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COURT FILE NUMBER COURT

Court File No. 0702-00120 of COURT OF QUEEN’S BENCH OF ALBERTA. DRUMHELLER JESSICA ERNST

JUDICIAL CENTRE PLAiNTIFF (RESPONDENT)
DEFENDANTS (APPLICANTS)

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

DOCUMENT

BRIEF OF ARGVNENT OF TilE RESPONDENT JESSICA ERNST APPLICATION OF HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA TO BE HEARD ON APRIL 16,2014

ADDRESS FOR SERVICE AND CONTACT iNFORMATION OF THE PARTY FILING THIS DOCUMENT

KLIPPENSTEINS Barristers & Solicitors 160 John Street, Suite 300 Toronto, ON M5V 2E5 Tel.: (416) 598-0288 Fax: (416) 598-9520 Murray Kiippenstein W. Cory Wanless murrav.k1ipenstein@jclippensteins.ca cory.wanIess(klippensteins.ca

Table of Contents PART I: INTRODUCTION PART II: FACTS The Action Facts alleged regarding Alberta Environment Cause of Action against Alberta Environment PART III: ISSUES RAISED BY THIS APPLICATION PART IV: LAW AND ARGUMENT 2 6 6 7 1 1

ISSUE #1: Alberta Environment’s Application to Strike is an Abuse of Process.... 7 ISSUE #2: Alberta Environment mischaracterizes an Application to Strike as an Application for Summary Judgment

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ISSUE #3: It is not “plain and obvious” that Alberta Environment cannot owe a duty 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 of Claim”) [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 of Rights 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 Compliance Assurance”) [AENV Authorities, Tab 32].

3 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.
Statement of Claim at para 74 [AENV Authorities, Tab 1].

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.
Statement of Claim at para 73 [AENV Authorities, Tab 1].

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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 proposition that Alberta Environment acted reasonably in the circumstances. With respect, Ernst strongly challenges the reliability and the independence of the ARC Review. It is a central premise of this lawsuit that the ARC Review is seriously flawed, and further that Alberta Fnvironrnent knew that it is was seriously flawed. The dispute regarding the reliability and independence of the ARC Review, however, cannot and should not be determined on a preliminary application to strike without the benefit of any evidence. AENV Brief at para 98; Alberta Research Council Inc “Ernst Water Well Complaint Review” (December31, 2007) [AENV Authorities, Tab 34].

6 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?

7 PART IV: LAW AND ARGUMENT

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

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’s Authorities, Tab 13]. Canada Post Corp. v. Goodfellas Delivery Inc., 2002 ABQB 585 (CanLil) at para 26 [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 of judicial resources, and violates the foundational rule that the Alberta Rules of Court be

8 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 an

Application for Summary Judgment

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’).

26.

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 to which 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 the authenticity 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 a claim on one or more of the following grounds: (b) there is no merit to a claim or part of it...

27.

9
(2) The application must be supported by an affidavit swearing positively that one or more of the grounds described in subrule (1) have been met or by other evidence to the effect that the grounds 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, 31.
if

3.68(2)(b) & 7.2 [AENV Authorities, Tab 4].

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.

10
Environmental Metal Works Ltd v Murray, Faber & Associates mc, 2013 CarswellAlta 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 care to 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

11 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’s Authorities, Tab 17]. -1lberta Adolescent Recovery Centre v Canadian Broadcasting Corporation, 2012 ABQB 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 In vestments 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 of care?

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.

12 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 of Anns 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 Anns v. 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 paras 40-43 (“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].

