2014 03 18 brief of argument of respondent jessica ernst to alberta environment (government) filed...

03/18/2014 13:07 14038236073 DRUMHELLER COURTS PAGE 81/82

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COURT FILE NUMBER Court File No. 0702-00120of

COURT COURT OF QUEEN’S BENCHOF ALBERTA.

JUDICIAL CENTRE DRUMHELLER

PLAiNTIFF JESSICA ERNST(RESPONDENT)

DEFENDANTS ENCANA CORPORATION, ENERGY(APPLICANTS) RESOURCES CONSERVATION BOARD

and HER MAJESTY THE QUEEN IN RIGHTOF ALBERTA

DOCUMENT BRIEF OF ARGVNENT OF TilERESPONDENT JESSICA ERNST

APPLICATION OF HER MAJESTY THEQUEEN IN RIGHT OF ALBERTATO BE HEARD ON APRIL 16,2014

ADDRESS FOR SERVICE KLIPPENSTEINSAND CONTACT Barristers & SolicitorsiNFORMATION OF THE 160 John Street, Suite 300PARTY FILING THIS Toronto, ON M5V 2E5DOCUMENT Tel.: (416) 598-0288

Fax: (416) 598-9520

Murray KiippensteinW. Cory [email protected](klippensteins.ca

Table of Contents

PART I: INTRODUCTION 1

PART II: FACTS 1

The Action

Facts alleged regarding Alberta Environment 2

Cause of Action against Alberta Environment 6

PART III: ISSUES RAISED BY THIS APPLICATION 6

PART IV: LAW AND ARGUMENT 7

ISSUE #1: Alberta Environment’s Application to Strike is an Abuse of Process.... 7

ISSUE #2: Alberta Environment mischaracterizes an Application to Strike as anApplication for Summary Judgment 8

ISSUE #3: It is not “plain and obvious” that Alberta Environment cannot owe aduty of care to Ernst 10

ISSUE #4: Alberta Environment is not protected from liability for acts taken in“bad faith” 29

PART V: RELIEF SOUGHT 35

PART I: INTRODUCTION

1. Her Majesty the Queen in Right of Alberta (“Alberta Environment”) brings an

Application to strike the pleadings for failing to disclose a reasonable cause of action. In the

alternative, Alberta Environment seeks summary judgment on the grounds that it is plain and

obvious that there is no merit to the claims against Alberta Environment (the “Application”).

2. Alberta Environment’s Application must fail for the following reasons:

a. Alberta Environment’s application to strike, its third attack on the pleadings, is an

abuse of process;

b. it is not “plain and obvious” that Alberta Environment cannot owe a duty of care to

the Plaintiff Jessica Ernst; and

c. Alberta Environment is not protected from liability for acts taken in “bad faith”.

PART II: FACTS

The A ction

3. Jessica Ernst (“Ernst” or the “Plaintiff’) is a landowner who resides on an acreage near

Rosebud, Alberta. Her rural property is supplied with fresh water by a private well that draws

from the Rosebud Aquifer.

Fresh Statement of Claim, dated June 25, 2012 at paras 1 & 5 (“Statement ofClaim”) [Book of Authorities of the Defendant Her Majesty In Right of Alberta

(“AENV Authorities”), Tab 1].

4. Between 2001 and 2006, the defendant EnCana Corporation (“EnCana”) engaged in a

new and untested program of drilling for methane gas from shallow coal beds at over 190 gas

wells located adjacent to Ernst’s property. This program included a technique known as

hydraulic fracturing or “fraccing” at shallow depths underground, in some cases at less than 200

meters below the surface. Shortly thereafter, Ernst’s well water became severely contaminated

with hazardous and flammable levels of methane and other toxic chemicals.

Statement of Claim at paras 6-15 & 29 [AENV Authorities, Tab 1].

5. Ernst has brought claims against the defendants EnCana Corporation (“EnCana”), the

Energy Resources Conservation Board (“ERCB”), and Her Majesty the Queen in Right of

Alberta (“Alberta Environment”) regarding the severe contamination of her well water and the

failure of the ERCB and Alberta Environment to properly investigate and remediate the harm.

The lawsuit claims against EnCana (for negligence, nuisance and other torts); the ERCB (for

breaches of Ms. Ernst’s fundamental freedoms under the Charter ofRights and Freedoms and

for the negligent failure to implement the ERCB’s inspection scheme); and Alberta Environment

(for engaging in a faulty investigation that was conducted negligently and in bad faith, as

detailed below).

Statement of Claim [AENV Authorities, Tab 1].

6. The present Application is concerned solely with the negligence claim pleaded against

Alberta Environment.

Facts alleged regarding Alberta Environment

7. Alberta Environment is the government ministry responsible for environmental

protection, including the protection of groundwater supply for rural landowners. In particular,

Alberta Environment is mandated under both the Water Act, and the Environmental Protection

and Enhancement Act (“EPEA”) to conduct inspections and investigations, including

investigations into public complaints regarding water well contamination.

Statement of Claim at para 59 [AENV Authorities, Tab 1].

Water Act, RSA 2000, c W-3 (“WaterAct”), “Inspections” at ss 118-126,“Investigations” at ss 127-134 & “Emergencies” at ss 105-107 [AENV Authorities,

Tab3].

Environmental Protection and Enhancement Act, RSA 2000, c E- 12 (“EPEA”),“Investigations and Inspections” at ss. 195 — 209 [AENV Authorities, Tab 2].

8. Alberta Environment has also established a Compliance Assurance Program to “provide

clarity and certainty to all Albertans about how compliance assurance will be achieved in

Alberta.” Core responsibility for delivering the Compliance Assurance Program for the EPEA

and the Water Act rests with the Regional Services Division of Alberta Environment

Alberta Environment Compliance Assurance at 1 & 9 (“AENV ComplianceAssurance”) [AENV Authorities, Tab 32].

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9. While a portion of Alberta Environment’s mandate does involve the setting of “high

level” policies (which inevitably involve the balancing of competing interests) this is not true of

the Regional Services Division’s inspection and investigation activities. On the contrary, the

Regional Services Division’s inspection and investigation activities are entirely operational or

administrative in nature.

10. Importantly, investigations and inspections into water well complaints are performed by

on-the-ground staff from the local offices of the Regional Services Division of Alberta

Environment in accordance with a detailed set of mandated operational guidelines. These

operational guidelines are included in, among other sources, the “Compliance Assurance

Program”, the “Compliance Inspection and Monitoring Operational Guideline” and the

“Compliance Inspection Operational Guideline”. Investigators, through the Water Act and the

EPEA, have broad powers to gather the information necessary to complete an effective

investigation.

Statement of Claim at para 61 {AENV Authorities, Tab 1].AENV Compliance Assurance at 24-25 & 34-36 [AENV Authorities, Tab 32].

Water Act at ss 119-134 [AENV Authorities, Tab 3].EPEA at ss 198 — 209 {AENV Authorities, Tab 2].

11. Between 2001 and 2006, EnCana conducted new and untested shallow fraccing

operations at dozens of EnCana Wells in close proximity to Ernst’s private property. By

February 2005, Alberta Environment was specifically aware that EnCana had directly targeted

and fracced the Rosbud Aquifer — the aquifer that provided fresh water for Ernst’s household

use. These shallow fraccing activities caused the severe contamination of Ernst’s well water

with hazardous and flammable levels of methane and other toxic chemicals.

Statement of Claim at paras 6-16, 30 & 68 [AENV Authorities, Tab 1].

12. In late 2005, Ms. Ernst contacted Alberta Environment to report concerns regarding the

contamination of her well water. On March 3, 2006, Alberta Environment finally began an

investigation into the contamination of Ernst’s water well and several other wells nearby. The

key allegation in the lawsuit against Alberta Environment is that Alberta Environment conducted

a faulty, irrational and bad faith investigation into the severe contamination of Ernst’s well.

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Statement of Claim at paras 67-69 & 73-74 [AENV Authorities, Tab 1].

13. Alberta Environment’s investigation involved numerous site visits to sample and test

Ernst’s water, and included frequent personal interactions between Ernst and various

investigators and other employees of the Regional Services Division of Alberta Environment,

including its lead investigator, Kevin Pilger (“Pilger”).

Statement of Claim at paras 67-70 & 73-74 [AENV Authorities, Tab 1].

14. Alberta Environment’s tests on Ernst’s water well showed that her water was

contaminated with very high and hazardous levels of methane. Alberta Environment tests also

indicated that Ernst’s water was contaminated with F-2 hydrocarbons, 2-Propanol 2-Methyl and

Bis (2-exyhexyl) phthalate; that levels of strontium, barium and potassium in her water had

doubled; and that her well water contained greatly elevated levels of chromium.

Statement of Claim at para 70 [AENV Authorities, Tab 1J.

15. Alberta Environment’s handling of Ernst’s complaint has all of the hallmarks of “bad

faith”. In particular, from the very start, Pilger, Alberta Environment’s lead investigator, showed

prejudice, bias and hostility towards Ms. Ernst. Notably, before any investigation had begun,

Pilger had concluded that Ms. Ernst’s water well was not impacted by CBM development. He

also repeatedly and without foundation accused Ernst of being responsible for the contamination

of her own well.


