Supreme Court of Canada Denies Leave to Appeal in Moulton Contracting Ltd.
The Supreme Court of Canada recently denied leave to appeal in
Moulton Contracting Ltd. v British Columbia, confirming
the BC Court of Appeal's decision (2015 BCCA 89) overturning an award of
$1.75 million in damages against the Province of BC for failing to
inform Moulton Contracting Ltd. of the complaints of certain
members of the Fort Nelson First Nation (FNFN) regarding two Timber
Sales Licenses granted by BC to Moulton.
Moulton sued the Province for losses suffered as a result of a
blockade on Moulton's logging access road. The BC Supreme Court
found the Province liable for failing to inform Moulton of the
threat against its logging operations by an individual member of
the FNFN based upon breach of an alleged implied term in the
Licenses and negligent misrepresentation.
On appeal, the Court held that the wrong legal test for implying
a term into the Licenses was applied. The test is not what
reasonable parties would have intended, but what the actual parties
to the agreement actually intended. The Court held that Moulton and
the Crown did not intend the Licenses to contain a term that the
Crown was to keep Moulton informed of any dissatisfaction by the
FNFN of the consultation undertaken by it. The Court also rejected
Moulton's argument that the recently recognized duty of good
faith and honesty in contractual performance (see Bhasin v
Hrynew,2014 SCC 71) supported the implied
The Court further overturned the trial judge's finding on
liability for negligent misrepresentation. There was no express
representation made by the Province to Moulton, nor was there any
evidence that Moulton relied upon and was induced to purchase the
Licenses by a continuing representation regarding First Nations
The Supreme Court's denial of leave indicates that courts
will continue to be reluctant to impose liability against the Crown
where damages have been incurred due to allegations of a failure to
consult. The denial of leave also confirms that the duty of good
faith and honesty in contractual performance will not apply broadly
to import issues of good faith and honest contractual performance
to every situation. However, the decision is based on the
particular facts of the case and does not foreclose future awards
of damages should the Crown's failure to keep companies
informed of any potential threat to their operations due to
complaints about consultation result in a disruption of operations.
It likely remains good practice for companies to review the Crown
consultation undertaken and periodically contact the government to
keep informed of First Nations relations in order to avoid the
potential for business disruption or prolonged litigation.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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