COURT FILE NUMBER

COURT

JUDICIAL CENTRE

PLAINTIFF

DEFENDANTS

DOCUMENT

ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT

0702-00120

COURT OF QUEEN'S BENCH OF ALBERTA

DRUMHELLER

JESSICA ERNST

ENCANA CORPORATION, ENERGY RESOURCES CONSERVATION BOARD, and HER MAJESlY THE QUEEN IN RIGHT OF ALBERTA

REPLY BRIEF OF THE DEFENDANT HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA

TO BE HEARD BY THE HONOURABLE CHIEF JUSTICE N.C. WIITMANN ON APRIL 16, 2014

ALBERTA JUSTICE Civil Litigation gth Floor, Peace Hills Trust Tower 10011 - 109 Street Edmonton, Alberta TSJ 388 Solicitor: Neil Boyle I Nancy McCurdy Telephone: (780) 427-2543 Fax: (780) 427-1230

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CONTENTS

ISSUES RAISED BY THE PLAINTIFF ...................................................... 2

Issue #1: Alberta Environment's Application to Strike in an Abuse of Process ............ ................................................. ....... ........ ........ .... ...... ...... ...... 2

Issue #2: Alberta Environment mischaracterizes an Application to Strike as an Application for Summary Judgment .......................... .............. .......... ... 3

Issue #3: It is not "plain and obvious" that Alberta Environment cannot owe a duty of care to Ernst .................................................................................... 5

Issue #4: Alberta Environment is not protected from liability for acts taken in "bad faith" ................................. ........................................... ...... ............... .. 8

II LIST OF AUTHORITIES ............................................................. ............. 11

2

ISSUES RAISED BY THE PLAINTIFF

Issue #1: Alberta Environment's Application to Strike in an Abuse of Process

1 . The Applicant, Her Majesty the Queen in right of Alberta ("the Province"),

respectfully submits that it is not barred from bringing the within application,

either under rule 3.68 or under rules 7.2 and 7.3. This is not the case of a "latest

in a successive string of applications," it is essentially the second application, and

on entirely different grounds from the first to second. All parties brought

applications to strike some or all of the claim and the Plaintiff responded by filing

the Fresh Statement of Claim. No costs were awarded as this Court recognized

that these applications effectively never proceeded. The Province then

proceeded with its first application with respect to the Fresh Statement of Claim,

an application to strike only certain paragraphs on the grounds that they were

akin to class proceeding allegations. That application failed and the Province

now seeks to strike the entire claim on the basis that it either fails to disclose a

reasonable cause of action against the Province and/or that it is plain and

obvious that there is no merit to the claims against the Province.

2. With respect to rule 3.68, our Court of Appeal has indicated that the

decision relied upon by the Plaintiff, Grassick v Calgary Power Co. Ltd, does not

stand for an absolute rule that multiple attacks on a pleading may not be made or

that a party is estopped from doing so. Rather, a delay in attacking a pleading or

doing so in a piecemeal fashion, is possible grounds for a costs award. The

Province denies that it proceeded in a piecemeal fashion in any event, as it was

entitled to know the form of pleading it was attacking before bringing an

application to strike that pleading in its entirety.

Alexander v Pacific Trans-Ocean Resources Ltd, 1993 ABCA 43 at para 7. TA B 1

3

3. Even in cases were a party makes more than one application for dismissal

of the entire claim, but the applications are on different grounds, that party is not

estopped or barred from doing so, even if both grounds could have been

advanced at the same time in one application.

Bott v Sorley, 1999 CarsweiiBC 958, [1999] BCJ No 1027 (SC) at paras 16-19. TAB2

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

4. The Province submits that it is not bringing a striking application in the

guise of a summary judgment application, it is bringing both as either

complimentary to one another or in the alternative to one another, a not

uncommon practice as was the case in the ERCB's successful application in this

matter. This Court held that the claim against the ERCB was struck or, in the

alternative, dismissed (see Ernst at TAB 5 of the Province's Book of Authorities,

at para. 88).

5. Whether a valid cause of action arises is well within rule 3.68, but also

may be relevant to a determination under rules 7.2 and 7.3. These rules provide

for "other evidence", pleadings specifically provided for by Rule 7.2(a) and

records under rule 7.2(b). It is submitted that these pleadings and records do not

require an affidavit to prove their authenticity, and the Province has cited a

number of cases where alternatives to a sworn affidavit were accepted by the

courts in support of a summary judgment application.

6. The Province cited Combined Air Mechanical (see Tab 14 of the

Province's Book of Authorities) and the SCC's call for an expanded access to

summary dismissal applications. Our Court of Appeal has made a similar call for

courts to not limit themselves to a strict test of whether there is a "genuine issue

for trial", but instead to examine the record placed before it and determine

whether a claim has any merit in proceeding further. In so doing, it commented

4

on the myth of disputes eventually going to trial and that this myth should no

longer govern civil procedure. The Province submits that the Plaintiff can take

issue with whether the record of pleadings and other documents provided

provides this court with a view to whether there is merit or not to its claim, but it

cannot take issue with the Province's right to place that record before this court

and applying for summary dismissal on the basis of that record. The Province

could have chosen to wait until after questioning to have a more complete record

but submits that this is an unnecessary step in light to the lack of merit apparent

on the record to date.

Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108 at paras 11-15. TAB3

7. The Province adopts and rel ies upon the argument made by the ERCB at

paragraph 15 of its Reply Brief filed January 3, 2013, cited in full as follows:

The Plaintiff in her Brief suggests that the ERCB bears the onus of disproving each and every issue raised by Ms. Ernst in her Statement of Claim. There is no authority for that proposition. The ERCB could readily admit much of the Plaintiff's claim and still succeed in showing that there is no cause of action or that it is plain and obvious that the Plaintiffs cla im will fail. The mere fact that Ms. Ernst has pleaded something does not lead to the conclusion that if the allegation is true she would be entitled to a remedy against the ERCB. The ERCB may readily agree with the description of the parties, the length of trial, and a number of facts - none of which lead in themselves to judgment. At its essence the ERCB's Application is quite simple. The ERCB says that the Statement of Claim does not disclose a cause of action because the legislation makes it clear that the ERCB has a public duty, not a private one, and, even if a private duty is owed by the ERCB, because the ERCB is immune from suit. The ERCB has satisfied its onus by clarifying the public nature of its duty, and the immunity provision. The onus has now shifted to Ms. Ernst. She has submitted no evidence to meet her onus. Summary judgment must therefore be granted.

5

8. With respect to paragraph 19 of the Respondent's Brief, the ARC Review

did not simply rely upon samples provided by the Province. This independent

body, that has not been named as a party, also looked at additional lines of

evidence (see Tab 34 of the Province's Book of Authorities, at page Ill-Executive

Summary):

• Review of the local and regional geology and hydro stratigraphy. • Calculation of hydraulic gradients between the aquifer in the Upper

Horseshoe Canyon Formation and the CBM wells. • A theoretical review of the potential of methane migration along a fracture

(potentially induced by well stimulation) between the Horseshoe Canyon aquifer and the CBM well using the observed pressure gradients.

• An estimation of the change in dissolved methane concentrations in the Ernst well related to the measured decrease in well water levels from 2003 to 2007.

• A graphical and statistical approach to the evaluation of the major ion, bacteria, gas and isotope chemistry of the Ernst well, 145 surrounding water wells from the AENV database and CBM wells in the area.

9. The conclusion reached was that not only was there insufficient evidence

that energy development projects in the area had adversely impacted Ms. Ernst's

well, but that such projects "most likely have not adversely affected Ms. Ernst's

private water supply well." Such a finding precluded the Province from taking

any steps to require the Defendant EnCana to undertake any reclamation work

on Ms. Ernst's property.

Issue #3: It is not "plain and obvious" that A lberta Environment cannot owe a duty of care to Ernst

10. The thrust of the Plaintiff's argument under this heading is a reliance on an

older line of case law that focused on the operational/policy dichotomy in

analyzing whether a government entity owed a private law duty of care. With

respect, this line of cases is no longer the basis of the test on government liability

in negligence. Under this older line of cases, the only issue was foreseeability of

harm in deciding whether a prima facie duty was owed. The fact that

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government responsibilities being examined arose from statutes that were

phrased in languages of powers and not mandatory duties, and from statutes

which did not expressly provide for civil rights of action, and in fact may have

expressly offered immunity from such action, did not factor into these decisions

(i.e. Nielsen v Kamloops; Just v BC; Ingles v Tutkaluk). The fact that the actions