16. The Alberta Environment investigation itself was ad hoc, irrational and beset by serious

errors. These errors were known to Alberta Environment. There was no sampling protocol.

Samples were contaminated. Alberta Environment lost or destroyed data its investigators had

collected. Investigators entirely failed to investigate specifically-identified EnCana gas wells

that had been fracced either directly into or near the Rosebud Aquifer. Investigators failed to

obtain from EnCana a list of chemicals used in its fraccing operations, and correspondingly

failed to test the water for possible “red flag” contaminants that would help identify the source of

the water contamination.


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17. Despite knowing that the investigation of Ernst’s contaminated well was inadequate and

negligently conducted, Alberta Environment nonetheless sent the limited data collected in this

investigation to the Alberta Research Council (“ARC”) for review and analysis (the “ARC

Review”). Alberta Environment radically and improperly restricted the scope of the ARC

Review by improperly instructing the ARC only to review the limited and deficient information

provided by Alberta Environment, thereby ensuring that the ARC Review itself would be

deficient and unreliable.

Statement of Claim at paras 73 & 75 [AENV Authorities, Tab 1].

18. The ARC Review contained serious flaws.’ For instance, the review failed to consider,

account for, or explain the presence of indicators of oil and gas industry contamination in Ernst’s

water including, for example, F-2 hydrocarbons, 2-Propanol 2-Methyl and Bis (2-exyhexyl)

phthalate. Moreover, in large part owing to Alberta Environment’s faulty investigation, and as a

result of Alberta Environment’s failure to investigate likely sources of contamination, the ARC

Review did not include information or data from any of EnCana’s 190 shallow coalbed methane

wells (including 60 in the area that were drilled less than 200m below the surface) that are the

subject of the lawsuit, and that are the likely causes of contamination. In other words, the ARC

Review entirely failed to consider the highly likely possibility that Ernst’s water well was

impacted by EnCana’s shallow CBM wells. Finally, the ARC Review included and relied upon

factually incorrect information.

Statement of Claim at paras 8-9, 70 & 76 [AENV Authorities, Tab 1].Alberta Research Council mc, “Ernst Water Well Complaint Review” [AENV

Authorities, Tab 34].

19. Alberta Environment knew that the ARC Review was faulty and unreliable. Nonetheless,

Alberta Environment unreasonably relied on the review to close its investigation into the

contamination of Ernst’s water and to justify stopping the delivery of safe, drinkable water to her

home in April 2008.

Alberta has included the ARC Review in its authorities, and seeks to rely on it in support of its general propositionthat Alberta Environment acted reasonably in the circumstances. With respect, Ernst strongly challenges thereliability and the independence of the ARC Review. It is a central premise of this lawsuit that the ARC Review isseriously flawed, and further that Alberta Fnvironrnent knew that it is was seriously flawed. The dispute regardingthe reliability and independence of the ARC Review, however, cannot and should not be determined on apreliminary application to strike without the benefit of any evidence. AENV Brief at para 98; Alberta ResearchCouncil Inc “Ernst Water Well Complaint Review” (December31, 2007) [AENV Authorities, Tab 34].

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Statement of Claim at paras 76-77 {AENV Authorities, Tab 1].

Cause ofAction against Alberta Environment

20. The claim against Alberta Environment is based in negligence. The Pleadings state that

Alberta Environment negligently implemented its own specified and published investigation and

enforcement scheme by, inter alia, conducting a negligent, irrational and bad faith investigation

and review of the contamination of Ernst’s water.

Statement of Claim at paras 59-80 [AENV Authorities, Tab 1].

PART III: ISSUES RAISED BY THIS APPLICATION

21. Alberta Environment’s Application raises the following issues:

Issue #1: Is Alberta Environment’s current Application to strike (its third attack on the

pleadings) an abuse of process?

Issue #2: Has Alberta Environment mischaracterized what is actually an Application to Strike

as an Application for Summary Judgment?

Issue #3: Is it plain, obvious and without doubt that Alberta Environment does not owe a duty

of care regarding the manner in which it conducted an investigation into the

contamination of Ernst’s water well?

Issue #4: Dos. 220 of the EPEA and s. 157 of the Water Act provide immunity to Alberta

Environment for engaging in a badfaith investigation and review of the

contamination of Ernst’s water well?

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PART IV: LAW AND ARGUMENT

ISSUE #1: Alberta Environment’s Application to Strike is an Abuse ofProcess

22. Alberta Environment’s current application to strike is the latest in a successive string of

applications attacking the pleadings. Importantly, this is Alberta Environment’s second

application to strike the Fresh Statement of Claim dated June 25, 2012. In January 2013,

Alberta Environment unsuccessfully sought to strike particular sentences and paragraphs of the

claim. Having failed in its piecemeal attack, Alberta Environment now, belatedly, seeks to

strike the entire action against it.

Ernst v EnCana Corp, 2013 ABQB 537 at paras 99-130 [AENV Authorities, Tab 5].

23. The approach taken by Alberta Environment is an abuse of process; the present

Application should be dismissed, and further, Alberta Environment should be sanctioned with an

award of substantial indemnity costs. There is ample case law holding that, barring special

circumstances, a party should be allowed only one chance to attack an opponent’s pleadings.

This rule both a) reflects a desire to “avoid a multiplicity of proceedings which would unduly

strain economic resources and require valuable court time” and b) is based on the principle that

“a litigant ought not to be faced with a continuing series of motions on similar subjects”.

Grassick v. Calgary Power Co Ltd, [1948] 1 DLR 103 (QL) at para 15 [Plaintiff’sAuthorities, Tab 13].

Canada Post Corp. v. Goodfellas Delivery Inc., 2002 ABQB 585 (CanLil) at para26 [Plaintiff’s Authorities, Tab 4].

Horii v. Canada, [2000] FCJ No. 1712 (QL) at paras 10-14 [Plaintiff’s Authorities,Tab 16]

24. There are no special circumstances here. Alberta Environment has known that it is being

sued in negligence for its faulty investigation of the Ernst well from day one. If it was Alberta

Environment’s position that the entire action was misconceived on the grounds that Alberta

cannot owe a private duty of care to the Plaintiff it makes little sense to attack particular

sentences and paragraphs, and only later attempt to strike the whole claim. Such an approach is

a waste ofjudicial resources, and violates the foundational rule that the Alberta Rules ofCourt be

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used to “identify the real issues in dispute” and to “facilitate the quickest means of resolving a

claim at the least expense”.

Alberta Rules of Court, r 1.2(2) [AENV Authorities, Tab 4].

25. Multiple attacks on the very same pleading should not be condoned. They are a waste of

judicial resources, increase the costs of litigation, and result in delay for all parties. Accordingly,

Alberta Environment’s belated Application should be dismissed and Alberta Environment should

be sanctioned through an award of substantial indemnity costs.

ISSUE #2: Alberta Environment mischaracterizes an Application to Strike as anApplication for Summary Judgment

26. Alberta Environment’s Application purports to be both an application to strike out the

Statement of Claim on the grounds that it is plain and obvious that the pleading “fail[s] to

disclose a reasonable cause of action” as well as a motion for summary judgment on the grounds

that there is “no merit to any of the Plaintiff’s claims” against Alberta Environment.

Brief of the Defendant Her Majesty the Queen in Right of Alberta at paras 1-2(“AENV Brief’).

27. With respect, Alberta Environment has done little more than mischaracterize what is

clearly an application to strike as an application for summary judgment. In other words, Alberta

Environment’s application for summary judgment is simply an application to strike called by

another name. In any event, summary judgment is not available in a case where there is no

evidentiary record.

28. The Rule for summary judgment is as follows:

7.2 On application, the Court may at any time in an action give judgment or an order towhich an applicant is entitled when(a) admissions of fact are made in a pleading or otherwise, or;(b) the only evidence consists of records and an affidavit is sufficient to prove theauthenticity of the records in which the evidence is contained.

7.3 (1) A party may apply to the Court for summary judgment in respect of all or part of aclaim on one or more of the following grounds:(b) there is no merit to a claim or part of it...

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(2) The application must be supported by an affidavit swearing positively that one or more ofthe grounds described in subrule (1) have been met or by other evidence to the effect that thegrounds have been met. [Emphasis added].

Alberta Rules of court, r 7.2 -7.3 [AENV Authorities, Tab 4].

29. Despite the clear requirement of evidence within r. 7.2, Alberta Environment has chosen

not to submit any evidence in support of its summary judgment application. Instead, Alberta

Environment states that “evidence” on which it seeks to rely are “the facts set forth in the Fresh

Statement of Claim” and “legislation”. Given that “legislation” is clearly not evidence, Alberta

Environment appears to be seeking summary judgment on the basis of the pleadings alone.

AENV Brief at para 29.

30. Given that all the Court has before it is the Statement of Claim, what Alberta

Environment appears to be asking the court to determine is simply whether the Statement of

Claim discloses a reasonable claim in law. With respect, this is identical to the question raised in

an application to strike the pleadings under r. 3.68(2)(b): is it “plain and obvious that the

“commencement document or pleading [does not] disclose [a] reasonable claim or defence to a

claim”?

Alberta Rules of Court, if 3.68(2)(b) & 7.2 [AENV Authorities, Tab 4].

31. Rule 3.68 (application to strike) and rule 7.2 (summary judgment) are two distinct

procedures, aimed at addressing different issues and concerns. Alberta’s approach, which

improperly conflates these two distinct rules, does a disservice both to the intention of the Rules

and to the process of this Honourable Court.

32. It is worth pointing out that none of the cases relied upon by Alberta Environment

provide support for the proposition that a Court can and should grant summary judgment on the

basis of pleadings alone. Instead, all cases relied upon by Alberta Environment are premised on

the idea that a court may grant summary judgment, but only if there is a sufficientfactual basis

on the record. Each one of the cases cited by Alberta Environment involved significant

evidentiary records which included affidavits or other sworn testimony and which provided the

court with a sufficient factual basis to grant summary judgment.

Gauchier v Cunningham, 2013 CarswellAlta 1584 at para 10 [AENV Authorities,Tab 9].

Terrigno v Kretschner, 2012 CarswellAlta 2283 at paras 48-49.

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Environmental Metal Works Ltd v Murray, Faber & Associates mc, 2013CarswellAlta 1579 at paras 41-42 [AENV Authorities, Tab 11]

CCS Corp v Secure Energy Services mc, 2013 CarswellAlta 1997 at para 49[AENV Authorities, Tab 12]

Jackson v Canadian National Railway, 2012 ABQB 652 (CanLil) at para 7.

33. Finally, it is useful to remember that Alberta Environment’s application for summary

judgment does not raise a discrete or limited legal issue. It is not, for example, similar to a

limitation issue, where the key factual issue can be resolved by reference to the admission of a

key fact in a pleading. In the absence of any evidence whatsoever regarding any of the many

issues in the lawsuit, this Court is simply not in a position to entertain a summary judgment

application.

ISSUE #3: It is not ‘plain and obvious” that Alberta Environment cannot owe a duty of careto Ernst

34. As noted above, Alberta Environment’s Application purports to be both an application to

strike out the Statement of Claim on the grounds that it is plain and obvious that the pleading

“fail[s] to disclose a reasonable cause of action” as well as a motion for summary judgment on

the grounds that there is “no merit to any of the Plaintiff’s claims” against Alberta Environment.

Alberta Environment cannot succeed on either ground.

AENVBrief paras 1-2.

The test on an Application to Strike is very difficult to meet

35. The test on an application to strike is a very difficult test to meet. Alberta Environment

bears the “extremely high” onus of “proving that the Plaintiffs action is bound to fail”. Pursuant

to Rule 3.68, a court should only strike out a pleading if it is “plain and obvious or beyond

reasonable doubt” that the facts, taken as proved, do not disclose a reasonable cause of action.

“The Supreme Court of Canada and all other courts in the country have said repeatedly that a

pleading cannot be struck out if there is the faintest chance that it may succeed at trial.” The

Plaintiff is entitled to a broad and generous reading of the pleadings. Neither the novelty of the

cause of action nor the potential for the defendant to mount a strong defence should prevent the

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claim from proceeding. “Only if the action is certain to fail because it contains a radical defect”

should the claim be struck out.

Alberta Rules of Court, r 3.68 [AENV Authorities, Tab 4].

Hunt v Carey Canada mc, [1990] 2 SCR 959 (QL) at paras 32-33 [Plaintiff’sAuthorities, Tab 17].

-1lberta Adolescent Recovery Centre v Canadian Broadcasting Corporation, 2012ABQB 48 (QL) at paras 27 & 29 [Plaintiff’s Authorities, Tab 2].

Test on an Application for Summary Judgment is also dfflcult to meet

36. The bar on an application for summary judgment is also high. According to the Alberta

Court of Appeal, “the test for summary judgment is that it must be ‘plain and obvious’, or ‘clear’

or ‘beyond real doubt’ that the action should be summarily dismissed”. Moreover, the

“defendant who seeks summary dismissal bears the evidentiarv burden of showing that there is

‘no genuine issue of material fact requiring trial” [emphasis added].

Stobbe v Paramount Investments Inc., 2013 ABCA 384 (CanLil) at para 9[Plaintiff’s Authorities, Tab 23].

Canada (Attorney General) v Lameman, [2008] 1 SCR 372 (QL) at para 11[Plaintiff’s Authorities, Tab 3].

37. Alberta Environment has not and cannot meet either of the above tests.

When can a government actor owe a private duty ofcare?

38. This Application deals with the question of when a government agency, such as Alberta

Environment, will be in a relationship of sufficient proximity with a plaintiff, such as Ernst, to

ground a private law duty of care.

39. Alberta Environment bases its Application on the premise that it is plain and obvious that

Alberta Environment cannot, as a matter of law, owe a duty of care to Ernst in the circumstances.

In particular, Alberta Environment relies heavily on the idea that Alberta Environment owes

public duties only, and these public duties preclude any possible duty of care owed specifically to

Ernst. With respect, Alberta’s argument is overbroad and ignores a substantial body of Supreme

Court jurisprudence.

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40. As a starting point, it is important to recognize that there are a great many circumstances

in which courts have found that governments can and do owe private duties of care to

individuals — this despite the fact that governments will generally always also owe wider duties

to the public at large. Indeed, as the Supreme Court noted in Nielsen v Kamloops (Cliv), Lord

Wilberforce considered just this question in the seminal case ofAnns v. Merton London Borough

Council, [1978] A. C. 728, and held that while “the local authority is a public body whose powers

and duties are definable in terms of public rather than private law. . . . in some circumstances the

law could impose over and above, or perhaps alongside, these public law powers and duties a

private law duty towards individuals enabling them to sue the authority for damages in a civil

suit”. In that case, the court held that the government body did owe a private duty of care.

]Welsen vKamloops (City), [1984) 2 SCR 2 (WL) at paras 38 & 44, describing Annsv. Merton London Borough Council (“Kamloops”) [Plaintiff’s Authorities, Tab 20].

41. Examples of governments owing private law duties of care alongside their public duties

are replete in our common law. For example, in Hill v Hamilton Wentworth Regional Police

Services Board, the Supreme Court found that the police can owe a private duty of care to an

individual they are investigating, despite the fact that police obviously owe a wider duty of care

to the public at large to fight crime. Similarly, in Fullowka, the Supreme Court found that a

public mine inspector can owe a private duty of care to miners at a mine, even as they also owe a

wider duty of care to the public. Moreover, building inspectors have also been found liable for

negligently implementing inspection schemes, despite the fact that they were exercising statutory

and public powers.

Hill v Hamilton Wentworth Regional Police Services Board, 2007 SCC 41 at paras40-43 (“Hill”) [Plaintiff’s Authorities, Tab 15].

Fullowka v Pinkerton’s of Canada Ltd, 2010 SCC 5 (QL) at paras 46-51 & 55(“Fullowka”) [Plaintiff’s Authorities, Tab 12].

42. In other words, it is never enough for a government to simply point to their public duties

as a complete answer to a claim against it. Instead, a court must look at the totality of the

circumstances of the particular case to determine whether a relationship between the plaintiff and

the defendant is sufficiently “close and direct” to warrant imposing a private duty of care.

Hill at para 29 [Plaintiff’s Authorities, Tab 15].Fullowka at para 40 [Plaintiff’s Authorities, Tab 12].

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Alberta Environment owes a duty ofcare to Ernst

43. In this Application, the relevant question is whether it is “plain and obvious” that AlbertaEnvironment cannot owe a duty of care to Ernst. and therefore the action is “bound to fail”.Alberta Environment cannot and has not met this stringent standard.

44. For the purposes of this Application, to determine whether a duty of care may exist in aparticular circumstance, the Court must first consider whether the duty of care pleadedpotentially belongs within an established or analogous category of negligence. If it does, for thepurposes of this Application, a primafacie duty of care is established. If the duty of care allegeddoes not belong within an established or analogous category of negligence (i.e. the duty allegedis “novel”) the Court must apply the full two-part Cooper/A nns test (described in more detailbelow).

Adams v Borrel, 2008 NBCA 62 (QL) at para 36 (“Adams”) [Plaintiff’s Authorities,Tab 1]

There is a primafacie duty of care based on the pre-existing legal category of “negligentinvestigation”

45. The cause of action pleaded by Ernst against Alberta Environment clearly falls within thepreviously-recognized category. Accordingly, a prima facie duty of care based on pre-existinglegal categories is established.

46. In particular, the duty of care alleged here is precisely analogous to the duty of care foundin the Supreme Court’s numerous “negligent investigation or negligent inspection” cases. Inthese cases, the Supreme Court has repeatedly held that once a government agency, such asAlberta Environment, has established an investigation or inspection mechanism at an operationslevel, it will owe a duty of care to carry out that inspection without negligence, failing which theauthority can be held liable. The Supreme Court has explained this concept in the followingterms:

[A] government agency in reaching a decision pertaining to inspection must act in areasonable manner which constitutes a bona fide exercise of discretion. To do sothey must specifically consider whether to inspect and if so, the system ofinspection must be a reasonable one in all the circumstances. [Emphasis added]

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Just v British Columbia, [1989] 2 SCR 1228 at para 21 (“Just”) [Plaintiff’sAuthorities, Tab 19].

