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Court of Appeal for British Columbia Decisions - Summaries


British Columbia (Minister of Forests, Lands and Natural Resource Operations) v. Western Forest Products Inc. and Forest Appeals Commission

Decision Date: February 23, 2016

Court: B.C.C.A., Justices Saunders, Chiasson, and Harris

Citation: 2016 BCCA 80

Western Forest Products Inc. (“Western”) appealed a decision of the BC Supreme Court which overturned a decision of the Forest Appeals Commission (the “Commission”). The Commission’s decision concerned Western’s appeals against two stumpage determinations issued by the Timber Pricing Coordinator (the “Coordinator”), Coast Forest Region, Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). The determinations set the stumpage rate that Western would pay on Crown timber harvested under cutting permit 300 (“CP 300”), which covered an area within a tree farm licence held by Western.

Stumpage rates in the Coast region of the Province are determined in accordance with the policies and procedures in the Coast Appraisal Manual (“CAM”), which has the force of law. Under the CAM, stumpage rates are affected by certain variables. The variable at issue in this case was the amount that Western could claim for estimated road development costs.

Western had entered into an extended road amortization agreement (the “Agreement”) with the Province, for the apportionment of road costs between two CPs: one that Western applied for around the time when the Agreement was signed, and a CP that Western would apply for in the future, which became CP 300. Western intended to build the road to access both CP areas for harvesting. When the Agreement was made, the road had not been built. The Agreement indicated the apportionment between the two CPs as both percentages and dollar amounts.

The road was built when Western applied for CP 300, and the costs were higher than estimated. Western sought to use the higher costs, which would have had the effect of reducing the stumpage payable for timber harvested under CP 300. Western requested that the Ministry agree to amend the Agreement to reflect the updated costs. The Ministry refused. The Ministry’s position was that the Agreement provided that the original estimated costs would apply to the second CP. The Coordinator refused to amend the Agreement, and the Coordinator calculated the stumpage rates for CP 300 using the dollar amounts set out in the Agreement. Western appealed to the Commission.

In its appeal to the Commission, Western’s main arguments were: (1) the Coordinator determined the stumpage rates based on information that was no longer accurate, contrary to section 105.1 of the Forest Act (the “Act”) and the CAM; (2) the Ministry exercised its discretion unreasonably when it declined to amend the Agreement to account for the more accurate information that was available; and, (3) the Agreement required the Coordinator to determine the cost allowances applicable to CP 300 based on the information available when Western applied for CP 300.

In Western Forest Products Inc. v. Government of British Columbia (Decision Nos. 2013-FA-001(a) and 002(a), issued December 2, 2013), the Commission held that, as a specialized tribunal with expertise in forestry legislation, and de novo powers in hearing appeals, it was not obligated to give deference to the Coordinator’s decisions. Next, the Commission found that section 105.1 of the Act requires licensees to submit accurate data to the Ministry for stumpage appraisal purposes, and that section 3.2 of the CAM, which authorizes the Ministry to review appraisal data for errors or emissions, is consistent with those accuracy requirements.

Turning to the nature of the Agreement, the Commission found that extended road amortization agreements are an integral part of the stumpage appraisal process. Therefore, the Commission’s jurisdiction in deciding stumpage appeals includes interpreting the Agreement, and considering whether the Ministry exercised its discretion reasonably in refusing to agree to an amendment of the Agreement.

Further, the Commission found that the Coordinator should have applied the percentages in the Agreement to the updated costs Western had provided for CP 300. The Commission found that the Agreement was unclear regarding whether the parties’ intention was to apply the percentages or the dollar amounts it specified. Given the lack of clarity, the Commission found that the Agreement must be read in the context of the CAM and the Act, which imply that the dollar values in the Agreement should be updated when the subsequent CP (i.e., CP 300) was appraised, to be current with the cost base of the CAM in effect at that time.

Finally, the Commission found that the Coordinator exercised his discretion in an unreasonable manner in refusing to amend the Agreement and apply the updated costs, which were the most accurate information available when Western applied for CP 300. His exercise of discretion was unreasonable because it was inconsistent with section 105.1 of the Act, the overall scheme of the CAM, and the objectives and intent of the governing legislation. Accordingly, the matter was remitted back to the Coordinator with directions to re-determine the stumpage rates for CP 300 using the updated costs, and to amend the Agreement accordingly.

The Province appealed the Commission’s decision to the BC Supreme Court. The Province raised four main issues in the appeal: (1) whether there was a reasonable apprehension of bias because the Commission member who decided the appeal is employed in the forest industry and his work includes lobbying the government on forestry matters such as stumpage rates; (2) whether the Commission exceeded its jurisdiction by reviewing the Ministry’s exercise of a contractual authority in relation to the Agreement; (3) if the Commission had jurisdiction to review the stumpage determinations, did it exceed its jurisdiction by failing to give deference to the Coordinator; and (4) whether the Commission erred in its interpretation of the CAM, the Agreement, and the Act.

First, the BC Supreme Court addressed the standard of review that applied to the Commission’s decision. The Court held that a standard of fairness, with no deference to the Commission, applied when considering the question of reasonable apprehension of bias. However, regarding the merits of the Commission’s decision, including the Commission’s interpretation of the Agreement, the CAM, and the Act, a standard of reasonableness applied. A decision is unreasonable if it is outside the range of acceptable or possible outcomes and is indefensible in respect of the law and facts in the case.

Turning to the substantive issues, the Court found that there was no reasonable apprehension of bias. The Court considered that almost all members of the Commission are part-time members who are not expected to give up their employment. The pool of potential members with the expertise to decide stumpage appeals is small, and consists of people who have worked in the forest industry or have close ties to the industry. The member in this case was employed in the forest industry for decades. His employment in the industry was known to the Government when it recommended him for appointment to the Commission, and his work had long involved some form of lobbying for changes to forest practices. He had not lobbied for amendments to the CAM or the appraisal manual that applies to the Interior region, and there was no evidence that he had a closed mind regarding the relevant provisions of the CAM or the Act.

