Scherle v Treadz Auto Group Inc, 2019 ABQB 987

Court of Queen’s Bench of Alberta Citation: Scherle v Treadz Auto Group Inc, 2019 ABQB 987 Date: 20191220 Docket: 1501 06687 Registry: Calgary Between: Andrea Scherle and Stacy Rachkewich, as Representative Plaintiff Plaintiffs - and - Treadz Auto Group Inc., Sean O'Brien, Her Majesty the Queen in Right of Alberta as Represented by Service Alberta, and Alberta Motor Vehicle Industry Council Defendants _______________________________________________________ Decision of the Honourable Madam Justice G.A. Campbell _______________________________________________________ Table of Contents I Introduction . 3 II Background . 4 A The Evidentiary Record . 4

B Service Alberta and AMVIC .. 5 C Treadz Defendants’ History with AMVIC .. 7 1) Licensing . 7 2) Complaints . 8 D The Action . 9 III

Summary Dismissal Applications . 11 A Law on

Summary Dismissal 11 B Law on Negligence Claims Against Public Bodies . 12 C Analysis . 13 1) AMVIC .. 13 2) Service Alberta . 21 D Anns/Cooper Legal Principles . 22 1) Application of the Anns/Cooper test to AMVIC .. 24 2) Application of Anns/Cooper Test to Service Alberta . 27 E AMVIC - The Immunity Provision and Bad Faith . 31 1) Applicable Legal Principles . 31 2) Parties’ Positions . 32 3) Analysis . 33 F

Summary Dismissal Conclusion . 38 IV Certification of the Action . 38 A Class Action Requirements . 38 1) Cause of Action . 39 2) Identifiable Class . 40 3) Common Issues . 41 4) Preferable Procedure . 46 5) The Representative Plaintiff Criterion . 47 B Should the Action be Certified as a Class Action? . 48 V Conclusion . 49 I Introduction [ 1 ] In this action, Andrea Scherle and Stacy Rachkewich (the Plaintiffs) allege that they and others suffered financial loss and damages arising out of their dealings with Treadz Auto Group Inc. (Treadz), a used car dealership in Calgary (the Action).

The Plaintiffs allege that their losses and damages are due to the actions and inactions of the following defendants: Treadz and its principal, Sean O’Brien (together, the Treadz Defendants); Her Majesty the Queen in Right of Alberta as represented by the Ministry of Service Alberta (Service Alberta); and the Alberta Motor Vehicle Industry Council (AMVIC). [ 2 ] The Treadz Defendants failed to respond to the Action and have been noted in default.

The two remaining defendants, Service Alberta and AMVIC, are the public bodies that are alleged to have been negligent in carrying out their respective regulatory duties. [ 3 ] In this proceeding, the Plaintiffs seek to certify the Action as a class action under the Class Proceedings Act , SA, 2003, c C- 16.5 (the CPA ) on behalf of all persons who entered into a consumer transaction with Treadz and suffered loss or damage from 2011 to

the date of certification (the Proposed Class). [ 4 ] Having pled a cause of action for breach of contract and negligence on their own behalf and on behalf of the Proposed Class, the Plaintiffs submit that the Action satisfies the criteria for certification as a class action under the CPA . [ 5 ] Service Alberta and AMVIC resist certification and bring cross-applications for

summary dismissal of the Action against each of them. They submit that the Plaintiffs’ claim of regulatory negligence cannot succeed and that there is no genuine issue of merit requiring a trial. Specifically, they argue that they do not owe a duty of care to the Plaintiffs or Proposed Class, nor should a novel duty of care be recognized.

Service Alberta and AMVIC take no position with respect to certification of the Action against the Treadz Defendants. [ 6 ] As will be discussed, the allegations that the Treadz Defendants breached their consumer transaction agreements with customers, were unjustly enriched, and made false representations that resulted in loss and damages to its customers, are genuine issues requiring a trial. [ 7 ] However, there is no merit to the allegations that Service Alberta and AMVIC are liable for regulatory negligence to the Plaintiffs and the Proposed Class.

I find there is no factual or legal basis for concluding that either Service Alberta or AMVIC owed the Plaintiffs or the Proposed Class a private law duty of care to protect them from unfair business practices and to investigate and remedy any unfair business practice. [ 8 ] In addition, because I find there is no merit to the allegation that AMVIC acted in bad faith in carrying out its regulatory duties, AMVIC is also protected from any liability for regulatory negligence by the statutory limitation of liability clause of the Fair Trading Act , RSA 2000, c F-2 9 (the FTA ).

I note that in December 2017, Bill 31: A Better Deal for Consumers and Businesses Act received Royal Assent; Bill 31 made amendments to the FTA and changed its name to the Consumer Protection Act , RSA 2000, c C- 26.3 . The references in this decision are to the FTA as it read prior to January 1, 2018. [ 9 ] For the reasons that follow, I allow the certification application against only the Treadz Defendants. The applications for

summary dismissal of the Action against Service Alberta and AMVIC are granted. II Background [ 10 ] While the facts will be discussed throughout this decision, the necessary background for both the application for certification and the applications for

summary dismissal follows. A The Evidentiary Record [ 11 ] The Plaintiffs’ application for certification and opposition to the

summary dismissal applications of Service Alberta and AMVIC is supported by the 26 February 2016 Affidavit of Stacy Rachkewich, the 27 October 2016 Affidavit of Andrea Scherle, the 27 June 2017 Affidavit of Owen Michaluk, and the documentary exhibits and transcripts of questioning of Mr. Rachkewich, Ms. Scherle and Mr. Michaluk. [ 12 ] Mr. Rachkewich and Ms. Scherle were customers of the Treadz Defendants. [ 13 ] In May 2012, Mr. Rachkewich purchased a 2010 Dodge Journey from the Treadz Defendants. In July 2014, Mr.

Rachkewich returned to the Treadz Defendants and purchased a 2011 Dodge Journey and an extended warranty. At the time, the 2010 Journey, which he kept, was subject to Scotiabank financing. The Treadz Defendants agreed to provide a combined loan for the purchase of 2011 Journey, which would pay out the Scotiabank financing on the 2010 Journey and also providing a new loan for the 2011 Journey (the Treadz Loan). [ 14 ] The Treadz Defendants transferred the Treadz Loan to a third-party financing company that was never advised that Mr. Rachkewich remained in possession of the 2010 Dodge Journey.

That financing company did not pay out the Scotiabank financing but paid the entire amount of the Treadz Loan to the Treadz Defendants. The Treadz Defendants never paid out the Scotiabank financing. [ 15 ] Mr.

Rachkewich claims that the Treadz Defendants owe him approximately $19,186 comprised of $13,965.32 for the Scotiabank financing buyout (he still has the 2010 Dodge Journey), $2500 for what he alleges was a fraudulent extended warranty, $1,921 for payments on the Scotiabank financing that the Treadz Defendants should have paid and $800 in interest per year on the alleged fraudulent warranty for four years. [ 16 ] In January 2015, Mr. Rachkewich submitted a formal complaint to AMVIC for compensation from the AMVIC compensation fund for his alleged losses. [ 17 ] In February 2014, Ms.

Scherle entered into a consignment agreement with the Treadz Defendants under which they agreed to sell her 2012 Dodge Ram. At the time, the Dodge Ram was subject to Scotiabank financing. Ms. Scherle learned that on 24 March 2014, the Treadz Defendants had sold the Dodge Ram for $53,500, which should have paid out the financing. In June 2014, Ms. Scherle received $2,500 from the Treadz Defendants as payment for the sale of her Dodge Ram. The Treadz Defendants provided a cheque to Scotiabank to payout the Scotiabank financing. However, before the Treadz Defendants’ cheque cleared, Scotiabank removed their lien.

The Treadz Defendants’ cheque was returned for insufficient funds. When Scotiabank re-registered their lien, it became the second lien on the Dodge Ram as an intervening lien had been registered. With its security impaired, Scotiabank pursued Ms. Scherle for payment of the loan money, which was almost $47,000. Ms. Scherle filed an online complaint with AMVIC on 14 August 2014, and was contacted by Mr. Michaluk as the AMVIC investigator. Ms. Scherle made a claim to the compensation fund for $25,000, which is the maximum amount that can be claimed against the fund.

