Canada: Can The Queen Be Taken At Her Word? Federal Court Of Appeal Answers In Canada v. South Yukon Forest Corporation

The Federal Court of Appeal has clarified when the federal Crown will be held responsible for representations made by its officers. In issuing its decision, the Court opted for a narrow interpretation of the Crown's liability and reiterated that parties that rely on the Crown's representations have the responsibility to conduct their own due diligence.


The action arose out of the construction of a timber mill in the Yukon. South Yukon Forest Corporation and Liard Plywood and Lumber Manufacturing Inc. (the "Plaintiffs") alleged that the Department of Indian Affairs and Northern Development (the "Department") had promised and represented to them that if they built a mill in the Yukon, the Crown would ensure that there would be an adequate, long term supply of timber of the mill. The Plaintiffs built a mill in Watson Lake, Yukon. The supply of timber was inadequate, and the mill was shut down. The Plaintiffs commenced legal proceedings against the Crown alleging negligence, negligent misrepresentation and breach of contract.

Most Yukon forests are Crown land that cannot be harvested without authorization. Authorization can be obtained in three ways – a permit (for a relatively small amount), a short-term Commercial Timber Permit ("CTA") and a long-term Timber Harvest Agreement ("THA"). A THA requires the approval of the Governor in Council by order in council.

Decisions Below

At trial, there was no dispute that certain federal officials sought to cause the Plaintiffs to build a mill in the Yukon. For example, one of the Plaintiffs testified that at a meeting with the Plaintiffs, the Executive Assistant to the Minister of Indian Affairs and Northern Development stated: "If you build a mill that will employ 100 people, why wouldn't we give you timber?" Letters to a similar effect were sent to the Plaintiffs by various officials of the Department. At another meeting, representations to the effect that "if you build a mill, we will give you timber" were made by a Department official.

Nevertheless, a THA was never entered into.  For a while after the mill was built, it operated on the basis of CTAs with local loggers. It then failed to secure sufficient supply of timber and shut down.

The Federal Court found the Department liable for negligence, negligent misrepresentation and breach of contract. The Court concluded that the Crown owed a duty of care to the Plaintiffs and that it breached such a duty when it failed to implement a policy that would govern the long term access of the Plaintiffs to timber pursuant to a THA. The Federal Court found that the Crown was liable in negligent misrepresentation on the basis of statements made by the Department officials. Reliance on the statements was reasonable, and the Plaintiffs would not have built the mill had they not been made. The Federal Court found that the Crown was liable for breach of contract. The representation that timber would be available was an unilateral promise, which was accepted when the Plaintiffs built a mill. Thus, a contract was formed. The Federal Court found that it was an implied term of the unilateral contract that the requisite annual volume of timber would be guaranteed to be supplied.

The Federal Court of Appeal accepted all of the factual findings of the Federal Court. However, it overturned its legal findings and concluded the Crown was not liable. Pursuant to section 8 of the Territorial Lands Act, a THA could only be obtained with the consent of the Governor in Council. This fact was either known or should have been known to the Plaintiffs. Furthermore, the totality of the representations made the Plaintiffs made their reliance unreasonable, as it was evident from some of the representations that it was not certain that they would receive a THA. Accordingly, the Federal Court of Appeal held that the Plaintiffs' reliance upon the Crown's representations was not reasonable.

The Federal Court of Appeal also found that, as a matter of law, no contract could arise in the circumstances of the case. Any promises or representations made by the Department officials to the effect that THA would be granted were outside their authority, as such an agreement needed the approval of the Governor in Council. Where a statute regulates the power to make contracts, a contract binding on the Crown does not come into existence until the requirements of the statute are met. The Court cited Wind Power Inc. v. Saskatchewan Power Corp . to the effect that no implied term that the requisite approval by the Lieutenant Governor in Council would be granted could exist in the face of the statutory requirement for such an approval. The Saskatchewan Court of Appeal in that case also held that a contractor dealing with government is on notice of all statutory limitations paced on public officers. Similarly, in Donald Frederick Angevine v. Her Majesty the Queen, in the Right of Ontario, the Ontario Superior Court of Justice held that the Attorney General could not bind the rest of the Cabinet to accept his recommendation of a judicial appointment, and hence lacked the capacity or authority to enter into a contract with a prospective candidate for such position.

The Federal Court of Appeal did not rule on whether the Crown was liable in negligence, because it found that the Crown's conduct did not cause the Plaintiffs' alleged loss.

The Federal Court of Appeal thus found the Crown was not liable to the Plaintiffs and allowed the Crown's appeal.

Significance of the Appeal

The appeal is a stark reminder of the importance of due diligence in dealing with the Crown. In particular, commercial entities cannot rely on representations of the officers of the Crown without verifying that such representations are within their authority. Private contractual parties are deemed to be on notice of any statutory limitations placed upon government officers. Furthermore, if a representative of the Crown makes a representation that is not within his or her authority to make, no contract can be formed, and the Crown will not be liable in damages.

The case signals the Federal Court of Appeal's reluctance to hold the Crown (and hence, the taxpayer) liable for the acts of a few "bad apples" in the civil service who exceed their authority and make representations they are not empowered to make. It reinforces the responsibility of individuals and companies to do their own due diligence prior to relying upon government agents.

Case Information

Canada v. South Yukon Forest Corporation, 2012 FCA 165

FCA Court File No. A-307-10

Date of Decision: May 31, 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.