concerned the government's failure to prevent harm originally caused by another

(in this case allegedly by the Defendant EnCana), or by natural causes, was not

considered an obstacle to finding a duty of care. What developed is what

Professor Klar describes as a situation where there was no apparent pattern in

the judgments or any way to predict whether a matter would be found to be

operational or policy. The SCC decision in Cooper v Hobart (TAB 18 of the

Province's Book of Authorities) added the notion of proximity to that of

foreseeability, and it is both that create a duty of care, a duty that can be negated

by policy considerations. The statute became the only source of government's

duties, private or public. Pre-Cooper decisions are of little precedential value.

Lewis N Klar, QC, "Government Liability in Negligence: How is it Evolving, and is Fu/lowka v Pinkerton a Game-Changer?" (ih Annual Conference on Crown Liability, Osgoode Professional Development CLE, 18 February, 2011)

[Unpublished] at pages 12-15. TAB4

11. When the statute mandates a duty to the public as a whole, rather than to

individuals, as does the EPEA, then there is no private duty of care owed ,

whether the Act includes investigation/inspection duties or not. It has been rare

that proximity has been established by Plaintiffs under this new

proximity/foreseeability regime, as statutes such as the EPEA clearly create a

public duty, not a series of private duties of care to every party that may come

within the confines of this legislation. To hold otherwise would create

indeterminate liabil ity and negate the second test under Anns.

12. R v Imperial Tobacco Ltd (see Tab 23 of the Province's Book of

Authorities) has gone further in holding that implementation of policy decisions,

7

which Pre-Cooper would be operational decisions giving rise to a potential claim

in negligence, are not subject to liability in negligence. This has resulted in an

extension of the scope of immunity for government actions. Where public

statutory duties conflict with alleged private law duties, it is submitted that the

public duties trump the private duties.

13. The decision in Taylor v Canada (see Tab 24 of the Respondent's Book of

Authorities), is distinguishable in that it deals with a situation where the

government action is related directly to the Plaintiff (i.e. provision of ambulance

services), rather than a situation as in the within action , where the complaint is

about government's failure to protect a Plaintiff from a third party's actions. In

this situation, proximity will usually not be established. The key fact is that the

Plaintiff is in no way different than any other landowner who is in proximity to

energy projects that may or may not have an impact on the environment. If a

duty is owed to her it falls within the public duty of care owed to all who resided in

the area she lived, not to her as an individual. This was not a situation of one

piece of property being searched for environmental pollution; this was a large

geographical area that happened to include the Plaintiff's property. She was not

the only landowner whose well was tested (see para 69 of the Fresh Statement

of Claim). The duty owed was to the public at large. To hold otherwise would

mean any inspection under the EPEA would create such proximity and a private

duty of care. The Act is not designed in this manner and the immunity provisions

reflect that this was not the Legislature's intention.

14. River Valley Poultry (see Tab 24 of the Province's Book of Authorities) is

cited as an example of a case where the Plaintiff was the actual target of the

government investigation, and was going to be directly impacted economically by

that investigation. Any harm befalling the Plaintiff in that case would come from

the government's actions, or the Plaintiff's own actions, not from the actions of a

third party. Despite this, the Court did not find a private duty of care owed. In

that case the Plaintiff had a stronger argument for proximity to government

8

officials than does Ms. Ernst. She is looking to government to protect her from

the actions of a third party or an unknown entity. As stated in Taylor v Canada

(see para. 1 07), courts will differentiate between regulators whose positive

actions of negligence create a new risk of harm from regulators whose only

negligence is in fai ling to prevent harm. The latter ('nonfeasance') will generally

not create sufficient proximity to create a private law duty of care.

15. This case is not about one specific investigation. This case raises the

notion that any person involved in an EPEA investigation ought to have standing

to determine the manner and mode of investigation, the scope of testing, both

geographically and also in terms of substances included, and other matters that

may be characterized as 'scientific debate'. What the Plaintiff's claim is seeking

to do is to put her at the table with government workers and dictate to them the

way they should properly go about their business. Simply inserting the term "bad

faith" in a couple of paragraphs does not change what this case is rea lly about.

