In Moulton Contracting Ltd. v. British Columbia, 2013 BCSC 2348, a BC Supreme Court found that a private company could rely on permits to claim damages from the Crown when members of a First Nation blockaded a road and prevented the company’s access to timber lots covered by the permits. In light of the case, those relying on permits to develop resources on lands affected by claims of Aboriginal rights and title should review negotiate the terms of pending permits with attention to issues flowing from the duty to consult.

Justice Saunders found the Province of British  Columbia liable for $1.75 million in damages to Moulton Contracting Ltd. (“Moulton”) for breach of both an implied contractual term and an implied representation associated with Timber Sale Licences (“TSLs”) the Ministry of Forests (“MoF”) had issued to Moulton. Moulton had lost the opportunity to secure other logging contracts when George Behn and members of his family (the “Behns”), members of the Fort Nelson First Nation (“FNFN”), blockaded access to Moulton’s cut blocks.

Justice Saunders found that given the Crown must know that conflict could arise if consultation was not sufficient, for business efficacy, the TSLs must have contained two implied terms:

  1. That the Province had engaged in all necessary consultation with affected First Nations, and had discharged its duty to consult;
  2. That the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as the Province had disclosed to Moulton Contracting (para. 291).

Justice Saunders found that FNFN’s lack of capacity meant consultation was not meaningful and MoF owed a duty to delay both the Amendment and the TSLs until the FNFN’s concerns had been addressed.

However, there was not a sufficient causal connection between the insufficient consultation and the Behn’s blockade. Mr. Behn’s August 31, 2006 letter to MoF could be read as opposition to all industrial activity in the area. On the balance of probabilities, Mr. Behn was unlikely to have been satisfied by any level of consultation and Moulton’s losses did not flow from the inadequate consultation. Moreover, the Blockade Exemption relieved the Province of liability even if the Province was at fault.

Justice Saunders did find that the Province had breached the implied term that it was not aware of any First Nations expressing dissatisfaction with its consultation. MoF did not inform Moulton of Mr. Behn’s threat at a critical time when Moulton could have pursued other contracts. The Province was concurrently liable in negligence, based on an implied continuing representation.

The court found no liability on the part of either the Behns or the FNFN.

Following this decision, it is likely that Crown agencies will draft permits to exclude liability for inadequate consultation and the failure to warn. Proponents negotiating permits should pay particular attention to these clauses.

 

Other Author

Sean Jones

Expertise

Energy
Environmental
Environmental Law