In addition, the Court agreed with the Commission that the Agreement was an integral part of the stumpage appraisal process, and its terms were dictated by the CAM. Also, the Commission properly characterized the Coordinator’s refusal to amend the Agreement as an exercise of statutory discretion. However, the Court held that the Commission’s finding that the Agreement was unclear was unreasonable. The Court held that the Agreement indicated that the dollar amounts specified in it were to be included in the appraisals of both CPs, including CP 300, and this interpretation is consistent with the CAM. The Court also found that the underlying premise of the CAM and section 105.1 of the Act is that the licensee must submit accurate information when input from the licensee is required, and the information must only be accurate based on the standards set by the CAM. In addition, the Court held that the Commission should not have interpreted the accuracy requirement in section 105.1 of the Act to be a paramount and over-riding principle, because the CAM only permits reappraisals of stumpage rates in certain circumstances, and those circumstances did not apply in this case. Consequently, the Court concluded that the Commission’s interpretation of section 105.1 of the Act was unreasonable, and the Commission erred when it concluded that the refusal to amend the Agreement was inconsistent with section 105.1 and was an unreasonable exercise of discretion. The Court concluded that the Commission’s decision was not within the range of acceptable outcomes, and the matter was remitted back to the Commission for re-hearing.

Western appealed the BC Supreme Court’s decision to the BC Court of Appeal.

The Court of Appeal agreed with the BC Supreme Court that the standard of review was reasonableness in this case, because the Commission is a specialized tribunal and its task was to interpret its home statute and an agreement mandated by the CAM, which is subordinate legislation under that statute. However, the Court found that the standard of review was not significant in this case, because the Court agreed with the BC Supreme Court that the Commission’s interpretation was wrong.

Specifically, the Court found that section 105.1 of the Act requires licensees to use currently accurate appraisal data in submissions for the purpose of stumpage determinations. The requirement in section 105.1(2) that the licensee must supply accurate information when the information is submitted to the Ministry applies generally, and includes information required for stumpage determinations. This general provision does not override the provisions of the CAM that authorize an extended road amortization agreement to apportion costs between CPs. The provision of the CAM permitting the apportionment of estimated road development costs, section 5.3.2.1, does not create an exception to this requirement, but it is satisfied if the information submitted when an extended road amortization agreement is formed is accurate. Subject to the provisions of the extended road amortization agreement, the information submitted at that time is applicable to stumpage determinations for tributary CPs (in this case, CP 300). In the present case, the specific wording of the Agreement was not unclear, and did not override the regulatory scheme; it was consonant with it.

Accordingly, the Court of Appeal dismissed Western’s appeal.

British Columbia v. Canadian National Railway and Forest Appeals Commission

Decision Date: May 1, 2014

Court: B.C.C.A.; Justices Saunders, Groberman, and Willcock

Citation: 2014 BCCA 171

Her Majesty the Queen in Right of the Province of British Columbia (the “Province”) appealed a decision of the BC Supreme Court, which had dismissed the Province’s appeal of a decision issued by the Forest Appeals Commission (the “Commission”). The decision related to the amount of money that the Canadian National Railway Company (“CNR”) was obliged to pay to the Province as a result of causing a fire that damaged or destroyed Crown timber.

On July 29, 2005, hot metal fragments from the brakes of a train operated by Canadian National Railway Company (“CNR”) caused a wildfire. The fire destroyed 25,010.8 cubic metres of Crown timber. At the time of the wildfire, the Province had no plans to harvest the timber. In the Fall of 2006, the salvageable timber was harvested. A total of $4,874.80 in stumpage was paid for 19,809.79 cubic metres of timber.

In 2008, the Fire Centre Manager (the “Manager”), Ministry of Forests and Range (the “Ministry”), determined that CNR had contravened the Wildfire Act and the Wildfire Regulation in causing the fire. Section 27(1)(c) of the Wildfire Act and section 30(a) of the Wildfire Regulation provide that a cost recovery order may be issued when a wildfire is caused by a contravention, and if a cost recovery order is issued, the value of damaged or destroyed Crown timber must be calculated by ascertaining the amount of stumpage applicable under the Forest Act. The Manager ordered CNR to pay $254,680.38 for the damaged or destroyed Crown timber, which was 75 percent of the timber’s stumpage value at the time of the fire, as calculated by the Manager. CNR appealed to the Commission.

The issue before the Commission was the date on which to value the timber, which would determine the stumpage rate used to calculate the value of the timber. The Province argued that the value should be calculated using the stumpage rate that applied when the timber was damaged or destroyed by the fire, resulting in a value of $280,299.19. CNR argued that the value should be calculated using the stumpage rate that applied from April 2006 to 2009, based on a future date (sometime after the fire) when the timber would have been scaled or harvested, resulting in a value of $6,252.50.

In Canadian National Railway v. Government of British Columbia (Decision Nos. 2008-WFA-001(a) & 2008-WFA-002(a), issued June 27, 2011), the Commission determined that the amount of stumpage payable by CNR was $6,250.50. The Commission found that, under section 103(1) of the Forest Act, if a harvesting agreement had been in place, the damaged timber would have been valued based on the stumpage rate when the timber was scaled. The Commission also considered section 103(3) of the Forest Act, which describes the procedure for calculating the stumpage owing when a person “cuts, damages, destroys or removes Crown timber without authorization”. Section 103(3) contemplates using the stumpage rate that “would likely have applied to the timber” under section 105(1) of the Forest Act “if rights to the timber had been granted under an agreement entered into under” the Forest Act. The Commission interpreted this to mean that the applicable stumpage rate is the one that would have applied when the timber might have been harvested. The Commission concluded that, in this case, the appropriate stumpage rate is not the one that applied when the fire occurred, given that there were no plans to harvest the timber at that time. Rather, the appropriate stumpage rate is the one that would likely have applied when the timber was cruised or scaled, sometime after the fire. In addition, the Commission found that the Manager had no statutory authority to reduce the cost recovery order to 75% of the timber’s value. Accordingly, the Commission concluded that the cost recovery order should be for $6,252.50.

