Canada: The ‘Honour Of The Crown’ In The BC Forest Industry

The Haida decision represents the Supreme Court of Canada's seminal discussion on the Crown's duty to consult with and accommodate First Nations who claim Aboriginal rights or title, but have yet to establish those rights or title in court or through treaty. A recent decision of the BC Supreme Court indicates that, ten years on, we are still muddling our way through the aftermath.

Moulton Contracting Ltd. v. British Columbia concerned various claims that the plaintiff logging contractor advanced against the Province of British Columbia, the Fort Nelson First Nation (the "Band"), and particular members of the Band. The dispute concerned two Timber Sale Licenses (TSLs) that the Province had awarded to the plaintiff, but that the plaintiff was unable to harvest on account of a blockade that various Band members erected upon an access road. The blockade reflected the Band members' unhappiness over the Province's consultation efforts with respect to a major amendment made to a forest development plan on account of the TSLs.

Critically, the Province failed to advise the plaintiff that Band members were not satisfied with the Province's consultation, or that these members had threatened to take action that would to prevent logging under the TSLs. Since the plaintiff was unaware of this threat, it did not pursue other work normally available to it until it was too late.

The plaintiff's claims against the Band and members were dismissed. The court also dismissed the plaintiff's claim that the Province was obliged to provide access to the roads and cutblocks: the TSLs included a standard clause that exempted the Province from any liability that might arise due to a First Nations blockade.

The court was left to consider whether the Province had breached either of two implied terms of contract found to exist in the TSLs. The first implied term was an obligation on the Province to discharge its duty to consult with First Nations. The second was an obligation on the Province to inform the plaintiff in a timely manner if any First Nations people were dissatisfied with the Province's consultation and threatened interference with the plaintiff's logging operations.

Ultimately, the court found that the Province was liable to the plaintiff for a breach of the second implied term, and awarded damages to the plaintiff in the amount of $1.75 million. In essence, the Province's breach took away the plaintiff's opportunity to pursue other sources of revenue aside from the TSLs. While the court did not find the Province liable to the plaintiff in damages on account of the first implied term due to the exemption clause discussed above, and due to concerns about the existence of a causal relationship between any breach and the plaintiff's losses. The court nevertheless did find that the Province's consultation efforts did not maintain "the honour of the Crown" and, therefore, that the Crown had breached this contractual obligation. The court was critical of the Province's failure to accommodate the limited capacity of the Band to evaluate the Province's forestry proposals.

While the court clarified that this "is not to say ... that the Province was under an obligation to provide funding for improved capacity," one gets the impression that the court made this statement with a wink of the eye. The court went on to say that if consultation owed to the Band was not completed in a timely manner "the Province owed a duty to delay posting the TSLs for sale." In other words, the message that the court appears to have delivered to the Province is: "while you're not necessarily obliged to fund a First Nation's evaluation of any forestry proposal, it could be a long wait if you don't". An appeal of this decision was filed in the BC Court of Appeal.

Previously published in The Legal Perspective

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