lands or on any spacing unit of which the said lands or any portion thereof form a part, is shut-in, suspended or otherwise not produced for any cause whatsoever which is in accordance with good oil field practice, the time of such interruption or suspension or non-production shall not be counted against the Lessee.

This case involved a low productivity well which failed to produce for extended periods. The lessor sought summary judgment seeking an order that the lease had terminated. In order to defeat that application the lessee would need to provide some evidence: (1) that there had been drilling or working operations on the lands within 90 days of the cessation of production, (2) that any drilling or working operations if interrupted were interrupted for reasons beyond the lessee’s reasonable control, or (3) if a well on the land was not being produced it was not being produced for a reason in accordance with good oilfield practice. These options are alternatives. The availability of some evidence in relation to any one of these headings should be enough to require a trial.

In this case the lessor succeeded before the master and before Justice Bensler. However, on the appeal de novo before Justice Bensler the lessee had filed additional expert evidence which tended to show that the lessee was acting in accordance with good oilfield practice in trying to obtain production from a well of this type. Counsel for the lessee argued that Justice Bensler gave this expert evidence little if any weight and in doing so effectively made findings on the ultimate issue and therefore failed to assess whether the lessor had proven that there were no genuine issues to be tried. The Court of Appeal agreed with those contentions and set aside the summary judgment terminating the oil and gas lease.

I commented on Justice Bensler’s judgment here. On the basis of her account of the available evidence I found her conclusion reasonable. But that just goes to show that one really cannot assess whether a decision to grant summary judgment is appropriate unless one is able to assess the totality of the evidence. And for related posts on the appropriateness of summary judgment in an oil and gas lease case see here and here.

My colleague Professor Jonnette Watson Hamilton has drawn my attention to two recent Supreme Court of Canada decisions on the subject of summary judgment in Ontario: Hryniak v Mauldin, 2014 SCC 7 and Bruno Appliances and Furniture, Inc v Hryniak, 2014 SCC 8 in which the Court examines the role of summary judgment in ensuring access to justice at a reasonable cost. These cases both deal with the amended (2010) Rule 20 of the Ontario Rules of Civil Procedure. The Court, per Justice Karakatsanis, in the Mauldin decision describes the effect of the new rules as follows:

[43] The Ontario amendments changed the test for summary judgment from asking whether the case presents “a genuine issue for trial” to asking whether there is a “genuine issue requiring a trial”. The new rule, with its enhanced fact-finding powers, demonstrates that a trial is not the default procedure. Further, it eliminated the presumption of substantial indemnity costs against a party that brought an unsuccessful motion for summary judgment, in order to avoid deterring the use of the procedure.

[45] These new fact-finding powers are discretionary and are presumptively available; they may be exercised unless it is in the interest of justice for them to be exercised only at a trial; Rule 20.04(2.1). Thus, the amendments are designed to transform Rule 20 from a means to weed out unmeritorious claims to a significant alternative model of adjudication.

(Emphasis added)

I will leave it to others to comment on how relevant and applicable these comments are to the new Alberta Rules.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

What is the Test for Leave to Appeal from the Decision of a Regulatory Tribunal in Alberta?

Fri, 02/07/2014 - 9:00am

By: Nigel Bankes

PDF Version: What is the Test for Leave to Appeal from the Decision of a Regulatory Tribunal in Alberta?

Case commented on: Judd v Alberta Energy Resources Conservation Board, 2014 ABCA 41

The provincial legislature has chosen to “channel” judicial supervision of the decisions of Alberta’s energy regulators to the Alberta Court of Appeal. The legislature achieves this channeling through two linked provisions in the relevant legislation. The first is a strong privative clause which purports (I say purports because such a measure can never be completely successful for constitutional reasons: Crevier v Attorney General of Quebec, [1981] 2 SCR 220, Dunsmuir v New Brunswick, 2008 SCC 9) to exclude ordinary judicial review applications. Then, having purported to close the door, the legislature cracks it open again with a provision that allows an aggrieved party to appeal the regulator’s decision on a point of law or jurisdiction, but only with leave. The leave application is heard by a single judge who is charged with assessing whether the matter should be heard by three of his or her colleagues on the merits of those alleged points of law or jurisdiction. The relevant provisions of the Energy Resources Conservation Act, RSA 2000, c E-10 in force at the time read as follows:

41(1) Subject to subsection (2), on a question of jurisdiction or on a question of law, an appeal lies from the Board to the Court of Appeal.

(2) An application for leave to appeal must be filed and served within 30 days from the day that the order or direction sought to be appealed from was made, or within a further period of time granted by the judge where, in the opinion of the judge, the circumstances warrant it.

(3.2) On leave to appeal being granted by a judge of the Court of Appeal, the appeal shall proceed in accordance with the practice and procedure of the Court of Appeal.

42 Subject to section 41, no proceedings of or before the Board may be restrained by injunction, prohibition or other process or proceedings in any court nor are they removable by certiorari or otherwise into any court.

The legislation affords no guidance to the single judge as to how to exercise his or her discretion. But several things seem obvious. The first is that the decision ought not to depend upon how that particular judge “feels” about the application or what sort of morning he or she might have been having. This is, after all, notwithstanding the realists and the crits, a scheme that should at least adhere to the forms of the rule of law and the idea that no discretionary power is unconstrained and free of its context. Second, except in the most obvious cases, the single judge ought not to be deciding the ultimate question, the point of law or jurisdiction, that the putative appellant seeks to advance. If that were the case the legislature would not have created a two step system. And third, given this relative void in legislative guidance it should be open to the Court of Appeal to develop its own guidance as to how it might exercise this discretion. No doubt this will be an iterative process but it did seem for a while as if the Court was progressing towards giving the regulatory bar and interested parties this sort of guidance. In particular, Justice Slatter in Berger v Alberta (Energy Resources Conservation Board), 2009 ABCA 158 seemed to have enunciated a test that was finding support in subsequent decisions.

In that case Justice Slatter suggested (at para 2) as follows.

(a) Is the proposed issue a question of law or jurisdiction? This is a condition precedent to the granting of leave: Energy Resources Conservation Act, R.S.A. 2000, c. E-10, s. 41.

(b) Is the issue of general importance? This factor is sometimes stated to be whether the issue is “of significance to the practice”, but the reference here is to industry or commercial practice, not just court procedures. The point is whether the issue is only of interest to the immediate parties, or whether it has a wider relevance.

(c) Is the point raised of significance to the action itself? If the issue is merely interlocutory or collateral, or tangential to the action, leave may not be granted, particularly if a determination of the issue will not affect the ultimate outcome of the proceedings.

(d) Does the appeal have arguable merit? Leave is less likely to be granted when the appeal appears to have little chance of success. This factor is balanced with the importance of the issue. If the issue is of lesser importance, a more compelling argument must be shown than if the issue is of great public importance.

(e) What standard of review is likely to be applied? This factor is a corollary of .

(f) Will the appeal unduly hinder the progress of the action? This factor assumes that the action is still ongoing, and has or will be delayed by any appeal.

The first paragraph repeats the language of the statute and is a true condition precedent to proceeding to the next stage. The subsequent paragraphs all seek to provide additional guidance on whether leave should be granted assuming that the applicant has met the requirements of the first paragraph. For similar but less extensive statements of relevant considerations see: ATCO Midstream Ltd v Energy Resources Conservation Board, 2008 ABCA 231 (CanLII), 2008 ABCA 231, 171 ACWS (3d) 454 at para 20 and Atco Electric Ltd v Alberta (Energy and Utilities Board), 2002 ABCA 45 (CanLII), 2002 ABCA 45, 299 AR 337 at para 17.

Now one might cavil with Justice Slatter’s list of criteria. There is clearly some overlap and interaction between the different elements of the test; and the test may be difficult to apply in different contexts. And there may be additional criteria to be added. But it is a start and more than a start. And, as noted above, the decision seemed to be attracting some support: Métis Nation of Alberta Region 1 v Joint Review Panel, 2012 ABCA 352 (per Berger JA), Prince v Alberta (Energy Resources Conservation Board), 2010 ABCA 214 at para. 9 (per Watson JA).