The Province appealed the Commission’s decision to the BC Supreme Court. In British Columbia v. Canadian National Railway, 2012 BCSC 1856, the Court held that the Commission’s conclusion on the valuation date was a reasonable exercise of its specialized expertise in relation to forestry statutes, and was also correct. The Commission reasonably concluded that the common law principles on damages did not apply, because the legislation creates a complete scheme for valuing lost Crown timber, and there is clear legislative intent not to follow the common law principles on damages. The Commission clearly and rationally explained its decision. Accordingly, the Court upheld the Commission’s decision.

The Province sought leave to appeal the Supreme Court’s decision, and the BC Court of Appeal granted leave (2013 BCCA 185).

On appeal to the BC Court of Appeal, the Province argued that the BC Supreme Court erred in declining to interfere with the Commission’s interpretation of section 103(3) of the Forest Act, and that the Commission’s interpretation was unreasonable and contrary to the plain meaning of the legislation. However, the Court of Appeal concluded that the Commission’s interpretation was reasonable. Given the regulatory processes surrounding the determination of stumpage rates, it was reasonable for the Commission to assess compensation from a future date when the timber could have been harvested, rather than at the time of the fire. The appeal was dismissed.

Her Majesty the Queen in Right of the Province of British Columbia v. Canadian National Railway and Forest Appeals Commission 

Decision date: April 24, 2013

Court: BCCA; Justice Hinkson 

Cite: 2013 BCCA 185

Her Majesty the Queen in Right of the Province of British Columbia (the “Province”) sought leave from the BC Court of Appeal to appeal a decision of the BC Supreme Court, which had dismissed the Province’s appeal of a decision issued by the Commission.

On July 29, 2005, hot metal fragments from the brakes of a train operated by Canadian National Railway (“CNR”) caused a wildfire. The fire spread to Crown land and destroyed 25,010.8 cubic metres of Crown timber. At the time of the wildfire, the Province had no plans to harvest the timber.

In the Fall of 2006, the salvageable timber was harvested. A total of $4,874.80 in stumpage was paid for 19,809.79 cubic metres of timber.

In 2008, the Fire Centre Manager (the “Manager”), Ministry of Forests and Range (the “Ministry”), determined that CNR had contravened the Wildfire Act and the Wildfire Regulation in causing the fire. Section 27(1)(c) of the Wildfire Act and section 30(a) of the Wildfire Regulation provide that a cost recovery order may be issued when a wildfire is caused by a contravention, and if a cost recovery order is issued, the value of damaged or destroyed Crown timber must be calculated by ascertaining the amount of stumpage applicable under the Forest Act. The Manager ordered CNR to pay $254,680.38 for the damaged or destroyed Crown timber, which was 75 percent of the timber’s stumpage value at the time of the fire, as calculated by the Manager. CNR appealed to the Commission.

In the appeal before the Commission, the parties agreed that the amount of stumpage applicable to the timber based on the rate that applied from July 1, 2005, to September 30, 2005, would be $280,299.19. The parties also agreed that the amount of stumpage applicable to the timber based on the rate that applied from April 1, 2006, to 2009 would be $6,252.50. The issue before the Commission was when to value the timber, which would determine the appropriate stumpage rate. The Province argued that the value should be calculated using the stumpage rate that applied when the timber was damaged or destroyed by the wildfire, which is the 2005 rate. CNR argued that the value should be based on the stumpage rate that applied on April 1, 2006, based on the date when the timber would have been scaled or harvested, which is the 2006 to 2009 rate.

In Canadian National Railway v. Government of British Columbia (Decision Nos. 2008-WFA-001(a) & 2008-WFA-002(a), issued June 27, 2011), the Commission determined that the applicable stumpage payable by CNR was $6,250.50. Specifically, the Commission found that, under section 103(1) of the Forest Act, if a harvesting agreement had been in place, the damaged timber would have been valued based on the stumpage rate when the timber was scaled. The Commission also considered section 103(3) of the Forest Act, which describes the procedure for calculating the stumpage owing when a person “cuts, damages, destroys or removes Crown timber without authorization”. Section 103(3) contemplates using the stumpage rate that “would likely have applied to the timber” under section 105(1) of the Forest Act “if rights to the timber had been granted under an agreement entered into under” the Forest Act. The Commission interpreted this to mean that the applicable stumpage rate is the one that would have applied when the timber might have been harvested. The Commission concluded that the appropriate stumpage rate is not the one that applied when the fire occurred, given that there were no plans to harvest the timber at that time. Rather, it is the rate that would likely have applied when the timber was cruised or scaled. In addition, the Commission found that the Manager had no statutory authority to reduce the cost recovery order to 75% of the timber’s value. Accordingly, the Commission concluded that the cost recovery order should be for $6,252.50.

The Province appealed the Commission’s decision to the BC Supreme Court. In British Columbia v. Canadian National Railway, 2012 BCSC 1856, the Court held that the Commission’s conclusion on the valuation date was a reasonable exercise of its specialized expertise in relation to forestry statutes, and was also correct. The Commission reasonably concluded that the common law principles on damages did not apply, because the legislation creates a complete scheme for valuing lost Crown timber, and there is clear legislative intent not to follow the common law principles on damages. The Commission clearly and rationally explained its decision. The Commission’s specialized skill and experience qualified it to interpret the legislation and reach a different conclusion than the Manager. Accordingly, the Province’s appeal was dismissed, and the Commission’s decision was upheld.

The Province sought leave from the BC Court of Appeal to appeal the Supreme Court’s decision on the basis that the Commission went beyond the statutory scheme, and rather than interpreting the statutory wording, instead read wording into the statute that altered the plain meaning of the subsection into which the wording was read.

The Court of Appeal granted leave to appeal. The Court held that the proposed appeal involves the interpretation and application of statutory provisions, which is important to the Province and to others who may be affected by those provisions. The decisions of the Commission and the Supreme Court are markedly different from that of the Manager. The issue on appeal does not appear to have been considered by other appellate bodies, and the benefit to be derived from the appeal is the clarification of the statutory scheme.

Ronald Edward Hegel and 449970 B.C. Ltd. v. British Columbia (Ministry of Forests and the Forest Appeals Commission)(Forest Practices Board, Intervenor) 

Decision date: November 8, 2011

Court: BCCA; Justices Donald, D. Smith and Bennett 

Cite: 2011 BCCA 446

Ronald Edward Hegel and 449970 B.C. Ltd. (the “Appellants”) appealed a decision of the BC Supreme Court that had dismissed an appeal from decision of Forest Appeals Commission (the “Commission”).  The Supreme Court had upheld the Commission’s decision in Ronald Edward Hegel and 449970 B.C. Ltd. v. Government of British Columbia (Decision No. 2005-FOR-009(a), October 12, 2007).

The Appellants’ appeal to the Commission was against a determination issued by the District Manager, Ministry of Forests and Range.  The District Manager found that the Appellants had contravened sections 96(1) and 97(2) of the Forest Practices Code of British Columbia Act, by failing to ascertain the boundaries of their private property, and harvesting Crown timber without authority.  The District Manager levied administrative penalties totalling $132,897.40 against the Appellants.  The Appellants appealed to the Commission on the grounds that they had exercised due diligence in attempting to locate the property boundaries, that they were under a mistake of fact regarding the boundaries, that their actions resulted from an officially induced error, and that the penalty was excessive.  The Commission considered a great deal of evidence regarding the boundaries of the Appellants’ property, including modern and historical surveying reports.  The Commission concluded that the Appellants had failed to correctly locate the northern boundary of the property, and the defences of due diligence and mistake of fact did not apply in the circumstances.  The Commission confirmed the District Manager’s determination, except for making a small adjustment to the penalty amount. 

The Appellants appealed the Commission’s decision to the BC Supreme Court, based on four grounds for appeal.  The Supreme Court concluded that: (1) the Commission made no error of law in reaching its conclusion about the location of the northern boundary of the Appellants’ property and in concluding that the alleged area of unlawful harvesting was Crown land; (2) although the Commission had misstated Mr. Hegel’s evidence as to the starting point of his investigation of the property boundary, the Commission’s decision would not and should not have been any different; (3) the Commission did not misapprehend the evidence concerning the Appellants’ due diligence in trying to determine the location of the boundary; and (4) the Commission did not err in law in its approach to the defence of mistake of fact.  Accordingly, the Supreme Court dismissed the appeal (Ronald Edward Hegel and 449970 B.C. Ltd. v. Province of British Columbia (Ministry of Forests and Range), 2009 BCSC 863). 

The Appellants sought leave to appeal to the BC Court of Appeal.  A Chambers Judge for the Court of Appeal denied the application for leave to appeal, on the basis that the appeal raised questions of mixed fact and law, and therefore, was not properly before the BC Supreme Court (Hegel v. British Columbia (Ministry of Forests and Forest Appeals Commission), 2009 BCCA 527). 

The Appellants applied to vary the Chambers Judge’s order denying leave to appeal.  A panel of three Court of Appeal judges granted leave to appeal on two questions of law: (1) was he entitled to rely on dimensions in the original Crown grant; and (2) did the Commission treat due diligence and mistake of fact as equivalent defences? (Hegel v. British Columbia (Ministry of Forests and Forest Appeals Commission), 2010 BCCA 289). 

On the merits of the appeal, the Court of Appeal found that sections 1 and 2 of the Land Survey Act provide that the survey markers (monuments) establish the boundaries of land, not what is described in the title documents.  Consequently, Mr. Hegel was not entitled to rely on dimensions in the original Crown grant.  In addition, the Court held that the Commission considered the defences of due diligence and mistake of fact separately, and nothing in the Commission’s decision indicates that the Commission treated the defences as equivalent.  Accordingly, the appeal was dismissed, and the Commission’s decision was upheld.

Ronald Edward Hegel and 449970 B.C. Ltd. v. British Columbia (Ministry of Forests and the Forest Appeals Commission) 

Decision date: June 10, 2010 

Court: BCCA; Justices Newbury, Huddart, and Saunders 

Cite: 2010 BCCA 289 

Ronald Edward Hegel and 449970 B.C. Ltd. (the “Appellants”) sought a review of a decision by a Chambers Judge in the BC Court of Appeal denying leave to appeal a decision of the BC Supreme Court.  The BC Supreme Court had dismissed an appeal from decision of Forest Appeals Commission (the “Commission”) which found that the Appellants had harvested Crown timber without authority contrary to the Forest Practices Code of British Columbia Act (the “Code”).  

