The Newfoundland and Labrador Court of Appeal set aside a perpetual injunction granted by the chambers judge in 2012 arising from a one-day protest by members of the appellant NunatuKavut Community Council in 2011. The applications judge erred in law in granting the injunction. The Court of Appeal also provided guidance in regards to how issues surrounding the Crown’s duty to consult Aboriginal peoples should be considered in an injunction application.

In 2011, members of the appellant NCC gathered at the intersection of the Trans Labrador Highway and a forestry access road leading to the construction site of the Muskrat Falls hydro development. The proponent of the Muskrat Falls development is Nalcor Energy, a provincial Crown corporation. The NCC members were protesting the lack of progress in resolution of their Aboriginal land claims. There was some dispute as to the activities of the NCC members that day, but the Court held that they mostly consisted of approaching drivers to persuade them from proceeding to the construction site. Approximately five vehicles were either persuaded or prevented from proceeding to the site.

Nalcor Energy obtained an ex parte interim injunction to enjoin the picketing activities. The matter later came on for final hearing before the applications judge who granted a perpetual injunction in wide terms enjoining the NCC, its agents and “any person having notice of this order” from interfering with access to the access road and construction site, approaching within 50 meters of the road, as well as setting aside a “safety zone” where NCC members could carry on information picketing activities.

The Court of Appeal set aside the perpetual injunction. Chief Justice Green noted that the proceeding commenced by way of an originating application, rather than a statement of claim, and that seemed to have deflected the parties from recognizing that a perpetual injunction can only be granted after a full trial has been held. Nalcor Energy had not established a cause of action against the NCC and, if so, that a perpetual injunction was an appropriate remedy.

Although it was not necessary to deal with other issues raised in the appeal, due to the finding that the trial judge erred in law in granting the perpetual injunction, the Court of Appeal decided to comment on these matters. In particular, both Chief Justice Green (with White J.A. concurring) and Rowe J.A. discussed the relevance of “duty to consult” claims in an injunction hearing.

The NCC asserted that both the Crown and Nalcor (as a Crown agent) owed a duty to consult and accommodate their interests. They cited the decision of NunatuKavut Community Council Inc. v. Newfoundland and Labrador Hydro-electric Corp., 2011 NLTD(G) 44 as authority for the proposition that Nalcor, as a Crown agent, was subject to this duty. Chief Justice Green, for the majority, assumed that the duty applies to Nalcor. (As discussed below, Rowe J.A. questioned this approach).

The NCC relied upon the Ontario Court of Appeal decision in Frontenac Ventures Corp. v. Ardoch, 2008 ONCA 534 on the relevance of the Crown’s duty to consult in injunction hearings. In that case, the Ontario Court of Appeal held that when an injunction would create a “protest-free zone” for contentious private activity, the court must be careful to ensure that the Crown has fully and faithfully discharged its duty to consult. The NCC submitted that this case requires the Court to address three questions before granting injunctive relief:

… (i) whether every effort has been made by the court, to encourage consultation, negotiation and accommodation; (ii) whether the party with the duty to consult and accommodate has fully and faithfully discharged its duty to consult; and (iii) whether every effort has been exhausted to obtain a negotiated or legislated solution to the dispute before it.

The majority held that this argument went too far. The comments of the Ontario Court of Appeal in Frontenac Ventures were in the context of an interlocutory injunction, and the principles relating to irreparable harm and the balance of convenience, and do not stand for the propositions stated by the NCC. Further, the more recent Supreme Court of Canada decision in Behn v. Moulton Contracting Ltd., 2013 SCC 26 “works against the appellants’ propositions”. The Supreme Court of Canada specifically dealt with the use of “self-help remedies” by Aboriginal groups such as blockades. Chief Justice Green stated:

I agree that Behn is not congruent with the instant case; however, its finding that it is an abuse of process to raise a duty to consult as a defence to a tort claim as a means of collaterally attacking Crown authorizations which could have been, but were not, attacked at the time of their issuance is inconsistent with the notion advanced by the appellants that an examination of whether every effort has been made to ensure the duty to consult has been complied with and satisfied must always be engaged in as a precondition to the granting of an injunction. In that sense, Behn is relevant to the current case.

I conclude, therefore, that the principles applicable to the granting of an injunction are no different just because aboriginal claims for consultation and accommodation may be involved in the issues regarding the cause of action being asserted and the specific remedy being sought. There is no pre-condition to application of the general principles for granting or refusing an injunction that the claimant satisfy the court that the duty to consult and accommodate has been exhausted and that the court must take steps to facilitate such consultation and accommodation. If there were such pre-conditions, a defendant resisting a remedy for vindication of claimed rights would always be able to stymie, or at least significantly delay, an injunction by simply asserting that the duty to consult has not been exhausted. That result would run counter to reassertion in Behn that the duty to consult does not give aboriginal peoples “a veto” (paragraph 29).

The majority held that the Crown’s duty to consult is not completely irrelevant to injunction matters. Chief Justice Green stated that the question of whether the Crown or the Crown agent have made efforts to comply with the duty to consult and accommodate may be relevant to the exercise of the Court’s discretion to deny an injunction on discretionary grounds. In particular, if the Crown patently failed to observe the duty to consult, then the “clean hands” doctrine may apply.

The majority warned that allowing the issue of the Crown’s duty to consult to be considered in injunction hearings should not lead to a “full trial within a trial”. Further, it should be remembered that a failure to consult would not automatically equate to a lack of clean hands. It would only be in egregious cases, when there has been an obvious failure to comply with the duty to consult, that the “clean hands” doctrine can be raised. Chief Justice Green stated:

The impact of a clear failure to observe the duty to consult and accommodate in an egregious case would, of course, have to be considered as well against the underlying rationale for the duty which is to encourage dialogue, discussion and negotiation as a means of resolving differences, rather than using self-help confrontation or legal adjudication.

