Court of Appeal Decision of the Week

Narrowing Crown Liability Arising from Parties Unhappy with First Nations Consultation

Case: Moulton Contracting Ltd. v. British Columbia, 2015 BCCA 89

Keywords: Implied terms, negligent misrepresentation, continuing representation, consultation

Synopsis: The Province of BC sold two timber sale licenses to Moulton Contracting. The Behn family, most members of Fort Nelson First Nation, set up blockades on access roads to prevent logging. The trial judge held that the Province had impliedly promised and represented to Moulton that it had engaged in all necessary consultation with First Nations. After entering into the licenses, George Behn told an employee of the Province he intended to “stop the logging”. The Province did not inform Moulton of this threat until two months later, after Moulton had started logging. Shortly after, a blockade went up preventing Moulton from logging. The trial judge found the Province liable for failing to inform Moulton of Behn’s threat. He awarded damages of $1,750,000 to Moulton for lost opportunities to enter into alternative logging contracts.

If the style of cause looks familiar, it’s likely because of this case’s protracted procedural history. Moulton started the action in November 2006. It then worked its way up to the Supreme Court of Canada on a motion to strike pleadings. Members of the Aboriginal community raised the defence that the issuance of the logging licences breached the duty to consult and treaty rights. The issue at the SCC was whether the individual members had standing to assert collective rights in defence — the Court held that they did not. Only the community could invoke such rights. That decision came out May 9, 2013. The pace picked up and the trial judge released his reasons for judgment on December 23, 2013.

Importance: With respect to Aboriginal interests, the SCC left open the possibility that individual members may be able to assert certain Aboriginal or treaty rights — litigation for another day. Before the B.C.C.A., the issue was no longer focused on Aboriginal and treaty rights, but instead on contractual rights. The B.C.C.A. decision narrows Crown liability to third parties flowing from consultation issues and confirms the applicability of liability exemption clauses in this regard. The Court of Appeal found that there was no implied term of the timber sale licences as to the Provinces knowledge with respect to First Nations expressing dissatisfaction with the consultation process. There was simply no evidence showing that the parties intended to agree such a term. Further, there was no negligent misrepresentation as the Province did not have a duty to inform Moulton of the details of the consultation process (or First Nations dissatisfaction with it). Finally, the Court upheld the exemption clause in the license which “expressly provides that Province is not liable for any losses suffered by Moulton as a result of an act of a third party, including any act or threat to act that interferes with accessing the timber harvest areas” (para. 106). Given the outcome for Moulton, this case may give pause to businesses entering into resource development agreements with the government. At the very least, it would be worthy of review prior to entering the juridical rabbit hole of litigation against the government.

Counsel for the Appellant: Karen Horsman, Q.C. & Joel Oliphant (Ministry of Justice, Vancouver & Victoria)
Counsel for the Respondent, Moulton Contracting Ltd.: Chuck Willms & Bridget Gilbride (Fasken Martineau DuMoulin LLP, Vancouver)
Counsel for the Respondent, Chief Liz Logan and Fort Nelson First Nation: Allisun Rana (Rana Law, Calgary)

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Posted: Wednesday, March 04, 2015