Ms. Ernst does not want fracturing to occur, and she wants to have a say in how

testing should be conducted. This would be an infringement on the discretion

afforded the Province's agents under the EPEA, and the statutory immunity that

flows from the use of that discretion. The overall effect of this claim is not about

bad faith allegations within a specific investigation; rather it is about a complaint

as to how the Province conducted its business, termed by the Plaintiff itself in its

brief as a negligent inspection case. The Province is immune from such

allegations of negligence by the provisions of the EPEA.

Issue #4: Alberta Environment is not protected from liability for acts taken in "bad faith"

16. As stated in the Province's Brief, the first response with respect to this

point is that one does not get to an examination of the immunity clause and

whether it protects against the specific allegations in the Fresh Statement of

Claim until after the hurdle of a private law duty being owed is first cleared. The

9

Province submits that the Plaintiff cannot clear this first hurdle, therefore any

discussion as to specific pleadings of bad faith are irrelevant.

17. Paragraph 73, whi le it contains the phrase "and in bad faith", is really

about the Plaintiff's allegations that the mode and manner of investigation was

negligent and did not accord with her views of proper scientific procedure.

Paragraph 79 is restricted to allegations of negligence. Only paragraph 7 4

contains classic allegations of bad fa ith, and c) and d) of paragraph 7 4 are not

allegations that ought to be allowed to proceed, as landowners are not granted a

right to share in the Province's investigation. Similar to a criminal investigation,

the Province is obliged to provide information to the party being investigated

(EnCana) so that this party may respond, but the complainant (similar to the

victim of a crime) does not necessarily participate actively in the investigation or

have any rights in this regard.

18. There is no independent cause of action for bad faith. Any liability that

may arise in tort when a publ ic authority acts in bad fa ith does not create a stand­

alone action for bad faith. The Plaintiff must first prove that a duty of care was

owed to the Plaintiff by the public authority.

Alberta v Elder Advocates of Alberta Society , as cited in RVB Managements Ltd v Rocky Mountain House (Town), 2014 CarsweiiAita 156 (QB) at para 104.

TABS

19. The concept of bad fa ith in this context, and only after the duty of care is

found, includes acts committed deliberately with intent to harm, and may also

include acts that are so inconsistent with the relevant legislative context that a

court cannot reasonably conclude that they were performed in good faith. The

pleadings do not elevate th is case to one with the potential for such a bad faith

exception to the statutory immunity clause contained within the EPEA.

RVB Managements, supra at para 105. TAB 5

10

20. The Province investigates complaints under the EPEA and Ms. Ernst's

complaint was in no way unique. All that is unique is that she is attempting to

participate in the investigation herself by suggesting that other modes or methods

of investigation should be used. Paragraphs 69-73 of the Fresh Statement of

Claim are not about bad faith , they are about Ms. Ernst not agreeing with the

scientific process used to investigate the water on her property. This cla im does

raise the specter of indeterminate liability as there is thousands of energy and

other commercial projects situated in this Province, any one of which may have

environmental impacts on surrounding landowners. To hold the Province to

liability in this type of claim creates indeterminate liability from all other

landowners.

21. To elevate landowners in the manner suggested by this Claim means that

the Province would have to follow the landowners' directions in terms of the

manner and mode of investigation it undertakes in a particular case. That is

something that is not provided for in the EPEA. Ms. Ernst is not part of a small,

identifiable group as was the case in either Fullowka or Hill v Hamilton­

Wentworth, she stands in the same position as all Albertans who own land and

who are in sufficient proximity to commercial enterprises to warrant an

investigation as to potential escape of contaminants.

ALL OF WHICH IS RESPECTFULLY SUBMITTED this 2nd d '9! of April , 2014.

Per:

II LIST OF AUTHORITIES

TAB

1. Alexander v Pacific Trans-Ocean Resources Ltd, 1993 ABCA 43

2. Bott v Sorley, 1999 CarsweiiBC 958, [1999] BCJ No 1 027 (SC)

3. Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108

4. Lewis N Klar, QC, "Government Liability in Negligence: How is it Evolving, and is Fullowka v Pinkerton a Game-Changer?" (?'h Annual Conference on Crown Liabil ity, Osgoode Professional Development CLE, 18 February, 2011) [Unpublished]

5. Alberta v Elder Advocates of Alberta Society, as cited in RVB Managements Ltd v Rocky Mountain House (Town), 2014 CarsweiiAita 156 (QB)