47. The Supreme Court has repeatedly found a duty of care to reasonably implement an

established investigation and inspection scheme in circumstances virtually identical to the case at

bar. As noted above, in Fullowka v Pinkerton ofCanada Ltd., the Supreme Court found a

duty of care owed by the government regulator of mines to mine workers to reasonably inspect

the mine pursuant to the statutory framework, and to order cessation of work if unsafe.

Fullowka at para 55 [Plaintiff’s Authorities, Tab 12].

48. The cases of Nielsen v Kamloops (City), Ingles v Tukaluk 1onstruction Ltd, and RothjIeld

v Manolakos deal with the regulatory duties to inspect and enforce provisions of a building code.

In these cases, the Supreme Court found that when a government had established a scheme for

inspecting construction, the municipality owes a duty of care to current property owners, future

property owners and to third parties to implement that scheme reasonably and without

negligence.

Fuiowka at paras 46-51 explaining Kamloops, Ingles and Rothfield [Plaintiff’sAuthorities, Tab 12].

Ingles v Tutkaluk Construction Ltd. 2000 SCC 12 (QL) at paras 18-21 (“Ingles”)[Plaintiff’s Authorities, Tab 18].

49. Finally, in Adams v Borrel, the New Brunswick Court of Appeal found that Agriculture

Canada owed a duty of care to farmers with respect to an investigation into a potato virus. Thecourt held that this case fell within the recognized category of “negligent inspection” in which agovernment agency will owe a duty of care once it has made the policy decision to establish aninvestigation scheme.

Adams at paras 41-49 [Plaintiff’s Authorities, Tab 1].

50. The present Action is on all fours with the above negligent inspection/negligent

investigation cases. As discussed above, Alberta Environment established a system for

inspecting public complaints regarding water well contamination. Having established an

inspection and investigation scheme, Alberta Environment owes aprimafacie duty of care to

conduct investigations reasonably, and can be held liable for the failure to do so.

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51. The Statement of Claim pleads that when Environment Alberta received complaints that

Ernst’s water well was contaminated with flammable levels of methane and other chemical

contaminants, it engaged a lead investigator who was openly hostile to Ernst, engaged in an

irrational and faulty investigation of the Ernst Well that produced results it knew to be unreliable,

and then took active steps to ensure that the review of the investigation was equally faulty.

Statement of Claim at para 69-77 [AENV Authorities, Tab 1].

52. For the purposes of an application to strike, the pleadings clearly fit within the

established category of “negligent investigation! inspection cases”, and accordingly a prima facie

duty of care is established. Alberta Environment cannot and has not met the high standard of

showing that it is “plain and obvious” that Ernst’s negligent inspection and investigation claim

must fail, and accordingly its Application must be dismissed.

Alberta Environment does not and should not have “unfettered discretion” in the conductof its investigation

53. Alberta Environment argues that its investigators should have “unfettered discretion” to

conduct investigations entirely as they see fit, without any recourse even if the investigation was

conducted negligently, irrationally and in bad faith (as pleaded here). In other words, according

to Alberta Environment, any investigation conducted by it should be sheltered from review by

the courts. With respect this is not and cannot be the law.

AENV Brief at paras 41 & 93.

54. As the Alberta Court of Appeal recently found, “while it is inappropriate for courts to

impose liability for the consequences of a particular policy decision, ‘a government actor may be

liable in negligence for the manner in which it carries out the policy.”

Elder Advocates ofAlberta Society v. Alberta Health Services, 2012 ABCA 355(CanLil) at paras 19-21 [Plaintiff’s Authorities, Tab 9].

55. Similarly, the Supreme Court has used the example of a policy of lighthouse inspections

to illustrate the point:

For example, at a high level there may be a policy decision made concerning theinspection of lighthouses.. . . [Al decision either not to inspect at all or to reduce thenumber of inspections may be an unassailable policy decision. This is so provided it

16

constitutes a reasonable exercise of bona fide discretion based, for example, upon theavailability of funds.On the other hand, if a decision is made to inspect lighthouse facilities the system ofinspections must be reasonable and they must be made properly. Thus once thepolicy decision to inspect has been made, the Court may review the scheme ofinspection to ensure it is reasonable and has been reasonably carried out in lightof all the circumstances, including the availability of funds, to determine whetherthe government agency has met the requisite standard of care. [Emphasis added,citations omitted]

Just at paras 22-23 [Plaintiff’s Authorities, Tab 19].

56. Moreover, the Supreme Court has specifically considered and rejected the idea that the

discretion that is sometimes inherent in professional work should serve to preclude a duty of

care.

The discretion inherent in police work fails to provide a convincing reason to negatethe proposed duty of care. It is true that police investigation involves significantdiscretion and that police officers are professionals trained to exercise this discretionand investigate effectively. However, the discretion inherent in police work is takeninto account in formulating the standard of care, not whether a duty of care arises.The discretionary nature of police work therefore provides no reason to deny theexistence of a duty of care in negligence.

Police are not unlike other professionals in this respect. Many professionalpractitioners exercise similar levels of discretion. The practices of law and medicine,for example, involve discretion, intuition and occasionally hunch. Professionals inthese fields are subject to a duty of care in tort nonetheless, and the courts routinelyreview their actions in negligence actions without apparent difficulty.

Hill at paras 5 1-54 [Plaintiff’s Authorities, Tab 15].

57. Alberta Environment relies on the dissenting opinion in the case ofKamloops for the

premise that a government agency vested with enforcement discretion will not owe a duty of care

in the exercise of their enforcement powers. Alberta Environment neglects to mention that in

that case, the majority found that because the government had established a framework for

inspections, the government agency did owe a duty of care to exercise its operational duties,

including inspections, in good faith and without negligence. Even the dissent in Kamloops held

that a government agency can be held liable if it makes operational decisions based on

“extraneous or improper matters, or from bad faith” — exactly what is alleged in the Statement of

Claim.

AENV Brief at para 41.Kamloops at paras 18-20 [Plaintiff’s Authorities, Tab 20].

17

58. In sum, the actions of Alberta Environment’s inspectors are certainly reviewable. In the

words of the Supreme Court, the “government agency must act in a reasonable manner which

constitutes a bona fide exercise of discretion”. To avoid liability, the government agency must

show that it conducted its inspection to the standard that “would be expected of an ordinary,

reasonable and prudent person in the same circumstances.” Once Alberta Environment has

decided to create an inspection scheme, and does in fact conduct such an investigation of a

citizen’s water well, it will owe a duty to conduct that inspection in good faith and without

negligence. If it does not conduct a reasonable investigation (as is alleged here), it can be liable.

Just at paras 25 & 30 [Plaintiff’s Authorities, Tab 19].Ingles at paras 18-19 [Plaintiff’s Authorities, Tab 18].

Alberta Environment is in a proximate relationship with the Plaintiff

59. In the alternative, if the duty of care alleged is not found to fall within a pre-existing or

analogous category of negligence (which the Plaintiff strongly disputes), this Honourable Court

must apply the two-part Cooper/Anns test to determine if it is “plain, obvious and beyond doubt”

that a duty of care cannot exist on the facts as pleaded. Under the Cooper/Anns test, the court

asks:

a. whether Alberta Environment is in a relationship of sufficient proximity and

foreseeability with the Plaintiff that aprimafacie duty of care is owed; and

b. if so, whether there are any overriding policy considerations that justif’ negating

or limiting the duty of care.

Hill at para 20 [Plaintiffs Authorities, Tab 15].

60. The Statement of Claim clearly discloses material facts sufficient to ground a relationship

of sufficient foreseeability and proximity under the Cooper/Anns test. It is certainly not the case

that it is “plain and obvious” that there cannot be a relationship of sufficient foreseeability and

proximity between Ernst and Alberta Environment.

61. Alberta Environment does not contest that it was foreseeable that harm could have been

suffered by the Plaintiff if Alberta failed to exercise reasonable care in engaging in the

implementation of its inspection and enforcement scheme. This makes sense — as discussed

18

above, Alberta Environment’s mandate includes safeguarding “human health” and “property”,

and “protecting the water supplies of household users”, including by taking remedial steps to

repair contamination after it occurs. If Alberta Environment fails in its responsibilities, it is

clear that rural landowners who depend upon private wells for their supply of safe drinking water

could be seriously harmed.

EPEA, see eg ss 109 & 113 [AENV Authorities at Tab 2].Water Act, see eg s 105 [AENV Authorities at Tab 3].

Groundwater Evaluation Guideline, February 5, 2003 at 21 {AENV Authorities atTab 30].

62. Instead, Alberta Environment incorrectly asserts that Alberta Environment is not in a

relationship of sufficient proximity with Ms. Ernst.

AENV Brief at eg para 58.

63. In answering the question of whether there is a relationship of sufficient proximity

between a plaintiff and a defendant, the Supreme Court differentiates between two situations.

The first kind of situation is where the alleged duty of care is said to arise explicitly or implicitlyfrom the statutory scheme. In other words, the only source of proximity is the statute itself.

R v Imperial Tobacco Canada Ltd, 2011 SCC 42 (QL) at paras 43-44 (“ImperialTobacco”) [Plaintiffs Authorities, Tab 21].

