In Carhoun & Sons Enterprises Ltd. v. Canada
(Attorney General), the British Columbia Court of Appeal
allowed a lawsuit to proceed against the federal government by a
private developer for losses caused by delays in the environmental
approvals process. While the suit may not ultimately succeed, the
court confirmed that the government could be liable and that the
review of applications for environmental approvals may entail a
consideration of the proponent's (business) interests,
especially in circumstances where the legislated goal includes the
promotion of economic development.
Carhoun & Sons Enterprises Ltd. (Carhoun) applied for an
authorization under section 35(2) of the Fisheries Act
from Fisheries and Oceans Canada (DFO) to fill in ravines for a
private commercial development. In considering the application, DFO
was required to conduct an environmental assessment screening under
the Canadian Environmental Assessment Act (CEAA). The DFO
initially advised Carhoun that the authorization would not be
issued because it would result in unacceptable harm to fish habitat
and as a result, the DFO would not be conducting the CEAA
screening. After two further requests, DFO reconsidered its
decision, undertook the screening and eventually issued the
Fisheries Act authorization. It took 993 days between the
initial application and the receipt of the authorization. However,
by the time the authorization was issued, financing for the project
Carhoun commenced a lawsuit against the federal government for
negligence and misfeasance in public office, claiming economic loss
from the unreasonable delay in completing the environmental
assessment process. The government attempted to have the
company's action dismissed before it could go to trial. The
British Columbia Supreme Court dismissed the government's
motion, holding that the case could proceed.
COURT OF APPEAL DECISION
On appeal, the federal government argued the authorization
process was governed by public legislation "where the purpose
is to protect the environment and federal fishery resources and not
to advance the profit-seeking interests of developers" and
that regulators "do not owe a duty of care to those seeking to
profit at the expense of the environment."
The Court of Appeal disagreed, confirming that government is not
exempt from civil liability and that—based on the legislated
goals in CEAA regarding economic development—the government
is to conduct environmental assessments having regard to multiple
interests, including both the public interest in maintaining
healthy fisheries and the private interest in efficiently
processing an application. (We note the new CEAA 2012 contains an
identical clause in the purpose statement).
The court ruled that the interests of environmental protection
and private interest in economic development are not
irreconcilable, and that the law does not expressly or implicitly
prohibit the government from considering a private company's
interests. The court allowed the case to proceed to trial.
Although it may be that Carhoun is not ultimately able to prove
the necessary requirements for a successful claim against the
government at trial, the significance of the court's ruling
that private interests are relevant to the manner in which
environmental assessments and Fisheries Act authorizations
are undertaken is important and significant.
Historically, proponents have experienced delays with
environmental approval processes. If nothing else, the prospect of
a successful claim for losses arising from such delays may
encourage more rigour in processing applications and changes to
policy to impose (more) mandatory time-frames.
As a practical matter, proponents can manage the delay risk by
planning and applying for environmental approvals at an early stage
in the project, monitor and work closely with the regulator during
the application process, and have contingency plans for delays that
may be experienced, despite all best efforts.
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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