Canada: Immune (At Least For Now): Divided Supreme Court Of Canada Strikes Claim For Charter Damages Against Energy Regulator

On January 13, 2017, the Supreme Court of Canada (SCC) released its decision in Ernst v. Alberta Energy Regulator. As BLG noted in our blog post discussing the SCC's decision to hear the Ernst case, leave to appeal was granted on a narrow but important constitutional issue. The Plaintiff, Jessica Ernst, claimed that the Energy Resources Conservation Board (the Board) had violated her rights under Canadian Charter of Rights and Freedoms (the Charter), and sought damages as a remedy pursuant to Section 24 of the Charter. The Alberta Court of Appeal (ABCA) had struck the Charter claim on the basis that, even if a Charter breach was proven, the Board was immune to damages for a Charter breach by virtue of a statutory immunity clause. In a split decision, the SCC ultimately upheld the ABCA decision to strike Ms. Ernst's Charter claim, but did so on grounds which differed from the reasoning adopted by the ABCA. The decision is notable for the energy industry because while it does not immediately alter the status quo with respect to the Board's broad immunity from damages claims, it leaves the law in this area surprisingly unsettled.

Background

As discussed in more detail in our previous blog post about the ABCA's decision in Ernst, Ms. Ernst's claim is based on her allegation that she suffered damages as a result of a coal bed methane shallow drilling program that was approved by the Board. Ms. Ernst claimed damages against the Board on two grounds: (i) negligent administration of a regulatory regime; and (ii) breach of Ms. Ernst's Charter right to freedom of expression. 

The negligence claim was struck by the ABCA on the basis that the Board did not owe a duty of care to Ms. Ernst, and in any event, her claim was barred by Section 43 of the Energy Resources Conservation Act, (the ERCA), which stated, in part, that "No action...may be brought against the Board...in respect of any act or thing done purportedly in pursuance of this Act..." (Section 43).  This aspect of the ABCA's decision was not appealed, and as we recently noted in our blog post regarding Goodhart v Alberta Energy Regulator, the ABCA's decision in Ernst has been held to apply with equal force to negligence claims against the Board's successor, the Alberta Energy Regulator (AER). 

The Charter claim was rooted in Ms. Ernst's vocal public criticism of the Board. Ms. Ernst alleged that in order to punish her for her criticism, the Board informed her that Board staff would avoid all contact with her until such time as she agreed to stop raising concerns through the media or public. Ms. Ernst alleged that this decision violated her right to freedom of expression under Section 2(b) of the Charter. The Court of Queen's Bench found that this novel Charter claim was not so unsustainable that it could be struck out summarily, but found that it was barred by Section 43. On appeal to the ABCA, Ms. Ernst explicitly argued that she was not challenging the constitutionality of Section 43, but rather was arguing that this section did not apply to bar Charter claims. This argument was rejected by the ABCA, which held that Section 43 did apply to bar Ms. Ernst' claim for Charter damages.

Ms. Ernst appealed to the SCC, arguing for the first time that Section 43 clearly barred her claim for Charter damages, and as such, was unconstitutional. As noted in our blog post about the SCC decision to grant leave to appeal, it was anticipated that Ernst would have broad implications for many regulatory and administrative tribunals by providing guidance regarding the interplay between statutory immunity provisions and claims for Charter damages.

The Decision

There was a tight three-way split (4:1:4) of the nine-member SCC panel in this case. The first opinion, authored by Justice Cromwell, with Justices Karakatsanis, Wagner and Gascon concurring, adopted Ms. Ernst's position that it was plain and obvious that Section 43 barred a claim for Charter damages. Justice Cromwell held the implication of this position was that to avoid the striking of her claim on the basis of Section 43, Ms. Ernst had a burden to provide "an adequate factual basis" to permit a finding that Section 43 was unconstitutional. Because Ms. Ernst had not met this evidentiary burden, the immunity clause applied. Ms. Ernst's claim was correctly struck. 

