In its recent decision in Moulton Contracting Ltd. v. British
Columbia, the British Columbia Court of Appeal (Court)
held that the Province of British Columbia (Province) can
contractually exclude liability for losses incurred by forestry
companies and other licensees due to third parties'
interference with the licensees' operations. The Court also
dismissed the claim by Moulton Contracting Ltd. (Moulton) that the
Province had impliedly represented that it had discharged its duty
to consult First Nations before issuing timber sale licences
(Licences) to Moulton. This case serves as a reminder to would-be
resource developers that a licence to harvest provincial resources
is necessary but not always sufficient to carry out the intended
Moulton obtained the Licences from the B.C. Ministry of Forests
(Ministry) to harvest timber in the territory of the Fort Nelson
First Nation (First Nation) within the Treaty 8 area of
northeastern B.C. The First Nation did not contest the validity of
the Licences. However, months before Moulton started its
operations, members of the First Nation—the Behn family, who
claim aboriginal and treaty rights within the proposed logging
area—told the Ministry that they would "stop the
logging." The Ministry did not inform Moulton of this threat
until two months later, after Moulton had started its harvesting
operations. Subsequently, the Behns carried out their threat,
erecting a camp that effectively blocked Moulton's access to
its operations. Within weeks of the blockade, Moulton released all
of its workers and its equipment was repossessed the following
The British Columbia Supreme Court held that the Province was
liable to Moulton for C$1.75-million in damages for failing to warn
Moulton of the threatened blockade. The Court of Appeal overturned
COURT OF APPEAL ANALYSIS
Moulton characterized its claim two ways:
Breach of contract: Moulton alleged that the
Province breached implied terms of the Licences that the Province
would provide Moulton access to the lands under licence, and that
the Province had discharged its duty to consult all relevant
aboriginal groups before issuing the Licences.
Negligent misrepresentation: Moulton argued
that the Province breached its duty to inform Moulton of
circumstances known to the Province that could well interfere with
Moulton's ability to exercise its Licence rights.
Fundamentally, the Court upheld the validity of the limitation
clause in the Licences, which provided that: "The government
is not liable to the Licensee for injuries, losses, expenses, or
costs incurred or suffered by the Licensee as a result, directly or
indirectly, of an act or omission of a person who is not a party to
this Licence, including but not restricted to an act or omission of
a person disrupting, stopping or otherwise interfering with the
Licensee's operations under this Licence by road blocks or
The Court concluded that this clause excluded any governmental
liability for the blockade, in particular any liability for failing
to warn Moulton of the Behns' intentions.
A licence to harvest provincial resources grants the holder
authority to harvest the specified resources, but is not a
guarantee that the holder will be able to do so. Practically
speaking, resource developers seeking licences from provincial
governments have very limited scope to negotiate the legal terms of
the licence. The terms offered by the Province may exclude
governmental liability, as in this case. As a result, companies may
seek to protect themselves through other means, such as (a)
maintaining close contact with staff at the relevant provincial
ministry, requesting frequent updates; and (b) engaging with local
First Nations to develop a respectful and open relationship, in
order to learn about their interests and concerns. A licensee
cannot count on government to volunteer information, even when it
is directly relevant to the licensee's ability to exercise the
rights granted under the licence.
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.
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