On February 8, 2017, the Alberta Court of Appeal released its leave to appeal decision in R v Precision Diversified Oilfield Services Corp, 2017 ABCA 47. Precision had been convicted at trial under Alberta's Occupational Health and Safety legislation for failing to ensure the safety of its workers. The Court of Queen's Bench set aside those convictions and ordered a new trial (which BLG previously wrote about in Queen's Bench Sets Aside Convictions Under OHS Legislation and Orders a New Trial). The Crown appealed that decision and the Court of Appeal agreed that it would allow the Crown to advance its appeal since workplace safety was of significant public importance in the context of the oil and gas industry.
Precision was involved in drilling a well for Novus Energy approximately 30 kilometres from Grande Prairie, Alberta. On December 12, 2010, the rig's crew was "tripping out" or removing pipe from a well hole. A Precision worker (Worker) was severely injured during the tripping out procedure, and died the following day.
As a result of the accident, Precision was charged with two offences: (i) failing to ensure the health and safety of the Worker insofar as it was reasonably practicable to do so as required by s. 2(1) of the Occupational Health and Safety Act (OHS Act); and (ii) failing to take measures to eliminate workplace hazards as required by s. 9 of the Occupational Health and Safety Code 2009.
At trial, there was no evidence from anyone about how the Worker was injured as no one witnessed any contact between the drilling equipment and the Worker. It was evident that some part of the drilling equipment struck the Worker when torque from the drillstring was released but there was no evidence of which part of the assembly had struck the Worker.
Despite the lack of evidence about how the Worker was injured, the Provincial Court trial judge (Trial Judge) convicted Precision of both offences, and imposed a total fine of $400,000. The Trial Judge determined that Precision had failed to take all reasonable steps to avoid the accident as it had not installed an interlock device, an engineered solution that had been put in place by Precision's competitor.
On appeal, Madam Justice Veit of the Court of Queen's Bench (Appeal Judge) set aside the convictions and ordered a new trial against Precision (Appeal Decision). The Appeal Judge held that the Trial Judge had erred by finding that the Crown proved the offence merely by proving that the accident occurred. The Appeal Judge also found that Precision met all industry standards and regulations and the Trial Judge failed to assess due diligence with reference to industry standards. In addition, the Appeal Judge found that there was only one other small drilling company that had implemented the engineered device referred to by the Trial Judge, and there was no evidence that the device or any other technical solutions had made an impact on industry standards.
The Crown applied under Section 19(1) of the Provincial Offences Procedure Act, RSA 2000 c p-34, for leave to appeal the Appeal Decision. The Crown sought leave to appeal two questions:
Did the Appeal Judge err in law by requiring the Crown, as part of the actus reus of the offence, to negate due diligence or prove negligence?
Did the Appeal Judge err in law in her interpretation and application of the due diligence test?
On the first question, the Crown argued that the Appeal Judge required the Crown to prove negligence or to negate due diligence. The Court of Appeal noted that based on existing law in Alberta, in order to prove a prima facie breach under Section 2(1) of the OHS Act, the Crown needed only to prove the fact the worker was employed, the worker's engagement in the employer's work, and his injury or death. As such, the Court of Appeal concluded that the Crown's position on this question had arguable merit.
The second question related to the standard of proof required by Precision at the due diligence stage. The Crown argued that the Appeal Judge made a legal error by strictly comparing Precision's practices to generally accepted standard practices in the industry, rather than taking a broader view of steps that Precision reasonably should have taken. The Crown argued that legislated and industry standards may set a minimum level of care, but they were not determinative of due diligence. The Court of Appeal held that the Appeal Judge's decision arguably used a due diligence test that required the Crown to disprove compliance with industry standards and did not apply the proper foreseeability test or broader due diligence test. The Court of Appeal noted that the question of law engaged in this case had not been broadly settled yet. The Court of Appeal concluded that the Crown's position had arguable merit since the decision of the Appeal Judge used a test of due diligence that imposed an obligation on the Crown to disprove compliance with industry standard and specific government regulation.
The Alberta Court of Appeal agreed that the appeal could proceed on those two issues. It held that the two questions were of sufficient importance to justify a further appeal, since workplace safety was of significant public importance in the context of the oil and gas industry, and generally, in Alberta.
The Alberta Court of Appeal decision will have significant implications on employers in the oil and gas industry as it should provide further clarification on the due diligence standard and it should finally determine whether an employer can rely on following industry standards in a closely regulated industry to prove due diligence. BLG will continue to monitor the appeal and provide a further update once the Court of Appeal releases its decision on the merits.
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.