13 Alberta Environment owes a duty of care to Ernst 43. In this Application, the relevant question is whether it is “plain and obvious” that Alberta Environment 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. For the purposes of this Application, to determine whether a duty of care may exist in a particular circumstance, the Court must first consider whether the duty of care pleaded potentially belongs within an established or analogous category of negligence. If it does, for the purposes of this Application, a prima facie duty of care is established. If the duty of care alleged does not belong within an established or analogous category of negligence (i.e. the duty alleged is “novel”) the Court must apply the full two-part Cooper/A nns test (described in more detail below). Adams v Borrel, 2008 NBCA 62 (QL) at para 36 (“Adams”) [Plaintiff’s Authorities, Tab 1] There is a prima facie duty of care based on the pre-existing legal category of “negligent investigation” The cause of action pleaded by Ernst against Alberta Environment clearly falls within the previously-recognized category. Accordingly, a prima facie duty of care based on pre-existing legal categories is established. 46. In particular, the duty of care alleged here is precisely analogous to the duty of care found in the Supreme Court’s numerous “negligent investigation or negligent inspection” cases. In these cases, the Supreme Court has repeatedly held that once a government agency, such as Alberta Environment, has established an investigation or inspection mechanism at an operations level, it will owe a duty of care to carry out that inspection without negligence, failing which the authority can be held liable. The Supreme Court has explained this concept in the following terms: [A] government agency in reaching a decision pertaining to inspection must act in a reasonable manner which constitutes a bona fide exercise of discretion. To do so 45. 44.

they must specifically consider whether to inspect and if so, the system of inspection must be a reasonable one in all the circumstances. [Emphasis added]

14 Just v British Columbia, [1989] 2 SCR 1228 at para 21 (“Just”) [Plaintiff’s Authorities, Tab 19]. 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 of Canada 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’s Authorities, 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. The 47.

court held that this case fell within the recognized category of “negligent inspection” in which a government agency will owe a duty of care once it has made the policy decision to establish an investigation scheme. Adams at paras 41-49 [Plaintiff’s Authorities, Tab 1]. 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. 50.

15 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.

51.

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 conduct of its investigation 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.

53.

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].
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 the inspection of lighthouses.. [Al decision either not to inspect at all or to reduce the number of inspections may be an unassailable policy decision. This is so provided it
. .

54.

55.

16 constitutes a reasonable exercise of bona fide discretion based, for example, upon the availability of funds. On the other hand, if a decision is made to inspect lighthouse facilities the system of inspections must be reasonable and they must be made properly. Thus once the policy decision to inspect has been made, the Court may review the scheme of
inspection to ensure it is reasonable and has been reasonably carried out in light

of all the circumstances, including the availability of funds, to determine whether the 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 negate the proposed duty of care. It is true that police investigation involves significant discretion and that police officers are professionals trained to exercise this discretion and investigate effectively. However, the discretion inherent in police work is taken into 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 the existence of a duty of care in negligence. Police are not unlike other professionals in this respect. Many professional practitioners exercise similar levels of discretion. The practices of law and medicine, for example, involve discretion, intuition and occasionally hunch. Professionals in these fields are subject to a duty of care in tort nonetheless, and the courts routinely review 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 of Kamloops 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” Claim. AENV Brief at para 41. Kamloops at paras 18-20 [Plaintiff’s Authorities, Tab 20].

exactly what is alleged in the Statement of

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/A nns 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 at Tab 30]. 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 62.

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 implicitly from 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 (“Imperial Tobacco”) [Plaintiffs Authorities, Tab 21]. The second kind of situation, and the situation relevant for this Application, is where the duty of care is alleged to arise from interactions between the claimant and the government, and this potential duty of care is not negated by the statute. In other words, the source of proximity is not the statute alone, but is also founded on other factors derived from the nature of the specific relationship between the claimant and the government agency. 2 The Supreme Court explained the second scenario in the following terms: The second situation is where the proximity essential to the private duty of care is alleged to arise from a series of specific interactions between the government and the claimant. The argument in these cases is that the government has, through its 64.

conduct, entered into a special relationship with the plaintiff sufficient to establish the necessary proximity for a duty of care. In these cases, the governing statutes 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. AENV Brief at para 43.

