Canada: Province Punished In Costs In Flawed Consultation Case: "Moulton Contracting Ltd. v. British Columbia"*

Last Updated: June 23 2014
Article by Joan Young and Lindsay Dykstra

Case Background

The Province of British Columbia has been punished with a substantial costs award made against it arising out of a flawed consultation process with the Fort Nelson First Nation. This is the follow up decision to the trial outcome in Moulton Contracting Ltd. v British Columbia,1 whereby the British Columbia Supreme Court held the Province of British Columbia liable to Moulton Contracting Ltd. ("Moulton") for failing to disclose information relating to Moulton's Fort Nelson Timber Sales Licences ("TSL").

The original action stemmed from events in October 2006 when the Behn family, who are members of the Fort Nelson First Nation ("FNFN"), established a blockade to halt Moulton's logging operation. The company had purchased two Timber Sales Licences from the Province of British Columbia to log in the area, but as a result of the blockade were unable to do so and suffered substantial economic damages. Moulton subsequently brought an action against FNFN and their Chief, the Behn family, and the Province.

The Court dismissed the claims made against the Behn family, Chief Logan and FNFN, but in a novel interpretation of the law found the Province liable for breaching an implied contractual term in the TSL that it had (1) adequately consulted and discharged its duty to First Nations, and that it (2) was unaware of any dissatisfaction expressed by First Nations with the consultation process. The Province had failed to disclose to Moulton both that FNFN had expressed dissatisfaction with the consultation process and that the Behn's intended to block Moulton's access to the logging area. Damages of $1.75 million were awarded to Moulton for the Province's breach of these implied contractual terms.

Ruling on Costs

On June 5, 2014 the judgement on costs was issued. It largely penalized the Province for failing to accept an earlier settlement offer, sanctioned the Behn's for setting up the blockade, and sanctioned FNFN and Chief Logan for failure to disclose certain documents in a timely and reasonable manner.

Specifically, Moulton was awarded double costs against the Province, a punitive measure due to their earlier rejection of Moulton's $1.5 million settlement offer. The Court determined that the offer to settle ought to have reasonably been accepted, and that the relationship between terms of the settlement and the final judgement justified the award.2

The Province argued that Moulton's costs should then be limited only to successful claims against the Province, however the Court found that it would not be just to apportion costs so as to force Moulton to bear them in order to pursue the Behn's and FNFN. The exception to this were costs from three days of trial related to an unsuccessful claim specifically against FNFN, the Behn's and Chief Logan.

Also of note, despite their success at trial the Behn's were disentitled to costs. According to the Court, they should not have used a blockade to express their opposition when they had other legal means such as judicial review available. As such, the order to bear their own costs was intended to "serve as a disincentive to others who might consider attempting to resolve land use disputes through extra-legal means such as blockades."3

FNFN and Chief Logan were entitled to 2/3 costs, reduced for failing to provide full disclosure in a timely manner that unduly drew out the discovery process and inconvenienced opposing parties. FNFN and Chief Logan sought indemnity from the Province in the event that they were found liable. Though they were not found liable, the Court addressed their claim by noting that if they had been liable; their participation in the blockade would have disentitled them to such indemnity.

Moulton sought a Sanderson4 order against the Province that would require the Province to pay the costs of both FNFN and Chief Logan. The Court developed the following guidelines for the proper exercise of discretion by the court when considering Sanderson and Bullock orders:

  1. The threshold test is whether it is reasonable to join the defendants;
  2. After meeting the threshold test, granting the order is entirely at the judge's discretion and must be just and fair;
  3. The trial judge must consider the conduct of the unsuccessful defendant in relation to the grounds of the successful defendant's alleged liability; and
  4. Where there are independent causes of action alleged with unconnected breaches, an order will not normally be granted unless the unsuccessful defendant's conduct can be shown to have caused the plaintiff to bring or continue an action against the successful defendant.5

The Court found that the threshold was met, and while several factors against granting the order were considered, the Judge determined that the overlap of issues involving the Province and the other defendants was significant enough to warrant granting the order.

The underlying trial decision is under appeal by both the Province and Moulton. In the meantime, Moulton Contracting Ltd. v British Columbia remains a strong judicial warning to governments that if they fail to adequately consult that they will be held legally accountable, not only to the First Nations, but also to private industry when private industry is harmed by the government's failure to meet its constitutional obligations to First Nations.

Footnotes

* 2014 BCSC 993

1. Moulton Contracting Ltd v British Columbia, 2013 BCSC 2348.

2. Moulton, ibid at para 18, referencing the British Columbia Supreme Court Civil Rules R.9-1(6).

3. Moulton¸ supra note 2 at para 35.

4. The order originated in Sanderson v Blyth Theatre Co, [1903] 2 KB 533 (CA), and is codified in the British Columbia Supreme Court Civil Rules, R.14-1(18).

5. Moulton, supra note 2 at para 74.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

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
Joan Young
 
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