[ 18 ] The final evidentiary support for the Plaintiffs comes from Mr. Michaluk. Mr. Michaluk was employed as an investigator with AMVIC from July 2012 to December 2014, when his employment was terminated. In late July, early August 2014, Mr. Michaluk was appointed as one of the lead investigators to assist in AMVIC’s investigation into the Treadz Defendants’ activities. Mr. Michaluk was not involved in the licensing side of AMVIC, including any investigations or other actions that were undertaken in respect of the licensing of the Treadz Defendants. [ 19 ] Service Alberta’s application for

summary dismissal is supported by the 13 April 2016 Affidavit of Darren Thomas, the transcript of questioning of Mr. Thomas and an Affidavit of Records. Mr. Thomas was employed as the Statute Administrator and in other capacities with Service Alberta. Mr. Thomas’s affidavit includes the documentation relevant to the delegation to AMVIC, including Delegation of Authority, Delegation Agreements, Operational Review Reports and Investigative Findings Reports, and communications between AMVIC and Service Alberta ministry officials. This evidence was also used in support of Service Alberta’s opposition to certification of the Action against it. [ 20 ] AMVIC’s application for

summary dismissal is supported by the 15 April 2016 Affidavit of Heather Ewasiuk, transcript of questioning of Ms. Ewasiuk and her answers to undertakings. Ms. Ewasiuk is an investigator with AMVIC, who was aware of AMVIC’s investigation into the Treadz Defendants and who reviewed and provided AMVIC’s business records. This evidence was also used in support of AMVIC’s opposition to certification of the Action against it. B Service Alberta and AMVIC [ 21 ] AMVIC is a not-for-profit independent self-governing organization registered under the Societies Act, RSA 2000, C S-14 .

AMVIC’s Board of Directors is comprised of 13 members: six appointed by the Minister, five appointed by industry associations, and two industry-at-large members, who are owners or employees of automotive businesses. [ 22 ] Service Alberta is the Alberta government ministry responsible for administering the consumer protection framework provided for under the FTA , including the regulation of automotive consignment businesses under the FTA and the Automotive Business Regulation, AR 192/1999 (the Regulation ).

Service Alberta’s mandate includes protecting Alberta consumers and automotive businesses from unfair business practices in the automotive services industry. [ 23 ] The Regulation sets out a system of mandatory rules designed to protect both automotive consumers and automotive businesses. [ 24 ] Sections 136 and 174 of the FTA authorize Service Alberta to delegate the powers, duties and functions of the Director of Fair Trading (the Director) to regulate automobile consignment businesses to a regulatory board. [ 25 ] The automotive consignment industry has been regulated in Alberta by AMVIC since 1999 when the Minister of Service Alberta first delegated the powers, duties and functions of the Director under the FTA and the Regulation under a Delegation of Authority to AMVIC, which was replaced in July 2002 by the current Delegation of Authority. [ 26 ] A 2014 Briefing Note provided to the Minister of Service Alberta advised that AMVIC has been delegated under the FTA to provide “…consumer protection by investigating consumer complaints about automotive businesses, licence automotive businesses operating in Alberta, register automotive sales people, educate and inform consumers and industry and operate a consumer compensation fund…”. [ 27 ] The AMVIC compensation fund, set at $4 million, was established in 2012 to compensate consumers for eligible losses up to $25,000 from an AMVIC-licensed business after it is no longer in operation or is unable to compensate the consumer. [ 28 ] The Delegation of Authority was accompanied by a series of Automotive Business Regulatory Services Delegation Agreements between Service Alberta and AMVIC. [ 29 ] The 12 October 2012 Automotive Business Regulatory Services Delegation Agreement (the Delegation Agreement) was the agreement in effect during the relevant time.

The Delegation Agreement, like its predecessor agreements, states that its purpose is to establish an agreement between the Minister and AMVIC concerning their respective legal roles and responsibilities relating to delegations to AMVIC under the FTA . [ 30 ] The Delegation Agreement states that “AMVIC in its regulatory role operates independently from government”.

The Delegation Agreement also sets out that Service Alberta does not have the ability to direct or instruct AMVIC or AMVIC investigators in carrying out their mandate. [ 31 ] T he Director’s powers, duties and functions exclusively delegated to AMVIC under the Delegation Agreement include: (

a) licensing and registration administration under the FTA and the Regulation ; (

b) investigations, claims and enforcement arising from complaints under the FTA , the Regulation , and other regulations; (

c) establishment and administration of the compensation fund; and (

d) establishment of educational programs for consumers and industry members in relation to automotive businesses. [ 32 ] While Service Alberta delegated its regulation of the automotive services industry to AMVIC under the Delegation Agreement, it retained some responsibilities, including: amending or repealing applicable legislation; ensuring that AMVIC reports as they are required to under the Delegation Agreement; and responding to consumer inquiries. [ 33 ] The Delegation Agreement also authorizes Service Alberta to retain an oversight function by permitting it to review how

AMVIC carries out its delegated functions. To this end, the Delegation Agreement provides that operational reviews will be completed once every three years by Service Alberta, but the Minister may undertake a review of AMVIC’s operations at any time. The operational review reports only contain review findings and recommendations based on specified review criteria and objectives.

AMVIC is not obligated to comply with the recommendations, but is required to respond to the recommendations within 60 days or such other time as specified by the Minister. [ 34 ] Since the relationship between Service Alberta and AMVIC is central to the duty of care analysis that will proceed below, further details of the powers and operation of these two regulatory bodies will be discussed within that analysis.

C Treadz Defendants’ History with AMVIC 1) Licensing [ 35 ] On 9 November 2004, AMVIC issued an Automotive Business Licence to the Treadz Defendants and approved them for used car sales, wholesale car sales, agent-broker sales and consignment sales. [ 36 ] The FTA permits the Director to refuse to issue or renew a licence or cancel or suspend a licence if the applicant or licencee has been convicted of a criminal offence that, in the opinion of the Director, makes the applicant or licencee unsuitable to be licenced: ss 125 and 127.

To this end, the AMVIC Policy Manual requires a criminal record check for applicants seeking an automotive licence. [ 37 ] AMVIC’s licensing file for the Treadz Defendants reveals the following information on their history of applications with AMVIC. [ 38 ] In late 2003, Mr. O’Brien first applied for an automotive business licence and automotive salesperson license on behalf of himself and a company, JDS Consulting. In connection with Mr. O’Brien’s initial licence, a criminal record check was requested and a Licence Cover Sheet states “Criminal record: Over 9 years ago. Putting through file for review.

Insufficient evidence not to issue licence”. [ 39 ] On 22 October 2004, Mr. O’Brien applied for an automotive business licence and automotive salesperson license on behalf of himself and Treadz. In response to the question in the licence application, Mr. O’Brien recorded “Yes” to having a criminal record which he described as “10 years ago car theft related charges”. [ 40 ] On 8 November 2004, AMVIC licensing staff approved the Treadz Defendants’ file for processing and noted, “CR and Bankruptcy – Insufficient evidence to not issue licence. See inside file for all details”.

A Licence Cover Sheet dated 8 November 2004 states, “CR indicated. Janet has looked over and okayed the file”. [ 41 ] AMVIC’s licensing arm was also made aware of Mr.

O’Brien’s criminal record relating to automotive theft on applications submitted to extend or renew the Treadz Defendants’ Automotive Business Licence. [ 42 ] An entry in the Licensing File dated 22 August 2007 includes the following notation on past convictions: “Multiple charges around car theft, 1992 through ‘94”, and opposite that notation are someone’s initials with the words “OK”. [ 43 ] On 21 February 2008, licensing staff ran a Canadian Police Information Centre (CPIC) search and noted: “in reviewing CPIC – insufficient evidence not to issue a licence.

This is a second location and previous hearing held on other file. Okay to proceed with issuing the licence. Forwarding application to Amanda for file review ”. An Automotive Business Licence renewal was issued to the Treadz Defendants on 28 February 2008. [ 44 ] In connection with the Treadz Defendants’ 2012 Automotive Business Licence renewal, licensing staff ran another CPIC search and the renewal application was sent to the Manager of Licensing for review. An entry in the licensing file dated 11 June 2012 from the Manager states: “Reviewed CR.

Information present does not preclude applicant from eligibility to be licenced. CPIC documents destroyed.” The Treadz Defendants’ Automotive Business Licence renewal was issued on 11 June 2012. [ 45 ] Mr.