64. The second kind of situation, and the situation relevant for this Application, is where theduty of care is alleged to arise from interactions between the claimant and the government, andthis potential duty of care is not negated by the statute. In other words, the source of proximity isnot the statute alone, but is also founded on other factors derived from the nature of the specificrelationship between the claimant and the government agency.2The Supreme Court explainedthe second scenario in the following terms:

The second situation is where the proximity essential to the private duty of care isalleged to arise from a series of specific interactions between the government and theclaimant. The argument in these cases is that the government has, through itsconduct, entered into a special relationship with the plaintiff sufficient toestablish the necessary proximity for a duty of care. In these cases, the governingstatutes are still relevant to the analysis. For instance, if a finding of proximity

2 In direct conflict with the Supreme Court’s ruling in Imperial Tobacco, Alberta Environment states in its Brief that“the governing statute is the sole basis for all of a statutory regulator’s duties”. This is clearly incorrect. AENVBrief at para 43.

19

would conflict with the state’s general public duty established by the statute, thecourt may hold that no proximity arises. However, the factor that gives rise to aduty of care in these types of cases is the specific interactions between thegovernment actor and the claimant. [Emphasis added]

Imperial Tobacco at paras 43 & 45 [Plaintiffs Authorities, Tab 21].

65. In the case at bar, the Plaintiff is not basing her claim only on the statutory scheme.

Rather, the allegations against Alberta Environment in the present Statement of Claim are in the

second category established by McLachlin CJ in Imperial Tobacco. In other words, Ernst is

asserting that Alberta Environment has “through its conduct, entered into a special relationship

with the plaintiff sufficient to establish the necessary proximity for a duty of care”, based in large

part on the faulty and bad faith on-the-ground investigation of Ernst’s well conducted by Alberta

Environment inspectors.

66. Crucially, when the duty of care alleged is based on specific interactions between the

government actor and the claimant, as it is in this case, the Supreme Court notes that it will be

difficult to strike a claim at the pleadings stage:

Since this is a motion to strike, the question before us is simply whether, assumingthe facts pleaded to be true, there is any reasonable prospect of successfullyestablishing proximity, on the basis of a statute or otherwise.... [W]here theasserted basis for proximity is grounded in specific conduct and interactions,ruling a claim out at the proximity stage may be difficult. So long as there is areasonable prospect that the asserted interactions could, if true, result in afinding of sufficient proximity, and the statute does not exclude that possibility,the matter must be allowed to proceed to trial, subject to any policyconsiderations that may negate the prima facie duty of care at the second stage of theanalysis. [Emphasis added, citations omitted]

Imperial Tobacco at para 47 [Plaintiffs Authorities, Tab 21].

The pleadings disclose a proximate relationship between Alberta Environment and Ernst

67. The factors which can satisfy the requirement of proximity are “diverse and depend on

the circumstances of the case”. In addition to personal contact between the parties, other indicia

of proximity can include the “expectations, representations, reliance and property or other

interests involved”. As the Supreme Court has repeatedly emphasized, “where a private duty of

care is said to arise from the specific relationship of the regulator and the plaintiff the entirety of

the circumstances said to constitute that relationship must be considered in determining whether

that duty exists.”

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Taylor v Canada (Attorney General), 2012 ONCA 479 at para 117 (“Tayor”)[Plaintiffs Authorities, Tab 24].

Hill at para 24 [Plaintiff’s Authorities, Tab 15].

68. The Statement of Claim outlines five factors which establish close proximity between

Alberta Environment and Ernst:

a. Alberta Environment conducted an investigation and review directed exclusively at

investigating the cintamination of Ernst’s water well.

Statement of Claim at paras 69-77 [AENV Authorities, Tab I].

b. Alberta Environment employees and inspectors, including in particular lead

investigator Kevin Pilger, had repeated and direct contact with Ernst regarding

Alberta Environment’s investigation into her contaminated water.

Statement of Claim at paras 63, 67, 70 & 74 [AENV Authorities, Tab 1].

c. Both Alberta Environment employees and government ministers made various direct

and specific representations to Ernst regarding the conduct of Alberta Environment’s

investigation into her well.


d. Alberta Environment created a specific Compliance Assurance Program designed to

ensure “clarity and certainty” regarding investigation and enforcement.

Statement of Claim at paras 6 1-62 [AENV Authorities, Tab 1].AENV Compliance Assurance at 1, 34-36 [AENV Authorities, Tab 32].

e. The nature of Ernst’s interests.

69. Each of the five factors will be considered in turn below.

1. Alberta Environment engaged in a specific investigation ofthe contamination ofErnst’s wellwater

70. The single most important indicator of proximity in this case is that Alberta Environment

engaged in a specific on-the-ground investigation of Ernst water well. This investigation was

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entirely focused on a) determining whether Ernst’s water well was contaminated; and, if so b)

identifying the causes of the contamination in Ernst’s water.


71. Alberta Environment specifically attended at Ernst’s property to sample and test Ernst’s

water well. These tests revealed that her water was contaminated with very high and hazardous

levels of methane and a variety of other contaminants including F-2 hydrocarbons, 1-Propanol 1-

Methyl and Bis (2-ethyhexyl) phthalate, strontium, barium and chromium.


72. After completing their investigation, Alberta Environment arranged for the Alberta

Research Council to conduct a review of the results from the investigation. While the Plaintiff

maintains that the review itself was faulty and unreliable, the intent of the review was entirely

focused on determining what caused the serious contamination of Ernst’s water well.

Statement of Claim at para 75-76 [AENV Authorities, Tab 1].

73. During this time, and in recognition of the fact that Ernst’s water was contaminated with

hazardous chemicals, Alberta Environment began delivering safe and drinkable water to Ernst’s

residence.


2. SpecifIc interaction between Alberta Environment employees and investigators and JessicaErnst

74. Specific interaction or personal contact between the plaintiff and members of the

government agency is a key factor in establishing a relationship of sufficient proximity. “In

considering whether the relationship in question is close and direct, the existence, or absence, of

personal contact is significant.”

Fullowka at para 44 [Plaintiff’s Authorities, Tab 12].

75. Ernst had direct and continual interactions with various investigators and employees from

the Regional Services Division of Alberta Environment regarding a specific and on-the-ground

investigation of the contamination of Ernst’s water well. This investigation necessitated several

22

site visits by various employees and inspectors so that these inspectors could physically inspect

her well and take samples from it.

Statement of Claim at paras 70, 73-74 [AENV Authorities, Tab 1].

76. Alberta Environment cites River Valley Poultry Farm Ltd v Canada (A-G) for the

proposition that direct dealings between a regulator and a plaintiff are not enough to create a duty

of care. According to Alberta, this case is “on all fours” with the case at bar. With respect, it is

not. River Valley dealt with an investigation into a potentially dangerous strain of salmonella at

a chicken farm. As pointed out by the Court, the purpose of the investigation was to address a

potential threat to Ontario consumers from the spread of contaminated eggs. In that context, the

Court held, “inspectors are not obliged to be mindful of the economic interests of individual

farmers. The overriding concern is the protection and promotion of human and animal health”.

River Valley Poultry Farm Ltd v Canada (Attorney General), 2009 ONCA 326 atparas 52, 59 & 69 (“River Valley”) [Defendant’s Authorities, Tab 24].

77. The case at bar is different several key ways. First, in River Valley, the inspection was

clearly conducted for the benefit of the public; in the case at bar, however, the investigation of

Ernst’s well was for the benefit of Ernst — not the public as a whole. In other words, unlike the

farmer in River Valley, Ernst was not the target of the investigation — she was supposed to be the

beneficiary of it. Second, unlike in River Valley, the investigation here was not and could not be

directed at protecting the public from future harm; instead, it was directed at determining what

caused the past contamination of Ernst’s water well with flammable levels of methane. Third, in

River Valley, the plaintiff’s only interests were economic.

River Valley at paras 51, 52, 59 & 69 [Defendant’s Authorities, Tab 24].

78. In other words, nothing in River Valley takes away from the point that Alberta

Environment is in a proximate relationship owing to the direct and continual contact between

Ernst and various Alberta Environment staff and regulators.

3. Specific representations made by Alberta Environment and relied on by Jessica Ernstregarding Alberta Environment s investigation into contamination ofErnst ‘s water

79. Representations and reliance are also key considerations in the proximity analysis. As

noted by the Ontario Court of Appeal, “[r]epresentations made specifically to a plaintiff and

23

relied on by that plaintiff’ can “clearly forge a direct connection between the regulator and the

plaintiff” and will “go a long way toward establishing a prima facie duty of care.”

Taylor at paras 115 & 118 [Plaintiffs Authorities, Tab 24].

80. As noted by the Alberta Court of Appeal in Tottrup v Alberta (Ministry ofEnvironmental

Protection), a “particularly important consideration is the degree of reliance by the public on the

authority, and the degree to which that has been encouraged by the authority”. Where a

government agency has encouraged reliance on it by repeatedly asserting that it is protecting

specific classes of individuals from harm, as occurred in this case, such representations will

ground a finding of proximity.

Tottrup v Alberta (Minister ofEnvironmental Protection), 2000 ABCA 121 (QL) atpara 21 [Plaintiffs Authorities, Tab 25].

