Canada: Case Comment: Teal Cedar Products Ltd. v. British Columbia (Ministry Of Forests)

Expropriation cases are rarely argued at the Supreme Court of Canada.1 In July of 2012, the Supreme Court of Canada granted leave to appeal to Her Majesty the Queen in right of the Province of British Columbia's application in Teal Cedar Products Ltd. v. British Columbia (Ministry of Forests) ("Teal Cedar"). This case will likely be heard in 2013.

British Columbia raised two issues at the Court of Appeal, stating that the lower court judge erred:

  1. In ordering that Teal is entitled to compensation for losses incurred during the period between the creation of the park in July 1995 and the reduction in its allowable annual cut in April 1999; and
  2. In failing to quash the award of compound interest.2

In addressing the first issue, the B.C. Court of Appeal's decision focused mainly on whether legislation which does not state the basis for determining compensation is sufficient to rebut the presumption of full compensation for a government taking. More specifically, this issue relates to the scope of damages claimable under the Protected Areas Forest Compensation Act,3(the "Compensation Act") and the Forest Act.4

In addressing the second issue, the B.C Court of Appeal considered whether it should quash the award of compound interest by the arbitrator.5 The Court of Appeal considered Her Majesty's argument that an award of compound interest as a component of compensation is not provided for in the Compensation Act or the Forest Act and offends the Court Order Interest Act.6

While Her Majesty obtained leave to appeal to the Supreme Court only on the second issue, the Court of Appeal's analysis of the scope of full compensation for a government taking in the first issue is helpful in setting the context for the upcoming argument at the Supreme Court on the compound interest issue.

There are numerous benefits to bringing claims for compensation under each province's Expropriation Act or equivalent legislation. Such legislation tends to provide additional protections and benefits for claimants including more expansive entitlements to full compensation and cost provisions that are interpreted broadly and liberally. This legislation embodying the indemnity principle represents the traditional approach to expropriation rights (the "traditional approach").

In addition to the traditional approach, legislation has been enacted in the past several decades relating to quasi or de facto expropriation rights beyond the traditional approach, such as is found in legislation related to natural resources or energy. In Teal Cedar, the Supreme Court of Canada may provide further insight into the scope of compensation owed for a government taking pursuant to these alternative types of statutes.


In Teal Cedar, the claim for compensation is not governed by the compensation scheme set out in the Expropriation Act, R.S.B.C. 1996 c. 125. Rather, it is governed by the Compensation Act and the Forest Act.7

The applicant held a forest license entitling it to harvest annually a stipulated volume of timber from a specified area. In 1993, the Ministry of Forests imposed a moratorium on harvesting timber for the purpose of considering the creation of a new provincial park. In 1995, part of the area at issue was used to create a new provincial park and logging became prohibited within the park boundaries. The applicant's allowable annual cut under its harvesting license was ultimately reduced in 1999.

The applicant's claim for compensation for partial expropriation as a result of the allowable annual cut reduction was submitted to arbitration under the Forest Act, which resulted in an Arbitration Award dismissing the applicant's claim for losses suffered prior to 1999 when the allowable annual cut was reduced and awarding compensation after that period totalling $6.35 million plus compound interest and actual reasonable legal costs agreed upon by the parties on an indemnity basis totalling $1.02 million.

The Supreme Court of British Columbia partially allowed the applicant's application for leave to appeal certain aspects of the Arbitration Awards, ruling that compensation was potentially owed for losses from 1995 to 1999 and dismissing the respondent's application for leave to appeal on certain of the aspects of the Award.

British Columbia Court of Appeal Decision

The Court of Appeal allowed the respondent's appeal in part, partially reinstating the arbitrator's award by denying claims for compensation for losses from 1995 to 1999. The Court of Appeal dismissed British Columbia's appeals of the denial of leave to appeal the award of compensation relating to compound interest.

Scope of Compensation Under the Forest Act and Compensation Act

Under most Expropriation statutes, the trend is that consequential damages are compensable as disturbance damages as well as the value of the property. The B.C. Court of Appeal cited Professor Todd's treatise The Law of Expropriation and Compensation in Canada, in which disturbance damages are described as "compensation for the economic loss which would otherwise be suffered by an owner by reason of having to move from the expropriated property."

The Compensation Act and the Forest Act do not provide for the expansive definition of damages as is compensable under B.C.'s Expropriation Act.

Section 7 of the Compensation Act, relating to compensation owed to the holder of a forest license, provides:

7 (0.1) In this section, "compensation" includes damages.

(1) The compensation payable to the holder of a licence because of


(b) an annual cut reduction affecting the licence, to the extent that it was or is attributable to the establishment of a protected area,


is limited to the amount of compensation determined in relation to that licence under section 60 of the Forest Act as it applies for the purposes of this Act.

Section 60 of the Forest Act is the limiting provision for compensation in the Compensation Act, providing:

60 (1) The minister, in a notice served at least one year in advance on the holder of the licence, may

(d) reduce the allowable annual cut authorized in a forest licence or timber sale licence if Crown land in the timber supply area specified in it is to be used


(ii) for a purpose other than referred to in subparagraph (i) and other than timber production.


(4) If the total reductions in the allowable annual cut authorized in a forest licence or timber sale licence made during a deletion period, in consequence of Crown land use


(b) for purposes under subsection (1)(d)(ii) exceed 5% of the allowable annual cut authorized for the licence at the beginning of the deletion period,

the government must compensate its holder in respect of the amount of the reduction exceeding 5%, for the unexpired portion of its term. [emphasis added]

The expansive definition of disturbance damages in B.C.'s Expropriation Act is stated in s. 34(1) as follows:

An owner whose land is expropriated is entitled to disturbance damages consisting of the following:

(a) reasonable costs, expenses and financial losses that are directly attributable to the disturbance caused to the owner by the expropriation;

(b) reasonable costs of relocating on other land, including reasonable moving, legal and survey costs that are necessarily incurred in acquiring a similar interest or estate in the other land.8

The applicant contended, and the Arbitrator and Supreme Court of British Columbia agreed that the Compensation Act and Forest Act do not provide a complete code of compensation. In assessing this concept, the Court of Appeal analyzed two potentially conflicting concepts in expropriation law, being: (1) the presumption of a right to full compensation and (2) the limits of the common law with respect to rights to compensation.

With respect to the presumption of full compensation, the B.C. Court of Appeal cited the leading expropriation case Toronto Area Transit Operating Authority v. Dell Holdings, 1997 CanLII 400 (SCC), [1997] 1 S.C.R. 32 ("Dell Holdings"):

Justice Cory in Dell Holdings endorsed a presumption of full compensation at para. 22:

... In The Queen in Right of British Columbia v. Tener ... at p. 559, Estey J. writing for the majority, relied on a passage of Lord Atkinson in Attorney-General v. De Keyser's Royal Hotel Ltd. ... at p. 542:

. . . unless the words of the statute clearly so demand, a statute is not to be construed so as to take away the property of a subject without compensation.9 [emphasis added]

The B.C. Court of Appeal referred to the limits of expropriation statutes, reciting Professor Todd's statement that:

It has never been suggested that there was a common law right to compensation. On the contrary, as Lord Parmoor stated in Sisters of Charity of Rockingham v. R. [[1922], 2 A.C. 315, 322 (P.C.)] "Compensation claims are statutory provisions. No owner of lands expropriated by statute for public purposes is entitled to compensation, either for the value of the land taken, or for damage, on the ground that his land is 'injuriously affected', unless he can establish a statutory right." However, unless the particular legislation clearly provides for confiscation, either in whole or in part, Canadian courts will apply the principle of statutory interpretation which raises a presumption in favour of the payment of full compensation. [Emphasis added.]10

In weighing these competing principles, the Court of Appeal stated:

I take from these authorities that the degree of compensation payable on an expropriation is determined by the applicable legislation, with a presumption of full compensation to the degree that this presumption is able to operate within the statutory language.

Although disturbance damages are permitted under the Expropriation Act, s. 7(3) of the Compensation Act, replicated above, expressly excludes the application of that statute in the circumstances of the present case. As a result, we are thrown back to the language of the Compensation Act and the Forest Act. Teal's entitlement to any compensation must be found within the four corners of these statutes, interpreted in light of the principles and presumptions I have discussed.11


In reaching this conclusion, I am mindful of the comments in Dell Holdings that support an award of full compensation including business losses suffered during the lead up period where such losses were caused by the scheme associated with the "taking". In the present case, however, the compensation scheme before the court does not support the broad entitlement to disturbance damages that served as the foundation for the decision in Dell Holdings. In my view, the language of s. 60(4) of the Forest Act, by itself and in context, expressly excludes the Dell Holdings result. The words of the legislation must govern.12

The Court of Appeal denied Teal Cedar's claims for compensation for the period from the creation of the park to April 1, 1999. This finding promotes a narrower view restricting compensation for purported business losses to the strict reading of the Forest Act.

Compound Interest

The Court of Appeal denied leave to appeal with respect to the arbitrator's award of compound interest. The Province asserted that s. 2 of the Court Order Interest Act applies to prohibit compound interest. The Province asserted that the Court Order Interest Act applies through s. 28 of the Commercial Arbitration Act:

For the purposes of the Court Order Interest Act and the Interest Act (Canada), a sum directed to be paid by an award is a pecuniary judgment of the court.13

Sections 1 and 2 of the Court Order Interest Act provide:

1(1)   Subject to section 2, a court must add to a pecuniary judgment an amount of interest calculated on the amount ordered to be paid ...

2      The court must not award interest under section 1


(c) on interest or on costs,14

The Court of Appeal extensively analyzed the B.C. Supreme Court's reliance on its prior 2007 decision of Morriss v. British Columbia, 2007 BCCA 337.  In Morriss, the Court held that an award of compound interest as a component of compensation to which the Expropriation Act does not apply, does not offend s. 2 of the Court Order Interest Act.

Morriss involved the creation of a park, but related to mineral rights so that matter was not governed by the Forest Act. The Court of Appeal cited Morriss, which states;

... In my view, where compound interest is required to provide full compensation, an award of compound interest generally should not be discretionary. In that context, the plaintiff is entitled to compound interest as a matter of law. This is particularly so in the calculation of compensation for a compulsory taking.15 [emphasis added]

The Province contended that Morriss was wrongly decided because;

  1. It is inconsistent with the judgment of the Supreme Court of Canada in British Pacific Properties Ltd. v. Minister of Highways and Public Works;16
  2. It is inconsistent with the objects of the Court Order Interest Act as expressed by the Law Reform Commission of British Columbia when it recommended the enactment of the statute in 1973; and
  3. It creates a distinction that unfairly discriminates among classes of litigants.17

The Court of Appeal, however, rejected these arguments and denied leave to appeal, stating that Morriss is binding and the issue "is properly caught by the principle of stare decisis...".18

Leave to Appeal to the Supreme Court of Canada

On its argument for leave to the Supreme Court of Canada, the Province's issue on appeal related to the B.C. Court of Appeal's decision with respect to denying leave to appeal only on the arbitrator's award of compound interest:

This case concerns the question of whether and in what circumstances a court may award compound pre-judgment interest on a pecuniary judgment in the face of an express statutory prohibition on such an award.  The case arises out of British Columbia, and the provisions of the Court Order Interest Act, R.S.B.C. 1996, c. 79. However, the issue has broad implications beyond the narrow confines of one provincial statute.  The availability and scope of pre-judgment interest is an issue that has long vexed the courts at common law and equity, and has been the subject of detailed consideration by various law reform commissions in this country and elsewhere.  A variety of legislative responses have been adopted.  A critical issue raised in the present case is the jurisdiction of a court at common law to carve out exceptions to the statutory interest rules, particularly where the exceptions are of uncertain origin and scope.19

The Province states that Teal Cedar Products Limited frames this as a case of "de facto expropriation."20 In its Response to Application for Leave to Appeal, Teal Cedar argues that the formulation of the issue by the Province was inaccurate because;

  • This case does not involve a court awarding interest at all, but rather an arbitrator including compound interest as an element of the award of compensation for a statutory taking;
  • This case does not involve an award of compound interest on a pecuniary judgment, rather an award of compound interest as an element of an award; and
  • There is no statutory prohibition on such an award in the context of compensation for an expropriation.21

Teal Cedar argues that the issue in this matter would more accurately be framed as:

 Is it open to an arbitrator who is assessing compensation for a statutory taking to include compound interest as an element of the award?22

While the B.C. Court of Appeal decision in Teal Cedar reviews narrow issues with respect to the scope of compensation under the Forest Act and Compensation Act and an award of compound interest in an arbitration relating to a government taking in British Columbia, its influence may be much greater. It appears that the Court of Appeal in Morriss and Teal has utilized compound interest where it "is required to provide full compensation" that might otherwise be limited by statutory wording outside the provisions of traditional expropriation statutes. In an ever expanding web of legislation conveying expropriation powers beyond the traditional approach, including B.C.'s Forest Act and Protected Areas Forest Compensation Act, Teal Cedar may greatly impact the breadth of compensation available as a result of government takings.


1 In 2011, only one expropriation case was argued: Smith v. Alliance Pipeline, 2011 SCC 7; in 2012, the appeal of Antrim Truck Centre v. MTO, 2011 ONCA 419 will be heard in November 2012.

2 Teal Cedar Products Ltd. v. British Columbia (Ministry of Forests), 2012 BCCA 70 at para. 13.

3 Protected Areas Forest Compensation Act, S.B.C. 2002, c. 51.

4 Forest Act, RSBC 1996, c 157.

5 Teal Cedar at para. 13.

6 Court Order Interest Act, RSBC 1996, c 79.

7 Teal Cedar Products Ltd. v. British Columbia (Ministry of Forests), 2012 BCCA 70 at para. 9.

8 Expropriation Act, RSBC 1996, c. 125, s. 34.

9 Id. at para. 25.

10 Id. at para. 24

11 Id. at para. 30-31.

12 Id. at para. 45.

13 Commercial Arbitration Act, RSBC 1996, c 55, s. 28.

14 Court Order Interest Act, RSBC 1996, c 79, ss. 1-2 .

15 Teal Cedar at para. 55 citing Morriss v. British Columbia, 2007 BCCA 337 at para. 37.

16 British Pacific Properties Ltd. v. Minister of Highways and Public Works, [1980] 2 S.C.R. 283.

17 Teal Cedar at para. 58.

18 Teal Cedar at para. 59.

19 Her Royal Majority the Queen in right of the Province of British Columbia, Application for leave to appeal to the Supreme Court of Canada filed April 17, 2012 at para. 1.

20 Id. at para. 2.

21 Teal Cedar Products Limited, Response to Application for Leave to Appeal, filed May 9, 2012 at para. 2.

22 Id. at para. 3.

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.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

In association with
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.