Alberta Skydivers Ltd v Darby, 2017 ABQB 273

Court of Queen’s Bench of Alberta Citation: Alberta Skydivers Ltd v Darby, 2017 ABQB 273 Date: 20170419 Docket: 1601 11917 Registry: Calgary Between: Alberta Skydivers Ltd.

Plaintiff - and - James Darby, John Cartwright-Terry, Mark Gresty, Simon Naylor, Marcus Evans, The Attorney General of Canada, The Ministry of Defence of the United Kingdom and The Attorney General of England and Wales Defendants Corrected judgment: A corrigendum was issued on April 21, 2017; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Decision of J.

Farrington , Master in Chambers _______________________________________________________ Background [ 1 ] The plaintiff seeks damages in the amount of $3 million jointly and severally against all of the defendants. The individual defendants are British soldiers. The defendant Ministry of Defence of the Government of the United Kingdom (“UKMOD”) seeks a

declaration that it is immune from the jurisdiction of this Court under the State Immunity Act, RSC 1985, c S-18, and dismissal of theaction, primarily under rule 3.68 of the Alberta Rules of Court. [2] The plaintiff provided skydiving training services to members of UKMOD stationed at CFB Suffield near Medicine Hat,Alberta. The plaintiff’s skydiving facilities were located off the base, at Beiseker, Alberta, which is approximately 250 km. from CFBSuffield.

All skydiving training occurred at those facilities. [3] The relationship between the parties is defined by various agreements and legislation. [4] The particular issue which gives rise to this action is a complaint by the plaintiff that its contract to provide skydivingtraining to UKMOD soldiers was not renewed. The plaintiff claims that it was induced by the individual defendants to believe that itscontract would be renewed, and in reliance upon those representations, it spent substantial sums of money in upgrading and enlarging itsfacilities for the purpose of servicing the anticipated renewal.

The plaintiff also claims directly against UKMOD, asserting that UKMODbreached duties of good faith which it owed to the plaintiff in the performance of contracts, largely based upon Bhasin v. Hrynew, 2014SCC 71 , [2014] 3 SCR 494 principles, and that the UKMOD also owed fiduciary duties to it, as a result of the ongoingrelationship between the parties. [5] The plaintiff’s actual contract for delivery of the skydiving training services was with Canada.

Notwithstanding that, thecontract says: For the purpose of this of this procurement, Canada is acting as agent for the British Army Training Unit Suffield. [6] The two most recent contracts were included in evidence. The plaintiff anticipated that its new contract would commence in2016, but on July 28, 2016, the plaintiff alleges that it was advised that there would be no skydiving contract awarded for 2016, norwould there be any commitment to award a contract in the future. [7] This application is not about the merits of the litigation generally.

It is about state immunity, and whether UKMOD isentitled to the protection of state immunity in relation to the action. Legislation [8] The legislative background is important.

Section 15(b)(ii) of the Visiting Forces Act, RSC 1985, c V-2 provides: (

b) in any other province (which description under the statute includes Alberta), (

i) a tort committed by a member of a visiting force while acting within the scope of their duties or employment shall be deemed to havebeen committed by a servant of the Crown while acting within the scope of their duties or employment, [9] The United Kingdom of Great Britain and Northern Island is designated as an applicable state for the purposes of theVisiting Forces Act in the Proclamation Designating Certain Countries as Designated States, CRC, c. 1596. As such, individualBritish soldiers are treated for tort liability purposes as Canadian soldiers.

Canada is obliged to treat them as such, and Canada isdefending this action on behalf of the individual soldiers as it should. Regardless of the outcome on the state immunity issues, the tortaspects against the individual soldiers remain. [10]

Section 3 of the State Immunity Act, RSC 1985, c S-18 provides the basic starting propositions for state immunity: 3

(1) Except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada.