81. The Statement of Claim pleads that Alberta Environment made numerous representations

specifically to the P1aintiff and further, these representations were specifically relied upon by the

Plaintiff. The key pleading is reproduced below:

63. Further, between February 2006 and April 17, 2008, government ministers andAlberta Environment staff made numerous specific representations to Ms. Ernstregarding her specific concerns about the contamination of her well water. AlbertaEnvironment represented that:a. Alberta Environment would fully address Ms. Ernst’s concerns regarding water

contamination;b. Alberta Environment would conduct a full and scientifically rigorous

investigation into the causes of contamination of Ms. Ernst’s water well;c. Alberta Environment would deliver alternative safe drinking water to the Ernst

Property;d. Alberta Environment would conduct comprehensive sampling of the Ernst Water

Well, and nearby EnCana Wells, as requested by Ms. Ernst; ande. Alberta Environment would ensure that groundwater used by Ms. Ernst was safe.

64. Alberta Environment’s representations had the effect of, and were intended to,encourage and foster reliance on Alberta Environment by Ms. Ernst. In particular,Ms. Ernst relied on Alberta Environment to protect underground water supplies; torespond promptly and reasonably to any complaints raised by her or otherlandowners and to undertake a prompt and adequate investigation into the causes ofwater contamination once identified.


24

82. These representations and the reliance placed on these representations by Ernst are

important indicia of proximity, and demonstrate that Alberta Environment was in a proximate

relationship with Ernst.

4. Operationalized legislative scheme ofinvestigation aimed at addressing contaminated wells

33. Alberta Environment is the primary and specialized government agency responsible for

protecting the quality and quantity of groundwater supply for the benefit of rural household users

of that groundwater. When the legislative scheme is read as a whole, its purpose includes

protecting “human health” and “property”.3 Various Alberta Environment guidelines furtherindicate that the purposes of the legislative scheme include “protect{ing] the water supplies ofhousehold users” and ensuring that there are no “adverse effects on the water supply of nearbyusers over the short-term or long-term”.

Water Act, see eg s 105 [AENV Authorities, Tab 3].Environmental Protection and Enhancement Act, see eg ss 109 & 113 [AENV

Authorities, Tab 2].Groundwater Evaluation Guideline, February 5, 2003 at 21 [AENV Authorities,

Tab 30].Alberta Environment Guidelines for Groundwater Diversion, April 2004 at 2

[AENV Authorities, Tab 31].

84. Both the Water Act and the EPEA set out detailed inspection and investigation regimes.The Regional Services Division of Alberta, through its various regional and district offices,conduct on-the-ground investigations of public complaints regarding possible water wellcontamination related to oil, gas or coalbed methane activities. These inspections are supposedto be carried out in accordance with a detailed set of operational procedures as set out in thevarious Alberta Environment operational guidelines. Landowners with water well concerns areencouraged to contact a toll-free, 24-hour public complaint number, or the local AlbertaEnvironment regional or district office nearest the landowner.

Water Act, ss 118-134 [AENV Authorities, Tab 3].EPEA, ss. 195 — 209 [AENV Authorities, Tab 2].

For example, The Water Act contains over a dozen references to “human health” and “public safety”. Similarly,the EPEA contains 59 references to “adverse effects”, which are defined as “damage to the environment, humanhealth or safety or property”.

25

AENV Compliance Assurance at 9, 11, 23-25 & 33-36 [AENV Authorities, Tab32].

85. Alberta Environment imposes duties and responsibilities on its staff regarding theconduct of investigations. These duties include, for example, the duty to carry out inspectionsand investigations in a “competent, safe and professional manner”, and the duty to be “neutraland objective” in the conduct of their investigations and inspections.

AENV Compliance Assurance at 8, 25 & 36 [AENV Authorities, Tab 32].

86. Importantly, once Alberta Environment has decided to conduct an investigation todetermine the source of the contamination of a particular water well (as is the case here), thatinvestigator has one focus and one focus alone — to carry out a reasonable, objective andcompetent investigation in accordance with the operational procedures set out by AlbertaEnvironment.

5. Important private property and safety interests ofErnst

87. The nature of the interests of the claimant is also a significant factor in the proximityanalysis. In this case, the Plaintiffs interests are serious. Water contamination and leaks at oiland gas operations can have catastrophic impacts on landowners, including damage to privateproperty, personal injury and even death. In this case, not only was Ernst’s water contaminatedwith hazardous and flammable levels of methane and other toxic chemicals, but her very homewas at risk of exploding because of the high levels methane that had migrated from her waterinto the air in her house.

Hill at para 34 [Plaintiffs Authorities, Tab 15].Statement of Claim at paras 13-15 & 82(d) [AENV Authorities, Tab 1].

88. Ernst, like all rural landowners who depend on private wells for their household’s freshwater, has little ability to ensure that the activities of oil and gas corporations do not contaminateher water. She has no ability to inspect operations, or to make sure that the operations do notpose a risk to her freshwater, and only a limited ability to respond to protect herself or herproperty when something goes terribly wrong. In this case, when her water becamecontaminated with hazardous and flammable levels of methane, Ernst went to AlbertaEnvironment for help, as she was encouraged to do by Alberta Environment itself. Instead of

26

acting in accordance with its own Compliance Assurance Program, Alberta Environment

conduced a faulty, irrational and bad faith investigation of her water well, and did absolutely

nothing to remedy the continued severe contamination of her water well by the oil and gas

industry. Where citizens have no means to protect themselves from a real danger, they should

be entitled to rely on government agencies tasked with inspection and enforcement.

Rothfield v Manolakos, [1989] 2 SCR 1259 at para 5 (“Rothfield”) [PlaintiffsAuthorities, Tab 22].

There are no overriding policy considerations sufficient to negate aprimafacie duty ofcare

89. The second stage of the Cooper/Anns test involves an analysis of whether there are “any

overriding policy considerations that justify negating or limiting the duty of care”.


90. Alberta raises two such policy considerations: conflicting duties, and indeterminate

liability. Both are misplaced.

91. Moreover, appellate courts have cautioned against determining at the pleadings stage that

residual policy considerations make it plain and obvious that policy reasons should trump a

primafacie duty of care. Defendants bear the evidentiary burden of showing that there are

countervailing policy considerations sufficient to negate a primafacie duty of care, and therefore

courts should be “circumspect in using those policy concerns to determine, without a Statement

of Defence and without any evidence, that it is plain and obvious that there is no cause of

action”. At this time, there is no evidence that there is a “real potential for negative policy

consequences”, and accordingly a “duty of care in tort law should not be denied on speculative

grounds”.

Haskett v Equifax Canada mc, 63 OR (3d) 577 (QL) at para 24 (CA) [PlaintiffsAuthorities, Tab 14].


There are no “conflicting duties “ sufficient to negate a duty ofcare

92. Alberta Environment raises the spectre of “conflicting duties” to argue that a private duty

of care should not be recognized. In particular Alberta Environment argues that a private duty of

care “would conflict with the Province’s overall obligations to look after these public interests

27

and the balancing of such interests”. How the public duties would create a conflict sufficient to

preclude the imposition of a private duty of care is not made clear in Alberta Environment’s

brief.


93. With respect, this concern is overstated and misplaced. As noted above, Courts have

repeatedly held that public authorities can owe private duties of care, even when those public

authorities owe significant duties to the public. These cases include the Supreme Court cases of

Hill, Fullowka, Kamloops, Just, Ingles and others.

94. Moreover, the Supreme Court has repeatedly emphasized that even if there were some

conflict between Alberta Environment’s public duties and a private duty of care, this conflict will

not necessarily be enough to trump a private duty of care: in order for conflict to trump a prima

facie duty of care, the conflict must cause “a real potential for negative consequences.”

Hill at paras 40-43 [Plaintiffs Authorities, Tab 15].Fullowka at paras 72-73 [Plaintiffs Authorities, Tab 12].

95. Here, the possible conflicting duties are the duty Alberta Environment owed to the public

and the duty to Ernst to conduct a rational, competent and good faith investigation and review in

accordance with its established compliance assurance program. These duties do not conflict.

To paraphrase the Supreme Court in Hill, Alberta Environment’s “duty to the public is not to

investigate in an unconstrained manner. It is a duty to investigate in accordance with the law.”

That public duty does not conflict with the presumed duty to take reasonable care towards the

individual whose water well is being investigated.

Hill at para 41 [Plaintiffs Authorities, Tab 15]

96. No concerns regarding conflicting duties were found in any of the Supreme Court’s other

negligent investigation or inspection cases. In Hill and Fullowka, both the police and the

building inspectors respectively were found to owe private duties of care despite the fact that

both clearly owe significant duties to the public as a whole. Similarly, no concerns regarding

conflicting duties arose in any of the analogous “building inspector” cases.

Ful!owka at paras 72-73 [Plaintiffs Authorities, Tab 12].Hill at paras 40-43 [Plaintiffs Authorities, Tab 15].

28

97. Even if there was a potential for conflict (which the Plaintiff denies), Alberta

Environment has not shown that there is a “real potential for negative policy consequences”.