This finding was seemingly sufficient to dispose of the appeal, but Justice Cromwell went on to find that Charter damages could never be an appropriate and just remedy for Charter breaches by the Board. This finding was due to both the appropriateness of judicial review as an alternative, more effective remedy, and the numerous policy rationales for statutory and common law immunity from civil suits granted to many quasi-judicial bodies and administrative agencies (discussed in more detail in our blog post on the ABCA decision in Ernst). Respecting the latter, Justice Cromwell found that "opening the Board to damages claims will distract it from its statutory duties, potentially have a chilling effect on its decision making, compromise its impartiality, and open up new and undesirable modes of collateral attack on its decisions" (at paragraph 55). Justice Cromwell held that case-by-case determinations of Charter damages are not necessary, because to effectively achieve its policy objectives, immunity must be granted for any and all claims of damages. Interestingly, this finding was influenced by, but did not turn on, the presence of a statutory immunity clause. Justice Cromwell noted at paragraph 50:

"Of course these sorts of statutory provisions cannot override constitutional rights, but the policy reasons on which they are based can and should be taken into account by a reviewing court."

In the second opinion, Justice Abella agreed with Justice Cromwell that, on its face, the immunity clause barred a Charter damages claim. Justice Abella then emphasized that Ms. Ernst had failed at the lower court levels to give notice of a constitutional challenge to the Attorney General of Alberta, as required by Section 24 of the Judicature Act, and had in fact denied that such a challenge was being made. Justice Abella noted that the required notice of a constitutional challenge is more than a formality, as it is imperative that any court considering the constitutionality of a statutory provision hear evidence and argument justifying the provision from the government which enacted it. In Justice Abella's view, Ms. Ernst's failure to properly raise the constitutional challenge meant that it would be procedurally improper for the SCC to consider whether Section 43 was constitutional. Because Section 43's constitutionality had not been successfully challenged, it applied to strike Ms. Ernst's Charter damages claim. Justice Abella also found that, on the facts of this case, the only appropriate remedy was judicial review of the Board's decision to cease communicating with Ms. Ernst.

The third and dissenting opinion, authored by Chief Justice McLachlin and Justices Moldaver and Brown, with Justice Côté concurring, would have set aside the order striking Ms. Ernst's Charter damages claim and returned the claim to the Alberta Court of Queen's Bench for consideration at first instance. This result was based on the dissenting Justices' opinion that it was not plain and obvious that the punitive conduct alleged by Ms. Ernst would be caught by the language of Section 43, which only covered acts "done purportedly in pursuance of" the ERCA. As it was arguable that allegedly punitive acts were not authorized by the ERCA, Ms. Ernst should be granted an opportunity to show that the Board's decision to avoid all contact with her was not protected by Section 43. It was only after a court had determined that the Board's conduct was protected by Section 43 that the issue of Section 43's constitutional validity could arise. It is noteworthy that the dissenting Justices' findings in respect of the effect of Section 43 on Ms. Ernst's Charter damages claim directly contradicted the positions taken by both the Board and Ms. Ernst herself. This aspect of the dissenting opinion attracted particular criticism from Justice Cromwell, largely on the basis that it would be unfair to decide the case on the basis of an issue that was not raised during the hearing.

The dissenting Justices strongly argued against Justice Cromwell's finding that Charter damages could never be an appropriate and just remedy for a Charter breach by the Board. Common law and statutory immunity granted to state actors is always qualified by exceptions, such as where there is evidence of bad faith or abuse of power. If Ms. Ernst's allegations of punitive conduct were true – which was to be presumed for the purposes of an application to strike – there was no compelling policy rationale to immunize the Board from such serious misconduct.  The dissenting Justices also found that it was not plain and obvious that judicial review would be an effective alternative remedy to Charter damages, particularly with respect to vindicating Ms. Ernst's rights and deterring future breaches by the Board. In the result, it was not plain and obvious that Charter damages could not be an appropriate and just remedy for Ms. Ernst's claims. 

Implications

In the long term, the strong dissent and lack of a true majority decision raise more questions than answers with respect to the interplay between Charter damages and regulatory decision-making. Most notably, the decision leaves open the possibility that, in different factual and procedural circumstances, a Charter damages claim against an administrative or quasi-judicial body might be successful at the SCC. In any such claim, the Ernst decision would at least seem to make it clear that the presence of a statutory immunity clause will not be determinative of the result, but rather will simply be a key factor to be considered.

Until such a claim is successfully brought at the SCC, the immediate implication of the decision for the energy industry is that lower courts remain likely to protect the AER and other administrative and quasi-judicial bodies from actions for damages, regardless of whether such actions are brought pursuant to the Charter or the common law. Courts, especially in Alberta, remain likely to find that the only appropriate means of challenging a decision made by an administrative and quasi-judicial body such as the AER is an application for judicial review. So, for the time being it is business as usual. In these uncertain times, any certainty for industry is welcome.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions