Signalta Resources Limited v Balancing Pool, 2021 ABQB 618

Court of Queen’s Bench of Alberta Citation: Signalta Resources Limited v Balancing Pool, 2021 ABQB 618 Date: 20210806 Docket: 1801 15971 Registry: Calgary Between: Signalta Resources Limited Plaintiff - and - Balancing Pool Defendant _______________________________________________________ Reasons for Decision of J.T. Prowse , Master in Chambers _______________________________________________________ [ 1 ] The defendant the Balancing Pool (“BP”) applies to strike Signalta’s statement of claim pursuant to rule 3.68(2)(

b) on the basis that it discloses no reasonable claim. [ 2 ] In determining whether the statement of claim ‘discloses no reasonable claim’ I am to assume that the factual assertions in the statement of claim are true. [ 3 ] For the reasons which follow I allow the application and strike Signalta’s statement of claim. The existence of a private duty of care [ 4 ] Signalta asserts that the BP was negligent and caused Signalta economic loss. [ 5 ] The starting point is to determine whether the BP owes Signalta a duty of care.

This is emphasized by the recent decision of the Supreme Court of Canada in 1688782 Ontario Inc. v. Maple Leaf Foods Inc. , 2020 CarswellOnt 16022, 2020 CarswellOnt 16023, 2020 SCC 35 , at para 21 :

Focussing exclusively upon how the loss occurs can, however, put strain on the analysis by obfuscating both fundamental differencesand similarities among cases of pure economic loss (J. Stapleton, “Duty of Care and Economic Loss: A Wider Agenda” (1991), 107 LawQ. Rev. 249, at pp. 262 and 284). Further, it obscures the starting point in a principled analysis of an action in negligence, which is toidentify what rights are at stake and whether a reciprocal duty of care exists (Livent, at para. 30).

It is proximity, and not a template ofhow a loss factually occurred, that remains a “controlling concept” and a “foundation of the modern law of negligence”. [emphasisadded] [6] The BP, while not a regulator, is a corporation created by statute. In other words, it carries out a public function. Usually apublic body does not owe a private duty of care to members of the public. [7] As I stated in Gilchrist v Levin, 2016 ABQB 474, 2016 CarswellAlta 1596: 15 Typically, public authorities do not owe a private duty of care to members of the public.

A list of authorities supporting thatproposition can be found in Project 360 Investments Ltd. v. Toronto Police Services Board, (ON SC), 2009CarswellOnt 3418, [2009] O.J. No. 2473 (Ont. S.C.J.) at para.16. 20 The Supreme Court of Canada considered the circumstances in which a public body should be held to owe a private duty of care inCooper v. Hobart, 2001 CarswellBC 2503, 2001 SCC 79 (S.C.C.).

There the Court rejected the concept of a private duty of care beingowed by the Registrar of Mortgage Brokers under British Columbia legislation in favour of investors who had lost funds invested with amortgage broker. 21 In its companion decision, Edwards v. Law Society of Upper Canada, 2001 CarswellOnt 3963, 2001 SCC 80 (S.C.C.), the Courtdecided that the Law Society did not owe a duty of care to persons who had deposited money in a solicitor's trust account as participantsin a business promotion rather than as clients. 22 Those decisions comment on the test established by the House of Lords decision in Anns v.

Merton London Borough Council,[1978] A.C. 728, [1977] 2 All E.R. 492 (U.K. H.L.) where the issue was whether a local council owed a private duty of care to partiessuffering loss when a building's foundation, that the council did not have inspected, failed. 23 The test resulting from the foregoing cases is known as the Anns/Cooper test and consists of two steps: (

i) the court must determine whether the existence of a private duty of care is decided in existing cases or in situations analogous toexisting cases. (ii) If the answer to (

i) is no, then the court must consider the situation ab initio and determine whether a duty of care should berecognized based on: (

i) foreseeability and proximity, and (ii) residual policy considerations The function of the BP [8] The Alberta Court of Appeal described the background to, and one aspect of the function of, the BP in Balancing Pool vTransAlta Corporation, 2013 ABCA 409 at para 4 as follows: The backdrop to the creation of the Balancing Pool was the deregulation of the electricity market in Alberta in 1998: see the ElectricUtilities Amendment Act, SA 1998 c 13. The EUA unbundled the generation and transmission of electricity and deregulated thegeneration of new power.

