Canada: SCC Denies Ernst A Claim For Damages Against The Alberta Energy Regulator

Last Updated: January 25 2017
Article by Paul A. Beke and James Delaney

Introduction

On January 13, the Supreme Court of Canada (the SCC) released its long-awaited decision in Ernst v. Alberta Energy Regulator1(Ernst). Splitting 5-4 on the result, a plurality of the Court endorsed the principle that quasi-judicial administrative bodies, like the Alberta Energy Regulator (the Regulator), must be protected from collateral attack by damages claims in order to preserve their impartial and independent function. The SCC also reaffirmed the need for a full evidentiary record when a plaintiff is pursuing a constitutional challenge. This decision should help to ensure that individuals cannot pursue a claim for damages against the Regulator when they are unhappy with a decision made in the course of the regulatory process.

Background: damages sought for infringing free speech, despite Regulator's immunity clause

Jessica Ernst owns land near Rosebud, Alberta, where she alleges that Encana's gas operations contaminated her well water. In pursuing these allegations, Ms. Ernst complained to the Regulator, which is tasked with regulating responsible and efficient development of Alberta's energy resources. At the same time, Ms. Ernst was publically critical of the Regulator, complaining about it to the media. In 2005, the Regulator informed Ms. Ernst that it would not continue to communicate with her unless she raised her concerns with the Regulator directly instead of airing her complaints in the media. The Regulator withdrew this condition one and a half years later, before Ms. Ernst first filed this lawsuit.

Ms. Ernst claimed damages against the Regulator, in part, for infringing her right to free speech under section 2(b) of the Canadian Charter of Rights and Freedoms (the Charter). Ms. Ernst alleged that the Regulator had withheld access as a means to stop her from speaking to the media.

The Regulator responded with an application to strike Ms. Ernst's claims on the basis that the claims had no reasonable prospect of success. The application to strike was successful at the Court of Queen's Bench and the Alberta Court of Appeal. Both Courts found that Ms Ernst's claim was barred by section 43 of the Energy Resources Conservation Act (the Act) (the Regulator's enabling statute at the time). Section 43 protected the Regulator from all legal claims arising in the course of carrying out of its function under the Act.2

Decision: judicial review—not damages—proper remedy against quasi-judicial bodies

The SCC focussed on two points. First, it found that Ms. Ernst's claim was indeed a challenge to the constitutionality of section 43 of the Act, whether she was clear about that at the lower courts or not. Both Ernst and the Regulator had agreed that section 43 barred Ms. Ernst's claim, but Ms. Ernst was asking the Court to refuse to apply section 43. The SCC found this was a constitutional issue as courts "cannot refuse to rule on the law's constitutionality and yet also refuse to apply the clause."3 And where there is an inadequate factual basis to decide a constitutional challenge, the claim has to fail.4 In this case, the factual basis or evidentiary record was inadequate due to Ms. Ernst's denial at the lower courts that she was challenging the constitutional validity of the provision.5

Second, and with important implications for administrative law, the SCC held that damages can never be an appropriate remedy for the sort of decision that gave rise to Ms. Ernst's claim.6 Instead the SCC found that judicial review was a more appropriate remedy,7 and endorsed the principle that quasi-judicial decision makers need to be able to exercise their adjudicative function with relative immunity. More specifically, protecting the Regulator and other quasi-judicial decision makers from damages claims is essential in that it preserves their resources of time and money, prevents collateral attack, enhances public confidence in the legal system, and preserves impartiality.8

The Dissent

The SCC was spilt 5-4 on the result. The dissent focussed on the application to strike and found that Ms. Ernst's claims were not doomed to fail. The dissent would have left the question of section 43's constitutionality "for another day," holding that it was not immediately obvious that section 43 barred Ms. Ernst's claim, and that the application to strike should therefore be set aside.9

Conclusion

With a split decision on an application to strike, it is unclear how important this decision will turn out to be. The divided result is a half-hearted endorsement of the principle that independent, quasi-judicial administrative bodies should operate with relative immunity from damages claims, including Charter damages. But if one thing is clear from this decision, it is this: litigants looking to challenge a provision's constitutionality should seriously consider their argument and ensure they meet the necessary notice and evidentiary requirements. In this respect, at least, this case serves as a warning to litigants and a potential salve for governments.

Footnotes

1 2017 SCC 1. [Ernst]

2 Note that the Energy Resources Conservation Act has since been replaced by the Responsible Energy Development Act, but section 27 of the new Act provides substantially the same protection for the Regulator as the old section 43

3 Ernst at para 21

4 Ernst at para 22

5 Ernst at para 124

6 Ernst at para 24

7 Ernst at paras 35-36

8 Ernst at paras 47, 54-55

9 Ernst at para 190

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