Canada: Appeals Court Overturns Damages Award To Proponent For Aboriginal Blockade

Last Updated: March 17 2015
Article by Bryn Gray and Stephanie Axmann

Most Read Contributor in Canada, September 2018

The BC Court of Appeal (BCCA) has overturned a significant trial decision that had ordered the province of British Columbia (Province) to pay $1.75 million in damages to a logging company arising from a blockade by members of a Treaty 8 First Nation.

The BCCA's decision, Moulton Contracting Ltd. v. British Columbia1 could limit the potential grounds for relief by mining, forestry and other resource developers against government when blockades or other efforts by Aboriginal groups impede project development after permits are granted.

Factual Background

By way of background, in June 2006, an agency of the BC Ministry of Forests entered into two timber sale licence agreements under the Forest Act (TSLs) with Moulton Contracting Limited (Moulton) that permitted Moulton to harvest timber in the Fort Nelson Timber Supply Area. This area is located in northeastern BC within lands covered by Treaty 8. Before Moulton began logging, the Province was informed by an affected trapper of the Fort Nelson First Nation that he and his family planned to stop the logging. The Province did not notify Moulton of this issue before entering into the TSLs, and a long-term blockade was subsequently established across the access road by the affected trapper and his family once Moulton began logging. This blockade prevented Moulton from accessing its harvesting sites. It was forced to withdraw its crew and equipment and was unable to fulfill contractual commitments to deliver timber to a mill.

Following the decision of the Supreme Court of Canada (SCC) in Behn v. Moulton Contracting Ltd2 in which the SCC dismissed the defences of the individual First Nation members against Moulton's tort action (see our commentary on that decision here), Moulton sought damages from BC and the First Nation defendants for its economic losses arising from the blockade. Justice Saunders of the BC Supreme Court dismissed Moulton's claim against the Aboriginal defendants but awarded Moulton $1.75 million in damages against the Crown.3 The trial judge awarded damages to Moulton on the basis of the Province's failure to inform Moulton if the blockade threat. The trial judge found that the TSLs contained an implied term that the Province was not aware of any First Nations expressing dissatisfaction with the consultation that the Province had undertaken (Dissatisfaction Term). The trial judge also held the Province concurrently liable in negligent misrepresentation for a breach of an implied continuing representation.

BCCA Decision

On February 26, 2015, the BCCA unanimously overturned the trial decision. The BCCA held that trial judge erred in finding an implied term in the TSLs by not applying the proper test: whether the parties to the contract intended such a term. The BCCA stated:

"The key element is that the implied term is more than just reasonable; it is necessary to make the contract as the parties intended. That is, without the term, the contract, as intended by the parties, would not be effective."4

The BCCA held that the trial judge appeared to make the finding on the basis of what reasonable parties would intend and did not making any findings of fact that would suggest that the actual parties intended the Dissatisfaction Term to be included in the TSLs or that it was necessary to give effect to the TSLs. The BCCA also held that, in any event, the limitation of liability clauses in the TSLs were inconsistent with such an implied term and would have precluded the Province's liability for the associated losses.

Notably, the BCCA considered the SCC's recent decision in Bhasin v. Hrynew, which recognized a general organizing principle of good faith and a duty of honest performance in contractual performance. [5] The BCCA held that the duty of honest performance did not apply because there was no basis to find that the Province acted unreasonably, dishonestly, arbitrarily or capriciously in failing to disclose the threats by the Aboriginal trapper when they were made.

With respect to negligent misrepresentation, the BCCA held that there was no express representation or evidence that Moulton was induced by or relied upon the Dissatisfaction Term in entering into the TSLs, and that such an implied term was inconsistent with the parties' contractual relationship and the limitation of liability clauses in the TSLs.

Implications

This decision may limit the ability of proponents, in certain circumstances, to successfully claim damages against the Crown for failure to warn of Aboriginal-related risks during permitting processes, either on the basis of implied terms or the duty of honest performance. An implied term requires evidence that the parties actually intended to agree to such a term, which can be difficult to prove.

That said, each case must be decided on its specific facts. In this case, the Province's liability was expressly limited in the TSLs (although the TSLs could be distinguished from other types of regulatory approvals that may not contain such terms). The evidence also showed that, prior to entering into the TSLs, Moulton did not make any inquiries with respect to the consultation that had occurred. Therefore, this decision also highlights the importance of pro-active due diligence by proponents in respect of resource development transactions and permitting processes.

This decision does not close the door to successful claims by proponents against the Crown, as each case will be fact-specific and there may be other legal bases upon which to claim damages. An interesting case to watch is Northern Superior Resources Inc. v. Ontario, which concerns a $125 million claim against Ontario by a Sudbury-based mining company, Northern Superior Sources (NSR). Among other things, NSR alleges that Ontario breached its duty of good faith and implied statutory duty of care to properly discharge Ontario's constitutional obligations to consult with affected First Nations. NSR claims that Ontario failed to warn NSR of its unstable relationship with affected First Nations and potential overlapping claims. NSR also alleges that Ontario breached its duty of good faith, duty of fairness and implied statutory duty of care under the Mining Act by creating the mineral exclusion zone. Ontario has denied all allegations and the matter is scheduled to go to trial later this year.

Footnotes

[1] 2015 BCCA 89, [2015] B.C.J. No. 331 (C.A.).

[2] 2013 SCC 26.

[3] Moulton Contracting Ltd. v. British Columbia, 2013 BCSC 2348.

[4] Moulton Contracting, at para. 55.

[5] 2014 SCC 71. McCarthy Tétrault's article on Bhasin v. Hrynew is available here.

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
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
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