Goodhart v Alberta Energy Regulator, 2016 ABQB 469

Court of Queen’s Bench of Alberta Citation: Goodhart v Alberta Energy Regulator, 2016 ABQB 469 Date: 20160908 Docket: 1301 14884 Registry: Calgary Between: Rupert Goodhart As Personal Representative of the Estate of Lise Goodhart Rupert Goodhart, Goodhart International Ltd. operating as Lochend Clinique, Charles Goodhart, Genevieve Goodhart Plaintiffs - and - Alberta Energy Regulator, and Energy Resources Conservation Board Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D. Macleod _______________________________________________________ Introduction [ 1 ] This is an application for

summary judgment and striking the claim. The Defendants in this action are the Alberta Energy Regulator (“AER”) and the Energy Resources Conservation Board (“ERCB”). The Plaintiffs include Rupert Goodhart, the Estate of Lise Goodhart, Goodhart International Ltd., Charles Goodhart and Genevieve Goodhart. [ 2 ] In this action, this Court ordered that all Plaintiffs must be represented by a lawyer or by themselves as required by statute and case law. To my knowledge, no lawyer has been retained and Rupert Goodhart was the only Plaintiff that represented himself. The other Plaintiffs did not participate in this application.

Background [ 3 ] The claim arises out of an incident which occurred near the residence of Rupert and Lise Goodhart on December 18, 2011. At that time, Mr. Goodhart alleges that he and his wife were exposed to toxic chemicals from a well site that was under the regulatory jurisdiction of the ERCB. Mr. Goodhart alleges that as a result of this exposure, he and his wife suffered serious injuries. His wife later succumbed to her injuries on February 27, 2013.

The claim alleges that the ERCB failed to exercise reasonable care in preventing foreseeable contamination, the particulars of which are set out in paragraph 22 of the Amended Statement of Claim. At paragraph 23 of the Amended Statement of Claim, the Plaintiffs allege that the ERCB and the AER acted in bad faith. [ 4 ] There is a lengthy history between the Defendants and Mr. Goodhart going back to the 1970’s and it continues still. For example, Mr.

Goodhart applied to the Supreme Court of Canada requesting that he be allowed to make a third party intervention with respect to Ernst v Alberta (Energy Resources Conservation Board) , 2014 ABCA 285 [ Ernst ]. The outstanding issue before the Supreme Court in Ernst is not germane to this case. [ 5 ] After the Amended Statement of Claim was filed in December 2014, the AER and the ERCB brought the application for

summary judgment and striking the claim which is now before me. Other relief is sought but there is no need to relate it here. [ 6 ] I have been informed that the Plaintiffs in this action have also brought Action Number 1301 14383 against those involved in the ownership and operatorship of the well in question. They have also brought Action Number 1301 14883 against the Reeve, the councillors and the municipal government of Rockyview County.

I know nothing else about those actions or their respective progress. [ 7 ] At the time of the alleged incident, which was December 18, 2011, the relevant regulating body was the ERCB and its parent Act was the Energy Resource Conservation Act , RSA 2000, c E-10 (“ ERCA ”). It was repealed and replaced by the Responsible Energy Development Act , SA 2012, c R-17.3 (“ REDA ”) and it was proclaimed into force on June 17, 2013. REDA dissolved the ERCB and established the AER (ss 81 and 3(1) of REDA , respectively). Thus, the AER succeeded the ERCB.

I note that under s 83(3) of REDA , the AER assumes the liabilities and obligations of the now dissolved ERCB. As such, all causes of action that previously existed against the ERCB now exist against the AER. Also, I note that s 2(1) of the Responsible Energy Development Act Transition Regulation , Alta Reg 92/2013 states that every proceeding commenced under ERCA and every proceeding to which ERCA applied shall be completed in accordance with REDA . Therefore, this application must be decided under REDA . Lastly, the Oil and Gas Conservation Act , RSA 2000, c O-6 (“ OGCA ”) is also relevant to this application.

Issues [ 8 ] The issues here appear to be: 1. Do the pleadings disclose a private duty care owed by the AER to the Plaintiffs? 2. Does s 27 of REDA bar the claim? The Law [ 9 ] Any pleading can be struck out under Rule 3.68(2)(

b) if it discloses no reasonable cause of action . Rule 3.68(3) states that no evidence is admissible for applications based on Rule 3.68(2)(b). Also, for the purpose of applications under Rule 3.68(2)(b), the facts as pleaded are assumed to be true. The current test for striking a claim is to be found in R v Imperial Tobacco Canada Ltd , 2011 SCC 42 at paras 19-21 . The test is whether there is any reasonable prospect that the claim will succeed, erring on the side of generosity in permitting novel claims to proceed ( Ernst at paras 13-15 ).

