The Nova Scotia Court of Appeal recently addressed what the government must do to ensure a fair process takes place before making an order transferring private land to a mining company. In Higgins v Nova Scotia (Attorney General), 2013 NSCA 106, the Court considered the first vesting order made by the Minister of Natural Resources (the Minister) pursuant to the Mineral Resources Act, SNS 1990, c 18 (MRA) in Nova Scotia.
The Court found that the Minister must only provide an affected owner with the chance to make submissions prior to divesting him of title to his land. Trial-like procedures entitling the owner to pre-decision safeguards are not required. Further, the Court affirmed that a judge sitting in appeal from a Ministerial vesting order pursuant to the MRA can consider the economic benefits of the proposed mine in determining which procedural safeguards the government owes the owner.
For almost seven years, D.D.V. Gold Limited (DDV) tried unsuccessfully to buy a lot of 7.23 acres of land from Mr. Higgins that it intended to develop as part of a 1,432 acre open pit gold mine. DDV therefore applied to the Minister for a vesting order transferring fee simple ownership of the land to it pursuant to section 70 of the MRA, which reads in part:
(3) Upon application, the Minister may, by a vesting order, vest in the lessee the property right claimed by the lessee or such other right as the Minister may determine.
The Minister published notice of DDV's application and invited Mr. Higgins to respond with information he would like to have taken into account. The Minister also met with him to discuss his objections. Among other things, Mr. Higgins proposed that the mine could proceed without his land.
The Minister then followed up with DDV and asked whether it could proceed with the mine without Mr. Higgins' land. The Minister also requested and received a copy of its formal offers to purchase this land. DDV argued that the land was critical to the development of the mine. The Minister did not provide any of DDV's responding submissions to Mr. Higgins and did not request any further information from him prior to issuing the vesting order.
Mr. Higgins appealed the Minister's decision to the Nova Scotia Supreme Court pursuant to subsection 173(1) of the MRA, alleging that the Minister was biased and that his process was procedurally unfair. Justice J. E. Scanlan (the judge below) dismissed Mr. Higgins' appeal, rejecting both grounds advanced.
The judge below referred to the information that was before the Minister, canvassing Mr. Higgins' attachment to the land and the economic benefit of the proposed mine to the community. He also considered the fact that the rest of the land required for the mine had already been acquired, and that Mr. Higgins' gold rich land forms part of the proposed development due to its location.
Mr. Higgins appealed to the Court of Appeal pursuant to subsection 173(3) of the MRA, arguing that Justice Scanlan erred in law by determining that the Minister's process was fair, and by improperly considering inappropriate economic factors in reaching his decision.
The Court of Appeal's Decision
Writing for the three judge panel, Justice Hamilton dismissed the appeal, holding that the judge below was correct in finding that the Minister's chosen process was fair. The Court found that the judge below applied the correct standard of review and law, understood the appellant's arguments, the material that was before the Minister, and the process followed by the Minister.
In determining that the process for the vesting order was procedurally fair, the Court considered the five non-exhaustive factors established in Baker v Canada (Minister of Citizenship and Immigration),  2 SCR 817, at paragraphs 21-28.
The Court examined the first and second Baker factors together, being the nature of the decision being made, the process followed, and the nature of the statutory scheme and terms of the statute pursuant to which the Minister operates. The Court explained that the decision of whether the land should be transferred to DDV to allow it to develop the open pit gold mine was essentially one of policy based on the public interest as articulated in the MRA. Subsection 70(3) of the MRA imbues the Minister with discretion to make the decision. This discretion must be led by the principles set out in section 1A of the MRA:
1A The purpose of this Act is to support and promote responsible mineral resource management consistent with sustainable development while recognizing the following goals:
(a) providing a framework for efficient and effective mineral rights administration;
(b) encouraging, promoting and facilitating mineral exploration, development and production;
(c) providing a fair royalty regime; and
(d) improving the knowledge of mineral resources in the Province.