19 would conflict with the state’s general public duty established by the statute, the court may hold that no proximity arises. However, the factor that gives rise to a duty of care in these types of cases is the specific interactions between the government 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, assuming the facts pleaded to be true, there is any reasonable prospect of successfully establishing proximity, on the basis of a statute or otherwise.... [W]here the asserted 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 a reasonable prospect that the asserted interactions could, if true, result in a finding of sufficient proximity, and the statute does not exclude that possibility, the matter must be allowed to proceed to trial, subject to any policy

considerations that may negate the prima facie duty of care at the second stage of the analysis. [Emphasis added, citations omitted] Imperial Tobacco at para 47 [Plaintiffs Authorities, Tab 21].

The pleadings disclose a proximate relationship between Alberta Environment and Ernst
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.” 67.

20

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.
Statement of Claim at paras 63-64 [AENV Authorities, Tab 1].

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. 69.

The nature of Ernst’s interests.

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

1. Alberta Environment engaged in a specific investigation of the contamination ofErnst’s well water 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

21 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.
Statement of Claim at paras 69-77 [AENV Authorities, Tab 1].

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 1Methyl and Bis (2-ethyhexyl) phthalate, strontium, barium and chromium.
Statement of Claim at para 70 [AENV Authorities, Tab 1].

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

2. SpecifIc interaction between Alberta Environment employees and investigators and Jessica Ernst 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].

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 at paras 52, 59 & 69 (“River Valley”) [Defendant’s Authorities, Tab 24].

76.

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

77.

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].

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 Ernst regarding Alberta Environment s investigation into contamination of Ernst ‘s water 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 79.

78.

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) at para 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 and Alberta Environment staff made numerous specific representations to Ms. Ernst regarding her specific concerns about the contamination of her well water. Alberta Environment 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; and e. 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; to respond promptly and reasonably to any complaints raised by her or other landowners and to undertake a prompt and adequate investigation into the causes of water contamination once identified. Statement of Claim at paras 63-64 [AENV Authorities, Tab 1].

24 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 of investigation aimed at addressing contaminated wells

82.

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 further indicate that the purposes of the legislative scheme include “protect{ing] the water supplies of household users” and ensuring that there are no “adverse effects on the water supply of nearby users 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].

33.

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 well contamination related to oil, gas or coalbed methane activities. These inspections are supposed to be carried out in accordance with a detailed set of operational procedures as set out in the various Alberta Environment operational guidelines. Landowners with water well concerns are encouraged to contact a toll-free, 24-hour public complaint number, or the local Alberta Environment regional or district office nearest the landowner.
Water Act, ss 118-134 [AENV Authorities, Tab 3]. EPEA, ss. 195 209 [AENV Authorities, Tab 2].

84.

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, human health or safety or property”.

25 AENV Compliance Assurance at 9, 11, 23-25 & 33-36 [AENV Authorities, Tab 32]. Alberta Environment imposes duties and responsibilities on its staff regarding the conduct of investigations. These duties include, for example, the duty to carry out inspections and investigations in a “competent, safe and professional manner”, and the duty to be “neutral and objective” in the conduct of their investigations and inspections. AENV Compliance Assurance at 8, 25 & 36 [AENV Authorities, Tab 32]. Importantly, once Alberta Environment has decided to conduct an investigation to determine the source of the contamination of a particular water well (as is the case here), that investigator has one focus and one focus alone

85.

86.

to carry out a reasonable, objective and

competent investigation in accordance with the operational procedures set out by Alberta Environment.
5. Important private property and safety interests of Ernst

The nature of the interests of the claimant is also a significant factor in the proximity analysis. In this case, the Plaintiffs interests are serious. Water contamination and leaks at oil and gas operations can have catastrophic impacts on landowners, including damage to private property, personal injury and even death. In this case, not only was Ernst’s water contaminated with hazardous and flammable levels of methane and other toxic chemicals, but her very home was at risk of exploding because of the high levels methane that had migrated from her water into 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]. Ernst, like all rural landowners who depend on private wells for their household’s fresh water, has little ability to ensure that the activities of oil and gas corporations do not contaminate her water. She has no ability to inspect operations, or to make sure that the operations do not pose a risk to her freshwater, and only a limited ability to respond to protect herself or her property when something goes terribly wrong. In this case, when her water became contaminated with hazardous and flammable levels of methane, Ernst went to Alberta Environment for help, as she was encouraged to do by Alberta Environment itself. Instead of 88.

87.

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”) [Plaintiffs Authorities, Tab 22]. There are no overriding policy considerations sufficient to negate aprimafacie duty of care 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”. Hill at para 20 [Plaintiffs Authorities, Tab 15]. Alberta raises two such policy considerations: conflicting duties, and indeterminate liability. Both are misplaced. 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 prima facie duty of care. Defendants bear the evidentiary burden of showing that there are countervailing policy considerations sufficient to negate a prima facie 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) [Plaintiffs Authorities, Tab 14]. Hill at para 43 [Plaintiffs Authorities, Tab 15]. There are no “conflicting duties sufficient to negate a duty ofcare

89.

90.

91.

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. AENV Brief at para 52. 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. 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]. 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] 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]. 96. 95. 94.

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”. Hill at para 43 [Plaintiffs Authorities, Tab 15]. No uncontrollable liability 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 to the 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]. Notably, Imperial Tobacco was a case involving negligent representation and pure economic loss, not, as here, a negligent investigation case. The Supreme Court has repeatedly emphasized that concerns regarding indeterminate liability loom largest in cases involving pure economic loss. The case at bar does not involve pure economic loss. Imperial Tobacco at paras 97 & 100 [Plaintiffs Authorities, Tab 21]. The policy concern surrounding indeterminate liability was explained by the Supreme Court in Fullowka: [Indeterminate liability] has often held sway in negligence claims for pure economic loss. But even in that context, it has not always carried the day to exclude a duty of care. The concern is that the proposed duty of care, if accepted, would impose “liability in an indeterminate amount for an indeterminate time to an indeterminate class”.... At the root of the concern is that the duty, and therefore the right to sue for its breach, is so broad that it extends indeterminately. Fullowka at para 70 [Plaintiffs Authorities, Tab 12]. 100. 99. 98.

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. 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]. 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. 103. 102.

ISSUE

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

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.”
AENV Brief at para 37.

104.

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 of the 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 committed
in 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 done by that inspector inspector, investigator, Director, person or member in good faith while carrying out that inspector’s, investigator’s, Director’s, person’s or member’s duties 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 done by that person in good faith while carrying out that person’s duties or exercising that person’s powers under this Act including, without limitation, any failure to do something when that person has discretionary authority to do something but does not do 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 that

encompasses serious carelessness or recklessness. Bad faith certainly includes However, recklessness implies a fundamental breakdown of the intentional fault. orderly exercise of authority, to the point that absence of good faith can be deduced and 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 with intent to harm, which corresponds to the classical concept of bad faith, but also acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith. Entreprises Sibeca Inc. v. Frelighsburg (Municipality), 2004 SCC 61, [2004] 3 SCR 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 ABQB 148 (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.
Statement of Claim at paras 72-77 [AENV Authorities, Tab 1].

110.

The key pleadings from the Statement of Claim are as follows: 73. The Plaintiff pleads that Alberta Environment’s investigation into contamination of the Ernst Water Well was conducted negligently and in bad faith. In particular, 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;
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 ethane e.

samples;

32 failed to test or investigate specifically identified gas wells that potentially caused water contamination, in particular Well 05-14; j. failed to investigate numerous CBM wells in the vicinity of the Ernst Property where EnCana had hydraulically fractured at shallow depths located in close proximity to the Rosebud Aquifer; k. failed to obtain from EnCana a list of all chemicals used in CBM Activities so that Alberta Environment could undertake proper and adequate testing for such chemicals in the Ernst Water Well; and 1. failed to conduct tests and collect data that were needed to complete an adequate 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 water wells he was responsible for investigating were not impacted by CBM development; n. Mr. Pilger repeatedly accused Ms. Ernst of being responsible for the contamination of her well water before conducting any investigations; o. Mr. Pilger falsely and recklessly accused Ms. Ernst of fabricating and forging a hydrogeologist’s report that indicated EnCana had fractured and perforated into the Rosebud Aquifer; p. Alberta Environment stonewalled and otherwise blocked all of Ms. Ernst’s attempts to gain access to relevant information regarding the contamination of her well and local CBM development; and q. Alberta Environment shared information collected as part of the investigation with EnCana, while refusing to release this information to Ms. Ernst, her neighbours or to the general public.
75.

1.

Alberta Environment.., prevented an adequate review from taking place by radically restricting the scope of the review..
..

76. Alberta Environment then negligently and unreasonably relied on the conclusions contained within the IARC Reviewl, despite having knowledge of serious and legitimate 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, as detailed above;

b. failed to include or consider crucial data that was available, or could have been available 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. Statement of Claim at paras 73-76 [AENV Authorities, Tab 1].

33 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].

111.

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 a regulator 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 a clearly 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. The very 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 for in the situation amounted to a fault consisting of gross carelessness and serious negligence”.
Finney at paras 42 & 45 [Plaintiff’s Authorities, Tab 11].

112.

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

113.

Alberta Environment’s statutory immunity clauses are evidence of an intention to allow claimsfor actions taken in bad faith

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

114.

34

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]. 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]. 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 immunity to the City and its officials for acts conducted in “good faith”, the converse must be that 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 regardless of its conduct, such language could have easily been employed. The legislature, however, chose not to do so. It therefore seems to follow logically that the legislature has decided that if the City otherwise owes a duty of care, it will be
. .

116.

117.

liable only if it has acted in bad faith. .Therefore, I do not take that the effect of Section 12 of the Safety Codes Act to be such as to negate a duty of care if one has otherwise already arisen pursuant to the first stage of the Anns test. [Emphasis added] Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB 493 (CanLil) at paras 230-231 [Plaintiff’s Authorities, Tab 6]. 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.
. .

118.

it is a simple matter to legislate to that effect.” The

35

legislature specifically chose not to immunize Alberta Environment for “bad faith” acts Honourable Court should give effect to that choice.

this

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 of care arisesfrom factors ofproximity, not an allegation of bad 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. b. c. An Order dismissing the Application brought by Alberta Environment; An Order granting substantial indemnity costs against Alberta Environment; 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. 2.

Adams v Borrel, 2008 NBCA 62 (QL). Alberta Adolescent Recovery Centre v Canadian Broadcasting Corporation, 2012 ABQB 48 (QL). Canada (Attorney General) v Lameman, [2008] 1 SCR 372 (QL). Canada Post Corp. v. Goodfellas Delivery Inc., 2002 ABQB 585 (CanLil). Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB 148 (CanLil). Condominium Corporation No. 9813678 v. Statesman Corporation, 2009 ABQB 493 (CanLil). Condominium Corporation No. 012 5331 v WDe Silva Properties Inc. 2010 ABQB 181 (CanLil). Edwards v. Law Society of Upper Canada, 2000 CanLil 5748 (ON CA). Elder Advocates ofAlberta Society v. Alberta Health Services, 2012 ABCA 355 (CanLil).

3.

4. 5.
6.

7.

8.

9.

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 of Canada 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 21.
i’

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

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

2

22. Rothfleld v Manolakos, [1989] 2 SCR 1259 (QL). 23. Stobbe v Paramount Investments mc, 2013 ABCA 384 (CanLil). 24. 25. Taylor v Canada (Attorney General), 2012 ONCA 479 (QL). Tottrup v Alberta (Minister ofEnvironmental Protection), 2000 ABCA 121 (QL).