The pleadings do not disclose a private duty of care [ 10 ] The AER and the ERCB have acted at different times in this province as the regulator in the public interest of owners, operators and participants in the oil and gas industry. The legislation which governs the regulating body mandates, among other things, that it oversee the economic, orderly and efficient development in the public interest of the oil and gas resources of Alberta.

To be sure, it is also concerned with conservation, environmental issues, and public safety. [ 11 ] But these regulators, for reasons which have been set out by this Court in Ernst v EnCana Corporation , 2013 ABQB 537 and by the Court of Appeal in Ernst , have not been considered to have a private duty of care to individual citizens. As the Alberta Court of Appeal stated at paragraph 18 in Ernst Forcing the Board to consider the extent to which it must balance the interests of specific individuals while attempting to regulate in the overall public interest would be unworkable in fact and bad policy in law.

Recognizing any such private duty would distract the Board from its general duty to protect the public, as well as its duty to deal fairly with participants in the regulated industry. Any such individualized duty of care would plainly involve indeterminate liability, and would undermine the Board’s ability to effectively address the general public obligations placed on it under its controlling legislative scheme. [ 12 ] I agree with counsel for the AER and the ERCB that the decision from the Court of Appeal in Ernst is dispositive of the motion.

In Ernst , the Plaintiff sued an oil company for allegedly damaging her ground water through its operations. The Plaintiff also sued the ERCB for “negligent administration of a regulatory regime” as the ERCB had regulatory jurisdiction over the defendant oil

company. [13] In striking out part of the claim against the ERCB, the Court of Appeal in Ernst, at paragraph 17, listed a number of reasonswhy a private duty of care is not placed on a regulator:

a) Policy decisions should not readily be questioned by subjecting them to a tort analysis, and the distinction between policy andoperating decisions is difficult to make: Imperial Tobacco at paras. 86-90.

b) Were the law to impose a duty of care, very difficult issues then arise as to how one decides the standard of care to be applied.Exactly “how much regulation” satisfies the duty? See Fullowka at para. 89.

c) All regulators have public duties owed to the community at large, so recognizing private law duties may place the regulator in aconflict: Syl Apps Secure Treatment Centre v B.D., 2007 SCC 38 at paras. 28, 41, 49, [2007] 3 SCR 83; 783783 Alberta Ltd. vCanada, 2010 ABCA 226 at paras. 44-6, 482 AR 136.

d) The source of the supposed private law duty is a purely statutory obligation to perform a public duty, but the law is clear that abreach of a statute is not per se negligence: Canada (A.G.) v TeleZone Inc., 2010 SCC 62 at paras. 28-9, [2010] 3 SCR 585.

e) Because of the large number of persons that may be affected by the decision of a regulator, “. . . the fear of virtually unlimitedexposure of the government to private claims, which may tax public resources and chill government intervention” are particularly acute:Alberta v Elder Advocates of Alberta Society, 2011 SCC 24 at para. 74, [2011] 2 SCR 261.

f) It is primarily the function of the Legislature to determine the scope of civil liability. Where a regulatory statute provides a numberof administrative and quasi-criminal remedies, but does not provide for any civil remedies, that strongly indicates that the statutecontemplates no private civil duty. In that regard the Energy Resources Conservation Act can be compared with provisions (like

Part 17of the Securities Act, RSA 2000, c. S-4) which do contemplate civil remedies. Further, the very existence of s. 43 preludes any inferencethat the statute contemplates a private law duty of care: Edwards v Law Society of Upper Canada, 2001 SCC 80 at paras. 16-7,[2001] 3 SCR 562. If the Energy Resources Conservation Act had contemplated a civil duty, it would undoubtedly have put the duty onEnCana, the regulated person who allegedly caused the damage in issue. The common law should not relocate the obvious target ofliability.

g) To the extent that administrative tribunals perform judicial or quasi-judicial functions, it is contrary to long standing common lawtraditions to expose them, as decision-makers, to personal liability for their decisions: Welbridge Holdings Ltd. v Greater Winnipeg, (SCC), [1971] SCR 957 at pp. 968-9; Slansky v Canada (A.G.), 2013 FCA 199 at paras. 135-7, 364 DLR (4th) 112;Butz v Economou, 438 US 478 (1978) at pp. 508 ff.