Instead, it merely baldly and speculatively alleges that such a conflict exists, without explaining

the nature of the conflict and without citing any law or leading any evidence to support its

position. As noted by the Supreme Court, a “duty of care in tort law should not be denied on

speculative grounds”.


No uncontrollable liability

98. Alberta raises the spectre of indeterminate liability to argue that a duty of care should not

be recognized in this case. Alberta argues that “if the Province is held to owe a duty of care tothe Plaintiff, then all individuals within Alberta affected by potential escape of contaminants into

the environment become a potential class of plaintiffs and the amount of liability would be

indeterminate.” Alberta Environment relies on Knight v Imperial Tobacco Canada Ltd (referred

to in this brief as R v Imperial Tobacco Canada Ltd) for this proposition.

AENV Brief, at paras 5 9-60.Imperial Tobacco at paras 97-101 [Plaintiff’s Authorities, Tab 21].

99. Notably, Imperial Tobacco was a case involving negligent representation and pure

economic loss, not, as here, a negligent investigation case. The Supreme Court has repeatedlyemphasized that concerns regarding indeterminate liability loom largest in cases involving pureeconomic loss. The case at bar does not involve pure economic loss.

Imperial Tobacco at paras 97 & 100 [Plaintiffs Authorities, Tab 21].

100. The policy concern surrounding indeterminate liability was explained by the SupremeCourt in Fullowka:

[Indeterminate liability] has often held sway in negligence claims for pure economicloss. But even in that context, it has not always carried the day to exclude a duty ofcare. The concern is that the proposed duty of care, if accepted, would impose“liability in an indeterminate amount for an indeterminate time to an indeterminateclass”.... At the root of the concern is that the duty, and therefore the right to suefor its breach, is so broad that it extends indeterminately.

Fullowka at para 70 [Plaintiffs Authorities, Tab 12].

29

101. With respect, this floodgates concern does not arise here. In this case, the Plaintiff’s

primary complaint is regarding the faulty, negligent and bad faith conduct of a specific

investigation carried out by Alberta Environment regarding a specific water well. By its very

nature, this claim is narrow and specific to the circumstances of the case— it does not and cannot

extend to a situation where Alberta Environment is unable to foresee or control its potential

liability.

102. Importantly, concerns surrounding “indeterminate liability” did not arise in any of the

“negligent inspection” cases described above.

Fullowka at para 71 describing the building inspection cases [Plaintiff’s Authorities,Tab 12].

Adams at para 45 [Plaintiff’s Authorities, Tab 1].Hill at para 60 [Plaintiff’s Authorities, Tab 15].

103. There are no concerns regarding indeterminate liability here. In the case at bar, the

category of potential claimants is limited to landowners that are reliant on a particular

investigation into that landowner’s contaminated well water.

ISSUE #4: Alberta Environment is not protectedfrom liabilityfor acts taken in “badfaith”

104. Alberta argues that even if it owes a duty of care to Ernst, the “statutory immunity

provisions contained within the EPEA and the Water Act shield the Province from any liability in

the nature alleged by the Plaintiff.”


105. This position is untenable. Both the EPEA and the Water Act explicitly provide

immunity only for actions taken in goodfaith. The core allegation against Alberta Environment

is that they engaged in a faulty, irrational and badfaith investigation and review of the severe

contamination of Ernst’s well. The pleadings specifically and repeatedly clarify that the Plaintiff

is alleging that Alberta Environment acted in badfaith, and provide particulars of that bad faith.

“The plaintiff pleads that Alberta Environment’s investigation into contamination ofthe Ernst Water Well was conducted negligently and in bad faith.”“Throughout the material time, Alberta Environment and its lead investigator, Mr.Kevin Pilger, dealt with Ms. Ernst in bad faith.”

30

“Alberta Environment’s various acts and omissions as listed above were committedin bad faith.”

Statement of Claim at paras 73, 74 & 80 [AENV Authorities, Tab 1].

Water Act, s 157 [AENV Authorities, Tab 3].

EPEA, s 220 [AENV Authorities, Tab 2].

106. The statutory immunity clauses from the Water Act and the Environmental Protection

and Enhancement Act are as follows.

s. 157. No action for damages may be commenced.. . for anything done or not doneby that inspector inspector, investigator, Director, person or member in good faithwhile carrying out that inspector’s, investigator’s, Director’s, person’s or member’sduties or exercising powers under this Act.

Water Act, s 157 [AENV Authorities, Tab 3].s. 220 No action for damages may be commenced. . . for anything done or not doneby that person in good faith while carrying out that person’s duties or exercising thatperson’s powers under this Act including, without limitation, any failure to dosomething when that person has discretionary authority to do something but does notdo it.

EPEA, s 220 [AENV Authorities, Tab 2].

Legal definition of “good faith”

107. Good faith is defined as the absence of bad faith. According to the Supreme Court, the

“concept of bad faith is flexible”, and includes not only intentional fault, but also includes the

concepts of “recklessness”, “serious carelessness” as well as acts that are “inexplicable” or

“incomprehensible”.

[TJhe concept of bad faith can and must be given a broader meaning thatencompasses serious carelessness or recklessness. Bad faith certainly includesintentional fault. .. However, recklessness implies a fundamental breakdown of theorderly exercise of authority, to the point that absence of good faith can be deducedand bad faith presumed.

Finney v Barreau du Québec, 2004 SCC 36 (QL) at paras 3 9-40 (“Finney”)[Plaintiff’s Authorities, Tab 11].

[T]he concept of bad faith can encompass not only acts committed deliberately withintent to harm, which corresponds to the classical concept of bad faith, but also actsthat are so markedly inconsistent with the relevant legislative context that a courtcannot reasonably conclude that they were performed in good faith.

Entreprises Sibeca Inc. v. Frelighsburg (Municipality), 2004 SCC 61, [2004] 3SCR 304 at para 25-26 (“Entreprises Sibeca”) [Plaintiff’s Authorities, Tab 10].

31

108. The above principles outlined by the Supreme Court in Finney and Entreprises Sibeca

have been repeatedly applied in Alberta courts.

Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB148 (CanLil) at paras 64-69 [Plaintiffs Authorities, Tab 5].

Condominium Corporation 012 5331 v WDe Silva Properties mc, 2010 ABQB 181(CanLil) at paras 18-22 (“WDeSliva”) [Plaintiff’s Authorities, Tab 7].

The Ernst Statement of Claim clearly pleads “bad faith”

109. In addition to explicitly pleading that Alberta Environment and its lead investigator

Kevin Pilger acted in bad faith, Ernst has pleaded material facts in support. The pleadings are

not that Alberta Environment made one or two minor mistakes; on the contrary, the pleadings are

that Alberta Environment, headed by a lead investigator who was openly hostile to Ernst,

engaged in an irrational and faulty investigation of the Ernst Well that produced knowingly

unreliable results, and then took active steps to ensure that the review of that investigation was

equally faulty. In other words, the allegations are that Alberta Environment took active and

intentional steps to ensure that the investigation would fail to provide adequate answers

regarding what caused the contamination of the Ernst well with flammable levels of methane and

other chemicals indicative of oil and gas development.


110. The key pleadings from the Statement of Claim are as follows:

73. The Plaintiff pleads that Alberta Environment’s investigation into contaminationof the Ernst Water Well was conducted negligently and in bad faith. Inparticular, Alberta Environment:a. conducted the investigation in an ad hoc, arbitrary and scientifically irrational

manner, including without the benefit of a plan or protocol;b. did not follow a sampling protocol when sampling water wells;c. used unsterilized equipment when taking the samples;d. committed sampling errors when collecting samples;e. lost, destroyed or otherwise disposed of data collected by Alberta

Environment investigators;

f. submitted samples for analysis that were contaminated or otherwise unusable;g. failed to test water wells for various substances that could be indicative of

industry contamination;

h. failed to complete isotopic fingerprinting oh relevant methane and ethanesamples;

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1. failed to test or investigate specifically identified gas wells that potentiallycaused water contamination, in particular Well 05-14;

j. failed to investigate numerous CBM wells in the vicinity of the ErnstProperty where EnCana had hydraulically fractured at shallow depthslocated in close proximity to the Rosebud Aquifer;

k. failed to obtain from EnCana a list of all chemicals used in CBM Activitiesso that Alberta Environment could undertake proper and adequate testingfor such chemicals in the Ernst Water Well; and

1. failed to conduct tests and collect data that were needed to complete anadequate and responsible investigation.

74. Throughout the material time, Alberta Environment and its lead investigator, Mr.Kevin Pilger, dealt with Ms. Ernst in bad faith. In particular:

m. Mr. Pilger concluded, before any investigation had begun, that the waterwells he was responsible for investigating were not impacted by CBMdevelopment;

n. Mr. Pilger repeatedly accused Ms. Ernst of being responsible for thecontamination of her well water before conducting any investigations;

o. Mr. Pilger falsely and recklessly accused Ms. Ernst of fabricating and forginga hydrogeologist’s report that indicated EnCana had fractured and perforatedinto the Rosebud Aquifer;

p. Alberta Environment stonewalled and otherwise blocked all of Ms. Ernst’sattempts to gain access to relevant information regarding the contamination of herwell and local CBM development; and

q. Alberta Environment shared information collected as part of the investigationwith EnCana, while refusing to release this information to Ms. Ernst, herneighbours or to the general public.