But this sort of test and the quest for at least a modicum of certainty will only work if it is refined and applied in subsequent cases. I am not sure that this is still happening; the individual members of the Court no longer seem to be applying this test in any rigorous manner. I commented on this here in Justice Slatter’s own recent decision in Fort McKay First Nation v Alberta Energy Regulator, 2013 ABCA 355 (and more recently Andre v Evergreen Gas Co-op Ltd. 2014 ABCA 29, also per Slatter JA).

But I see an even more egregious departure from any effort to apply this test (or alternatively refine it) in Justice O’Ferrall’s lengthy decision denying leave in Judd. In this case it looks to me as if Justice O’Ferrall has effectively decided the very issues that Mr. Judd and his counsel sought to put before the Court (i.e. a panel of three). That is not the gatekeeper role of the single judge on a leave to appeal application unless the issues are so clear and obvious that a single judge should decide them. Justice O’Ferrall arrives at this result without so much as referring to Berger or any other leave case for the test to be applied.

For a completely different take on the Judd leave application see Jordan Hulecki, Regulatory Process Protects Landowners’ Rights: Alberta Court of Appeal, here.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

Celibate, Awake, and Alone: The Hallmarks of a Credible Sexual Assault Victim?

Thu, 02/06/2014 - 9:00am

By: Joshua Sealy-Harrington

PDF Version: Celibate, Awake, and Alone: The Hallmarks of a Credible Sexual Assault Victim?

Case commented on: R v FY, 2013 ABQB 694

This post discusses a recent decision from the Alberta Court of Queen’s Bench which acquitted the accused of an alleged sexual assault. In that decision, the court adopts a problematic approach to assessing consent which creates unrealistic standards that women must satisfy to maintain credibility in a sexual assault trial.

1. Background                                                    

In R v FY, 2013 ABQB 694 [FY], the accused (Mr. FY) was charged with sexually assaulting the complainant (Ms. EP), his first cousin, in contravention of the Criminal Code, RSC 1985, c C-46, s 271 (at para 1). EP resided at an undisclosed First Nation (undisclosed, because of an identification ban) with her five children (at para 13).

At trial, the only evidence was the testimony of the complainant adduced by the Crown (at paras 11-12). EP testified to the following:

On the evening of April 20, 2001, EP went on a “bar run” with others to purchase liquor and bring it back to her home. They returned within a half hour (at para 15). While on this bar run, Mr. KL (who was present during EP’s later assault) arrived at her home. KL is a former husband of EP. He is also, like FY, one of her first cousins (at paras 1 and 16).

Between the afternoon/evening of April 20 and 5:00 a.m. on April 21, EP consumed 14 beers. She testified that both she and KL were drunk (at para 18).

Then, at 10:30 a.m. on April 21, EP and KL went to a bar where they joined a group of acquaintances including the accused, FY (at paras 19-20). At the bar, EP consumed approximately 8 more drinks (at para 21). Between 2:30 p.m. and 2:45 p.m. EP left the bar with KL and FY. At this point, all 3 were intoxicated. They were driven back to the reserve by an acquaintance (at para 22).

EP was dropped off first. When entering her home, she was unaccompanied by KL and FY. She immediately went to bed after using the washroom. She was fully clothed in bed and pulled the sheets up over her head (at para 23). Five hours later she awoke, completely naked, and with the accused, FY, having sex with her. Seated on a nearby chair, KL was consuming crack. EP remained silent for the following five minutes as FY finished having sex with her. Then, EP asked KL “if he wanted a chance too,” inhaled some crack, and had sex with him (at paras 23-29). Both men left the house about thirty minutes after EP first awoke (at para 31).

2. The Key Facts

Justice TW Wakeling provides a comprehensive timeline summarizing EP’s testimony regarding the events surrounding her alleged assault ranging from the day before to 7 years later (at paras 13-39). However, before discussing the forest, I begin with the trees – a few key paragraphs from the complainant’s testimony which, if true, undoubtedly substantiate a sexual assault of EP:

[24]     Ms. EP woke up at dusk the same day. The sun was setting. There was still some daylight.

[25]     She noticed that Messrs. FY and KL were in her bedroom.

[26]     The complainant was shocked to discover that the accused was having sexual intercourse with her. She had no clothes on and had no recollection of having removed her clothes.

(Emphasis added)

This is a sexual assault. The absence of consent is an element of that offence, and under the Criminal Code, s 273.1(2)(b), no consent is obtained where “the complainant is incapable of consenting to the activity.” According to the complainant, she awoke to the accused having sexual intercourse with her. She therefore lacked capacity to consent to the sexual activity that occurred before she awoke. As a majority of the Supreme Court ruled in R v JA, 2011 SCC 28:

[66]      It is not possible for an unconscious person to satisfy this requirement, even if she expresses her consent in advance. Any sexual activity with an individual who is incapable of consciously evaluating whether she is consenting is therefore not consensual within the meaning of the Criminal Code.

(Emphasis added)

Consequently, unless there is a reasonable doubt about the complainant’s account, there is no room for claiming that she consented to being sexually touched while unconscious. Put differently, Justice Wakeling’s finding of a reasonable doubt about the absence of consent requires first that he had a reasonable doubt about her claim of being unconscious while sexually touched and second that he had a reasonable doubt about her claim of not consenting to that (purportedly conscious) sexual touching.

The only evidence at trial was EP’s testimony, and Justice Wakeling’s basis for discrediting that testimony is flawed in several ways.

3. The Illegitimate Basis for Discrediting the Complainant

Justice Wakeling presented three primary reasons for not believing the complainant’s assertion of non-consent. I will address each of those reasons and demonstrate why his basis for discrediting the complainant imposes unreasonable expectations on victims of sexual assault.

(a) Celibate: The “sexual history” argument  

Justice Wakeling summarizes his first reason for discrediting the complainant as follows:

[7]     First, when the accused finished having sex with the complainant, she said to KL, a person who was sitting on a chair in the complainant’s bedroom while the accused and Ms. EP were having sex, “Do you want a chance too?”. He did. Ms. EP’s communication with Mr. KL can reasonably be characterized as an invitation from Ms. EP to Mr. KL to have sex with her. That she may have consented to having sex with Mr. KL minutes after having had sex with the accused, leaves the Court with a reasonable doubt as to whether Ms. EP consented to a sexual act with Mr. FY.

(Emphasis added)

This first reason for having a reasonable doubt about the absence of EP’s consent is the fact that she subsequently had sex with KL. Presumably, the reasoning goes that her willingness to have sex with another person shortly after her alleged assault discredits the claim that she did not consent to sex with the accused.

The timeline here is somewhat unique since the “sexual history” evidence in question follows the alleged assault (unlike the more common scenario of sexual history evidence preceding the assault). Nevertheless, Justice Wakeling’s reasoning still amounts to an inappropriate use of sexual history evidence to discredit the complainant.

Section 276 of the Criminal Code regulates the admission of sexual history evidence for certain improper inferences. It reads as follows:

276. (1) In proceedings in respect of an offence under section [...] 271 [...] evidence that the complainant has engaged in sexual activity, whether with the accused or with any other person, is not admissible to support an inference that, by reason of the sexual nature of that activity, the complainant

(a) is more likely to have consented to the sexual activity that forms the subject-matter of the charge; or

(b) is less worthy of belief.

A plain reading of this provision makes it applicable to sexual history evidence relating to sexual activity either before an alleged sexual assault (pre-assault sexual activity) or after an alleged assault (post-assault sexual activity). The provision is silent with respect to the order of the sexual history evidence and “the sexual activity that forms the subject-matter of the charge.” Consequently, there is no basis for reading in further qualifications that narrow the scope of the provision. To demonstrate the provision’s application to post-assault sexual activity, Justice Wakeling’s reasoning need only be transposed into the language of the provision. He is using “evidence that the complainant has engaged in sexual activity” (her post-assault sexual activity) “with any other person” (KL) “to support an inference that [...] the complainant is more likely to have consented [...] or is less worthy of belief.”