O’Brien’s criminal record in evidence states that he was convicted of attempted theft over $1000 in 1993 for which he received a $300 fine and probation of 1 year and two convictions in 1994, one of which was for possession of stolen property over $1000, the other conviction for mischief, for which convictions he received a sentence of 18 months on each charge. [ 46 ] During the time it was licenced with AMVIC, as required by AMVIC, the Treadz Defendants had in place a surety bond in the amount of $50,000. 2) Complaints [ 47 ] Between 2004 and 2012, AMVIC received a total of 8 complaints by customers in relation to the Treadz Defendants.

Investigative reports were prepared in each instance. The investigative reports in evidence document that only three of these customer complaints concerned failure to pay out proceeds of consignment sales but were resolved with required payments made. [ 48 ] No complaints were made to AMVIC about the Treadz Defendants in 2013. [ 49 ] On 11 February 2014 and 24 March 2014, AMVIC received two customer complaints about the Treadz Defendants. [ 50 ] The first complaint, received 11 February 2014, was from an individual named Mr.

Mackenzie, claiming he had not received payment from the Treadz Defendants for the vehicle he had consigned to them that sold. AMVIC investigator Robyn Diddams investigated the complaint and had communications with the Treadz Defendants. On 22 May 2014, the Treadz Defendants paid Mr. Mackenzie the consignment money owing to him.

[ 51 ] A similar complaint was received 24 March 2014 from an individual named Ms. McAllister. Mr. Michaluk investigated the complaint. By the end of May 2014, Ms. McAllister (and her bank) had been paid by the Treadz Defendants. Mr. Michaluk closed his investigation on this complaint. He made no recommendation that the Treadz Defendant’s licence be cancelled but indicated that he would continue his investigation into this matter. [ 52 ] As a part of the first complaint, Mr. Diddams completed an Application Report – Investigations at the conclusion of the case.

The report included a review of the Mackenzie complaint, an investigative history of other complaints made against the Treadz Defendants, and noted he had found multiple internet reviews about the Treadz Defendants not paying consignment sales. At the conclusion of his report, Mr. Diddams recommended the cancellation of the Treadz Defendants’ Automotive Business Licence.

The report was dated 20 May 2014. [ 53 ] On 13 June 2014, after receiving concerning information about the Treadz Defendants from another consignment business owner, AMVIC’s Executive Director directed an inspection into the Treadz Defendants’ activities to start the upcoming Monday 16 June 2014. [ 54 ] On 18 June 2014, Mr. Diddams was directed to investigate the complaint that Treadz had not been paying out its warranties to Global Warranty. [ 55 ] Between 16 June 2014 and 7 July 2014, five additional complaints were received by AMVIC about the Treadz Defendants’ conduct. [ 56 ] On 8 July 2014, Mr.

Diddams submitted an Application Report – Investigations arsing from the investigation directed on 13 June 2014. Mr. Diddams’ investigation revealed that the Treadz Defendants’ had a common theme of not paying out proceeds of consignment sales, that there were three pending investigation files and that Treadz had not paid out warranties from August 2013 to May 2014 but had recently made the required warranty payments to Global Warranty.

He again recommended the cancellation of the Treadz Defendants Automotive Business Licence and that the matter be set down for a hearing. [ 57 ] In response, a Notice of Administrative Review was sent to the Treadz Defendants on 14 July 2014, and a hearing was scheduled for 14 August 2014. [ 58 ] On 21 July 2014 AMVIC advised Service Alberta’s Statute Administrator Darren Thomas that media coverage regarding complaints against a consignment automotive dealer was imminent. That same day the Plaintiff Scherle publicized her complaint against the Treadz Defendants with local Calgary media.

She had yet to file a complaint with AMVIC. [ 59 ] Between 16 July 2014 and 28 August 2014, an additional 34 complaints against the Treadz Defendants were received by AMVIC. [ 60 ] Most customer complaints about the Treadz Defendants were received after AMVIC’s Executive Director appeared in numerous TV and radio interviews encouraging alleged victims to contact AMVIC. [ 61 ] On 27 and 28 August 2014, Service Alberta received its first complaints about the Treadz Defendants and specifically, AMVIC’s handling of complaints about the Treadz Defendants.

Subsequent similar complaints were received through to March 2015. [ 62 ] On 27 August 2014, Mr. O’Brien provided a Business Closure Request Form for the Treadz Defendants to AMVIC, advising that it was ceasing business. [ 63 ] After one adjournment, the hearing proceeded on 28 August 2014. The Treadz Defendants’ Automotive Business Licence was cancelled after the hearing that same day. D The Action [ 64 ] The Plaintiffs assert in their pleadings that the Treadz Defendants committed fraud and theft in its selling of used vehicles consigned to it by individual customers, including the Plaintiffs.

The Plaintiffs allege that they and the Proposed Class entered consumer transactions whereby the Treadz Defendants agreed to one or more of the following:

a) To display, demonstrate and advertise the consignment vehicle;

b) To pay a settlement cheque within 10 business days following the sale of the consignment vehicle;

c) To deduct and pay all liens associated with the consignment vehicle; and

d) To accept all trades in whole or in part payment for the consignment vehicle. [the Consignment Agreement] [ 65 ] The Plaintiffs allege that the Treadz Defendants breached the Consignment Agreement with them and the Proposed Class by failing to pay them and the Proposed Class for their consignment vehicles sold, and by failing to remove, deduct or pay vehicle liens. In so doing, the Plaintiffs allege that the Treadz Defendants were unjustly enriched and breached the FTA . [ 66 ] The Plaintiffs allege that Service Alberta and AMVIC were each negligent in administering their respective statutory responsibilities.

Specifically, the Plaintiffs allege that AMVIC and Service Alberta owed each of them and the Proposed Class a private law duty of care to protect them from unfair business practices and investigate and remedy any unfair business practice. [ 67 ] The Plaintiffs assert in their pleadings that AMVIC, as a result of its licensing and the investigations it had undertaken, knew

or ought to have known of the Treadz Defendants’ systemic wrongdoings, including ongoing systemic fraud and continual systemic misappropriation of their and the Proposed Class’s funds. They allege that AMVIC was under a duty to them, and other automotive consignment consumers and prospective automotive consignment consumers, to not have licensed the Treadz Defendants at all.

They also allege that AMVIC should have proactively investigated and suspended the Treadz Defendants’ licence once indicators of the Treadz Defendants’ systemic wrongdoing became apparent. [ 68 ] The Plaintiffs claim that they and the Proposed Class suffered economic loss and damage as a result AMVIC’s negligence. [ 69 ] The Plaintiffs assert that AMVIC acted in bad faith in the exercise of its powers and its failures to perform its duties with respect to licensing and oversight of the Treadz Defendants and that this bad faith caused it to fail to satisfy its consumer protection mandate. [ 70 ] The Plaintiffs also claim that through its oversight and operational reviews, Service Alberta knew or ought to have known that AMVIC was experiencing systemic operational difficulties and was not properly carrying out its delegated activities, specifically its licensing, investigation and consumer complaint processes. [ 71 ] The Plaintiffs say that Service Alberta was negligent in failing to: impose conditions on AMVIC; return the delegated activities back to it; exercise its powers and oversight role to ensure AMVIC reformed as necessary, including imposing sanctions and forcing compliance with its recommendations.