The decision at stake was the Commission’s decision in Ronald Edward Hegel and 449970 B.C. Ltd. v. Government of British Columbia, Decision No. 2005-FOR-009(a), issued on October 12, 2007.  The Appellants had appealed a determination by the District Manager, Ministry of Forests and Range, that they had contravened sections 96(1) and 97(2) of the Code by failing to ascertain the boundaries of their private property and harvesting Crown timber without authority.  The District Manager levied administrative penalties totalling $132,897.40.  The Appellants appealed to the Commission on the grounds that they had exercised due diligence in attempting to locate the property boundaries, that they were under a mistake of fact regarding the boundaries, that their actions resulted from an officially induced error, and that the penalty was excessive.  The Commission considered a great deal of evidence regarding the boundaries of the Appellants’ private property, including modern and historical surveying reports, and confirmed the District Manager’s determination, except for making a minor adjustment to the penalty amount. 

The Appellants appealed the Commission’s decision to the BC Supreme Court.  The Appellants raised four grounds for appeal.  With respect to the first ground of appeal, the trial judge concluded that the Commission made no error of law in reaching its conclusion about the location of the northern boundary of the Appellants’ property and in concluding that the alleged area of unlawful harvesting was Crown land.  As to the second ground of appeal, the judge found that the Commission had misstated Mr. Hegel’s evidence as to the starting point of his investigation of the property boundary.  However, the judge concluded that the Commission’s decision would not and should not have been any different.  Regarding the third ground of appeal, the judge found that the Commission did not misapprehend the evidence concerning the Appellants’ exercise of due diligence in their efforts to determine the location of the boundary.  Lastly, the judge found that the Commission did not err in law in its approach to the defence of mistake of fact.  Accordingly, the Court dismissed the appeal (Ronald Edward Hegel and 449970 B.C. Ltd. v. Province of British Columbia (Ministry of Forests and Range), 2009 BCSC 863). 

The Appellants sought leave to appeal to the BC Court of Appeal.  A Chambers Judge for the Court of Appeal held that the legislation enabling appeals of the Commission’s decisions to the BC Supreme Court only permits appeals on questions of pure law and jurisdiction.  The Chambers Judge considered the grounds for appeal before the BC Supreme Court, and held that they did not raise questions of law; rather, they raised questions of mixed fact and law.  The Chambers Judge also held the right of appeal on questions of law does not include a right of appeal on questions of mixed fact and law.  Consequently, the Chambers Judge concluded that the appeal was not properly before the BC Supreme Court.  Accordingly, the application for leave to appeal was dismissed (Hegel v. British Columbia (Ministry of Forests and Forest Appeals Commission), 2009 BCCA 527). 

The Appellants then applied to vary the Chambers Judge’s order denying leave to appeal.  Sitting as a panel of three judges, the Court of Appeal held that two issues raised by the Appellants were questions of law; namely, whether the measurement descriptions of the original survey of the land must be given effect, and the legal characteristics of the defences of due diligence and mistake of fact as set out in section 72 of the Forest and Range Practices Act.   The Court also held that these questions were important to the community and had sufficient merit to warrant the granting of leave to appeal.  Accordingly, the Court allowed the application and granted leave to appeal.

Forest Appeals Commission and Her Majesty the Queen in Right of the Province of British Columbia v. Canadian Forest Products Ltd.

Decision Date: December 10, 2009 

Court: BCCA; Madam Justice Rowles 

Cite: Court of Appeal File No. CA037429 

The Forest Appeals Commission and Her Majesty the Queen in Right of the Province of British Columbia (the “Province”) each sought leave from the BC Court of Appeal to appeal a decision of the BC Supreme Court, which had allowed an appeal by Canadian Forest Products Ltd. (“Canfor”) of a decision issued by the Commission.  

In Canadian Forest Products Ltd. v. Government of British Columbia, Decision No. 2007-FA-023(a), dated November 13, 2007, the Commission had confirmed a reappraisal of a stumpage rate that applied to timber harvested under a cutting permit issued to Canfor.  The reappraised stumpage rate was set out in a stumpage advisory notice issued in March 2007 by a Timber Pricing Officer with the Ministry of Forests and Range (the “Ministry”).  The reappraisal was triggered when the Ministry determined that there had been a “changed circumstance” as defined in the Interior Appraisal Manual (“IAM”).  The reappraised stumpage rate was higher than the rate set in the stumpage notice sent to Canfor when the cutting permit was issued.  The reappraised rate was effective from January 16 to March 31, 2005, which meant that it was backdated to apply to timber that had already been harvested and scaled. 

Canfor had appealed to the Commission on the basis that the reappraised rate could not apply to timber that had already been scaled.  Canfor argued that the section 103 of the Forest Act precludes the retroactive reappraisal of stumpage on timber that has already been scaled.  Canfor submitted that the IAM is a form of subordinate legislation created under the Forest Act, and as such cannot conflict with the Forest Act.   Canfor argued that section 2.4.1 of the IAM conflicts with section 103(1) of the Forest Act, and therefore, is ultra vires the Forest Act.  Canfor submitted that the Commission must refuse to apply section 2.4.1 of the IAM, and rescind the reappraised stumpage rate. 

The Commission found that section 2.4.1 of the IAM does not conflict with section 103(1) of the Forest Act.  The Commission held that stumpage rates are determined under section 105 of the Act, and those rates are then applied pursuant to section 103(1) of the Act.  Section 103(1) focuses on the calculation of the amount of stumpage owing, rather than the rate of stumpage, and section 103(1) does not limit the timing of the determination or redetermination of stumpage rates.  Section 103(1) refers to the stumpage rate applicable under section 105, which says that “rates of stumpage must be determined, redetermined and varied …” in accordance with the IAM.  Section 2.4.1 of the IAM permits the reappraisal of stumpage applicable to timber that has already been scaled.  On that basis, the Commission confirmed the reappraised stumpage rate and dismissed the appeal. 

Canfor appealed the Commission’s decision to the BC Supreme Court.  Before the Court, Canfor again argued that section 2.4.1 of the IAM is ultra vires the Forest Act because it conflicts with section 103(1) of the Act by permitting the retroactive application of a reappraised stumpage rate to timber that has already been harvested and scaled.   

