BC Government ordered by BC Supreme Court to pay Moulton Contracting Ltd. $1.7 million because the government owed the company a duty of care

Compensation order for forestry company could be tip of the iceberg
by Jennifer Brown, January 20, 2014, Canadian Lawyer Magazine
The government of British Columbia has been ordered to pay a forestry company $1.7 million for damages suffered during a blockade in 2006 and experts say other provinces, especially Ontario, should sit up and take notice.  In Moulton Contracting Ltd. v. British Columbia, which was also heard by the Supreme Court of Canada as Behn v. Moulton Contracting Ltd. on other issues last May, members of the Fort Nelson First Nation Aboriginal community — the Behn family — had set up a camp blockade in October 2006 to interfere with a logging operation within Treaty 8 territory. The blockade meant the logging company, Moulton Contracting, couldn’t get access to or cut the timber within the traditional territory of the FNFN where the company was authorized to do so. The Crown had granted licences to the logging company to harvest timber in two areas of the Fort Nelson territory.

The Behns argued under the Fort Nelson First Nation system of territorial management, hunting and trapping rights apply on tracts of land associated with different extended families. The SCC rejected the Behns’ argument the licences were invalid because they were awarded in breach of the duty to consult and infringed Treaty 8 rights. It found the defence to be an abuse of process.

While the Supreme Court of B.C. dismissed a claim made by the company against the Behn family, it sided with the forestry company’s claim that the province owed it a duty of care and should have warned it of the Behns’ intention to block access to the road and therefore be held liable for its financial loss during the period of the blockade. The court assessed the loss to Moulton as a result of the province’s failure to warn it about the Behns’ intention to block the road access at $1.75 million. “It’s an impressive amount,” says Pierre-Christian Labeau, a partner with Norton Rose Fulbright Canada LLP in Quebec City who deals with aboriginal and resource law. “It’s important especially in the context of a forestry company. You can imagine for a mining company that would be in a similar situation the damages could be higher.” The case speaks to a larger issue of the obligation of the Crown not to forget private parties also have rights in such situations. “The province signed a contract, general contractual principles were applied in terms of obligations, and the court said you’ve got to notify; it’s a material issue both in terms of contract and common law,” says Tom Isaac, head of the national aboriginal law practice at Osler Hoskin & Harcourt LLP in Calgary.

He notes in the 2010 case Beckman v. Little Salmon/Carmacks First Nation the Supreme Court said Beckman also had a right to timely government decision-making. “I see this as just a continuation of that theme. It signals to government they can’t forget they are dealing with other folks because we do see a tendency for governments to get a big myopic about these issues. They ought to be focused on the honour of the Crown but they can’t do it to the detriment of non-Aboriginal people’s rights to be treated fairly also by government,” says Isaac. Isaac says he thinks it’s “inevitable” there will be more claims against government. [But, Supreme Court of BC didn’t rule against Moulton for fear of opening the floodgates, like J Wittmann did re ERCB violating my Charter rights] He has had to remind governments his non-aboriginal clients also have a right to transparent record.

“This should be a wake-up call for the government of Ontario,” says Isaac. “This is a decision the government of Ontario in particular should take a careful look at given the examples of blockades and threats of blockades in that province.” Labeau agrees, pointing to several junior mining companies currently suing the province of Ontario because they didn’t have access to do exploration work because the First Nations living in the area opposed such activities. “They say the Ontario government didn’t take action and didn’t make sure the duty to consult was respected and because of that they should award damages,” he says.

In October, junior gold mining company Northern Superior Resources Inc. filed a lawsuit against the Ontario government for $110 million on the grounds the government failed in its duty to consult aboriginal people, thereby depriving the companies involved of the ability to carry on exploration at its Thorne Lake, Meston Lake, and Rapson Lake gold properties located west of the Ring of Fire in Northern Ontario.

Solid Gold Resources Corp. also filed a $100-million lawsuit in the Ontario Superior Court of Justice last January claiming the province “encouraged and promoted” a conflict with a First Nation, slowing its gold mine project.

“I expect we will see more of that in the future,” says Labeau. “Every time you have a situation where members of First Nations have been counseled to take action against a private company, maybe the company will say we have done everything right — they will argue the province or federal government has a responsibility. The government can’t ignore its responsibility not only to First Nations but also to private companies.” [What about private citizens, families, communities, municipalities, companies harmed by frac’ing?]

Canada: British Columbia To Pay $1.7 Million In Compensation To A Forestry Company by Pierre-Christian Labeau with assistance by law student Andréane Giguère, January 17, 2014, Norton Rose Fulbright Canada LLP, Mondaq
On December 23, 2013, the British Columbia Supreme Court finally ruled on the forestry company’s claim.

The British Columbia Supreme Court2 began by dismissing the claim against the Behns, Chief Logan and FNFN, stating that the blockade participants had not committed the torts of intentional interference with Moulton’s economic relations or conspiracy. The court rejected Moulton’s contention that erecting a camp blocking access to the logging sites was an act of criminal mischief within the meaning of the Section 430 of the Criminal Code. The court held that, although the blockade affected the rights granted to Moulton under its logging licences, its property rights were incorporeal in nature and therefore did not give rise to the offence of mischief. As for Moulton’s further contention that blocking a road used by a permit holder is unlawful because such conduct is not authorized by law, the court held that the road that was blockaded (the Canfor Road) was a forest road that was not considered a public highway and consequently existed in a legislative vacuum. As “that which is not expressly forbidden is permitted,” the Court also rejected this argument.

With respect to the second issue, the Court dismissed Moulton’s claim that the effect of its contract with the province was to promise it access to the logging sites area and that, consequently, the Government of British Columbia should have tried to obtain an injunction to end the blockade. The Court stated that the duty to consult FNFN was nonetheless an implied term of the contract entered into with Moulton. It felt that the Government of British Columbia had breached this duty because its actions in this regard had proven insufficient to facilitate a true dialogue with FNFN. … Finally, the court found liability on the part of the province for breach of an implied contractual term obliging it to warn Moulton about Defendant Georges Behn’s intent to deprive the forestry company of access to the logging sites identified in the timber-harvesting licenses. The province knew or ought to have known of Mr. Behn’s intentions as of July 31, 2006, but it failed to convey this “information of fundamental relevance” to Moulton. According to the court, the finding of liability could also be made on the basis of the province’s failure to pass on this information to Moulton, to whom it owed a duty of care. The court found the province liable for Moulton’s loss of opportunity to secure other logging contracts for the 2006-2007 season. The Court assessed the losses suffered by Moulton as a result of the province’s failure to warn it about Mr. Behn’s intention to block the Canfor Road at $1,750,000.

This decision highlighted British Columbia’s continuing disclosure obligation in its contractual relationship with Moulton. Although the court found that the province had failed to fulfill an implicit contractual term obliging it to advise Moulton of Mr. Behn’s threat to block physical access to the Canfor Road, the finding of liability could also be made on the mere basis of its failure to pass on this very important information. Therefore, even if there is no implicit contractual term, the province could still be found liable. Given the sizeable damages awarded to Moulton by the court, forestry companies operating in the natural resources sector should bear this in mind. This decision comes at a time when governments are being sued by forest exploration companies on the grounds that the governments in question had failed in their duty to consult Aboriginal People, thereby depriving the companies of the ability to carry on their exploration activities. For example, Northern Superior Resources is currently suing the Ontario government for $110 million. [Emphasis added]

[Refer also to:

Alberta Energy Regulator given immunity in frac suit, OK for regulator to violate constitutional rights of Canadians; ‘I have no choice but to appeal’, says Jessica Ernst

In famous flaming water case, regulator to argue ‘no duty of care’ to landowners or groundwater ]

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