(2) In any proceedings before a court, the court shall give effect to the immunity conferred on a foreign state by subsection (1)notwithstanding that the state has failed to take any step in the proceedings. [11] That does not necessarily end the matter. The State Immunity Act provides for exceptions to the general principle ofimmunity. [12] For example,

Section 4 of the State Immunity Act provides that a foreign state is not immune from the jurisdiction of theCanadian court if the state waives immunity. In this case, the plaintiff argues that a prior action commenced by UKMOD against thecurrent plaintiff relating to a skydiving accident involving a soldier operates as a waiver for the purposes of this action. [13]

Section 5 of the State Immunity Act is also important.

Section 5 provides: 5 A foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreignstate. [14] “Commercial activity” is defined in the State Immunity Act as “…any particular transaction, act or conduct or any regularcourse of conduct that by reason of its nature is of a commercial character.” Judicial Consideration of State Immunity [15] One of the leading Supreme Court of Canada cases on state immunity is Re Canada Labour Code (SCC),[1992] 2 SCR 50 (often referred to as P.S.A.C. v. United States Defence Department).

I will refer to it as “P.S.A.C”. [16] In P.S.A.C., the United States Defence Department operated a base in Canada. It hired Canadians in various civilian roles towork at the base. Many of them were tradespeople. The Public Service Alliance of Canada sought certification as a union for the civilianstaff. At issue was whether the United States Defence Department was immune from the certification proceedings.

[17] The case brought into issue the commercial exception to state immunity. Laforest, J. thoroughly considered the issue ofimmunity in the context of commercial activity. He ultimately held that it was first necessary to consider the nature of the activity inquestion in an overall context, and then consider the relationship between the legal proceeding in issue and the activity. [18] Prior to arriving at that conclusion, he first considered the origins of state immunity. [19] At paragraph 27, Laforest, J. held: Historically, nation states enjoyed an absolute immunity from adjudication by foreign courts.

Under international law, it was acceptedthat sovereign states should not be "embarrassed" by subjection to the control of a foreign judiciary. Over time, however, asgovernments increasingly entered into the commercial arena, the doctrine of absolute immunity was viewed as an unfair shield forcommercial traders operating under the umbrella of state ownership or control. The common law responded by developing a new theoryof restrictive immunity.

Under this approach, courts extended immunity only to acts jure imperii, and not to acts jure gestionis. [20] In Public International Law (Second Edition) 2008, the learned author John H. Currie states at pages 371-372: One of the principle objectives of thus codifying the principles of state immunity was to clarify some of the considerable uncertaintiessurrounding the topic resulting from certain twentieth century developments. One of these developments was the increasing propensityof the modern state to participate in the marketplace as a significant economic actor.

This was particularly (although by no meansexclusively) the case with socialist states with centrally planned economies.

When states as commercial actors engage in transnational business dealings- that is commercial transactions with one or more foreignelements- the difficulty posed is whether such states should enjoy greater privileges or immunities than any other commercial actor inthe international marketplace. [21] While not strictly necessary to the disposition of this matter, one would observe that the commercial activity exceptions tostate immunity generally seem to have arisen because state actors were participating in marketplaces for profit, and consequently it wasdebatable as to whether the normal rationale for state immunity existed.

The issue was whether states ought to be able to participate inthe commercial marketplace, as would a private entity, yet still enjoy state immunity for its alleged wrongs. The commercial activityexception which ultimately evolved said “no”. Analysis [22] With that background, I now consider the activity in this case generally in the way suggested by LaForest, J. in P.S.A.C. [23] In the present case, the activity involved was skydiving training.

While much was made by the plaintiff during argument thatthis was skydiving training that was identical to that which ordinary civilians participated in on a daily basis, and that it was not militaryskydiving, there was sufficient material in evidence to confirm that the skydiving training was part of the UKMOD’s overall adventuretraining program. Soldiers were encouraged to participate in an adventurous activity. Some soldiers participated in activities such asskiing, some participated in skydiving, and others participated in other activities.

There is no question that the activity was part of theUKMOD’s normal training program for soldiers, regardless of the precise nature of the skydiving activity. A significant number ofsoldiers participated in a significant way in the skydiving training program, and there is no doubt that it was a part of the UKMOD’sprogram for developing and training its soldiers. [24] The argument made here is that the skydiving training activity is a commercial one. It is certainly a commercial one from theperspective of the plaintiff.

The plaintiff is in the business of selling its skydiving training services, and presumably it hopes to make aprofit in doing so. I am not convinced, however, that from the perspective of the UKMOD, the activity is necessarily a commercial one. [25]

Section 5 of the State Immunity Act seems to require that I consider the nature of the activity in question from the perspectiveof the state. I repeat it here: 5 A foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreignstate. (Emphasis added) [26] The state is not in the business of marketing skydiving activities to soldiers, or to anyone. The state’s primary concern is thetraining of its soldiers. That is why the soldiers are in Canada.

They are not in Canada on organized skydiving vacations in the way that atour operator would connect participants to providers. [27] Even assuming the activity to be a commercial one, however, in my view the second part of the test is even moreproblematical for the plaintiff. That part of the test under P.S.A.C. involves considering the relationship between the legal proceedingand the activity. [28] This is not a case where a state breaches an agreement to pay for services that it procured, or breaches a commercial contractto buy and sell goods.

Indeed, all contracted services have been paid for, and there are no services remaining under the expired contract.The allegations pertain to a failure to award a new contract. The plaintiff asserts against UKMOD a breach of an alleged duty of goodfaith, and a breach of fiduciary duties owed in the context of failing to award a new contract. [29] In my view, allegations of that nature strike at the very heart of the concept of state immunity. State immunity exists becausesovereign states are free to consider their own interests, and make decisions based upon those interests.

That is the very essence of beingsovereign. The UKMOD is entitled to make its own decisions as to whether to continue to operate skydiving training as a part of thetraining of its military, or indeed as to how it wishes to train its military. [30] As reminded in Kazemi Estate v. Islamic Republic of Iran, 2014 SCC 62 , [2014] 3 SCR 176 by LeBel, J. atparagraphs 37 and 38:

Two other justifications for state immunity are comity and reciprocity (Forcese, at p. 135; Al-Adsani v. United Kingdom (2001), 34 E.H.R.R. 273, at para. 54). Just as foreign states do not want to have their executive, legislative or public actions called into judgment in Canadian courts, so too Canada would prefer to avoid having to defend its actions and policies before foreign courts. State immunity plays a large role in international relations and has emerged as a general rule of customary international law ( Jones v. United Kingdom , Nos. 34356/06 and 40528/06, ECHR 2014, at para. 89; Fox and Webb, at p. 2).

To be considered customary international law, a rule must be supported by state practice as well as opinio juris , an understanding on the part of states that the rule is obligatory as a matter of international law: Hape, at para. 46; Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 14, at para. 207. The I.C.J. has confirmed that the principle of state immunity meets both of these requirements ( Germany v. Italy , at paras. 55-56).

Given the presence of both state practice and opinio juris , it is now settled and unequivocal that immunity is more than a courtesy; it has a firm place in the international legal landscape (Fox and Webb, at p. 2). [ 31 ] The action against UKMOD cannot stand, unless some other exception to sovereign immunity applies. [ 32 ] It was argued in Kazemi Estate that the categories of exceptions should be made broader, and an exception to state immunity ought to be recognized for activities such as torture.

Notwithstanding the most unfortunate facts in Kazemi , LeBel, J. held at paragraph 56: With all due respect, I am of the view that the SIA provides an exhaustive list of exceptions to state immunity. For that reason, reliance need not, and indeed cannot, be placed on the common law, jus cogens norms or international law to carve out additional exceptions to the immunity granted to foreign states pursuant to s. 3(1) of the SIA . The SIA , in its present form, does not provide for an exception to foreign state immunity from civil suits alleging acts of torture occurring outside Canada.