Furthermore, a purposive reading of the provision similarly recognizes that both pre- and post-assault sexual activity qualify as sexual history evidence. Regarding the purpose of s 276, Justice Russell opined the following in R v Brothers (1995), 30 Alta LR (3d) 300 (CA) (available on QL):

[26]     The section is intended to eradicate negative stereotyping associated with the myth that a person who has been sexually active is less virtuous, and more likely to consent to other sexual activity, or be less credible.

The purpose of the provision – counteracting stereotypes that discredit sexually active women –applies to both pre- and post-assault sexual activity. How could it be legitimate to discredit a woman because of her sexual activity after an assault, but not before, when the consent inquiry is only concerned with the assault itself: “the voluntary agreement of the complainant to engage in the sexual activity in question” (Criminal Code, s 273.1(1) [emphasis added]). In either case, the reasoning relies on myths about the ongoing state of consent that sexually active women purportedly operate within. While most cases considering s 276 of the Criminal Code address pre-assault sexual activity evidence, there are cases that have applied the provision to evidence of post-assault sexual activity as well (see e.g. R v KO, [2008] OJ No 4193 (SC) (QL)).

Policy implications also demand an expansive view of sexual history evidence that includes both pre- and post-assault sexual activity. Discrediting sexual assault complainants because of their subsequent sexual activity would have profound implications, in particular, for victims in ongoing relationships. If such evidence was considered relevant, women in committed relationships, once assaulted, would seal the fate of any sexual assault complaint where they engaged in any further sexual activity with their partners. Such a consequence is untenable, especially within the context of committed relationships in which it is entirely plausible for two partners to vary in a destructive cycle between consensual and non-consensual sexual activity long before the victim gains an appreciation of the assaults she has experienced and the courage to make a complaint. This is especially concerning given the prevalence of intimate partner sexual violence – a topic addressed by Jennifer Koshan in an earlier ABlawg post, here (for an example of post-assault sexual history evidence being used to undermine an intimate partner’s credibility see R v Tait, 2008 ONCJ 629 at para 30 (QL)).

Justice Wakeling presents the sexual history evidence of EP as self-evidently conclusive of a reasonable doubt about the absence of consent notwithstanding a statutory mandate to the contrary. Such evidence may be admitted and considered under s 276(2) of the Criminal Code. However, its admission turns on a balanced consideration of multiple factors including “society’s interest in encouraging the reporting of sexual assault offences” (s 276(3)(b)) and “the need to remove from the fact-finding process any discriminatory belief or bias” (s 276(3)(d)). Justice Wakeling’s reliance on this evidence, with no discussion about his rationale for how it is legitimately related to the complainant’s consent to sex with FY, suggests that he may have been relying on problematic reasoning that the Criminal Code is committed to counteracting. In so doing, his reasoning reinforces problematic myths about sexual consent and is incorrect in law.

Admittedly, this case is particularly unique because of the brief timeline over which the alleged assault and subsequent sexual activity took place. According to her own testimony, EP made what is ostensibly an invitation for sexual activity to KL shortly after her assault by FY (my hesitation to label EP’s sexual activity with KL as genuinely consensual stems from the fact that she denied it to be. See para 30). While it may seem odd for EP to consent to sex with KL shortly after her assault by FY, it is important to recognize the speculative nature of this reasoning, and how speculation could just as easily explain how her conduct was consistent with having experienced a sexual assault.

Awaking to being sexually assaulted would be immensely traumatic. Even just awaking to two grown men in your bedroom would be traumatic. Consequently, EP’s subsequent conduct could be explained as her attempt to cope with her trauma. For example, being sexually assaulted while unconscious is an extreme form of exploitation and lost control over one’s body. Perhaps, by engaging in sexual activity with KL immediately after her assault, EP felt as though she was restoring her autonomy by taking control of her body and the traumatic situation she found herself in. Perhaps, by presenting herself as a woman exercising her consent, she was able to downplay the trauma she had just experienced which was predicated on her non-consent. Perhaps, in a state of confusion upon waking up to being sexually assaulted, EP was still processing the trauma she had experienced and acted inexplicably due to that confusion. This is all speculative, but so is Justice Wakeling’s finding that EP’s subsequent sexual activity with KL raises a reasonable doubt about her consent to sex with FY. Further, Justice Wakeling’s speculation feeds into the myth that a women’s consent with one partner increases her likelihood of consent with another, which the Criminal Code specifically opposes.

The fact that speculation can both support and oppose a finding of consent in this case does not prove beyond a reasonable doubt that EP was assaulted. Recall, though, that the evidence which is purportedly calling her credibility into question is itself presumptively inadmissible to support such inferences under s 276 of the Criminal Code. Thus, none of this speculation should be happening in the first place.

If judges continue to consider sexual history evidence as self-evidently conclusive of a reasonable doubt about the absence of consent, then it is imperative on the Crown to lead expert evidence on the experience of assaulted women to counteract such reasoning. With expert evidence, a complainant’s testimony regarding her post-assault conduct could be characterized as reflective of her trauma, rather than conclusive of her lacking credibility. Other unfounded speculation about the post-assault conduct of credible sexual assault victims, such as the failure to immediately report the assault, has presented immense barriers to effective prosecution. Subsequent sexual activity may be yet another speculative myth to be disposed of.

Sexual history evidence can, on rare occasion, be relevant (as an alternative explanation of physical evidence of sexual activity, for example. See R v Seaboyer; R v Gayme, [1991] 2 SCR 577 at para 52 (cited to QL)). Regardless, Justice Wakeling’s reasoning is inadequate and should have extended beyond the bare assertion that sexual history evidence was conclusive of a reasonable doubt about the absence of consent in this case.

(b) Awake: The “poor memory” argument

Justice Wakeling’s second reason for discrediting the complainant is summarized as follows:

[8]     Second, Ms. EP testified that she went to bed sometime in the afternoon on April 21, 2001 fully clothed. She swore at trial that when she woke up she was completely naked. She was unable to recall when, why or how she shed her clothes. Her inability to recall these events, which occurred before the accused had sex with Ms. EP, causes the Court to ask if she might have consented to have sex with the accused in this same time frame? This fact, combined with her invitation to Mr. KL to have sex with her, causes the Court to entertain a reasonable doubt on the consent issue.

(Emphasis added)

In essence, Justice Wakeling’s second reason for having a reasonable doubt about the absence of EP’s consent is her limited memory from the time she went to bed to the beginning of her assault – which should be unsurprising, given that she stated that she was unconscious during this time.

The ability for a sexual predator to exploit a vulnerable individual while she is unconscious is hardly a legitimate basis for finding a reasonable doubt about consent. Again, s 273.1(2)(b) of the Criminal Code states that no consent is obtained where “the complainant is incapable of consenting to the activity.” If an accused credibly claims to have been assaulted while unconscious, having no memory of that assault by virtue of unconsciousness (whether from intoxication or otherwise) should in no way exculpate the accused. This too has implications for victims of intimate partner violence who may be more likely to be assaulted while unconscious. If a complainant cohabits with her partner, she is presumably unconscious each night next to them and therefore vulnerable to both unconscious assaults and problematic credibility findings such as this.

Even if EP were conscious before the sexual activity in question, the evidence that she consented to sex is questionable. Put more precisely, Justice Wakeling’s timeline – based on EP being intoxicated from when she left the bar “up until the time Messrs. FY and KL had sex with her” (at para 40) – seems inordinately convenient for the accused. This finding bears the unfortunate consequence of using EP’s state of intoxication against her throughout her assault. Before her assault, she is purportedly too
intoxicated to remember both removing her clothes and consenting to sex with FY. Then, at the moment sex with FY begins, she is no longer intoxicated, which eliminates any concerns about her incapacity to consent while also explaining her sudden ability to only now recall what was happening. It would seem far more likely that she was unconscious prior to her assault, which would most plausibly reconcile her lack of memory at the beginning of her assault with her ability to recall what occurred once she awoke.

Again, it being “more likely than not” that EP was unconscious during part of her assault falls below the standard of proof beyond a reasonable doubt. It is open to Justice Wakeling to doubt EP’s claim of being unconscious for a variety of reasons: her demeanour on the stand, inconsistencies in her testimony, etc. But to doubt her claim of being asleep when initially assaulted because she cannot recall the beginning of her assault (a fact that necessarily follows from being asleep) is unsupportable. Not believing that a complainant was asleep because she cannot remember what happened during sleep is equivalent to not believing that a complainant had 10 drinks because she was drunk.