The industry was restructured to make use of PPAs, long term contracts that entitle a purchasing party to theelectrical output of a power generating unit. … The EUA created the Balancing Pool to handle the proceeds from the auction of PPAswith the proceeds going to the Balancing Pool. [9] The statement of claim in this Action points out another function of the BP, which is at the heart of Signalta’s claim in theseproceedings.

The BP is an electricity market participant which has ‘offer control’ over a significant amount of electrical power that itcontrols under the numerous PPAs which it holds. [10] The statement of claim states that the BP controlled (via the PPAs that it owned) up to 29.3% of the electricity supply inAlberta, and that this market share allowed it unilaterally to materially influence the price of electricity in the power pool. [11] The statement of claim further alleges that the BP used this market power to sell electricity into the pool at ‘non-commercialand non-competitive’ prices. [12] The statement of claim asserts that the BP was able to sell power into the pool at prices lower than its costs because it had theability to implement consumer charges against consumers of electricity, and the ability to borrow funds from the Government of Albertato sustain itself. [13] Signalta asserts that the foregoing conduct of BP ‘significantly and artificially reduced’ the power pool price paid toproducers of electricity, including Signalta.

Signalta estimates its loss at $12,500,000 as at June 30, 2018. It seeks damages of thatamount (plus ongoing losses) and punitive and exemplary damages of $5,000,000. Does the BP owe a duty of care to Signalta? [14] As indicated earlier in these reasons, typically public authorities do not owe a private duty of care to members of the public.

[15] The first step in the Anns/Cooper analysis is to determine whether a duty of care exists by reviewing existing case law to seeif existence of a private duty of care by the BP has already been decided. There is no such case law. [16] In addition, the function of the BP is so unique that an analogy cannot be made to situations considered in existing case law. [17] This then takes us into consideration of whether a duty of care should be recognized based on: (

i) foreseeability and proximity, and (ii) residual policy considerations [18] An example of this type of analysis can be found in the decision of Jane Doe v. Metropolitan Toronto (Municipality)Commissioners of Police, (ON SC), 1998 CarswellOnt 3144, 43 C.C.L.T. (2d) 123, where the topic was whether thepolice owed a duty of care to warn potential victims of crime where there was a crime wave in a specific neighbourhood of Toronto.

Asstated in that decision: For the most part, the police are free to go about their task of detecting and apprehending criminals without fear of being sued byindividual members of society who have been victimized. The reason for this is simple. While the police owe certain duties to the publicat large, they cannot be expected to owe a private law duty of care to every member of society who might be at risk. Foreseeability of risk alone is not sufficient to impose a private law duty of care.

See Hill v Chief Constable of West Yorkshire, [1988] 2All E.R. 238 (H.L.). [emphasis added] [19] The fact that Signalta and other electric energy producers were at risk of economic harm by the decisions of the BP is notsufficient to establish sufficient proximity to found a private duty of care. [20] The activities and decisions of the BP certainly will affect both electrical power producers and consumers of electrical power.Should the Court recognize a duty of just one of them, or both, or neither? [21] There seems to be no good reason to recognize a duty of care to just one and not the other.

Both are clearly economicallyimpacted by the conduct of the BP. [22] The statement of claim itself contains a direct quote from a representative of the BP, as follows: The unanticipated return of the PPAs to the BP has detrimentally affected the BP’s financial obligations.

Fortunately, consumers areexpected to benefit from sustained low power prices throughout 2017 that will serve to reduce the impact on electricity bills. [theemphasis was put into the above text in the statement of claim] [23] So for producers such as Signalta low prices were detrimental, but for consumers they were [at least claimed to be] beneficial. [24] Should the BP be expected to carry out its statutory duties, including actions which affect the price of electricity in Alberta,while looking over one shoulder to potential civil liability to power producers, and looking over the other shoulder to potential civilliability to power consumers? [25] If private duties of care are recognized will the Courts need to hold trials to assess civil liability, listening to the testimonyfrom economists and forecasters, of a nature usually placed before specialist regulators in regulatory hearings? [26] This would effectively involve the Court in determining public policy with respect to the functioning of the electrical powersystem in Alberta. [27] I note in passing that the BP does not have free hand in its conduct.