They allege that these negligent activities caused them and the Proposed Class to suffer economic loss and damages. [ 72 ] The claim against AMVIC rests on the proposition that AMVIC owed a private law duty of care to the Plaintiffs and the Proposed Class to properly monitor and regulate its licensed businesses. [ 73 ] The claim against Service Alberta rests on the proposition that Service Alberta owed a private law duty of care to the Plaintiffs and Proposed Class to properly and effectively oversee and supervise its delegate, AMVIC. [ 74 ] The key determination for

summary dismissal is whether these public bodies owe a private law duty of care to the customers who suffered financial loss as a result of the acts or omissions of a third party, the Treadz Defendants. [ 75 ] With this background the first issue for consideration is the

summary dismissal applications from AMVIC and Service Alberta. III

Summary Dismissal Applications A Law on

Summary Dismissal [ 76 ] It is now well-accepted that a conventional viva voce trial is not the only proportionate means for achieving a fair and just adjudication of legal disputes: Windsor v Canadian Pacific Railway Ltd , 2014 ABCA 108 , citing Hryniak v Mauldin , 2014 SCC 7 . [ 77 ]

Summary disposition that does not include a trial is another “procedure for deciding whether the moving party has proven its case on a balance of probabilities” and is a means for providing timely, less costly and proportionate adjudication of disputes: Stefanyk v Sobeys Capital Incorporated , 2018 ABCA 125 . [ 78 ] Rule 7.3 of the Alberta Rules of Court , AR 124/2010 provides the court with the jurisdiction to resolve disputes without a trial by granting

summary dismissal if there is no defence or merit to a claim or part of it. Thus, a party may apply to summarily dismiss an action on the ground that they have a complete defence and, therefore, there is no merit to the claim being advanced against them. [ 79 ] At the time of this hearing, the strength of the burden required for the moving party to prove their case to obtain

summary judgement or

summary dismissal in Alberta was unsettled. Our Court of Appeal recently clarified the approach to be taken in Weir-Jones Technical Services Incorporated v Purolator Courier Ltd , 2019 ABCA 49 . [ 80 ] The majority in Weir-Jones confirms the approach to

summary judgement applications taken in Hryniak and Windsor , emphasizing that “[t]he procedure and the outcome must be just, appropriate, and reasonable”. That approach requires a court to consider the following series of questions, at para 47: 1) Does the state of the record make it possible to resolve the dispute on a

summary basis; If yes; 2) Has the moving party (in this case AMVIC and Service Alberta) demonstrated, on the balance of probabilities, that on the facts as proven the responding party (here, the Plaintiffs) has no claim against them and there is no genuine issue for trial; If yes; 3) Has the responding party (here the Plaintiffs) shown that there is nonetheless a genuine issue requiring a trial because of the nature of the issue or its merits; If not; 4) Is there sufficient confidence in the state of the record that that the court is prepared to exercise its judicial discretion to summarily resolve the dispute and grant

summary judgement or dismissal.

[ 81 ] Further submissions were not sought from the parties on the Weir-Jones approach as it follows that set out in Hryniak . In the Weir-Jones approach, the record must be sufficiently complete such that the court can make the necessary findings of facts and apply the relevant legal principles to those facts. Assuming those first two requirements are met,

summary disposition must be a more proportionate, expeditious means to achieve a just and fair result as opposed to a trial: Weir-Jones at paras 21 and 25. [ 82 ] In assessing the

summary dismissal applications here, a determination as to whether a public body owes a private law duty of care requires applying the legal principles of proximity and foreseeability to the circumstances in question. [ 83 ] While

summary disposition may be used to decide whether a novel private law duty of care exists in the circumstances (especially when there is no dispute about the material facts), it may be preferable to determine such novel questions of law with the benefit of a full evidentiary record presented at trial: Condominium Corporation No. 0321365 v Cuthbert , 2016 ABCA 46 , at paras 34- 35 . [ 84 ] For the reasons that follow, I find that the Action against AMVIC and Service Alberta is well-suited for a

summary dismissal judgment. There are no material facts seriously in dispute and there is no need for the full machinery of a trial to conclude that there is no private law duty of care owed in the circumstances here and that AMVIC, in any event, is immune from liability under the FTA . These conclusions are dispositive of the Plaintiffs’ Action against AMVIC and Service Alberta.

B Law on Negligence Claims Against Public Bodies [ 85 ] The Plaintiffs’ claims against Service Alberta and AMVIC are based on their alleged regulatory negligence in failing to protect the Plaintiffs and the Proposed Class from the financial loss they sustained from the Treadz Defendants, a third party, and from the Treadz Defendants’ intentional wrongful acts.

The negligence alleged caused financial loss, but did not cause personal injury or property damage. [ 86 ] To prove negligence, the Plaintiffs must first establish that Service Alberta and AMVIC owed each of them and the Proposed Class a duty of care to protect them from unfair business practices and to investigate and remedy any unfair business practice . Unless a private law duty of care exists, these two public bodies cannot be found negligent. [ 87 ] The parties agree the test for whether a private law duty of care is owed by a public body is determined through the application of the Anns/Cooper test.

The test evolved from the test set out in Anns v Merton London Borough Council , [1977] 2 All ER 118 (UK HL) and was later refined in in Cooper v Hobart , 2001 SCC 79 , and Edwards v Law Society of Upper Canada , 2001 SCC 18 . [ 88 ] The first step under the Anns/ Cooper test is to determine whether the jurisprudence has previously found the existence of a duty of care based on the relationship that arises in the dispute, or is sufficiently analogous to a previous relationship where a duty of care was found. [ 89 ] If the relationship between the plaintiff and the defendant falls within a category of relationships giving rise to a recognized duty of care, it can be inferred that sufficient proximity is present and, if the risk of harm was foreseeable, a prima facie duty of care will be established. [ 90 ] The Supreme Court in Childs v Desormeaux , 2006 SCC 18 explained that a full Anns/ Cooper test is not always necessary because the approach of categorizing claims “simply captures the basic notion of precedent: where a case is like another case where a duty has been recognized, one may usually infer that sufficient proximity is present and that if the risk of injury was foreseeable, a prima facie duty of care will arise”: at para 15. [ 91 ] More recently, the Supreme Court in Deloitte & Touche v Livent Inc (Receiver of) , 2017 SCC 63 guided courts to be careful to ensure that any analogy found is very close to a recognized category and that courts should not identify or analogize established proximate relationships in overly broad terms.

The Supreme Court also emphasized that the analysis of proximity as opposed to reasonable foreseeability is key to recognition of a novel prima facie duty of care: Deloitte at paras 27-28. [ 92 ] If the relationship between the plaintiff and the defendant does not fall within a recognized duty of care category, then the court is required to apply the full Anns/ Cooper test. The test requires the court to answer the following three questions: (

a) Was the harm suffered by the plaintiff reasonably foreseeable in the circumstances; (

b) If so, was the relationship between the plaintiff and the defendant sufficiently close to impose a duty of care and there are no policy reasons that arise from the parties’ relationship itself that would negate or limit the imposition of a private duty of care; If so, a prima facie duty of care arises; and (

c) Are there are any residual or more general policy considerations outside the parties’ relationship that would negate any prima facie duty of care established by foreseeability and proximity; If not, then a new duty of care will be found to exist. [ 93 ] In this case, the key consideration is the nature of the relationship between the Plaintiffs, who were customers and members of the public interacting with Treadz, and each of AMVIC and Service Alberta, who were the public bodies responsible for regulating the automotive consignment industry in Alberta. [ 94 ] AMVIC and Service Alberta carried out different roles with respect to the regulation of automotive consignment businesses in Alberta and their respective dealings with consumers and businesses were different.

Accordingly, the allegations against AMVIC and Service Alberta are distinct claims that are analyzed separately. [ 95 ] Although their positions differ, all of the parties except Service Alberta argued that AMVIC and Service Alberta fall into a previous or analogous category where a duty of care is or is not owed. The arguments and analysis are considered for AMVIC first,

followed by Service Alberta. C Analysis 1) AMVIC [96] AMVIC and the Plaintiffs both submit that the existence of a private law duty of care in the circumstances here has beenpreviously determined by the courts, or is analogous to findings made in other decided cases.

With differing results, these two partiessubmit that because of these precedents, it is unnecessary to conduct a fulsome Anns/Cooper test. [97] AMVIC argues that Canadian courts have consistently rejected the existence of any private law duty of care between publicregulators and the persons who might be harmed by the actions of those that they regulate because there is insufficient foreseeability andproximity. [98] No duty of care was found in the following relationships that AMVIC asserts are analogous to the situation at hand: therelationship between a regulator that governed mortgage brokers in the marketplace and an investor: Cooper; the relationship between aregulator that governed Ontario lawyers and members of the public who put money into a lawyer’s trust account: Edwards; and therelationship between a regulator that oversees the oil and gas industry in Alberta and a landowner concerned about contaminatedgroundwater: Ernst v EnCana Corporation, 2013 ABQB 537 (the 2013 Ernst QB Decision), aff’d 2014 ABCA 285 (the Ernst ABCADecision), aff’d 2017 SCC 1(the Ernst SCC Decision), (collectively referred to as the Ernst Decisions). [99] AMVIC suggests that courts have not recognized a private law duty of care for a broad variety of regulators with powers andresponsibilities parallel to its own because their regulatory duties are owed to the public at large and not to any one individual.