(c) Alone: The “still friends” argument

Finally, Justice Wakeling’s third reason for discrediting the complainant was summarized as follows:

[9]     Third, some of Ms. EP’s post April 21, 2001 conduct is inconsistent with her evidence that she wanted to have as little to do with the accused as possible because of their non-consensual sex. She initiated contact with him in a number of occasions over an extended period of time. For example, in 2005 she gave him a painting and in 2008 she asked him to forgive her.

(Emphasis added)

In essence, Justice Wakeling’s third reason for having a reasonable doubt about the absence of EP’s consent is the fact the she failed to completely cut ties with FY, a family member, following her assault.

The encounters Justice Wakeling relies upon are the following:

  1. In June 2001, EP saw FY at a Sundance celebration (at para 38).
  2. In July 2005, EP visited FY’s home and gave him a painting she had done (at para 50).
  3. Sometime before 2006, EP encountered FY at her parents’ home. At the time, EP was living at her parents’ home and FY was doing chores there. She asked him to do a task in her bedroom, and may have requested some cigarettes (at para 53).
  4. Sometime after 2006, EP had called FY on behalf of others and (while possibly driving her children) stopped and gave him a ride while he was walking along the same road (at paras 38 and 51).
  5. In 2008, while working at the reserve’s daycare centre, EP asked FY to forgive her (at      para 38).
  6. In the 12 years since her assault, EP “saw the accused infrequently at family celebrations”  (at para 38).

In light of these encounters, Justice Wakeling opines the following:

[49]     In spite of her apparent dislike for Mr. FY, an emotion which would be completely understandable if he forced himself upon her, she willingly initiated contact with him on several occasions over an extended period of time under circumstances which belie her evidence that she has a strong antipathy to the accused.

Using the above examples as a basis for discrediting the complainant’s claim of being sexually assaulted is questionable.

Some of the examples are surely mischaracterized as EP “willingly initiat[ing] contact” with FY. EP’s presence at Aboriginal ceremonies, her work, family celebrations, and her own home are flawed grounds to discredit her assertion of non-consent when cultural pressures, familial ties, and necessity demand (or at least, strongly favour) her presence at these locations and events independent of her views on FY.

With those particularly flawed examples disposed of, all that remains is the exchange of a painting, a ride in her car, and some phone calls on behalf of others: a couple of in-person meetings and rare contact over the phone in the 12 years since her assault. Apparently, “strong antipathy” would demand even less contact with a family member who lives on the same reserve.

Notably, most of the examples would be difficult for EP to avoid without disclosing her assault to others. The difficulties in explaining her absence from significant religious or family celebrations is self-evident. Those same difficulties apply to the phone calls and picking up FY in her car when her kids may have been present because both involve third parties seemingly unaware of her assault. If a friend asked her to call FY, or if her kids saw FY on the road walking in the same direction as they were driving, it is probable that it would be perceived as odd, even rude, to not make the call or offer the ride. Caught between disclosing her traumatic experience to her children or friends and tolerating a brief exchange with FY, it is not surprising that she took what was likely the path of least resistance.

Finally, it bears repeating that this line of reasoning, like Justice Wakeling’s sexual history and poor memory arguments, has profound implications for victims of intimate partner sexual violence. Women who suffer from domestic sexual violence often live in terror – to demand that they abandon their home and families to prove it is unjustifiable.

4. Conclusion

Credibility is a finding of fact over which a trial judge deserves deference. But their findings are not immune to scrutiny. In particular, findings of consent in sexual assault cases – which have often failed to treat women fairly, inordinately rely on myths about ideal victims, and continue to contribute to underreporting – demand proper treatment from trial courts. Furthermore, all three of the arguments raised by Justice Wakeling in FY disproportionately undermine the ability for intimate partners to seek justice when they experience sexual assaults because intimate partners are more often sexually active with, asleep next to, and in ongoing relationships with, those who assaulted them.

An alternative lens through which to critique the reasoning presented by Justice Wakeling asks the question: in light of FY, what strategies must a woman employ to maintain her credibility in a sexual assault trial? Abstain from sex with others, for fear of undermining your purported trauma; remain awake, for fear of being assaulted while unconscious and not remembering when you may have consented; avoid further interaction with the man who assaulted you, for fear of undermining your claimed antipathy towards him. In other words: be celibate, awake, and alone – otherwise, who could possibly believe you?

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

Get Ready For a Whale of a Time: Northern Gateway and Species at Risk

Wed, 02/05/2014 - 9:00am

By: Shaun Fluker

PDF Version: Get Ready For a Whale of a Time: Northern Gateway and Species at Risk

Decision commented on: Report of the Joint Review Panel for the Enbridge Northern Gateway Project

In December 2013 federal authorities recommended the construction of the Enbridge Northern Gateway pipeline to transport bitumen from the Alberta oil sands to the west coast.  Professor Martin Olszynski has previously commented on Northern Gateway here, and my comment adds to his by investigating in particular how species at risk factor into the Northern Gateway report. But prior to getting there, I can’t resist a few general remarks.

There is little doubt the scale of bitumen mining, processing and transportation now has very significant socio-ecological effects which are experienced and observed far beyond the boundaries of a mine or the right of way of a pipeline.  Years from now when others look back on this era I think they will be astounded by our willingness to throw caution aside and go ahead with such a magnitude of projects despite the local and widespread consequences of developing massive carbon-based energy resources for worldwide distribution.  It was all about the $$$ for the overall good of society they will say.  Or was it?  Why then does Alberta struggle to fund basic public goods like health care and education despite having access to such an economically valuable resource?  Clearly we are open for business as the discount warehouse for global energy shoppers.

The scale of bitumen mining also polarizes discussion about its merits into a ‘friend or foe’ confrontation or a ‘with us or against us’ clash.  Even the rhetoric can strain relationships. So it can be difficult to have reasoned debate about the oil sands. Or is it tar sands? Our government and associated legal institutions are supposed to provide the procedural tools we need to overcome these difficulties. But as we see here even our government leaders have succumbed to the ‘with us or against us’ rhetoric.

We establish regulatory institutions – in this case the Northern Gateway Joint Review Panel – with authority and obligation to consider the socio-ecological effects of a project in an objective manner supposedly removed from partisan politics and individual preferences.  We have rules backstopped with the force of law to ensure these regulators perform their role.  The public law is concerned with the process by which a recommendation or decision is made – taking into account whether the process was fair, impartial and otherwise in accordance with fundamental justice – as well as ensuring the recommendation or decision itself is reasonable and justified.  But law and politics are never far from each other in disputes concerning resource development and environmental protection.

Just before the Northern Gateway review panel commenced formal hearings in January 2012, the federal Minister of Natural Resources issued an open declaration that Canada needs more access to Asia-Pacific markets for resource exports and that the regulatory process takes too much time because of environmental and other ‘radical’ groups who participate only to stall projects.  In the words of Minister Oliver himself:

These groups threaten to hijack our regulatory system to achieve their radical ideological agenda.  They seek to exploit any loophole they can find, stacking public hearings with bodies to ensure that delays kill good projects.  They use funding from foreign special interest groups to undermine Canada’s national economic interest. They attract jet-setting celebrities with some of the largest personal carbon footprints in the world to lecture Canadians not to develop our natural resources.  Finally, if all other avenues have failed, they will take a quintessential American approach:  sue everyone and anyone to delay the project even further. They do this because they know it can work.  It works because it helps them to achieve their ultimate objective: delay a project to the point it becomes economically unviable (See his Open Letter here).

Amendments to applicable federal legislation followed, which were intended to reduce regulatory review time for resource projects and keep out the ‘radicals’ – including a complete overhaul of federal environmental assessment legislation.  These politics alone make one question how the Northern Gateway panel could objectively consider and assess the Enbridge application.