75. .. Alberta Environment.., prevented an adequate review from taking place byradically restricting the scope of the review..

76. Alberta Environment then negligently and unreasonably relied on the conclusionscontained within the IARC Reviewl, despite having knowledge of serious andlegitimate concerns that the jARC Reviewj was inadequate. In particular,Alberta Environment knew that the Ernst Review:

a. was based on an inadequate and negligently completed investigation, asdetailed above;

b. failed to include or consider crucial data that was available, or could have beenavailable if appropriate samples were taken;

c. included factually incorrect information;

d. relied excessively on abstract theoretical models due to lack of data;e. failed to consider, account for, or explain the presence of indicators of

potential oil and gas industry contamination; and

f. made conclusions that were not supportable on the available data.


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111. The above pleadings are the very definition of “bad faith”. They are indicative of a

situation where there has been a “fundamental breakdown in the orderly exercise of authority, to

the point that the absence of good faith can be deduced and bad faith presumed.” This is a

situation where Alberta Environment’s acts were “so markedly inconsistent with the relevant

legislative context that a court cannot reasonably conclude that they were performed in good

faith.”

Finney at para 39 [Plaintiff’s Authorities, Tab 11].Entreprises Sibeca at para 26 [Plaintiff’s Authorities, Tab 10].

112. The pleadings are in many ways similar to the allegations in Finney v Barreau du

Québec. In this case, the Supreme Court specifically considered whether a clause granting aregulator immunity for actions taken in “good faith” could bar a claim in negligence made

against that regulator. After noting that “[g]ross or serious carelessness is incompatible with

good faith,” the Supreme Court concluded that the “attitude exhibited by the Barreau, in aclearly urgent situation in which a practicing lawyer represented a real danger to the public, was

one of such negligence and indifference that it cannot claim immunity conferred by s. 193. Thevery serious carelessness it displayed amounts to bad faith, and it is liable for the results.” In

other words, bad faith was found because “the virtually complete absence of diligence called forin the situation amounted to a fault consisting of gross carelessness and serious negligence”.

Finney at paras 42 & 45 [Plaintiff’s Authorities, Tab 11].

113. Given the above, it is not plain and obvious that the immunity clauses contained withinthe EPEA and the Water Act are a bar to Ernst’s claim. On the contrary, given the pleadings ofbad faith, it is clear that the statutory immunity clauses (for “good faith” acts only), do not andcannot apply.

Alberta Environment’s statutory immunity clauses are evidence ofan intention to allowclaimsfor actions taken in badfaith

114. Alberta also argues, relying on Edwards v. Law Society of Upper Canada, that the “clearand strong” statutory immunity clauses contained within the Water Act and the EPEA are anindication that the legislature did not intend to create private law duty of care. With respect,Alberta Environment’s position is overbroad.

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AENV Brief at paras 64-67.

115. Edwards is distinguishable from the case at bar on the grounds that the plaintiffs in

Edwards “neither explicitly nor implicitly plead[ed] bad faith”. In other words, Edwards does

not consider a situation where a plaintiff has specifically pleaded that the government agency

acted in bad faith (as is the case here).

Edwards v. Law Society of Loper Canada, 2000 CanLil 5748 (ON CA) at para 41[Plaintiff’s Authorities, Tab 8].

116. The case at bar is more analogous to the case of Finney, discussed above. In that case,

the Supreme Court held that the Barreau was liable for its negligent investigation and response to

a clearly identified complainant, despite the existence of a statutory immunity clause for actions

taken in “good faith”. While this case was a case under the civil code of Quebec, the Supreme

Court emphasized that it would have held the Barreau liable under common law principles.

Finney at paras 42, 45 & 46 [Plaintiff’s Authorities, Tab ii].

117. Further, the wording in the statutory immunity clauses contained in the Water Act and the

EPEA both clearly allow lawsuits for actions of Alberta Environment taken in bad faith.

According to this Honourable Court, far from indicating that the legislature wanted to exclude

any possible duty of care, the reference to “good faith” in a statutory immunity clause is clear

evidence that the legislature did intend to allow claims for actions taken in bad faith

If there is a provision such as Section 12 of the Safety Codes Act providing immunityto the City and its officials for acts conducted in “good faith”, the converse must bethat there is no such exemption for liability for actions conducted in “bad faith”.If the legislature had intended to give a blanket immunity to the City regardlessof its conduct, such language could have easily been employed. The legislature,however, chose not to do so. It therefore seems to follow logically that thelegislature has decided that if the City otherwise owes a duty of care, it will beliable only if it has acted in bad faith. . . .Therefore, I do not take that the effect ofSection 12 of the Safety Codes Act to be such as to negate a duty of care if one hasotherwise already arisen pursuant to the first stage of the Anns test. [Emphasis added]

Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB493 (CanLil) at paras 230-231 [Plaintiff’s Authorities, Tab 6].

118. Alberta Environment should not be able to do indirectly what the legislature declined to

do directly. As Alberta Environment’s authorities clearly point out, “if the Crown wishes to

exempt itself from tortious liability. . . it is a simple matter to legislate to that effect.” The

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legislature specifically chose not to immunize Alberta Environment for “bad faith” acts — this

Honourable Court should give effect to that choice.

Swinamer v Nova Scotia (A-G) 1 SCR 445 at para 24 [AENV Authorities, Tab 27].Smorag v Nadeau Estate (Trustee of), 2008 CarswellAlta 1829 at paras 28-29

{AENV Authorities, Tab 26].

The duty ofcare arisesfrom factors ofproximity, not an allegation ofbad faith

119. Finally, Alberta argues that if this Honorable Court determines that Alberta Environment

does not owe a duty of care, then an allegation of bad faith does not create a duty. In the words

of Alberta Environment, “pleading bad faith is not enough to create a duty of care that otherwise

does not exist”.

AENV Brief at paras 70-72.

120. This argument may be swiftly dispatched. Ernst is not alleging that the duty of care

owed by Alberta Environment arises from the allegations of bad faith. Rather, the duty of care

arises from the existing categories found by the Supreme Court in the negligent investigation!

inspection cases andlor from the various factors of proximity discussed extensively above.

PART V: RELIEF SOUGHT

121. The Plaintiff Jessica Ernst respectfully requests the following relief:

a. An Order dismissing the Application brought by Alberta Environment;

b. An Order granting substantial indemnity costs against Alberta Environment;

c. Such further and other relief as counsel may advise and this Honourable Court

deems just.

ALL OF WHICH IS RESPECTFULLY SUBMITTED THIS 17th day of March, 2014.

LIST OF AUTHORITIES

TAB

1. Adams v Borrel, 2008 NBCA 62 (QL).

2. Alberta Adolescent Recovery Centre v Canadian Broadcasting Corporation, 2012 ABQB48 (QL).

3. Canada (Attorney General) v Lameman, [2008] 1 SCR 372 (QL).

4. Canada Post Corp. v. Goodfellas Delivery Inc., 2002 ABQB 585 (CanLil).

5. Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB 148(CanLil).

6. Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB 493(CanLil).

7. Condominium Corporation No. 012 5331 v WDe Silva Properties Inc. 2010 ABQB 181(CanLil).

8. Edwards v. Law Society of Upper Canada, 2000 CanLil 5748 (ON CA).

9. Elder Advocates ofAlberta Society v. Alberta Health Services, 2012 ABCA 355 (CanLil).

10. Entreprises Sibeca Inc. v. Frelighsburg (Municipality), 2004 SCC 61 (QL).

Ii. Finnev v Barreau du Québec, 2004 SCC 36 (QL).

12. Fullowka v Pinkerton ‘s ofCanada Ltd, 2010 SCC 5 (QL).

13. Grassick v. Calgaiy Power Co Ltd, [19481 1 DLR 103 (QL).

14. Haskett v Equfax Canada Inc., 63 OR (3d) 577 (CA) (QL).

15. Hill v Hamilton Weniworth Regional Police Services Board, 2007 SCC 41 (QL).

16. Horii v. Canada, [2000] FCJ No. 1712 (QL).

17. Hunt v Carey Canada Inc., [1990] 2 SCR 959 (QL).

18. Ingles v Tukaluk Construction Ltd, 2000 SCC 12 (QL).

19. JustvBritish Columbia, [1989] 2 SCR 1228 (QL).

20. Nielsen i’ Kamloops (City) v. Nielsen, [1984] 2 SCR 2 (WL).

21. R v Imperial Tobacco Canada Ltd, 2011 SCC 42 (QL).

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22. Rothfleld v Manolakos, [1989] 2 SCR 1259 (QL).

23. Stobbe v Paramount Investments mc, 2013 ABCA 384 (CanLil).

24. Taylor v Canada (Attorney General), 2012 ONCA 479 (QL).

25. Tottrup v Alberta (Minister ofEnvironmental Protection), 2000 ABCA 121 (QL).

2014 03 18 brief of argument of respondent jessica ernst to alberta environment (government) filed...

Documents

jessica ernst ernst

majesty thequeen

fresh statement of claim

court file number court

fresh water

right of albertato

summary judgment

ernsts property