AMVICsays that it would be an aberration for this principle to not apply to it as the regulator of automotive consignment businesses in Alberta. [100] Contrary to AMVIC, the Plaintiffs contend that the circumstances involving AMVIC are analogous to cases involving negligentlicensing and inspection by government entities.

They say that their claim readily falls into this well-established category where a duty ofcare is found when statutory inspectors are negligent in carrying out their delegated duties. [101] The Plaintiffs suggest that the following relationships that courts have previously recognized as giving rise to a private law dutyof care are analogous to the relationship between AMVIC and the Plaintiffs and the Proposed Class: the relationship between aprovincial department in charge of inspecting and maintaining highways and a user of the highway: Just v British Columbia, (SCC), [1989] 2 SCR 1228; the relationship between a municipality’s building inspector and a future purchaser of a home:Kamloops (City of) v Nielsen 1984 SCC 21; the relationship between provincial government mine safety inspectors and the individualworkers in a mine: Fullowka v Pinkerton’s of Canada Ltd, 2010 SCC 5 and, the relationship between federal food safety inspectors andconsumers of contaminated meat products: Harrison v XL Foods Inc., 2014 ABQB 431. [102] I now review the cases. a.

AMVIC’s Caselaw [103] In Cooper the plaintiffs suffered economic losses after investing with a non-compliant mortgage broker. The Registrar, likeAMVIC, had the statutory authority to licence and regulate the activities of mortgage brokers in the province. The claim was that theRegistrar had knowledge of the broker’s wrongful conduct but failed to move quickly enough to suspend the broker’s licence and tonotify investors that the broker was under investigation.

The Supreme Court determined that the pleadings did not disclose a cause ofaction as the Registrar, a regulator, owed no private law duty of care to the plaintiffs. [104] The Court found although it may have been foreseeable that losses to investors would occur if the Registrar was negligent incarrying out his duties under its statutory scheme, there was insufficient proximity between the Registrar and investors. The statutoryscheme that the Registrar operated under provided a general framework for efficient operation of mortgages in the marketplace.

Itrequired the Registrar to balance competing interests, such as the public’s interest in obtaining mortgages while at the same timeensuring that mortgage brokers were suitable candidates. Along with its investigative powers into complaints, the Registrar was alsoobligated to ensure that a person being investigated had an opportunity to be heard before having their registration suspended orcancelled.

The Court concluded that “... though to some degree the provisions of the Act serve to protect the interests of investors, theoverall scheme of the Act mandates that the Registrar's duty of care is not owed to investors exclusively but to the public as a whole”: atpara 164. [105] In Edwards, the plaintiffs claimed that the Law Society of Upper Canada was negligent for failing to properly supervise alawyer’s operation of his trust account, or failed to warn the plaintiffs about their lack of oversight.

The plaintiffs, who sufferedeconomic losses allegedly caused by improper use of the lawyer’s trust account, argued that the Law Society knew how the lawyeroperated his trust account and owed them a private law duty of care to ensure the trust account was operated according to the regulations. [106] The Court found that there was no private law duty of care owed, noting there was no legislative intent in the Law Society’sgoverning legislation to impose a private law duty of care.

The responsibilities of the Law Society under the legislation includedadmission standards for the profession, continuing education, and the formulation and enforcement of a professional ethics code. It hadthe statutory authority to licence and regulate the activities of lawyers in the province and was also given investigative and disciplinarypowers over its members. The Court concluded that, taken together, these duties meant the Law Society was required under thelegislation to pursue a myriad of objectives that were public rather than private law duties.

The Court also found it relevant that thelegislation provided for a compensation scheme for clients who were affected by a lawyer’s negligence or dishonesty. [107] In the 2013 Ernst QB Decision, the plaintiff claimed that the Energy Resources Conservation Board (now the Alberta EnergyRegulator) was negligent in its administration of its statutory regime. The plaintiff alleged that her groundwater was contaminated due to

drilling by an oil and gas company whose drilling program was approved by the ERCB. The plaintiff alleged that the ERCB had a duty to protect her well water and failed to respond to her concerns about contamination. [ 108 ] The Alberta Court of Queen’s Bench struck the ERCB from her claim. The Court noted that even though the plaintiff had personal contact with the ERCB multiple times to voice concerns, the regulator had no direct regulatory authority over her. This was similar to the plaintiffs in Cooper and Edwards , who also communicated with the regulators in their cases.

The Court concluded that there was some expected contact within the statutory regime, and such contact was insufficient to support a finding of proximity, at para 170. The Court found that the ERCB’s duties were owed to the public, and were not private. [ 109 ] The 2014 Ernst CA Decision concurred that the ERCB’s duties in its governing legislation did not transform into a private duty owed to the plaintiff.

The Court of Appeal reasoned that recognizing a private law duty of care to a specific individual would distract the ERCB from its general duty to protect the public and its duty to deal fairly with the participants in the oil and gas industry. There would also be indeterminate liability. [ 110 ] As noted, AMVIC contends it is in a parallel situation with the regulators in Cooper , Edward , and the Ernst Decisions .

AMVIC admits the existing jurisprudence has not specifically considered whether such a duty of care exists in the context of an independent regulatory board carrying out delegated duties and functions similar to itself. b. Plaintiffs’ Caselaw [ 111 ] In Just , the plaintiff sued a provincial government for negligent inspection of a highway, after a boulder fell onto a highway and killed a passenger in a vehicle. The province had a department dedicated to inspecting and remediating rock slopes on the highway. It was alleged they were negligent in their highway maintenance.

The Supreme Court found a duty of care owed to users of public highways by the province. The province had implemented a policy of highway maintenance and inspection to carry out proper road maintenance and inspection. The duty was owed because the province invited the public to use its highways, and it had specifically undertaken to properly maintain them .

The Supreme Court found that this undertaking resulted in a direct and proximate relationship between users of the highway and the province. [ 112 ] In XL Foods , the defendant meat processor contended that the federal food inspection agency responsible for inspecting food products at its processing plant was a liable third party in a class action claim of contaminated meat products originating from the defendant’s plant. There was disagreement as to the extent of the agency’s relationship and participation in the defendant’s plant operations.

The defendant contended the agency was directly involved in how its plant operated and was involved in every step of the events giving rise to the lawsuit. The defendant argued that the inspectors were not merely overseeing conduct but had assumed an active part of the responsibility. As a result, their duties of care to consumers were interlocked and overlapping.

The agency disputed the alleged degree of control set out in the pleadings. [ 113 ] In refusing to strike the third party proceedings, and in granting certification, the Court, after conducting a fulsome Anns/ Cooper analysis, concluded that the government agency had not met the high test that it was “plain and obvious” that the proposed duty of care could not be found.

The Court determined that an evidentiary record of the facts as to the government inspectors’ involvement, control and proximity to the processes and products that gave rise to the risk was necessary because it was not absolutely clear at this stage that the defendants “cannot possibly succeed on the merits”: XL Foods at para 115. There was no finding that the federal food inspection agency owed a private law duty of care to consumers of contaminated meat products. [ 114 ] In Kamloops , the City had passed a bylaw to prevent homes from being constructed on defective foundations.

The municipal bylaw imposed a duty on the City’s building inspectors to enforce the bylaw provisions by inspecting foundations. [ 115 ] The plaintiff purchased a home with a defective foundation that was placed on loose fill rather than a solid bearing. The home had been built by a prior owner. While being built, a stop work order had been issued by the City, who inspected and found deficiencies in the foundation, but work continued in the face of the stop order. None of this was known by the plaintiff until after problems with the foundation arose.

The plaintiff sued the vendor of the home as well as the City for failing to enforce its building bylaws. [ 116 ] The Supreme Court permitted recovery for economic loss for the defective foundation. It determined that once the legislators made a policy decision to require inspections, the municipality had a duty of care to property owners whose homes were inspected. The Court concluded that the defective foundation “was obviously going to have to be repaired since it represented a threat to the health and safety of the occupants”.

The Supreme Court noted that no concern about indeterminate liability had been established: Kamloops , at paras 88 and 91. [ 117 ] Finally, in Fullowka , the plaintiffs were the families of miners killed in a mine explosion set by a disgruntled miner during a protracted and violent strike. The plaintiffs sued the security company for the mine and the province’s mine safety department for negligently failing to prevent the explosion and deaths of the miners.