In Canadian Forest Products Ltd. v. British Columbia and the Forest Appeals Commission, 2009 BCSC 1040, the Court allowed Canfor’s appeal.  The Court first considered the standard of review that applied to the Commission’s decision.  The Court applied the test set out in Dunsmuir v. New Brunswick, 2008 SCC 9, and found that the standard of correctness applies when reviewing pure questions of law.  The Court found that the issue in this case was a question of law; namely, the appropriate interpretation of sections 103 and 105 of the Forest Act.  The Court held that this issue did not directly engage the Commission’s specialized expertise, and therefore, the appropriate standard of review in this case is correctness. 

The Court then reviewed sections 103 and 105 of the Forest Act.  The Court found that section 103 (1)(c)(i) of the Forest Act contains a mandatory requirement that the amount of stumpage payable must be calculated based on the rate of stumpage applicable to the timber under section 105 at the time that the timber is scaled.  Section 103(1)(c) contemplates the application of stumpage rates only on a prospective basis, to timber that has not yet been scaled.  Section 103(1) is not subject to section 105, although it is expressly subject to other sections of the Forest Act.  Reading sections 103 and 105 together in the context of the Act, the Court found that the Minister’s power to redetermine stumpage rates under section 105(1) does not authorize the re-opening of completed stumpage assessments under section 103(1).  Moreover, the Court held that it is reasonable to assume that the legislature intended some measure of finality to the calculation of stumpage owing under section 103(1), subject to the limited exceptions stated in the Forest Act

Next, the Court considered the relationship between the IAM and sections 103 and 105 of the Forest Act.  The Court held that the IAM is a form of subordinate legislation enabled by the Forest Act, and as such it is presumed to be inoperative to the extent that it conflicts with the Forest Act.  The Court held that section 2.4.1(1) of the IAM conflicts with sections 103 and 105 of the Forest Act, in that it purports to allow the Ministry to apply a stumpage reappraisal retroactively to timber that has already been scaled.  Consequently, the Court held that section 2.4.1(1) of the IAM is ultra vires the Forest Act, and the Commission erred in finding that there was no conflict between section 103 of the Forest Act and section 2.4.1 of the IAM. 

In conclusion, the Court ordered that the Commission’s decision was stayed, and the stumpage advisory notice issued by the Timber Pricing Officer was rescinded.  The Court also declared that section 2.4.1 of the IAM is ultra vires the Forest Act to the extent that it purports to vary the stumpage payable on timber that has already been scaled.   

The Province and the Commission each sought leave from the BC Court of Appeal to appeal the judgement of the BC Supreme Court.  Both applications for leave to appeal were granted on December 10, 2009.   

Before the BC Court of Appeal heard the appeal, the parties reached an agreement to adjourn the appeals generally, by consent.

Ronald Edward Hegel and 449970 B.C. Ltd. v. Her Majesty the Queen in Right of the Province of British Columbia as represented by the Minister of Forests and The Forest Appeals Commission

Decision Date: November 25, 2009

Before: Kirkpatrick, J.

Cite: 2009 BCCA 527

Ronald Edward Hegel and 449970 B.C. Ltd. (the “Appellants”) sought leave to appeal a decision of the British Columbia Supreme Court dismissing an appeal from decision of Forest Appeals Commission (the “Commission”) which found that the Appellants had harvested Crown timber without authority contrary to the Forest Practices Code of British Columbia Act (the “Code”). 

The decision at stake was the Commission’s decision in Ronald Edward Hegel and 449970 B.C. Ltd. v. Government of British Columbia, Decision No. 2005-FOR-009(a), issued on October 12, 2007.  The Appellants had appealed a determination by the District Manager, Ministry of Forests and Range, that they had contravened sections 96(1) and 97(2) of the Code by failing to ascertain the boundaries of their private property and harvesting Crown timber without authority.  The District Manager levied a total of $132,897.40 in administrative penalties.  The Appellants appealed to the Commission on the grounds that they had exercised due diligence in attempting to locate the property boundaries, that they were under a mistake of fact regarding the boundaries, that their actions resulted from an officially induced error, and that the penalty was excessive.  The Commission considered a great deal of evidence regarding the boundaries of the Appellants’ private property, including modern and historical surveying reports, and confirmed the District Manager’s determination, except for making a minor adjustment to the penalty at the request of the Government. 

The Appellants appealed the Commission’s decision to the BC Supreme Court.  The Appellants raised four grounds for appeal.  With respect to the first ground of appeal, the trial judge concluded that the Commission made no error of law in reaching its conclusion about the location of the northern boundary of the Appellants’ property and in concluding that the alleged area of unlawful harvesting was Crown land.  As to the second ground of appeal, the judge found that the Commission had misstated Mr. Hegel’s evidence as to the starting point of his investigation of the property boundary.  However, the judge concluded that the Commission’s decision would not and should not have been any different.  Regarding the third ground of appeal, the judge found that the Commission did not misapprehend the evidence concerning the Appellants’ exercise of due diligence in their efforts to determine the location of the boundary.  Lastly, the judge found that the Commission did not err in law in its approach to the defence of mistake of fact.  Accordingly, the Court dismissed the appeal (Ronald Edward Hegel and 449970 B.C. Ltd. v. Province of British Columbia (Ministry of Forests and Range), 2009 BCSC 863).

The Appellants then sought leave to appeal to the BC Court of Appeal.  The Court of Appeal held that the legislation enabling appeals of the Commission’s decisions to the BC Supreme Court only permits appeals on questions of pure law and jurisdiction.  The Court of Appeal considered the four grounds for appeal that were before the BC Supreme Court, and held that those grounds for appeal did not raise questions of law; rather, they raised questions of mixed fact and law.  The Court also held the right of appeal on questions of law does not include a right of appeal on questions of mixed fact and law.  Consequently, the Court concluded that the appeal was not properly before the BC Supreme Court.  Accordingly, the application for leave to appeal was dismissed.

Western Forest Products Limited v. Her Majesty the Queen in Right of the Province of British Columbia as represented by the Minister of Forests and Range and the Forest Appeals Commission

Decision Date: August 13, 2009

Before: Newbury, J., Low, J., K. Smith, J.

Cite: 2009 BCCA 354

Western Forest Products Limited (“Western”) appealed a decision of the British Columbia Supreme Court allowing an appeal from decision of Forest Appeals Commission (the “Commission”) regarding the calculation of transportation costs for the purposes of assessing stumpage under the Forest Act.  The decision at stake was the Commission’s decision in Western Forest Products Ltd. v. Government of British Columbia, Decision No. 2004-FA-003(c), dated September 21, 2005.  The decision involved an appeal by Western of a determination by the District Manager, Ministry of Forests and Range, that a log dump used by Western near Jordan River was a suitable log dump for the purposes of determining the stumpage rate applicable to timber harvested by Western near Jordan River.  The issue before the Commission was whether, in determining the stumpage rate, the log dump at Jordan River was “unsuitable” for the purpose of calculating Western’s transportation cost estimates.   

The Commission found that the stumpage rate should be determined based on the assumption that Western was using a log dump in Sooke rather than the one at Jordan River, despite the fact that the Jordan River log dump involved a shorter truck hauling distance and was the one that Western actually used for timber harvested in that area.  The Commission accepted evidence provided by Western’s witnesses that the concept of licensee neutrality is a fundamental principle in stumpage appraisals under the CAM.  The Commission held that, under the CAM, harvesting costs are to be estimated independent of the actual circumstances of a particular licensee, and are to be based upon what would be done by a notional average operator.  There was undisputed evidence that the Jordan River log dump’s capacity is limited and that Western fully utilized the log dump, such that there was no capacity in the log dump to service any other licensee.  On that basis, the Commission concluded that the Jordan River log dump was not suitable for use by a notional average operator because it has constraints that prevent a notional, average operator from having access to it.  Since an appraisal is based on estimated costs of a notional average operator, if Jordan River is unsuitable as an appraisal log dump for the notional average licensee, it must be unsuitable for all.  It would be unfair to appraise all other licensees in the area to another log dump but appraise Western to Jordan River. 

The Province appealed the Commission’s decision to the BC Supreme Court.  In British Columbia (Minister of Forests and Range) v. Forest Appeals Commission, 2007 BCSC 696, the Court held that the issue before the Commission was a question of law, and that the appropriate standard of review lay between reasonableness simpliciter and correctness, but closer to reasonableness simpliciter.  Further, the Court determined that the evidence of the witnesses before the Commission appeared to be more argument and conclusion than statements of fact.  Regarding the Commission’s finding that the Jordan River log dump is unsuitable for the purposes of determining the applicable stumpage rate, the Court found that the concepts of licensee neutrality and “notional average operator” are not expressly used in the CAM.  Rather, those concepts were repeatedly referred to by Western’s witnesses.  The Court held that the Jordan River log dump only becomes unsuitable if the concepts of “licensee neutrality” and “notional average operator” are read into the CAM to defeat what would otherwise be the result of a plain and unambiguous reading of section 4.1 of the CAM.  The Court found that applying the concept of licensee neutrality to find that Western should pay stumpage as if it were trucking logs to a further log dump in Sooke simply because other licensees cannot use Jordan River produced an absurd result.  Therefore, the Court found the Commission’s decision unreasonable and ordered that the decision was stayed. 

Western appealed to the BC Court of Appeal.  Writing for the Court, Newbury JA held that the judge below did not have the benefit of Dunsmuir v. New Brunswick, 2008 SCC 9, which now requires the application of a standard of reasonableness to the Commission’s decision.  In particular, the Court held that the case turned on the exercise of discretion under section 4.1 of the CAM regarding whether a log dump is “unsuitable”.  The Court held that this question engaged the Commission’s technical expertise in stumpage appraisal, even though the question could be characterized as one of law (i.e. the interpretation of the CAM, which is a form of subordinate legislation).  Applying the standard of reasonableness, the Court found that the Commission’s decision was reasonable.  Specifically, the Court held that there was evidence to support the principle of licensee neutrality which the Commission had applied, and it was not unreasonable for the Commission to have accepted that evidence, especially in light of section 148.6 of the Forest Act which permits the Commission to accept evidence even if that evidence may be inadmissible in a court.  After considering the meaning of section 4.1 of the CAM, the Court held that the Commission’s decision was consistent with the scheme and tenor of the CAM, as explained by the unchallenged evidence of Western’s witnesses, and lies within the range of acceptable outcomes that were available to the Commission.  Accordingly, the Court allowed Western’s appeal and ordered that the Commission’s decision was restored.

Western Forest Products Limited v. Her Majesty the Queen in Right of the Province of British Columbia (as represented by the Minister of Forests and Range) and the Forest Appeals Commission

Decision Date: August 16, 2007

Before: Prowse, J.

Cite: 2007 BCCA 418

Western Forest Products Limited (“Western”) applied for leave to appeal to the British Columbia Court of Appeal an order of a chambers judge, staying a 2005 decision of the Forest Appeals Commission. The Commission had found that a log dump in Jordan River was “not suitable” as an appraisal log dump for the purpose of calculating stumpage to be paid to the Province.

The Court considered the criteria set out in Queens Plate Dev. Ltd. v. Vancouver Assessor, Area 09 (1987), 16 B.C.L.R. (2d) 104, including  whether the appeal raised questions of statutory interpretation and whether there was some prospect of the appeal succeeding on its merits, and whether there was any clear benefit to be derived from the appeal.

