The Ontario Superior Court of Justice recently dismissed
Northern Superior Resources Inc.'s claim against the Ontario
Crown for business losses stemming from lost access to mining
claims in the traditional territory of the Sachigo Lake First
Nation (the First Nation), allegedly resulting from the Crown's
breach of its duty of care around the duty to consult. Northern
Superior comes less than a year after the British Columbia
Court of Appeal's decision in Moulton Contracting Ltd. v
British Columbia, where a project proponent unsuccessfully
sought damages in both contract and tort for business losses
flowing from the erection of a blockade by indigenous individuals
dissatisfied with the level of consultation relating to the
project.
Northern Superior partnered with the First Nation to explore a
possible gold mining opportunity on the First Nation's
traditional territory. It was a seven-year partnership that
degraded in the final two years, ultimately terminating at the
request of the First Nation who decided the relationship was no
longer in its interest.
In response to the termination of the partnership, Northern
Superior brought an action against the Crown alleging Ontario owed
it a duty, the failure of Northern Superior's relationship with
the First Nation was the result of a breach of that duty, and
Northern Superior should be compensated accordingly.
Constitutional argument
Northern Superior grounded its argument, in part, in section 35
of the Constitution, claiming that the Crown failed in its
constitutional responsibilities and that those responsibilities
benefit not just First Nations but also third parties whose
interests may be impacted by that failure. The evidence before the
court was that other than letters to Northern Superior emphasizing
the importance of consultation, the Crown was uninvolved in the
relationship between Northern Superior and the First Nation until
after the relationship terminated.
The court was quick to reject Northern Superior's argument,
stating that duties created by section 35 are owed to the First
Nation, and a corresponding duty to Northern Superior would be
incompatible with the Crown's obligations to indigenous
peoples:
It cannot be that the Crown would, at the same time, owe an
independent duty to a mining company to work to protect its
exploration rights in the face of a legitimate constitutional
concern of a First Nation. The Crown would be in the untenable
position of being required to serve two opposing masters, each
insisting it can rely on one of two contradictory responsibilities.
In such circumstances, it would not be a matter for tort law. The
constitutional rights and concerns of the First Nation would
govern. (para. 51)
The court held that even though there is a need for balance between indigenous interests and other societal interests, this balancing does not amount to a legal right and the province did not have a fiduciary responsibility to any company that holds mining rights that challenge the treaty or aboriginal rights of a First Nation. Ultimately, the court found that the duty to consult is not owed to third parties and does not provide third parties with any legally enforceable benefit.
Other arguments rejected
Northern Superior also alleged Ontario breached its duty of good
faith, duty of fairness and implied statutory duty of care under
the Mining Act. The court determined that Section 4(3) of
the Mining Act limited the Crown's liability in tort
for misconduct to those circumstances where it is demonstrated that
the alleged neglect or default was executed in bad faith. As that
was not alleged here, there was no basis to impose liability on the
Crown under the statute.
With regard to liability arising from the Crown's breach of its
duty of care, the court found that given the lack of involvement of
the Crown by the parties until after the breakdown of the
parties' relationship, there was not sufficient proximity
between the Crown and Northern Superior to satisfy the first branch
of the Anns test.
This case was distinguished from Behn v Moulton Contracting
Ltd.,1 where the duty to consult was held to be
triggered by real or constructive knowledge on the Crown's part
of the potential existence of an aboriginal right or title and
contemplates conduct that might adversely affect it. In this case,
the court found that the Crown was not aware of the difficulties
between Northern Superior and the First Nation, or any potential
adverse effect of Northern Superior's activities on aboriginal
rights or title, until after the relationship had broken down, by
which time Northern Superior was unwilling to contemplate a
resolution other than litigation.
The court also concluded that, by rejecting the Crown's offer
to facilitate a resolution between Northern Superior and the First
Nation, Northern Superior "gave up any possibility of
succeeding in an action before the court regardless of the cause of
action," noting "[b]oth parties must take a reasonable
and fair approach in their dealings" (para 96).
Implications
While the court was quick to reject Northern Superior's
submission that it was owed any duties pursuant to section 35 of
the Constitution, the decision did not close the door on the Crown
being held liable to a project proponent for negligence where the
Crown played a more active role in the relationship between the
project proponent and the First Nation.
This decision highlights the important role the Crown can play in
assisting project proponents with consultation and the extent to
which courts may expect proponents to avail themselves of such
assistance before seeking legal redress.
Footnote
1 [2013] 2 SCJ 227 (SCC).
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