Commercial Litigation and Dispute Resolution Blog

In its first decision of 2017, the Supreme Court of Canada addressed the likelihood of successful damages claims against quasi-judicial boards pursuant to s. 24 of the Charter. In a 4-4-1 split decision, the Court ultimately dismissed the appeal and struck the appellant’s claim for damages. Given the nature of the split decision, and the fact-specific basis for the result, a closer look is warranted both to understand the decision in question and evaluate its potential reach.

Factual Background

The Energy Resources Conservation Board (the “Board”) is an independent quasi-judicial body responsible for regulating Alberta’s energy resource and utility sectors. It is responsible for overseeing energy related activities and enforces legislation intended to protect the groundwater supply. The Board was created by the Energy Resources Conservation Act (the “ERCA”), R.S.A. 2000, c. E-10. That statute includes an immunity clause at s. 43 which insulates the Board from actions or proceedings against it “in respect of any act or thing done purportedly in pursuance of this Act, or any Act that the Board administers, the regulations under any of those Acts or a decision, order or direction of the Board.”

Ms. Ernst owns land in Alberta. Throughout 2004 and 2005, she frequently voiced her concerns to the Board about the negative impacts caused by hydraulic fracturing and drilling near her home. She also voiced her concerns publicly.

In December 2007, Ms. Ernst brought claims against the project proponent, the Board, and the government of Alberta. Only one of those claims was still alive before the Supreme Court of Canada, i.e.: whether or not the Board had breached Ms. Ernst’s s. 2(b) right to freedom of expression by “arbitrarily, and without legal authority” restricting her communications with the Board for a period of 16 months. She asserted that the Board had punished her for her earlier public criticisms.

The Board brought an application to strike Ms. Ernst’s claims. The onus was therefore on the Board to demonstrate that it was “plain and obvious” that Ms. Ernst’s claims could not succeed as pleaded. Both the Alberta Court of Queen’s Bench and the Court of Appeal found that the immunity clause on its face barred Ms. Ernst’s claim for Charter damages and concluded that her claim should be struck out, 2013 ABQB 537; 2014 ABCA 285.

The Issues

While there were three key issues on appeal, the three decisions written by the court addressed these issues in substantially different fashions. Three judges sided with Cromwell J.; one judge sided with Justice McLachlin C.J., Moldaver J. and Brown J.; and Abella J. wrote for herself.

(a)            Does s. 43 of the ERCA bar a claim for Charter damages?

Justice Cromwell, writing for himself, and Justices Karakatsanis, Wagner and Gascon, and Justice Abella (writing for herself) held that it is “plain and obvious” that the immunity clause bars a claim for Charter damages, but for slightly different reasons. Justice Cromwell concluded it would be unfair to the Board to rule otherwise, since the case has been argued in the lower courts on this basis. However, Abella J. was of the view that s. 43 is an absolute and unqualified immunity clause and that, absent a successful challenge to the constitutionality of the provision, it bars all claims against the Board.

The Chief Justice, Moldaver J. and Brown J. disagreed. Although this issue was not properly before the lower courts, the circumstances of this case, involving a novel legal problem of significant public importance, compelled the Court to consider the issue. In their view, it was not plain and obvious that Ms. Ernst’s claim was barred by the immunity clause. Focusing on the language of “any act or thing done purportedly in pursuant of the [ERCA],” it is arguable that punitive acts or non-adjudicative functions could fall outside the scope of the immunity that s. 43 confers.

(b)               Is s. 43 of the ERCA constitutional?

At both the Queen’s Bench and the Court of Appeal, Ms. Ernst maintained that she was not challenging the constitutionality of the immunity clause, but rather was challenging the applicability of the clause to her Charter damages claim. It was not until she reached the Supreme Court that this issue was raised. As a result, neither the Attorney General of Alberta nor the Attorney General of Canada received notice of a constitutional question and no evidence was lead as to the constitutionality of the provision.

Justice Abella was critical of this procedural failure, and emphatically declined to rule on the constitutionality of s. 43. Notice to the Attorneys General serves the vital purpose of ensuring courts have a full evidentiary record before invalidating legislation and affords governments the fullest opportunity to support duly enacted statutes. She stated that new constitutional questions ought not to be answered “unless the state of the record, the fairness to all parties, the importance of having the issue resolved by this Court, the question’s suitability for decision, and the broader interests of the administration of justice demand it.”

The Chief Justice, Moldaver J. and Brown J. also declined to rule on the constitutionality of the provision. In their view, the appeal should have been allowed on the basis of their answers to the other two questions. However, they expressed some support for Abella J.’s approach, commenting in obiter that the record did not provide an adequate basis on which to decide the issue.

Justice Cromwell ruled the provision was constitutional, for two reasons. First, the appellant had simply failed failed to discharge her burden of showing that the law is unconstitutional. Second, however, Cromwell J., found that as Charter damages would never be an appropriate and just remedy for Charter breaches by the Board, and s. 43 did not actually limit the availability of Charter remedies, it could not then be unconstitutional.

(c)              Are Charter damages an appropriate remedy as against the Board?

Charter damages may be an “appropriate and just” remedy for a breach of a claimant’s Charter rights if the claimant demonstrates that damages would fulfill one or more of the functions of compensation, vindication, or deterrence. However, Charter damages will not be available where countervailing factors, such as alternative remedies or good governance concerns, render s. 24(1) damages inappropriate or unjust, 2010 SCC 27.

Justice Cromwell concluded that it was plain and obvious that Charter damages would never be an appropriate remedy against the Board. Judicial review is available to vindicate any misconduct by the Board and good governance concerns support the Board’s immunity – immunity protects the Board’s independence and impartiality and ensures the Board is able fulfill its functions without the distraction of time-consuming litigation. His decision reminds litigants and lower courts that courts must be careful not to extend the availability of Charter damages too far.

Those siding with the Chief Justice again, disagreed. In their view, the limited evidentiary record did not support the high threshold mandated by an application to strike. It was not plain and obvious that Charter damages could not, in any circumstances, be an appropriate and just remedy against the Board. It was not obvious that judicial review would fulfill the same the same objectives as an award of Charter damages, namely, vindicating Ms. Ernst’s Charter right and deterring future breaches. It was also not plain and obvious, on the record at this junction, that good governance concerns, either alone or together, would be enough to oust a claim for Charter damages.

Justice Abella declined to decide this issue as well, finding that the question of whether Charter damages are appropriate requires a prior determination of the constitutionality of the immunity clause. Though her comments in obiter suggest that, absent the procedural error, she would have otherwise agreed with Cromwell J.

What does all of it mean?

Although the justices reached their conclusions in different ways, the collective result is that s. 43 remains in effect and bars claims against the Board. However, a constitutional challenge of s. 43 and other similar immunity clauses appears to remain open, as there was a limited evidentiary record before the Court to support its ruling. It is unclear whether an argument is still open to litigants to argue that s. 43 does not apply to a claim for Charter damages, as only Abella J. conclusively ruled on the matter.

It is also unclear whether Charter damages are available to litigants as against a quasi-judicial board other than Energy Resources Conservation Board. Although Abella J.’s comments suggest that such a claim would fail, the Court’s decisions do not offer a clear majority on this issue.

With thanks to articling student Rochelle Collette for her assistance.