Canada: Environmental Damages - Observations from the Supreme Court of Canada

This article was originally published in Blakes Bulletin on Environmental Law - October 2004

In June, the Supreme Court of Canada handed down its decision in British Columbia v. Canfor (known as the Stone Fire case), which considers a government’s right to recover environmental losses, such as the loss of a protected natural area and related values. This decision is important because it recognizes environmental losses as recoverable damages within the common law and it examines the supporting principles. However, on the facts of this case, no environmental losses were awarded to the government of British Columbia. Nonetheless, the door remains open for future litigants to claim environmental losses. In our view, this will be of most significance to government claimants, but it also creates opportunities for public interest class actions and expanded claims by First Nations. For a discussion of this case at the B.C. Supreme Court and Court of Appeal levels, see Blakes Bulletin on Environmental Law, October 2003.

The Facts

In 1992, a forest fire caused by Canfor destroyed about 1,500 hectares of public forest land in northern B.C., including trees located in certain environmentally sensitive areas (ESAs) that were protected from commercial logging. The protected trees bordered along Stone Creek, which was used as a source of drinking water and fish habitat. These trees were set aside to protect water quality and control floods and erosion. In 2003, the B.C. Court of Appeal ruled that the ESA trees were worth one-third of their commercial value. This decision was contrary to the trial court’s finding that any loss of the ESA trees was included in the province’s claim for expenses related to fire suppression and restoration. These expenses were found to be $3.5 million and were the only damages awarded at trial. At trial, the province had also claimed damages for the loss of the harvestable trees and the ESA trees.

On appeal to the Supreme Court of Canada, Justice Binnie, writing for the majority of the Court, observed that the following three issues were raised by the appeal: (i) the Attorney General’s ability to recover damages for environmental loss; (ii) the requirement of proof of such loss; and (iii) a principled approach to the assessment of environmental compensation at common law.

The Recovery of Environmental Damages

The Supreme Court began its decision by noting that the "question of compensation for environmental damage is of great importance." In particular, this case considers the government’s role as both a landowner and the protector of the public interest in an unspoiled environment, as well as its role as regulator of the forest industry by establishing a scheme for revenue generation for forest harvesting activities. Canfor argued that the B.C. government’s right to recovery is limited by its own regulatory scheme, that is, the government is no ordinary landowner and, by establishing the stumpage system for revenue generation under the Forest Act, its only entitlement was to revenue loss. In this case, Canfor stated that there was no shortfall in revenue caused by the fire. This view prevailed before all levels of Courts hearing this matter, including the Supreme Court, which determined that the B.C. government was unable to establish any compensable revenue shortfall.

Notwithstanding success on the revenue loss issues, Canfor also argued that environmental damages were exclusively the domain of the legislature. The Supreme Court disagreed. Based on the notion that the common law is rooted, since Roman times, in the concept that public rights in the environment reside in the Crown or the government, the Court acknowledged the right of the province to seek monetary compensation for the loss of public resources. On this fundamental point, Justice Binnie found that there was no legal barrier to the province of B.C. suing for compensation. However, he observed that the converse was also true and that the province could be held liable due to its inactivity in the face of threats to the environment. In this regard, the "public" would be the potential claimant against the government given the Court’s remark that such potential liability is related to the "existence or non-existence of enforceable fiduciary duties owed to the public."

However, in this case, the province’s claim on some broader "public" basis was not fully argued. Justice Binnie observed that such cases raise important and novel policy questions that the Court need not consider in this appeal. Instead, the ability of the government to claim environmental losses for the ESA trees was limited by the way it framed its case as a landowner. The last part of the decision deals with considerations about quantifying the damages claimed by the B.C. government. This entitlement, the Court stated, was necessarily limited by the role the B.C. government adopted in its claim, namely that of landowner rather than as protector of the public interest.

Proof of Loss and Related Principles

The Court examined whether the province as landowner can recover compensation equivalent to the regulatory "stumpage" (or harvesting "tax" payable to the province) on the ESA trees, essentially a measure for lost revenue to the province, or some other measure of commercial value, including a premium. While accepting that a "commercial basis" could form a "floor value" for the ESA trees, the Court concluded that, on the facts of this case, no such damages were proven. As noted above, all courts hearing this case accepted that there was no revenue shortfall. Thus, the commercial value basis was a non-starter. With respect to the province’s claim for a 20% premium for the ESA trees above their commercial value, the Court concluded that this claim, while apparently trying to occupy the moral high ground, was overly arbitrary and simplistic and commented as follows:

"Less arbitrary techniques, which may or may not win eventual support in the courts are available and will have to be carefully considered when and if properly presented."

As a result, the Court left for another day how exactly environmental damages can be proven. The Court said these are matters to be explored by appropriate experts at trial as to the assessment of compensable loss (not just proof of physical damage). Justice Binnie observed that the quantification of such loss need not be based on "airy-fairy" valuations, as argued by Canfor,

or on the inclination to mete out rough justice and punish the wrongdoer, a principle endorsed by the province. He stated that fairness is the guiding principle and it is "best achieved by avoiding both undercompensation and overcompensation".

In its final paragraph, the Court highlighted that, in the absence of statutory intervention, courts must proceed cautiously on the basis of proper evidence:

". . . there is no reason to neglect the potential of the common law, if developed in a principled and incremental fashion, to assist in the realization of the fundamental value of environmental protection. However, the Court cannot act on generalizations and unsupported assertions. In the absence of statutory intervention, the Court must proceed cautiously. We do not have the basis in this record to proceed further at this time."

Finally, three judges (of nine) wrote a dissenting opinion, finding that there was a revenue loss for the harvestable trees. In addition, the dissent held that the ESA trees had intrinsic value at least equal to their commercial value, despite their non-commercial use. Despite admitting the persistence of "significant flaws" in the evidence, these judges accepted that the commercial value could serve as a yardstick to measure the appropriate damages. However, they agreed with the majority that in this case a premium award was not in order.

Conclusion

The government’s authority to seek damages on behalf of the public for environmental losses remains open for decision in a future case. As a result, companies engaged in carrying out forest activities need to be aware that they are now potentially at risk for paying damages for the loss of environmental values associated with carrying out these activities.

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 Mondaq.com.

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

Authors
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions