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Court of Appeal Rejects Private Law Duty of Care Owed by Regulators

24-Sep-14

By Gavin Fitch and Michael Barbero

In Ernst v. Alberta (Energy Resources Conservation Board), 2014 ABCA 285, the Court of Appeal upheld the decision of a Case Management Judge who struck out portions of a claim for not disclosing a reasonable cause of action. The Court upheld a prohibition on the ability of an individual to bring a claim against a regulator and the application of immunity clauses to both claims for damages in tort and breach of the Canadian Charter of Rights and Freedoms ("Charter").

Facts

Jessica Ernst sued EnCana Corporation for damage to her fresh water supply purportedly caused by EnCana's hydraulic fracturing. Ernst also sued the Energy Resources Conservation Board ("ERCB") for negligent administration of a regulatory regime and for damages resulting from a violation of her right to expression under the Charter. Ernst alleged that between November 24, 2005 and March 20, 2007, the ERCB's compliance branch refused to accept any communications from her. This refusal, allegedly, constituted a violation of her Charter right to freedom of expression.

The ERCB successfully applied to have portions of Ernst's claim struck. The Judge found that:

  • The proposed negligence claim against the ERCB was unsupportable at law.
  • No private law duty of care was owed by the ERCB to Ernst.
  • In the alternative, any claim against the ERCB was barred by the immunity provisions found in section 43 of the Energy Resources Conservation Act, RSA 2000, c. E-10.

On Appeal, Ernst raised three issues:

  1. Did the ERCB have a private law duty of care to Ernst?
  2. Does section 43 of the Energy Resources Conservation Act bar a claim for negligent omissions?
  3. Can section 43 of the Energy Resources Conservation Act bar a Charter claim?

Decision

Cause of Action and Negligence
The Court confirmed that generally there is insufficient foreseeability and proximity to establish a private law duty of care in situations involving an individual and a regulator. In addition, multiple policy considerations exist against regulators owing a duty of care and being "insurers of last resort for everything that happens in a regulated industry". Regulators cannot effectively balance the interests of specific individuals while at the same time attempting to regulate in the overall public interest. The Court concluded that recognizing a duty of care owed to individuals would undermine a board's ability to address its obligations to the general public.

Immunity Clause: Section 43
The ERCB argued that even if a private law duty of care existed, any action was foreclosed by the immunity provisions of section 43 of the Act. Ernst argued that section 43 was limited to an act or thing actually done. Rejecting this, the Court held such a narrow interpretation was inconsistent with the broader purposes of the legislation. To accept Ernst's argument was to hold that the immunity provision was intended to only be operative for half of all decisions made by a regulatory body, as any decision involves a choice between options one of which is not acted upon.

Charter Claim
The Appellant sought damages for breach of section 2(b) of the Charter. The Court of Appeal confirmed that a claim in damages for breach of a Charter right was barred by section 43 of the Act, rejecting the Appellant's argument that section 43 was inapplicable to remedies for Charter claims.

The Court noted that remedies for Charter breaches are governed by well-established legal rules, which mandate that to be "appropriate and just" remedies must be measured, limited and principled. The Court acknowledged that protecting administrative tribunals and their members from liability for damages is constitutionally legitimate and there is nothing constitutionally illegitimate about provisions like section 43.

Conclusion

The Court of Appeal's decision suggests that parties who are dissatisfied with the result of regulatory proceedings will be limited to existing remedies such as judicial review and appeals. Novel claims in tort or constitutional law will be difficult to advance.
 

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