The Province of Alberta created a statutory body, theMarket Surveillance Administrator (under the authority of the Alberta Utilities Commission Act) which is able to monitor the conduct ofthe BP and other participants in the electric energy industry. [28] In my view the factors mentioned above lead to the conclusion that the recognition of a private duty of care to energyproducers such as Signalta is, under the Anns/Cooper test, bad public policy, and I decline to do so. [29] In other words, just as: • The Registrar of Mortgage Brokers in British Columbia does not owe a private duty of care to investors [see Cooper v.

Hobart,supra]; • The Law Society of Upper Canada does not owe a duty of care to persons who deposit money in a solicitor's trust account asparticipants in a business promotion rather than as clients [see Edwards v. Law Society of Upper Canada, supra]; • The Energy Resources Conservation Board does not owe a private duty of care to a landowner who claims her fresh water supplywas damaged by activities carried out under the regulation of the ERCB [see Ernst v. EnCana Corp., 2014 CarswellAlta 1588, 2014ABCA 285]; in my view the BP does not owe a private duty of care to Signalta.

Section 92 of the EUA [30] I reject Signalta’s submission that a private duty of care of the BP was established, inferentially, by

section 92 of the ElectricUtilities Act, SA 2003, c E-5.1(the “EUA”).

[ 31 ] Certainly the EUA does not expressly create a right of action, as can be done by statute. See for an example of the statutory creation of a cause of action section 60(1) of the Personal Information Protection Act , SA 2003, c P-6.5 , which states: If the Commissioner has made an order under

section 52 against an organization and the order has become final as a result of there being no further right of appeal, an individual affected by the order has a cause of action against the organization for damages for loss or injury that the individual has suffered as a result of the breach by the organization of obligations under this Act or the regulations. [ 32 ] Rather, Signalta looks to a liability shield provided by

section 92 of the EUA , and its assertion that if fits within an exception to that liability shield, as sufficient to create a private duty of care where otherwise none would exist. [ 33 ] The relevant portions of

section 92 of the EUA state: Liability protection of Balancing Pool 92(1) In this section, (a) “balancing pool person” means ... [the BP] ... (b) “balancing pool person act” means any act or omission carried out or purportedly carried out by a balancing pool person in exercising its powers and carrying out its duties, responsibilities and functions under this Act and the regulations or the Utility Payment Deferral Program Act and the regulations under that Act; (c) “direct loss or damage” does not include loss of profits, loss of revenue, loss of production, loss of earnings, loss of contract or any other indirect, special or consequential loss or damage whatsoever arising out of or in any way connected with a balancing pool act.

(2) No action lies against a balancing pool person, and a balancing pool person is not liable, for a balancing pool person act. [this is the liability shield] (3) Subsection (2) does not apply (

a) where a balancing pool person act is carried out by a balancing pool person that is not an individual, if the act constitutes wilful misconduct, negligence or breach of contract, or ... [this is the exception to the liability shield]

(4) Where, as a result of the operation of subsection (3), a balancing pool person is liable to another person for a balancing pool person act, the balancing pool person is liable only for direct loss or damage suffered or incurred by that other person . [this is the limitation to the exception] [commentary in italics has been added] [ 34 ] I do not accept that the inclusion of an exception to a liability shield is sufficient, in the absence of a private duty of care, to create a private duty of care. [ 35 ] Further, in my view, even if the exception created a private duty of care, the limitation to the exception removes any liability for economic loss, which is the type of loss being pursued by Signalta.

Conclusion [ 36 ] I am striking out the Signalta statement of claim on the basis that it discloses no reasonable claim. Costs [ 37 ] If the parties cannot agree on a costs outcome they may

schedule a hearing to make submissions in that regard. Heard on the 28 th day of July, 2021. Dated at the City of Calgary, Albert a this 6th day of August, 2021. J.T. Prowse M.C.C.Q.B.A.

Appearances: David Madsen, Q.C./ Chidinma B. Thompson/ Bradon Willms Borden Ladner Gervais LLP for the plaintiff Patrick Roche/Adrienne Wong DLA Piper (Canada) LLP for the defendant