The Northern Gateway pipeline project consists of two pipelines approximately 1200 kilometers in length connecting Bruderheim, Alberta with Kitimat, British Columbia, as well as associated infrastructure such as storage tanks, pumping stations and a marine terminal.  One line will carry diluted bitumen west to Kitimat for loading onto tankers, and the other line will carry condensate east to Bruderheim.  The project is designed to access Asia-Pacific markets with estimates of more than 200 tanker ships berthing in the Douglas Channel near Kitimat annually to receive bitumen.

While the risk of pipeline ruptures and the linear disturbance associated with pipeline construction and operation is cause for concern, the notion of another pipeline moving oil products across Alberta does not seem very alarming in the grand scheme of things.  Likewise the construction of the Bruderheim terminus in what Alberta calls its ‘Industrial Heartland’ is unlikely to find many detractors.  Indeed, the Northern Gateway Panel Report states no person objected to this location (Panel Report volume 2 at 180).  The fight to preserve the rich agricultural lands along the North Saskatchewan River in the Bruderheim region was lost years ago.

The politics of Northern Gateway is more firmly placed in British Columbia where the line crosses more undisturbed public land, the risk of a marine oil spill weighs heavily, and the economic benefits are more elusive and indirect. Indeed the imbalance between environmental risks and economic benefits led the BC government to initially oppose construction of the line and demand certain conditions be met (See here). The volume of tanker traffic that will berth in the Douglas Channel near Kitimat to receive bitumen or deliver condensate will have significant socio-ecological impacts on the region.  History shows the tar sands have drastically changed every socio-ecological system they’ve encountered.  That being said, Kitimat itself is no stranger to heavy industry.  It was incorporated in the mid-20th century as a planned town for employees of a smelter constructed and operated by Alcan Aluminum (now owned by Rio Tinto). The presence of abundant hydro power and the deep waters of the Douglas Channel have and will continue to attract heavy industry to the region (As an aside, Eden Robinson wrote an excellent novel based in this region that I highly recommend: Monkey Beach (Alfred A Knopf, 2000)).

The Northern Gateway Panel conducted its environmental assessment review under both the National Energy Board Act, RSC 1985, c N-7 (NEBA) and the Canadian Environmental Assessment Act, 2012, SC 2012, c 19, s 52 (CEAA 2012). The panel was responsible for making a recommendation under section 52 of NEBA as to whether the Northern Gateway pipeline should receive regulatory approval from the Governor in Council, having regard for its socio-ecological effects and including an assessment of the environmental effects listed in section 5 of CEAA 2012.  The panel was to include any terms or conditions on construction or operations necessary in the panel’s view to mitigate adverse socio-ecological effects of the project and to ensure the pipeline is in the public interest.  The panel issued its recommendation for project approval on December 19, 2013. The matter of legal approval now rests with the Governor in Council (i.e. the federal cabinet) who pursuant to section 54 of NEBA and section 31 of CEAA 2012 is the authority that decides whether the project is likely to cause significant adverse effects and if so whether such effects are justified in the circumstances such that the project can go ahead subject to the terms and conditions set by the panel.

Early in the process the panel heard submissions on and ultimately set the issues for consideration in its May 2011 Hearing Order. Public participation in the process was extensive – presumably some ‘radicals’ managed to get in – with several options available to interested persons to give evidence to the panel and question Enbridge.  The panel began to hear oral evidence in January 2012 and concluded the hearing in Terrace, British Columbia on June 24, 2013. In sum, the panel reports that there were 206 formal intervenors, 12 government participants (e.g. Fisheries and Oceans and Environment Canada), and 1179 oral statements before it. The panel received over 9000 letters of comment. The hearing itself consisted of 180 days, of which 72 days were for hearing oral statements and evidence.  Hearing locations were spread across the pipeline route in British Columbia and Alberta.  The entire hearing record is available on the National Energy Board website.

The key preliminary step in assessing project impact on species at risk is selecting the spatial and temporal scope of the assessment. The applicant provides its preferred or chosen spatial and temporal boundaries to the regulator, these are open to question, and ultimately the regulator agrees or disagrees with the applicant and sets the boundaries of assessment which govern evidence and analysis on species impacts. For the Northern Gateway pipeline, spatial considerations include the location of the terminus and marine terminal, pipeline routing, and tanker approaches.

Enbridge identified 4 temporal phases for assessment: baseline pre-construction; construction; operations; decommissioning.  There can be – and was in this case – extensive disagreement amongst participants on what information on species impacts is needed and/or relevant within each temporal phase, however baseline information seems most contentious because an accurate assessment of incremental project impacts depends on accurate baseline data.  For example, many participants including the federal Department of Fisheries and Oceans argued that Enbridge failed to conduct an adequate or proper survey of marine mammals to accurately assess project impacts such as vessel strikes from tanker traffic.  Enbridge asserted it would conduct more detailed surveys and gather more baseline data on marine mammals if the project receives regulatory approval (Panel Report volume 2 at 231). Similarly, several participants and Environment Canada argued that Enbridge failed to conduct an adequate survey of marine birds, and Enbridge committed to conduct further surveys prior to construction (Panel Report volume 2 at 254).

Baseline information also provides the applicant with a basis upon which to decide which species to consider in its project application. It is generally accepted to be impractical to require a project proponent to assess every known species that may be affected by a project, so it is typical for an applicant to select key indicator species for assessment individually and as proxies for the ecosystems as a whole.  These selections can be subject to disagreement – as was the case here where intervenors questioned the rigour and suitability of species chosen by Enbridge as key indicator species (Panel Report volume 2 at 183). The choices made by Enbridge were accepted by the panel, although intervenor questions did lead Enbridge to commit to further species monitoring during the preconstruction phase which may lead to additional species assessments (Panel Report volume 2 at 185).

It is noteworthy to observe that Enbridge selected some species at risk as key indicator species for ecosystem effects, and that the panel endorsed this methodology with positive remarks including a statement that this method reflects a precautionary approach to the assessment (Panel Report volume 2 at 185).  I think this illustrates the growing importance of identifying the presence of endangered species in or near the footprint of a resource development project in resource project assessments. Failure to do so may require a project proponent to subsequently redesign its project.

The regulatory assessment must also have a methodology to provide guidance to the applicant and other participants on the type of evidence concerning project impacts that the regulator deems relevant. For the Northern Gateway pipeline and its impact on species at risk, the evidence and assessment of project impacts is categorized by the panel as impact on species habitat and impact on species mortality.

There is no provision in the Species at Risk Act, SC 2000, c 29 (SARA) that prohibits a federal authority from approving or authorizing an activity that will jeopardize the existence of a species at risk or adversely harm its habitat. Section 77 of SARA does, however, require federal authorities to consider harm to critical habitat in issuing a project authorization and to be of the opinion that all reasonable alternatives to the project that would reduce the impact have been considered, the best solution has been adopted, and all feasible measures to reduce the harm to a critical habitat will be taken. But one of the legislative amendments that followed Minister Oliver’s open declaration in 2012 was to exempt the National Energy Board from these obligations concerning a pipeline approval under NEBA (of course, here there is yet to be an approval).

Section 79 of SARA requires the panel to identify adverse project impacts to listed species at risk and ensure measures are taken to mitigate those impacts as well as monitor them. The following table summarizes the panel findings in this regard.  I’ve also included a cross reference to critical habitat provisions in an applicable recovery strategy (if any since section 79 of SARA also requires mitigation measures to be consistent with an applicable recovery strategy (See table here).

By my count the panel considered 34 SARA listed species, and of those, 20 species are listed as either threatened or endangered.  An ‘endangered’ species is one facing imminent risk of extinction; a ‘threatened’ species is one likely to become endangered if nothing is done to halt its demise (SARA, s 2).  Remarkably, the panel concludes that after taking proposed mitigation measures by Enbridge into account there will be no significant project impacts for any of these species except for woodland caribou.

Another observation is the high number of threatened or endangered species for which there is no recovery strategy and/or no identified critical habitat.  The federal government is failing to adhere to the legislated timeframes for implementing recovery strategies (up to 4 years after listing – SARA, s 42) which identify critical habitat, the key measure of protection under SARA. In September 2012 several environmental groups and foundations commenced proceedings seeking a mandamus order from Federal Court requiring federal authorities to file recovery strategies for 4 of the species affected by the northern gateway project: humpback whale; marbled murrelet; woodland caribou (southern population); Nechako river white sturgeon.