This conclusion does not freeze state immunity in time. Any ambiguous provisions of the Act remain subject to

interpretation, and Parliament is at liberty to develop the law in line with international norms as it did with the terrorism exception. [ 33 ] There is no question that waiver is a recognized and legislated exception to state immunity, and that was argued here. The plaintiff asserts that by filing a previous claim in Canada against the plaintiff on behalf of an injured British soldier in 2014, that that action operates as a waiver for the purposes of this action. I find that filing the previous action does not constitute waiver. [ 34 ] Waiver must, of course, be express.

In addition, the previous action pertained to one specific skydiving incident and personal injuries suffered in the incident. It had nothing to do with contracts, or renewal of contracts, or delivery of the skydiving services generally. I find that waiver is not applicable here. Filing an action on behalf of one British soldier cannot constitute waiver of immunity for all future purposes for UKMOD. In fact, s. 6 of the State Immunity Act expressly provides that there is no state immunity for acts of death or personal injury that occur in Canada. The previous action had nothing to do with state immunity.

While the situation was reversed here in that it was the British government that commenced the action, s. 6 nevertheless indicates that different considerations apply on personal injury matters. [ 35 ] Finally, I comment briefly on the two cases cited in the plaintiff’s brief as examples of cases where state immunity was found not to apply. I find them to be distinguishable and not directly on point here. [ 36 ] In Kais v. Abu Dhabi Education Council et al , 2011 ONSC 75 , a teacher who had contracted with the Abu Dhabi Education Council had her arrangements cancelled when her visa proved to be unobtainable.

The plaintiff sued. The case was actually argued primarily as a forum non conveniens case and the decision expressly sets out that state immunity was not directly engaged. Nevertheless, the Court commented briefly on state immunity. Consistent with P.S.A.C ., the Court reminded that generally employment contracts are considered to be commercial in nature. More importantly, the ratio for the decision appears to be based upon forum non conveniens factors.

Additionally, the action was about an alleged breach of the actual contract as opposed to a forward looking consideration of what the future ought to have brought, which is what is sought here. [ 37 ] In Dorais v. Saudi Arabian General Investment Authority , 2013 QCCS 4498 state immunity was directly engaged and considered. The dispute was a fee dispute in which Montreal lawyers were trying to collect fees for services they alleged to have rendered, including for arranging meetings between the defendant and Canadian businesspeople. It was a simple action alleging unpaid services under a contract.

Not surprisingly, the commercial exception to state immunity was found to apply. At paragraph 35, Collier, J.S.C. held: Furthermore, it is evident that the plaintiff’s action on account will have no impact on the defendants’ sovereign activities. Dorais’ action is for a sum of money, nothing more. No part of its claim is likely to interfere with the defendants’ exercise of their sovereign mandate – unlike the situation that prevailed in Re Canada Labour Code .

To borrow the words of Hugessen J.A. in Lorac Transport Ltd ., “In no way does the present action put in question the authority or the dignity of the government of [The Kingdom of Saudi Arabia] or interfere with its sovereign or governmental functions.” [ 38 ] That is not the case here. Conclusions [ 39 ] For the foregoing reasons, UKMOD is entitled to the declaration that it seeks, namely that state immunity applies. As a result, all claims as against UKMOD are dismissed.

The parties may speak to costs within 60 days of these reasons if they cannot agree. [ 40 ] I note that the plaintiff asserted prejudice with respect to document production if UKMOD is removed from the action. Of course, that is not one of the recognized exceptions to state immunity. No general or advance ruling can be made on those issues. Any matters or disputes regarding document production will need to be dealt with in the ordinary way under the Rules of Court and argued by those who have an interest in the issues raised.

Heard on the 04 th day of April, 2017. Dated at the City of Calgary, Alberta this 19 th day of April, 2017. J. Farrington M.C.Q.B.A. Appearances: James P. Flanagan McLennan Ross LLP for the Plaintiff Allison Kuntz and Emily McCartney Norton Rose Fulbright Canada LLP for the Defendant The Ministry of Defence of the United Kingdom _______________________________________________________ Corrigendum of the Reasons for Decision of J. Farrington J. Farrington, Master in Chambers _______________________________________________________ The appearances for the Defendants have been revised.