The Supreme Court found a duty of care existed on the part of the mine safety inspectors to individual mine workers to protect them from the risk of intentional criminal conduct perpetrated by others. The statutory scheme provided the mining regulator with the authority to shut down mining operations, as it eventually did after the explosion. [ 118 ] In determining that the province owed a duty of care, the Court in Fullowka grappled with the proximity analysis for the regulator of mines.

It found that the regulator’s general statutory role under the province’s Mine Safety Act was somewhat analogous to the general statutory roles of the Registrar of Mortgage Brokers and of the Law Society in Cooper and Edwards . This was because all three regulators put the onus on the regulated parties — the mortgage brokers, lawyers, and mine operators and employees — to follow the regulations.

On that basis alone, the Supreme Court noted it would not have found that the regulatory scheme alone created sufficient proximity. [ 119 ] However, after considering the relationship between the mine inspectors and the miners who had been killed, the Court found the relationship was considerably closer and more direct than the relationships in Cooper and Edwards .

[ 120 ] The Court summarized the three factors that led to its imposition of a duty of care: 1) the persons to whom the mining inspectors owed a duty was a smaller and more clearly defined group than in Cooper and Edwards ; 2) the mining inspectors had a much more direct and personal dealing with the miners than the Law Society or the Registrar had with the clients of the lawyer or mortgage broker in Edwards and Cooper ; and, 3) the inspectors' statutory duties related directly to the conduct of the miners, in contrast to the Law Society in Edwards or the Registrar in Cooper who had no direct regulatory authority over the claimants: see paras 43-45. [ 121 ] The Plaintiffs argue that AMVIC’s duties as a consumer watchdog are analogous to the regulators in Just , Kamloops , XL Foods and Fullowka .

AMVIC was given strong powers to protect the public, namely, members of the public who consign their vehicles. It had the power to both inspect and investigate business premises such as Treadz for compliance with the FTA and the Regulation . AMVIC also had the power to suspend a licence, including without notice.

Finally, AMVIC had a relationship with the Treadz victims through their complaint process. [ 122 ] For these reasons, the Plaintiffs argue that AMVIC is a regulatory inspector and falls into the well-established category of inspectors who fail to enforce an inspection and licensing regime. [ 123 ] The Plaintiffs strongly disagree with AMVIC’s contention that a public regulator cannot owe a private law duty of care, pointing to the case law and commentary referred to in Freya Kristjanson and Stephen Moreau “Regulatory Negligence and Administrative Law”

(2012) Canadian Journal of Administrative Law & Practice at 103-129. They submit that Fullowka itself is an example of a case where a “regulator” who is responsible for an inspection scheme was found to owe a private law duty of care. c.

Does AMVIC fall into an existing category that owes a duty of care? [ 124 ] AMVIC’s day-to-day responsibilities include licensing automotive businesses, registering salespersons, conducting investigations and taking action as a result of complaints under the FTA , administering the compensation fund, and providing educational programs to consumers and industry. [ 125 ] AMVIC’s licensing role allows it to issue or renew licences, refuse to issue or renew a licence, cancel or suspend a licence, and impose terms and conditions on a licence for the reasons set out in

section 127 of the FTA , including,

section 127(

c) where, in the opinion of the Director, it is in the public interest to do so. To ensure due process, AMVIC may hold a hearing when enforcement action is taken against one of its licensed constituents. AMVIC’s necessarily broad mandate requires it to consider any and all factors that may be relevant to the public interest. [ 126 ] Applicants or licencees may appeal any decision to a panel of AMVIC’s Appeal Committee.

Section 181 of the FTA grants the right to appeal a decision of the AMVIC Appeal Panel to the Court of Queen’s Bench of Alberta. [ 127 ] AMVIC also enforces the regulatory regime through numerous measures such as requiring undertakings, issuing compliance orders, conducting administrative reviews, and suspending or removing licences. [ 128 ] Finally, AMVIC is responsible for educating industry and consumers on the statutory requirements for automotive businesses that protect consumers.

Many of those requirements are set out in the Regulation , and are aimed at preventing improper or misleading advertising and preventing unfair business practices. There are also specific requirements for businesses who sell vehicles on consignment, including requirements for consignment agreements and for payout of proceeds.

The Regulation also requires automotive businesses to comply with a Code of Conduct. [ 129 ] This broad mandate requires AMVIC to regulate an industry in the interest of a number of stakeholders, including the automotive industry, its salespersons, and the ultimate consumers. [ 130 ] When these various statutory duties are compared to the duties of the public bodies in the Plaintiffs’ licensing and inspection cases, it becomes apparent that they are not analogous.

While the Plaintiffs’ claims include similar allegations on their face – of negligent investigation, negligence inspection and negligent enforcement – the statutory scheme that AMVIC operates under is quite distinguishable. [ 131 ] In the licensing and inspection cases, the public body was directly involved in managing the risk of harm because it invited the injured party to rely on an inspection that it had taken on, and, in so doing, assumed responsibility for avoiding the risk. If the public body fails to then inspect as required by the legislated standard, it is foreseeable that the harm is likely to happen.

The individual member of the public is relying on the public body to take steps to avoid the identified risk through reasonable inspection. It is the very active and continual involvement that creates reliance between the public body and the individual, resulting in proximity. This type of relationship is missing in the case of AMVIC. [ 132 ] Unlike AMVIC’s regulatory role, the building inspectors in Kamloops had a direct relationship flowing from their contact with the individual home owner or purchaser who suffered a loss.

The objective of the municipal bylaw was to prevent homes from being constructed on defective foundations. To achieve that objective, building inspectors had a positive duty to enforce the bylaw. The building inspectors undertook inspections of a mechanical or supervisory nature that could result in liability, but on an individual basis. [ 133 ] Similarly, in Just there was a positive duty to inspect and maintain the highways for the safety of the public. The public was invited to rely on inspections of the highway done by the government inspectors.

These inspection duties are positive obligations imposed on the public body by statute and the responsibility for maintenance was that of the province. [ 134 ] AMVIC, on the other hand, is not under a positive duty to inspect automotive businesses. As one of its many duties, AMVIC may inspect a business, and if it has reasonable grounds to suspect a person has committed an offence under the FTA or Regulations, it may commence an investigation: FTA, ss 145-148. AMVIC oversees the conduct of the regulated entity, which has primary responsibility for the regulated activity.

AMVIC did not have a significant measure of control over the risk of financial loss that ultimately occurred here.

[ 135 ] There is also a different flavour to the type of regulation being done by AMVIC. First, it conducts both inspections and investigations and takes enforcement action. Second, AMVIC is not performing a mechanical or supervisory task. It is exercising a discretion whether to inspect businesses, investigate complaints and to take or not take enforcement action.

Third, AMVIC is investigating a business’s compliance with legislation, which is quite different than the safety concerns that arise with a home’s foundation, an operating mine, or meat produced in a processing plant. [ 136 ] The risk being managed is one of economic loss, rather than one of health or safety. This difference has been recognized as an important one in the duty of care analysis: Fullowka. This also negates a finding that AMVIC is in an analogous category. [ 137 ] Unlike in the licensing and inspector cases, AMVIC’s responsibility is to regulate an industry.

AMVIC is more akin to the Cooper and Edwards line of cases in that regard, as its functions include quasi-judicial functions such as holding hearings into the conduct of those it regulates. [ 138 ] I conclude that the licensing, inspection, investigation and enforcement provisions of the FTA are regulatory functions and that the decisions made by AMVIC regarding licensing, investigation of complaints and what, if any enforcement action to take, are discretionary ones. These are quasi-judicial decisions that necessarily balance the public interest with the rights of the individual licensed entity.

AMVIC’s adjudicative role cannot be separated from its other functions in characterizing whether it fits into an existing category or is analogous to one. [ 139 ] In making this determination I am cognizant of Justice Cromwell’s caution, in Ernst SCC Decision at para 48, against separating the functions of a quasi-judicial regulatory board for the purposes of the duty of care analysis: This jurisprudence also cautions against attempting to segment the functions of a quasi-judicial regulatory board such as this one into adjudicative and regulatory activity for the purposes of considering whether its actions should give rise to liability.