The legal battle between northern gateway and species at risk will be fought over species with established recovery planning. In the table above, these species include whales, the Nechako river sturgeon, and woodland caribou. The panel report makes little work of recovery strategies (both proposed or final), placing considerable doubt on whether the northern gateway panel complied with its SARA s 79 obligation to ensure mitigation measures for species at risk are consistent with recovery strategies.  In January 2014 several environmental groups and foundations commenced legal proceedings seeking, among other remedies, an order from Federal Court declaring that the panel erred by failing to comply with section 79 of SARA.

The most intense legal battle between the northern gateway pipeline and species at risk will likely occur in identified critical habitat for the North Pacific Humpback Whale. This is because the tanker route into the Kitimat terminal goes through identified critical habitat for the humpback whale. You can see the overlap on waters surrounding Gil Island by comparing the tanker route on page 179 of the Panel Report with the critical habitat map on page 34 of the Recovery Strategy for the whale (See here). Avoidance of humpback whale critical habitat would not appear to be an option for the project with a terminal in Douglas Channel.

It is important to recall that critical habitat is defined in section 2 of SARA as habitat that is necessary for the survival of the species, and also that critical habitat includes the biophysical functions, features and attributes of habitat (Environmental Defence Canada v Canada, 2009 FC 878 at para 54). So in the case of the humpback whale, these functions or attributes include adequate prey (e.g. herring), adequate physical space, and the absence of underwater noise pollution in the identified areas.  These whales – like all other marine mammals – are also vulnerable to vessel strikes and toxic pollution (for threats to individuals and critical habitat see pages 16-23 and 35-42 of the Recovery Strategy).  Humpback whale critical habitat identified in the Recovery Strategy (both geophysical and attributes) is under federal jurisdiction and will be protected by a Ministerial protection order under section 58 of SARA because legal protection under SARA means mandatory protection rather than protection under the discretionary powers of Fisheries and Oceans (David Suzuki Foundation v Canada, 2012 FCA 40 at paras 110-125).

It is obvious from reading pages 230-244 of the Panel Report where the impacts of the project on marine mammals are discussed that this issue was a focal point of disagreement between Enbridge and various participants.  Enbridge submitted that knowledge on whales is sparse, vessel strikes and other impacts on whales are unavoidable, and that if the project goes ahead it will conduct more research to confirm the presence of whales in the waters affected by the project and implement a marine mammal protection plan to manage and minimize project impacts on whales. The panel accepted these submissions to conclude the project would not have a significant adverse impact on the humpback whale.

Is this a reasonable and justifiable conclusion in light of the evidence heard by the panel and the applicable law?  I think not.

In my view the panel erred by accepting that known threats to the humpback whale will occur from tanker traffic in critical habitat and by concluding that this will not be a significant adverse effect on the species. It is unreasonable to rely on further studies by Enbridge to manage and mitigate these known project impacts on a threatened species.  It is unreasonable because the panel fails to have due regard for the threatened status of the humpback whale and the location and attributes of its critical habitat under SARA. This is particularly so in light of the evidence that persons who conduct these activities (foreign tankers) will be difficult to prosecute under SARA when (not if) their ships strike individual whales or otherwise harm critical habitat in violation of sections 32 and 58 of SARA. The foreseeable difficulties we will face prosecuting foreign tankers under SARA further emphasizes the importance of real legal protection for critical habitat now. Management and mitigation does not amount to legal protection of critical habitat, and it is an error in law to conclude otherwise.

The panel purports to have taken a precautionary approach and applauds Enbridge for doing likewise. But how is it precautionary to accept harm to a threatened species and its critical habitat? A species categorized in law as likely to become endangered if nothing is done to halt its demise.  It is hardly precautionary to then recommend more activities which are known to inflict harm to the species. And how is it precautionary for the panel to wrap up proceedings before the humpback whale recovery strategy is published, knowing full well from the evidence placed before it that the project will have unavoidable impacts on the threatened species?

I suspect the conflict between protecting humpback whale critical habitat and approving Northern Gateway has been apparent to federal officials and Enbridge for years. It is hard not to link this conflict to the 2012 amendments to SARA that exempt federal authorities from having to opine that all reasonable alternatives to the project that would reduce the impact to critical habitat have been considered and the best solution has been adopted. Because a reasonable alternative and the best solution for the humpback whale is a different marine terminal location – requiring perhaps the more costly Prince Rupert terminal alternative identified at the hearing. But then again, law and politics are never far from each other in disputes concerning resource development and environmental protection.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

Alberta Government Considers Strategies to Address Bullying—Is Legislation the Answer?

Tue, 02/04/2014 - 9:00am

By: Linda McKay-Panos

PDF Version: Alberta Government Considers Strategies to Address Bullying—Is Legislation the Answer?

Event commented on: Rocky Mountain Civil Liberties Association Discussion on Anti-bullying Legislation

On January 30, 2014, the Rocky Mountain Civil Liberties Association (RMCLA) hosted a panel discussion on anti-bullying legislation in Alberta. The panel members were Sandra Jansen, Calgary-North West MLA, and Associate Minister of Family and Community Safety; Peter Brown, current Mayor of Airdrie; and Derek From, a constitutional lawyer from the Canadian Constitution Foundation.

Sandra Jansen spoke about the cross-ministerial initiative to address bullying, cyber bullying, family violence and sexual exploitation. She has been working on the new initiative for a few months and has been looking at what other provinces, such as British Columbia, are doing about these issues. There is a great deal of public interest in addressing bullying in Alberta, perhaps through provincial legislation. Alberta’s new Education Act, SA 2012, c E-0.3, section 1 (effective 2015) defines bullying as:

(d) “bullying” means repeated and hostile or demeaning behaviour by an individual in the school community where the behaviour is intended to cause harm, fear or distress to one or more other individuals in the school community, including psychological harm or harm to an individual’s reputation . . .

When Albertans (age 16 and over) were surveyed by IPSOS Reid in 2012, 93% indicated that they have a personal responsibility to reduce bullying in their community, and 87% indicated that bullying prevention should be an urgent government priority (see Government of Alberta, Alberta Children and Youth Services: Albertans’ Perceptions of Family Violence and Bullying Survey 2012 at 3).

Ms. Jansen stated that the Alberta Government had undertaken a number of initiatives, which included preparing three bullying prevention websites, instituting a 24-hour help line (available in over 170 languages), sponsoring anti-bullying advertising campaigns, and initiating partnerships with six schools to address bullying. She also consulted youth from other jurisdictions about how bullying awareness was addressed in their communities. There are also anti-bullying projects being implemented in communities across Alberta.

The conclusion Sandra Jansen has drawn thus far is that bullying is often related to mental health issues (both in the bully and later in the victims). Support and resilience efforts need to be provided for all children in order to address bullying behavior. The emphasis is that we are concerned with bullying behavior by people and not “bullies”.

While there is anti-bullying legislation in Nova Scotia, British Columbia, Manitoba and in some municipalities in Alberta, Sandra Jansen wonders whether provincial legislation will ultimately protect victims, and change people’s attitudes and behaviours. She believes that the intent behind this legislation is commendable, but that the issue needs more analysis and debate. Any legislation would have to respect division of powers issues (e.g., the federal government has jurisdiction over criminal law) and Canadian Charter of Rights and Freedoms issues, such as limits on freedom of expression.

Finally, Sandra Jensen is aware that parents struggle with their children being exposed to bullying and cyber bullying, but believes that any government approach to these issues has to address public attitudes, the role of bystanders and the response of victims.

Airdrie Mayor, Peter Brown, discussed a new by-law amendment that was passed by Airdrie Council. A father of four children, he is aware that there are children, seniors, and workers who are bullied. The Anti-Bullying Bylaw, Bylaw B-22/2013, amends the Public Behaviour Bylaw No. B-09/2007. The key provisions read:

NOW THEREFORE the Municipal Council of the City of Airdrie in Council duly assembled enacts as follows that:

1. Section 2.1 be amended to include:

a) “‘bullying’ means repeated and hostile or demeaning behaviour by an individual in the municipality, either directly or through any medium whatsoever, where the behaviour results in harm, fear or distress to one or more individuals in the municipality including, but not limited to, physical harm, psychological harm or harm to an individual’s reputation.”

