By: Zachary Miloff
On February 26, 2015, the British Columbia Court of Appeal (“the Court”) overturned a trial judge’s order that the Province of British Columbia (“the Province”) pay logging contractor Moulton Contracting Ltd. (“Moulton”) a sum of $1.75 million in damages for the Province’s failure to disclose Fort Nelson First Nation’s (FNFN) dissatisfaction with the Province’s lack of meaningful consultation .
Background
The Province had issued timber sale licences (TSLs) to Moulton over territory traditionally assigned to the Behn family, members of the Fort Nelson First Nation. The Behn family blocked access to the license area and the logging company brought an action claiming relief against the Crown. A member of the FNFN had informed an employee of the province that timber harvesting in that area would constitute an infringement of aboriginal and treaty tights, and was therefore intending to “stop the logging”. The province only informed Moulton of this threat two months later, after they had already commenced logging, thus failing to inform them in a timely manner.
While a very complex fact pattern, the judgement turned on the finding of an implied term in the TSLs. Saunders J held that the Province failed to fulfill its duty to consult with the FNFN, and was liable for breach of an implied contractual term that, “the province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province” . Liability could also be made in tort on the basis of an implied continuing representation of the same term. The Court established that the Province knew or ought to have known that the Behns contested the validity of the TSLs and were indeed threatening to block physical access to the area. The Court affirmed that if Moulton had been advised of the threat, they would not have pursued the TSL, and would instead had pursued other contracts.
The Appeal
The BC Court of Appeal overturned the trial judge’s decision, denying crown liability to Moulton. The Court found that the trial judge should not have implied a term into the timber sale licenses where the parties never actually indented to agree to such a term. Further, the Court did not support liability for negligent misrepresentation for an implied continuing representation in the same terms.
No Implied Term (Dissatisfaction Term)
The Court reasoned that the implied term was inconsistent with the actual terms as agreed.
Moreover, the Court cited specific clauses in the licenses intended to limit the liability of the Province in the event that the First Nations were dissatisfied with the consultation. These clauses referred explicitly to:
1) The right of the Crown to vary or suspend the licenses in the event that a court determined operations would unjustifiably infringe an Aboriginal right or title, or a Treaty right
2) The limited liability of the Crown in the event of costs incurred as a result of interference with operations “by road blocks or other means”
No Negligent Misrepresentation
Likewise, the Court found that the trial judge erred in concluding that the Province was liable for breach of an implied continuing representation of the same term. The Court affirmed that the Province was under no obligation to Moulton to pass on information of relevance regarding their ability to access the license areas. The terms of the licenses had specifically exempted the Province from liability for losses arising out of acts or omissions that interfered with Moulton’s access to the timber harvest areas . This means that the Province was not liable to Moulton for failing to inform them of the First Nation’s dissatisfaction with consultation and its intention to “stop the logging” .
Why this Case Matters
Although the Court had different reasons to refute the implied term, I suggest that in this more modern era of development and following relevant Supreme Court of Canada directions concerning infringement and impacts on Indigenous rights and lands, the satisfaction, partnership or consent of First Nation parties is not to be “implied”. Instead it is now an express requirement to ensure in each case that the honour of the Crown has been upheld and the s. 35 rights have been respected. The Crown, Proponents and First Nations should be in closer consultation to avoid misunderstandings and the complex analysis we see in Moulton Contracting of implied terms, silence and other contractual considerations.
Moreover, the Crown should not be able to use limitation of liability clauses to contract out of its obligation of honour and the constitutional duty to consult. The Crown exemption from liability would certainly have been challenged at the Supreme Court of Canada for the unconstitutionality of the contractual terms. However, we must wait to know the limits of contractual exemptions from Crown liability for failure to consult as application for leave to appeal to the Supreme Court of Canada was dismissed in October 2015.