Exposing tribunal members to personal liability also undermines the testimonialimmunity which they have traditionally enjoyed with respect to their decision making process: Ellis-Don Ltd v Ontario (LabourRelations Board), 2001 SCC 4 at paras. 36, 52, [2001] 1 SCR 221. [14] I find that these same principles are applicable in the present action. REDA does not contemplate a private duty of care toindividuals, nor does the AER’s mandate, outlined in s 2 of REDA, contemplate the Plaintiffs’ individual interests.

Rather, the AER isconcerned with the public interest. [15] Also, in the Ernst case, there was not sufficient proximity between the ERCB and the Plaintiff to create a duty of care. Thereis no greater degree of proximity between the Plaintiffs and the AER in this action than there was between the ERCB and the Plaintiff inErnst. Therefore, no private duty of care exists between the Plaintiffs and the AER.

Section 27 of REDA bars the claim [16] In the alternative, if I am incorrect in finding that no private duty of care exists between the Plaintiffs and the AER, I find thatany tort action against the AER would be barred by the immunity clause in REDA. [17]

Section 27 of REDA gives the AER statutory immunity for acts it performs in good faith.

Section 27 states: No action or proceeding may be brought against the [Alberta Energy] Regulator, a director, a hearing commissioner, an officer or anemployee of the [Alberta Energy] Regulator, or a person engaged by the [Alberta Energy] Regulator, in respect of any act or thing doneor omitted to be done in good faith under this Act or any other enactment. [18] In order to circumvent s 27 of REDA, the Plaintiffs must show that the AER acted with a lack of good faith.

As mentionedabove, the Plaintiffs allege that the AER acted in bad faith. [19] Based on cases dealing with similar immunity clauses to the immunity clause in REDA, bad faith includes not only acts withthe intent to harm, but also includes acts which are clearly negligent, reckless or markedly inconsistent with the relevant legislative intent. [20] In Finney v Barreau, 2004 SCC 36 [Finney], the Supreme Court stated at paragraph 37 that the “courts do not appear to equatethe state or acts of bad faith squarely with a demonstrated intent to harm another or, consequently, to require evidence of intentionalfault”.

Instead, the Court held at paragraph 39 that the concept of bad faith can and must be given a broader meaning that encompasses serious carelessness or recklessness. Bad faithcertainly includes intentional fault… Such conduct is an abuse of power for which the State, or sometimes a public servant, may be heldliable. However, recklessness implies a fundamental breakdown of the orderly exercise of authority to the point that absence of goodfaith can be deduced and bad faith presumed. [21] Even though Finney was decided under the Québec civil law, the Supreme Court held at paragraph 46 that “the common law

would have been no less exacting than Quebec law on this point”. Therefore, this

interpretation of bad faith applies in Alberta. [ 22 ] Another Québec case, Entreprises Sibeca Inc v Frelighsburg (Municipality) , 2004 SCC 61 at para 26 , similarly defined bad faith: the concept of bad faith can encompass not only acts committed deliberately with intent to harm, which corresponds to the classical concept of bad faith, but also acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith. [ 23 ] In the present case, the Plaintiffs have alleged that the AER acted in bad faith.

I am aware that I must assume that the facts pleaded are true. However, “this assumption does not extend to bald allegations, to legal conclusions or to speculations, absurdities, highly implausible statements or statements incapable of proof” ( Grenon v Canada Revenue Agency , 2016 ABQB 260 at para 32 ). The Plaintiffs in this case offer no particulars with respect to the AER acting in bad faith. As such, the Plaintiffs are barred from bringing this action. [ 24 ] Moreover, I have read and listened to Mr. Goodhart’s submissions. He described the actions of certain representatives of the regulator in detail.

Their actions could be described as dismissive and rude. But in my view it cannot be said that anyone deliberately acted contrary to the statutory mandate or ignored it. The facts here don’t suggest a fundamental break down of the orderly exercise of authority such that the absence of good faith can be deduced and bad faith presumed to paraphrase the Supreme Court. I find that this action is barred by s 27 of REDA . [ 25 ] The application is allowed and this action is struck. Heard on the 8 th day of January, 2016. Dated at the City of Calgary, Alberta this 8 th day of September, 2016. A.D. Macleod J.C.Q.B.A.

Appearances: Rupert Goodhart- Self Represented for the Plaintiff Glenn Solomon, Q. C. for the Defendants