2. The following section be inserted before the section entitled “FIGHTING”:

BULLYING

3.1 No person shall bully any person in any public place.

3.2 No person shall participate in or encourage by verbal or public means the bullying of any person in any public place.

3.3 Any person who contravenes sections 3.1 or 3.2 is guilty of an offence.”

3. Section 8.5 be added to read:

“With respect to any person who contravenes the section entitled  ‘BULLYING,’ the Court may order the person with or without their legal guardian to attend an anti-bullying counselling session(s) or educational program recommended by the prosecutor. Successful completion of the anti-bullying counselling session(s) or educational program recommended by the prosecutor will result in a reduced fine as outlined in this Bylaw.”

5. Schedule “A” be amended to include:

SECTION DESCRIPTION SPECIFIED PENALTY

“3.0 Bullying

(a) First offence* $500.00

(b) Second and subsequent offences $1000.00

*The fine for the first offence will be reduced to $125.00 if the offender successfully completes an approved anti-bullying counselling session(s) or educational program.

Although Mayor Brown was initially opposed to the proposed by-law, he eventually became convinced that it will serve an educational function with respect to intolerance. The focus of the by-law is the provision of community resources to address both the victim and the bullying behavior ($50,000 has been allocated towards these resources). Mayor Brown believes that Airdrie had jurisdiction to pass the by-law under the Municipal Government Act, RSA 2000 c M-26, section 7, which permits councils to pass by-laws for municipal purposes for matters of safety, health and welfare of the people and the protection of people and property, among other matters. He asserts that the by-law has dual emphases on public safety and education. Interestingly, Mayor Brown believes that there won’t be many tickets and fines issued under the new by-law in the next few months. He is more interested in seeing the resources allocated to the RCMP, community, professionals and schools for counselling put to use.

The third speaker, Derek From, has written an article about several smaller centres in Alberta passing anti-bullying by-laws. (See “Alberta’s Municipal Anti-Bullying Laws are Deeply Flawed” (24 September 2013) Huffpost Alberta). In the article, he reviews by-laws from Consort, Grand Prairie, Rocky Mountain House and Hanna, and, he also commented on Oyen’s by-law at the presentation. (The other presenters noted that there is a by-law in Red Deer, too. See Bylaw No. 3383/2007). While Derek From complimented Mayor Brown and Airdrie’s by-law as being “the best I’ve seen in Alberta”, he argued that this by-law, together with the by-laws in the other centres, are outside of the municipality’s jurisdiction, because they attempt to restrict freedom of expression. He further states that under the Constitution Act, 1867, provincial laws may only incidentally restrict expression provided the laws are otherwise within provincial jurisdiction. For example, Grande Prairie’s by-law defines bullying as an “objectionable or inappropriate comment, conduct or display” directed at an individual “which causes or is likely to cause physical or emotional distress.” (City of Grande Prairie Bylaw C-1103).  He is also concerned that the by-laws are redundant (they address already illegal behaviour), vague (poorly drafted) and too subjective (e.g., how do you determine whether a statement is likely to cause emotional distress?). While the local anti-bullying message is important, it should not be made with laws that are illegal. This diminishes respect for the rule of law.

All of the speakers agreed that bullying is not acceptable and that by-laws do get this message across. However, where they part ways is in whether the by-laws (or provincial legislation) are the best method for addressing bullying. Sandra Jansen is concerned about spending resources and time passing a law that would be found to be unconstitutional and would not necessarily address the complexities of the issue—reducing or eliminating bullying behavior and its effects on all parties concerned (including by-standers).

I was glad to see the Alberta government taking time to examine what other jurisdictions are doing before deciding on the best approach(es) for dealing with bullying. Any approach should be sustainable and multi-faceted (i.e. not just legal). And, any legal approach should be constitutional. RMCLA hosted a very informative panel discussion.

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

 

Keystone XL Final Supplemental Environmental Impact Statement: Next Steps & Climate Impact

Mon, 02/03/2014 - 9:00am

By: James Coleman

PDF Version: Keystone XL Final Supplemental Environmental Impact Statement: Next Steps & Climate Impact

Report commented on: Keystone XL, Final Supplemental Environmental Impact Statement

On January 31, the United States State Department issued its Final Supplemental Environmental Impact Statement (EIS) on the Keystone XL pipeline, which is designed to transport oil sands bitumen from Hardisty, Alberta to Steele City, Nebraska.  The environmental impact statement was issued to comply with the National Environmental Policy Act, 42 U.S.C. 4321 et seq., which requires agencies to consider the environmental impact of major federal actions.

As noted in a previous post on ABlawg, President Obama raised the stakes for this environmental impact statement in June when he stated that he would only approve the pipeline if it would “not significantly exacerbate the problem of carbon pollution.”  As described below, the final EIS suggests that Keystone XL meets this standard, but does not entirely rule out a contrary decision.

Now President Obama must decide whether the pipeline is in the “national interest” under Executive Order 13337, which governs cross-border pipelines.  But first there will be 105 days of comment periods for federal agencies and the public.  A further wildcard is that the State Department’s Inspector General is imminently expected to issue a report on whether the independent contractors that performed the environmental impact assessment on Keystone XL had a conflict of interest.

The President’s decision on the pipeline is delegated to Secretary of State John Kerry.  If other US federal agencies object to his decision, then the President will have to decide himself whether to overrule Secretary Kerry’s decision.  If the pipeline is approved, environmental groups will challenge this decision in U.S. court.

State Department’s Analysis of the Greenhouse Gas Impact of Keystone XL

The State Department concludes that Keystone XL, like “any one crude transport project . . . is unlikely to significantly impact the rate of extraction in the oil sands” and thus unlikely to increase greenhouse gas emissions.  (State Department, Final Supplemental Environmental Impact Statement at ES-16).  And it goes further, stating that even if “new east-west and cross-border pipelines were both completely constrained, oil sands crude could reach U.S. and Canadian refineries by rail.”  (State Department, Final Supplemental Environmental Impact Statement at ES-12).  As a result, the State Department estimates that rejecting the pipeline would actually lead to higher greenhouse gas emissions than approving it, due to the higher energy requirements of shipping crude by rail—“28 to 42 percent” higher.  (State Department, Final Supplemental Environmental Impact Statement at ES-34 &Table ES-6).

The State Department’s estimate that rejecting the pipeline would mean 28 to 42 percent higher emissions due to rail is a significant increase from its earlier assessment that rejecting the pipeline would increase emissions by “about eight percent.”  (State Department, Draft Supplemental Environmental Impact Statement 5.1-26).  That being said, the State Department’s conclusion that the pipeline is “unlikely to significantly impact” oil sands extraction is a slight retreat from its Draft report, which concluded there would be “no substantive change in global GHG emissions.”  (State Department, Draft Supplemental Environmental Impact Statement 4.15-107).  And the State Department also acknowledged that, if global oil prices fell significantly (West Texas Intermediate under $75 a barrel), then rejecting the pipeline could decrease greenhouse gas emissions because “higher transportation costs could have a substantial impact on oil sands production levels.”  (State Department, Final Supplemental Environmental Impact Statement at ES-34 &Table ES-12).

Moving forward, a crucial question will be if other U.S. federal agencies support the State Department’s analysis.  When the State Department released its draft environmental impact statement, the U.S. Environmental Protection Agency critiqued its treatment of crude-by-rail.  It requested “a more careful review of . . . rail transport options,” because it thought that, if the pipeline was not approved, high crude-by-rail costs might slow oil sands production and thus, greenhouse gas emissions.  (U.S. EPA Keystone XL Project Comment Letter (Apr. 22, 2013)).  In response, the State Department expanded its climate change, oil market, and rail transport analysis.  (State Department, Final Supplemental Environmental Impact Statement at ES-34 &Table ES-1).  It remains to be seen whether agencies like the Environmental Protection Agency will be satisfied with the expanded analysis or remain skeptical of the State Department’s mostly unaltered conclusions.