Reflecting on section 1A, the Court found that a purpose of the MRA is to encourage, promote and facilitate mineral exploration, development and production for the economic advantage of the province. The Court also highlighted the fact that section 70 of the MRA does not prescribe any procedure for the Minister to follow for granting vesting orders, leaving it to him to decide. The Court then held:
As a discretionary decision based on policy considerations, the Minister's decision is not similar to an adjudicative one. The trial-like procedures urged by Mr. Higgins: documentary disclosure, an oral hearing and an opportunity to cross-examine DDV's representatives and to test their evidence before the decision is made, are not required; Sara Blake, Administrative Law in Canada, 5th ed (Markham, Ontario: LexisNexis Canada Inc., 2011) at p. 13.
The Court examined the third Baker factor, the importance of the decision to those involved, concluding that the recognized importance of this decision to Mr. Higgins does not trump the other Baker factors which indicate that fewer procedural safeguards are owed. The Court noted that the Minister's decision divested Mr. Higgins of what he said was an emotionally and economically important parcel of land, but found that the decision was also important to DDV. The mining company would suffer revenue loss and face safety issues should it develop the mine without the land. The Court went further and considered the importance of the decision to other people in the community of Nova Scotia, of which many were passionately in favour of or against the proposed mine.
Turning to the fourth Baker factor, legitimate expectations, the Court held that Mr. Higgins could have no reasonable expectation of any greater procedural protection than he had received. No procedure had been set by a precedent prior to this one. There were also no regular practices, promises or representations on the part of the Minister or his staff that gave rise to a legitimate expectation of greater procedural protections.
Finally, the Court examined the fifth Baker factor, the respect for the procedural choices of the decision maker, noting again that the MRA leaves the choice of procedure entirely to the Minister. Hence, his choice of process deserves deference as long as he treats those who are affected fairly. Here, there could be no doubt that the Minister acted fairly and was not required to provide Mr. Higgins with any further procedural protections.
The Court further dismissed the second ground of appeal, finding that the judge below did not err by considering the effect of the proposed gold mine on the local economy and the mining industry in his decision. On the contrary, the Court held that he was correct to consider these points since they are relevant under the first and second Baker factors.
The decision underscores judicial deference to Ministerial choices regarding procedure pursuant to a statutory scheme which encourages mining development. Although this decision is centered on the MRA, it is instructive to parties outside of Nova Scotia where legislation empowers the government to compromise the property rights of private parties for mining (see for example Manitoba's The Mines and Minerals Act, CCSM, c M162, sections 154-159).
The Court's analysis of the third Baker factor is particularly interesting. The Supreme Court in Baker qualified its third factor by holding at paragraph 25 that a reviewing court must look at the importance of the decision to "the individual or individuals affected." The Court of Appeal interpreted these words to be wide enough to encompass a corporation's interests. Further, it found under the second Baker factor that a policy objective of economic development is embodied in section 1A of the MRA. The Court thus upheld the relevance of the economic interests of individuals in the wider community who stood to gain from the mine as a consideration in the Baker analysis. This is generally consistent with the lesson in Baker at paragraph 22 that "the duty of fairness is flexible and variable, and depends on an appreciation of the context of the particular statute and the rights affected." Notably, the Court of Appeal did not address whether any of the individuals against the mine in the wider community advanced environmental concerns, although an explicit goal in section 1A of the MRA is "sustainable development." Nor did the Court engage in an analysis to weigh those interests, should they exist, under the third Baker factor.
The appellant now seeks leave to appeal at the Supreme Court of Canada (application for leave received 2013-09-20, docket number 35540), and is awaiting a ruling on his request. Meanwhile, the Nova Scotia Court of Appeal dismissed the appellant's motion for an order staying the implementation of the Minister's vesting order pending the outcome of the application for leave.
Court Docket: CA 415194
Decision Date: September 24, 2013
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