Such an approach would not encourage self-help remedies. Further, it would only be after a cause of action has been established, and the Court considers whether a perpetual injunction is appropriate, that the clean hands doctrine arises.

The applications judge did not directly address the issue, but it can be inferred that he did not find that the Crown acted in bad faith when dealing with the NCC. The majority stressed that, if the clean hands doctrine was relevant in this case, it would not be the obligation of Nalcor to prove good faith, but the onus would be on the NCC to show that bad faith affected the conscience of Nalcor, and was a relevant consideration. The majority held that it was not necessary to address the issue in this case.

The majority provided a lengthy discussion about the remedy of a perpetual injunction, and when it would be appropriate. It is a private law remedy that can only be granted following a determination that some cause of action has been proven or threatened. The remedy is also prospective, so there must be evidence of a sufficient risk that the acts complained of will continue in the future. The concepts of irreparable harm and the balance of convenience, used in the test for interim and interlocutory injunctions, are generally irrelevant. There must also be a consideration of the availability of an effective alternative remedy. The Court can take into account applicable equitable discretionary considerations such as clean hands, laches and hardship. Further, the Court should consider whether terms should be imposed on the claimant, and must tailor the scope of the order.

In this case, the perpetual injunction must be set aside as no cause of action had been established. There was also very little basis for the applications judge to conclude that there was a sufficient risk that the activities of the NCC would continue. The protest lasted one day and had been voluntarily stopped before the ex parte injunction. The scope of the injunction order was also too broad.

In a minority opinion, Rowe J.A. agreed that the appeal should be allowed, and the perpetual injunction should be set aside, on the basis that Nalcor failed to establish a cause of action. That is the ratio of this case. He also commented that the terms of the injunction were grossly disproportionate.

Rowe J.A. differed with the majority on the issues relating to the Crown’s duty to consult. Such a duty is borne by governments and arises from the honour of the Crown. He noted that the majority did not find it necessary to decide whether Nalcor is an agent of the Crown for the purposes of applying the duty to consult, or whether it was more akin to a commercially independent third party. Since there was a 2011 decision of the Trial Division that Nalcor does have a duty to consult, Rowe J.A. held that remaining silent on the issue may be misread as implicit affirmation of that decision.

In the 2011 case, the trial judge noted that Nalcor was required to consult with Aboriginal groups pursuant to an environmental assessment process. The trial judge then stated Nalcor, like the provincial and federal Crown, owed a duty to consult in good faith and accommodate where necessary. Rowe J.A. commented:

In my view, this is simply a conclusionary statement, one made without reference to the principles underlying Haida Nation. Nalcor does not wield governmental authority. It has been delegated no power to decide matters that governments do. It implements policy, rather than making it. It operates under ministerial discretion, rather than itself exercising such discretion. It is the regulated, not the regulator.

Rowe J.A. noted legislation that expressly made Nalcor an agent of the Crown, but also provided that Nalcor would not be an agent when entering into contracts for the Muskrat Falls project. The issue of whether Nalcor is a Crown agent, for the purposes of the duty to consult, is therefore unclear. Rowe J.A. queried:

For many purposes, Nalcor, while owned by government, operates as a commercial enterprise. Like a private sector proponent, Nalcor had to undergo environmental assessment, seek permits and be subject to conditions for such permits when received. Given that Nalcor does not exercise governmental control over lands claimed by NunatuKavut, can it properly be said that Nalcor bears a duty to consult and accommodate?

The fact that Nalcor was directed to consult with Aboriginal groups in the environmental assessment context does not change Nalcor’s status in relation to the duty to consult. If the duty to consult arose in such circumstances, then every private party that is directed to consult would bear the duty, despite the absence of the necessary link to the honour of the Crown. Third parties clearly do not have that duty.

Rowe J.A. also disagreed with the majority on the relevance of the Crown’s duty to consult in injunction hearing, and the majority’s use of the “clean hands” doctrine. He held that, as a matter of judicial policy, this issue should not be taken into account. The focus must be on the tortious conduct giving rise to the injunction application. If the adequacy of the consultation process was a relevant factor, then “we can expect that almost every application for such an injunction will be engulfed by evidence and hearings … on the process of consultation and accommodation”. This would consume vast resources and lead to considerable uncertainty. Whether the Crown failed to discharge its duty to consult should be dealt with in a separate proceeding for that purpose, and would involve the Aboriginal group seeking declaratory relief or setting aside an authorization granted by the government. Rowe J.A. held:

On the facts of this case, if NunatuKavut wishes to assert that the provincial Crown has failed properly to consult and accommodate its claim to aboriginal title, then it can bring a proceeding to that effect. To litigate whether the duty to consult and accommodate has been met within a proceeding for an injunction is to unduly complicate and lengthen injunction proceedings and to deflect those proceedings from their principal purpose.

Despite the majority’s warning that the Crown’s duty to consult should only be considered in egregious cases, so that there would not be a “trial within a trial”, Rowe J.A. concluded that lawyers would use the consultation issue as a “Hail Mary pass” in the hopes of giving them the touchdown they need.

The appeal brought by the NCC was therefore allowed with costs, and the injunction was dissolved without prejudice to Nalcor to commence fresh litigation based on further events.

http://www.canlii.org/en/nl/nlca/doc/2014/2014nlca46/2014nlca46.html

Author

Scott Kerwin 
SKerwin@blg.com
604.640.4029

Expertise

Aboriginal Law