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

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

Supreme Court Denies Leave to Appeal in Alberta Cases

Fri, 01/31/2014 - 2:00pm

By: Admin

PDF Version: Supreme Court Denies Leave to Appeal in Alberta Cases

Cases commented on: R v Alcantara, 2013 ABCA 163; R v Hanna, 2013 ABCA 134; Young v National Money Mart Company, 2013 ABCA 264

On January 30, 2014 the Supreme Court denied leave to appeal in three Alberta cases that gave rise to four separate leave applications. The Court’s summaries of the cases, and their dispositions, are below. Jonnette Watson Hamilton posted a comment on the Money Mart decision here.

35580       John   Reginald Alcantara v. Her Majesty the Queen (Alta.)(Criminal)    (By Leave)

Charter of   Rights – Remedy –   Criminal law – Evidence – Disclosure – Can a court of appeal decline to order   a new trial under s. 24(1) of the Charter when the Crown has failed to   provide timely disclosure that affected trial fairness and violated the   applicant’s right to make full answer and defence – Does the three-part   framework in R. v. Grant for the exclusion of evidence under s. 24(2)   of the Charter apply to an application for a stay of proceedings under   s. 24(1) – s. 24(1) of the Charter.

The   evidence at trial included a number of intercepted communications which were   recorded pursuant to judicially approved authorizations. It was a term of the   authorizations that certain classes of intercepted conversations be “live   audio monitored”.  After the applicant was convicted, the Crown   disclosed that the intercepted conversations had not all been “live   monitored” and that a “put away” feature had also been used.  The   applicant appealed his conviction and argued that his Charter rights   were violated by the failure to continuously “live monitor” the   interceptions, and by the failure of the Crown to disclose in a timely way   the use of the “put away” feature.  The applicant’s appeal from   conviction was dismissed.

Coram: McLachlin / Cromwell / Wagner: The motion for an extension of time to serve and file the application for leave to appeal is granted.  The application for leave to appeal is dismissed without costs.

****************************************************************************

35615    Dwayne   Daryl Hanna v. Her Majesty the Queen (Alta.) (Criminal) (By Leave)

Criminal   law — Sentencing — Fitness of sentence — Accused guilty of dangerous driving,   driving while disqualified and breaching two recognizances — Accused alleged   police used excessive force during arrest but trial judge found no police   misconduct — Accused sentenced to five years and six months incarceration —   On appeal, sentenced varied to four years and nine months — Whether Court of   Appeal erred in declining to further reduce sentence? — Whether Court of   Appeal erred in limiting itself to sentencing judge’s analytical approach,   having found palpable and overriding error in portion of judge’s analysis? —   Whether Court of Appeal erred in considering effect of police misconduct,   which trial judge failed to identify, when Court of Appeal deemed itself   otherwise bound by judge’s analysis of totality principle? — Whether five   year sentence for driving while disqualified unduly excessive and harsh where   court deducts only nine months for police misconduct?

The   applicant, Mr. Hanna, was charged with dangerous driving, driving while   disqualified, assault with a weapon and breaching two recognizances.    After observing Mr. Hanna driving in excess of the speed limit, a sheriff   followed Mr. Hanna’s vehicle to a farmyard. Just as the sheriff was   preparing to exit his vehicle, Mr. Hanna gunned his engine and sped by the   sheriff’s vehicle, clipping the driver’s side door with his mirror.    Following a spin-out, Mr. Hanna’s vehicle came to rest in a ditch.  A   police dog was used to apprehend Mr. Hanna.  Mr. Hanna took the position   that the charges should be stayed because the police used excessive force   during the course of his arrest.  The trial judge found Mr. Hanna guilty   of dangerous driving, driving while disqualified and breaching two   recognizances, but not guilty of assault with a weapon because the Crown   failed to establish that Mr. Hanna intended to hit the sheriff’s vehicle or   to threaten the sheriff.  Considering the circumstances, releasing the   police dog without warning Mr. Hanna first was not excessive, nor were the   punches administered by the police.  Mr. Hanna was sentenced to   five years and six months incarceration and a seven year driving   prohibition.  A majority of the Court of Appeal, however, found that Mr.   Hana should receive a sentence of three years and six months on the offence   of driving while disqualified.  On the offence of dangerous driving, the   majority concluded that the trial judge’s consecutive sentence of two years   should be subject to a deduction of nine months for the police’s   misconduct.  Therefore, the majority concluded that the final sentence   was four years and nine months, less the 382 days credit for pretrial custody   and the seven year licence suspension would remain as imposed.  Berger   J.A. (dissenting) would have allowed the appeal and substituted a sentence of   three years and three months imprisonment less the 382 days credit for   pretrial custody.

Coram: Abella / Rothstein / Moldaver: The motion for an extension of time to serve and file the application for leave to appeal is granted.  The application for leave to appeal is dismissed without costs.

****************************************************************************

35564      National Money Mart Company carrying on business under the name and  style “Money Mart” v. Gareth Young, as representative Plaintiff, H. Craig Day, as representative Plaintiff (Alta.) (Civil) (By Leave)

Contracts   – Class actions – Stay of proceedings – Are class action waiver clauses in   consumer contracts enforceable if they operate independently of any   arbitration provision? – If the language of a class action waiver clause is   clear and unambiguous, on what grounds or in what circumstances should a   court decline to enforce a class action waiver clause? – Are class action   waiver clauses in consumer contracts are unconscionable per se, or   presumed to be unconscionable, or must be proven to be unconscionable, or   contrary to public policy, or inconsistent with the scheme and purpose of   class action statutes.

As   representative plaintiffs, Day and Young claim that the fees charged by the   applicant Money Mart for short term or “payday” loans are unlawful.  The   written loan documentation contained clauses requiring the arbitration of any   disputes relating to the loan contract.  There were separate clauses   with respect to class action litigation.  The most recent version reads   in part:

Each party also agrees not to commence or   participate in any class action either as    a representative Plaintiff or as a   member of a Plaintiff class, and to opt out of any class action, if the class   action involves, directly or indirectly, any Claim.

The   applicants brought a motion to dismiss or stay the proceedings on the grounds   that the representative plaintiffs had agreed in writing to proceed with   mediation or arbitration of the disputes against Money Mart, and that they   had also agreed in writing not to participate in class actions.  These   motions to stay were dismissed, as were the subsequent appeals to the Court   of Appeal for Alberta.

Coram: Abella / Rothstein / Moldaver: Dismissed with Costs

***************************************************************************

35565      1008485 Alberta Ltd., 815028 Alberta Ltd., and 632758 Alberta Ltd. v. H. Craig Day, as representative Plaintiff (Alta.) (Civil) (By Leave)

Contracts – Class actions – Stay of proceedings – Are class action waiver clauses in     consumer contracts enforceable if they operate independently of any arbitration provision? – If the language of a class action waiver clause is     clear and unambiguous, on what grounds or in what circumstances should a court decline to enforce a class action waiver clause? – Are class action waiver clauses in consumer contracts are unconscionable per se, or presumed to be unconscionable, or must be proven to be unconscionable, or contrary to public policy, or inconsistent with the scheme and purpose of class action statutes.

As representative plaintiffs, Day and Young claim that the fees charged by the applicant Money Mart for short term or “payday” loans are unlawful. The written loan documentation contained clauses requiring the arbitration of any disputes relating to the loan contract.  There were separate clauses with respect to class action litigation.  The most recent version reads in part:

Each party also agrees not to commence or participate in any class action either as a representative Plaintiff or as a member of a Plaintiff class, and to opt out of any class action, if the class action involves, directly or indirectly, any Claim.

The applicants brought a motion to dismiss or stay the proceedings on the grounds that the representative plaintiffs had agreed in writing to proceed with mediation or arbitration of the disputes against Money Mart, and that they had also agreed in writing not to participate in class actions. These motions to stay were dismissed, as were the subsequent appeals to the Court of Appeal for Alberta.

Coram: Abella / Rothstein / Moldaver: Dismissed with Costs

To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca

Follow us on Twitter @ABlawg

 

Pages