For example, in Edwards , this Court endorsed the Ontario Court of Appeal’s refusal to distinguish between the Law Society’s adjudicative and investigatory functions for the purpose of the duty of care analysis: see para. 11, citing (2000, 48 O.R. (3d) 329 (Ont. C.A.), at para. 30 .

The Board has a broad mandate to, among other things, conduct inquiries and investigations, make inspections and conduct hearings, making it impractical and artificial to try to distinguish among its various roles for the purposes of liability. [ 140 ] The Plaintiffs have not shown that their claim against AMVIC falls within a recognized category of negligence, namely that of negligent licensing or inspection by a public body. [ 141 ] Turning to AMVIC’s submission that it falls into the category of a statutory regulator, I agree with its position.

It fulfills a similar role to the regulators in Cooper , Edwards , and the Ernst Decisions. [ 142 ] First, as was the case for the regulators in Cooper , Edwards , and the Ernst Decisions , the duties allegedly owed by AMVIC are owed, in effect, to the public at large. The objective of AMVIC’s regulation is for the public good, including both individuals and businesses alike, for the protection of the public as a whole.

In this case, the Plaintiffs and the Proposed Class are not members of any small and clearly defined group, like the small identified group of miners in Fullowka . [ 143 ] Second, AMVIC’s relationship with automotive customers is very similar, if not the same, as the regulators in Cooper , Edwards , and the Ernst Decisions. These regulators do not have, to the same extent, direct and personal dealings with the clients and consumers of the regulated parties in cases like Kamloops and Fullowka .

In Fullowka , the mine inspectors visited the mine almost daily during the strike, which created a more personal and direct relationship with the miners. [ 144 ] Third and last, AMVIC has no direct regulatory authority over the respective plaintiffs, who were the customers of the Treadz Defendants.

This is similar to the role of the Registrar in Cooper , the Law Society in Edwards , and the ERCB in the Ernst Decisions . [ 145 ] The statutory powers and duties imposed on AMVIC are to promote the public interest and are not intended to benefit or protect the interests of particular individuals or a discrete class of individuals. [ 146 ] After considering the caselaw, I conclude that the relationship that existed between the Plaintiffs and Proposed Class and AMVIC is very similar to the statutory regulators in AMVIC’s line of cases. [ 147 ] The question that remains is whether this similarity is enough to exclude a finding of a private law duty of care. [ 148 ] AMVIC is correct that many court decisions have ruled that statutory regulators do not typically owe a duty of care to private individuals: Cooper ; Edwards ; Ernst Decisions ; R v Imperial Tobacco Canada Ltd, 2011 SCC 42 ; Alberta Ltd v Canada (Attorney General) , 2010 ABCA 226 .

However, I conclude after considering the recent jurisprudence from the Supreme Court and other courts, that finding that a defendant falls into a category of a statutory regulator is not enough, on its own, to justify excluding a private law duty of care. [ 149 ] I agree with the Plaintiffs that there is no broad category of “statutory regulator” that results in there being no private law duty of care. The Anns/ Cooper test was developed in Cooper specifically to determine if a statutory regulator owes a duty of care, and has been applied many times since to statutory regulators, with differing results.

Fullowka is a case where a statutory regulator was found to owe a private law duty of care. [ 150 ] This is because regulators are not created the same. Different government regulators are responsible for different government functions and duties, exercise different powers, and can have different relationships with their regulated entities and the individuals that interact with those entities.

Imperial Tobacco recognized that in some cases proximity can arise from specific interactions between the regulator and the claimant, such that they have formed a special relationship: at para 45. [ 151 ] This means there can be cases where a statutory regulator of the same type owes a duty of care in one factual situation, but not in another, such as a law society not owing a duty of care in Edwards , but owing a duty of care in Finney v Barreau du Quebec , 2004

SCC 36 (a case involving a law society in Quebec). [ 152 ] As discussed, Deloitte also cautions that categories of proximity should not be cast in overly broad terms because it is the nature of the particular relationship at issue that matters. [ 153 ] I am also reluctant to use a previous category to deny a duty of care rather than to extend a duty of care to a similar relationship.

Typically, the analysis asks whether the relationship falls into or is analogous to an existing category, and if not, the court then undertakes the fulsome Anns/ Cooper test: see, for example Cooper and Deloitte . [ 154 ] In the result, although AMVIC shares clear similarities to the types of regulators and relationships in the cases it put forward, I find that the category of “regulator” is too broad to be representative of an existing category.

Completion of the Anns/ Cooper analysis is therefore necessary in this case. [ 155 ] Before proceeding to an Anns/ Cooper analysis, I discuss whether the Anns/ Cooper analysis is necessary for Service Alberta as well. 2) Service Alberta [ 156 ] The Plaintiffs relied on the same arguments and case law in relation to Service Alberta as they did for AMVIC.

They argue that Service Alberta falls into a category analogous to the defendants in the negligent licensing or negligent inspection cases, such as Kamloops , Just , Fullowka , and XL Foods . [ 157 ] The Plaintiffs say that their claim readily falls into this well-established category of proximity that arises when there is an operational failure of a licensing and inspection regime. Specifically, the Plaintiffs point to Service Alberta’s awareness of ongoing and systemic issues in AMVIC operations, especially in AMVIC’s investigations branch and the misconduct of its Executive Director.

They argue that Service Alberta’s operational failure was to use reasonable care to ensure AMVIC complied with its recommendations, which resulted in consumers being injured. [ 158 ] As with the argument against AMVIC, the Plaintiffs contend that Service Alberta’s role is akin to a consumer watchdog agency rather than a quasi-judicial body carrying out policy-making and adjudicative responsibilities like those carried out by the ERCB in the Ernst Decisions . [ 159 ] Service Alberta agrees with AMVIC’s position that courts have previously recognized that a regulator does not owe a private law duty of care to potential claimants who might be damaged by the actions of regulated entities due to insufficient foreseeability and proximity. [ 160 ] However, Service Alberta notes that it is not the regulator of automotive consignment businesses, having delegated this regulation to AMVIC.

Service Alberta is the government entity responsible for administering the statutory regime under the FTA and, in carrying out that role, made a policy decision to create AMVIC as the regulator. Service Alberta is one more step removed from customers of a regulated entity than that of the regulator. [ 161 ] Service Alberta submits that the courts have not previously considered whether a private law duty of care exits on the part of a provincial government ministry, like Service Alberta, who created a regulator and was responsible for its oversight.

In the result, Service Alberta submits that the issue, in relation to it, is whether a new private law duty of care ought to be recognized in Service Alberta’s circumstances. a. Does Service Alberta fall into an existing category that owes a duty of care? [ 162 ] In my view, the cases relied on by the Plaintiffs are distinguishable on their facts and are not similar enough to be analogous to the facts here. [ 163 ] The Plaintiffs’ claim against Service Alberta is not in respect of its role as regulator but as the creator and overseer of AMVIC.

The Plaintiffs’ claim does not include similar allegations of negligent investigation, inspection and enforcement that were present in the caselaw relied on. Its role was not akin to an inspector enforcing a licensing regime. There is no evidence that Service Alberta was directly involved in monitoring the automotive industry or enforcing the licensing regime.

Unlike the inspectors in Kamloops , Just, Fullowka and XL Foods , Service Alberta was not actively involved in monitoring an operation or business at ground level. [ 164 ] Instead, the Plaintiffs’ claim against Service Alberta focuses on allegations of negligence concerning Service Alberta’s decision to delegate, the scope of that delegation, the degree of oversight it undertook, and when, whether, and how it sanctioned its delegate, AMVIC. [ 165 ] As no analogous case has been presented, I conclude there is no established private law duty of care owed.

In the result, it is necessary to consider whether a novel duty of care ought to be recognized here by applying the Anns/ Cooper test. D Anns/Cooper Legal Principles [ 166 ] As discussed, to establish a prima facie duty of care, a plaintiff must establish that the circumstances of the relationship between themselves and the public body disclose both sufficient foreseeability and proximity. [ 167 ] The foreseeability element examines whether it was reasonably foreseeable that the actions of the public body would cause harm to the plaintiff.

Reasonable foreseeability alone is insufficient to ground a prima facie duty of care: Cooper at para 42 . There must also be sufficient proximity in the relationship between the parties.

[ 168 ] A public law duty of care focused on the public interest does not generally provide a sufficient basis to create proximity with individuals affected by the regulatory scheme.

This is the case even if the party is one who benefits from the proper implementation of the regulatory scheme as seen in cases such as Imperial Tobacco , Cooper , and Edwards . [ 169 ] Typically, a public body may be found to have sufficient proximity and owe a prima facie duty of care in two situations: (1) where the alleged duty of care is said to arise explicitly or by implication from the statutory scheme; and, (2) where the alleged duty of care arises from specific interactions between the plaintiff and the public body, and is not negated by statute: Imperial Tobacco , at para 43. [ 170 ] While there is no precise judicial meaning as to what constitutes sufficient proximity, the jurisprudence has developed a number of useful considerations in analyzing proximity in relationships.

The proximity assessment asks whether the parties are in such a “close and direct” relationship that it would be “just and fair having regard to the relationship to impose a duty of care in law”: Cooper at paras 32 and 34 . The proximity assessment considers the nature of the parties’ relationship and the harms that carelessness in that relationship might cause: Deloitte at para 29. [ 171 ] Factors that may satisfy the proximity requirement are “diverse and depend on the circumstances of each case” and include broad policy considerations: Cooper at para 35 .

Relevant factors include the parties’ expectations, physical closeness, representations, reliance, the nature of the property or other interest involved, assumed or imposed obligations and whether there is a close casual connection between the alleged misconduct and the harm alleged: Cooper at para 38 .

The focus is on “whether the alleged actions of the alleged wrongdoer have a close and direct effect on the victim”: Edwards at para 9 . [ 172 ] If the public body has direct, close and continuing interactions with the individual in the operation or implementation of a policy, a duty of care may arise, especially where the individual’s safety is at risk.

A failure to act in accordance with an established policy when it is reasonably foreseeable that failing to do so will cause physical harm to a private citizen may result in liability for a public body: Fullowka at paras 54-55 . [ 173 ] If the plaintiff establishes a prima facie duty of care, then the analysis shifts to consider any countervailing policy considerations. These include the effects that a novel duty of care might have on other legal obligations, the legal system and society more generally.

In this analysis, the Court must determine whether there are reasons arising from societal concerns to deny recognizing a duty in the circumstances, despite the fact the harm was a reasonably foreseeable consequence of the conduct in question: Deloitte at para 22. [ 174 ] Policy considerations can include whether the law already provides a remedy or when finding a duty could result in “the spectre of unlimited liability to an unlimited class”, Cooper at para 37 .

For claims of pure economic loss, this latter factor is especially a concern because of the potential liability for indeterminate amounts owed to an indeterminate class: Deloitte at para 42. [ 175 ] It is also at this stage that unique considerations arise when considering the distinction between policy and operational decisions of public bodies.

Public bodies are not liable for decisions they make at a policy level, but may be liable for operational decisions they make when the policy is implemented: Cooper at para 38 . [ 176 ] The difference between a policy and operational decision is explained well in David Phillip Jones and Anne S. De Villars, Principles of Administrative Law , 6 th ed. (Toronto: Carswell, 2014) at 742 as follows: The term “policy” is used in this distinction to describe certain kinds of discretionary decisions which would not be suitable subjects for judicial re-evaluation.

It refers to high-level discretionary decisions dependent on considerations of social, economic or political factors beyond the knowledge or expertise of the courts. In contrast, the term “operational” is used to describe the process of implementation. It refers to a host of lower-level governmental decisions or actions associated with the practical execution of a policy decision.

These decisions may involve the exercise of discretion in a sense of making a choice between alternative courses of action…these choices are of a more specific or technical nature… . [ 177 ] Thus, policy decisions about what acts to perform under a statute cannot result in liability for negligence.

However, once the decision is made to implement the policy, the public body may be liable if it implements the policy in a negligent manner: Holland v Saskatchewan , 2008 SCC 42 at para 14 . [ 178 ] Therefore, at the residual policy stage, a court may also consider whether the regulator’s decisions were policy or operational, and whether that affects the imposition of a duty of care. 1) Application of the Anns/Cooper test to AMVIC [ 179 ] To establish a prima facie duty of care, the Plaintiffs must establish that the relationship between AMVIC and themselves, and the Proposed Class, discloses both sufficient proximity and foreseeability. a.

Foreseeability [ 180 ] I accept it was foreseeable on the part of AMVIC that negligence in carrying out its duties in regard to licensing, investigating and enforcing compliance with the FTA by automotive businesses might cause economic loss or damage to the Plaintiffs and the Proposed Class. b. Proximity i The Legislative Scheme

[ 181 ] The FTA set outs the regulatory scheme under which AMVIC operates through delegated authority. The FTA is designed for the protection of the public, as its overall legislative scheme is intended to regulate ordinary consumer agreements in specific sectors of the consumer market, such as automotive consignments. [ 182 ] The FTA does not set out a list of specific factors that applicants must meet to be licensed to operate an automotive consignment business.

Rather, the FTA requires the Director (whose duties have all been delegated to AMVIC) to exercise discretion, after considering the factors set out in s 125 of the FTA , including whether it is in the public interest to do so. In doing so, AMVIC’s decisions in this regard will undoubtedly affect individual rights. Specifically, the right to operate an automotive consignment sales business as balanced against the public interest.

In determining whether an entity or person seeking a licence is entitled to be licensed or not, AMVIC is acting in a quasi-judicial capacity. [ 183 ] The same comments are applicable to AMVIC decisions on whether to investigate customer complaints and take enforcement action. The FTA does not require AMVIC to investigate every complaint or to carry out an investigation of an automotive consignment business.

When a complaint is investigated, the results of that investigation are submitted to AMVIC’s senior management, who, in an exercise of discretion, decides what further action to take, if any. [ 184 ] In performing its regulatory and quasi-judicial functions, AMVIC’s duties will, at times, conflict with the private interests of an individual. [ 185 ] I see no apparent legislative intent within the FTA , or the Regulation , expressly or by implication, that would create a private law duty of care owed by AMVIC to customers who deal with automotive consignment businesses.

The objective of AMVIC’s regulation is for the public good, including both customers and those who have been licensed to conduct business under the regime. [ 186 ] While AMVIC owes certain duties to the public at large, it cannot be expected to owe a private law duty of care to every customer of an automotive consignment business who might be at risk. [ 187 ] In my view, the FTA establishes only general public interest duties to the public and no private law duties to either customers or businesses in the automotive consignment area.

AMVIC owes duties to the public that arise from the FTA and the FTA alone. [ 188 ] I conclude that the FTA regulatory regime , on its own, does not create a relationship of proximity that gives rise to a prima facie private law duty of care. ii The Relationship [ 189 ] As it has been determined that the FTA establishes only general duties owed to the public by AMVIC, it is necessary to examine the specific features of the relationship between the parties to determine if their relationship is one where the interest of the individual has been elevated over the general public interest in a manner that creates sufficient proximity to impose a duty of care.

The question is did AMVIC, through its conduct, enter into a special relationship with the Plaintiffs and Proposed Class? [ 190 ] The Plaintiffs suggest that AMVIC’s investigators, like the mining inspectors in Fullowka , had a direct, transactional personal relationship with customers who lodged a complaint and dealt directly with AMVIC investigators. [ 191 ] AMVIC investigators had personal dealings with customers who made complaints to them about the Treadz Defendants.

Such a relationship is an expected and necessary part of any licensing and regulatory regime in which individual customers can make complaints to the regulator about a regulated entity.

However, it does not follow that the regulator is then imposed with an obligation to have particular regard for the interests of the customer beyond carrying out its mandated statutory duties. [ 192 ] There is no evidentiary foundation for a finding that any AMVIC investigator ever formed a close relationship with either of the Plaintiffs or any of the Proposed Class that went beyond their statutory duties, which were duties owed to the public generally. [ 193 ] Unlike the situation in XL Foods , AMVIC was not actively involved with any of its regulated entities’ day-to-day operations, including the Treadz Defendants’.

Regulated businesses did not carry out their operations under the supervision of AMVIC. AMVIC’s role and responsibilities were very distanced from any interactions carried on between the Treadz Defendants and its customers. [ 194 ] Further, as in Edwards , Cooper and the Ernst Decisions , none of AMVIC’s investigators had any direct regulatory control over either of the Plaintiffs or any of the Proposed Class. AMVIC regulated the Treadz Defendants. [ 195 ] It is notable that the Plaintiffs’ and Proposed Class’s claim is not that AMVIC failed any of them indivi

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