With respect to the merits test, the Court found that the chambers judge had incorrectly set fort the relevant standard of review to be applied to the Commission’s decision. The Court agreed with Western that adopting the correct standard of review was critical to a proper analysis by the chambers judge of the Commission’s decision, and found that the standard of review was a significant ground of appeal.

The Court further determined that there was an arguable case that the chambers judge erred in his interpretation of section 4.1 of the Coast Appraisal Manual. The Court noted that the interpretation of that provision had been part of a continuing dispute between the Ministry and licensees, and that it raised questions as to the relevance of Ministry policies and the admissibility of certain types of evidence as aids to interpretation. The Court found these to be questions of general importance to the industry, and concluded that there was a clear benefit to the parties and others in having these issues addressed by the Court. As a result, the Court granted leave to appeal.

Thomas Paul v. The Forest Appeals Commission and The Attorney General of British Columbia and the Ministry of Forests, (Council of Forest Industries, Intervenor) 2001 B.C.C.A. 644

Decision Date: October 30, 2001

Court: B.C.C.A.; Lambert, J. Donald, J.  Huddart, J.

Cite: Vancouver Registry No. CA026440/V03552

In this decision the Court provided supplementary reasons with respect to the remedy to be granted following its June 30, 2001 judgement allowing Thomas Paul’s appeal. The Court issued an order in the nature of certiorari quashing the preliminary ruling of the Commission dated April 24, 1998, in which the Commission gave its opinion that it had jurisdiction to decide the aboriginal rights issue in the appeal taken to it by Mr. Paul under the Forest Practices Code.

An order in the nature of prohibition was also issued, prohibiting the Commission from taking jurisdiction to decide any question of aboriginal rights in relation to the appeal taken to it by Mr. Paul under the Code.

A declaration was made that the Commission does not have jurisdiction to decide any question of aboriginal rights or aboriginal title in the course of exercising its functions under the Code.

Similarly, a declaration was made that the Legislature of British Columbia does not have the legislative capacity to confer on the Commission any jurisdiction to decide questions of aboriginal rights or aboriginal title in the course of exercising its functions under the Code.

Additionally, an order was made that Mr. Paul is entitled to costs against the Commission, with liberty to apply for an order for costs against the Attorney General of British Columbia and the Ministry of Forests.

Thomas Paul v. The Forest Appeals Commission and The Attorney General of British Columbia and the Ministry of Forests, (Council of Forest Industries, Intervenor) 2001 B.C.C.A. 411

Decision Date: June 14, 2001

Court: B.C.C.A.; Lambert, J. Donald, J.  Huddart, J.

Cite: Vancouver Registry No. CA026440/V03552

Corrigendum

Thomas Paul, an aboriginal Canadian, applied for an order prohibiting the Forest Appeals Commission from hearing an appeal under the Forest Practices Code of British Columbia Act, on the question of whether he removed four cedar trees from Crown land in contravention of s. 96 of the Code. Mr. Paul claimed an aboriginal right to harvest timber in traditional territory, but argued that s. 91(24) of the Constitution Act precludes the province from enacting legislation which empowers the Commission to directly adjudicate in respect of the existence of aboriginal rights and, in the alternative, if the province can so legislate, it has neither expressly nor impliedly done so. The Province disputed Mr. Paul’s claim that it cannot empower a tribunal to adjudicate in respect of the aboriginal right claimed by Mr. Paul, but endorsed his position that the Commission had not been so empowered.

The British Columbia Supreme Court found that the Province had lawfully granted the Commission jurisdiction over the parties and subject matter of the appeal, as well as the remedy sought. Accordingly, the Supreme Court dismissed the application for an order of prohibition. Mr. Paul and the Province subsequently appealed to the Court of Appeal. The Court of Appeal considered two issues. First, it considered whether the Province has the constitutional capacity to give the Commission the jurisdiction to decide questions of aboriginal rights and title in the context of deciding appeals about alleged violations of the Code. Second, it considered whether, if the Province had that constitutional power, it has exercised it by conferring that jurisdiction on the Commission.

The majority of the Court found that the provincial legislature had no constitutional authority to give the Commission the power to determine questions of aboriginal title or aboriginal rights when dealing with alleged violations of the Code. In light of this, Mr. Justice Lambert found it unnecessary to address the question whether the Code granted such power. Mr. Justice Donald concurred with Mr. Justice Lambert on the first issue. However, he also allowed the appeal on the second issue, as he found that the Code did not give the Commission the power to decide the aboriginal rights issues in this case. In dissent, Madame Justice Huddart would have dismissed the appeal and upheld the conclusion of the Supreme Court.

Accordingly, the appeal was allowed. The Court reserved judgement on the remedy, pending further submissions on the remedy from the parties.

MacMillan Bloedel Limited, Canadian Forest Products Ltd., Western Forest Products Limited, Mission Tree Farm and Richmond Plywood Corporation Limited v. The Ministry of Forests and the Appeal Board appointed by Order in Council under section 148 of the Forest Act, R.S.B.C. 1996, c.157

Decision Date: June 6, 2000

Court: B.C.C.A.; McEachern, J. Hollinrake, J.  Finch, J.

Cite: Vancouver Registry No. CA025823

The companies appealed a decision of the Supreme Court of British Columbia affirming a decision of the Forest Appeal Board. The Appeal Board had upheld the decision of the Director of Revenue Branch to correct a mathematical error in the calculation of stumpage rates by making a "special stumpage adjustment", rather than sending the error to the Regional Manager for a full stumpage reappraisal. The Board also found that the effective date of the correction (when "notice" was given), was when the Revenue Branch "realized" there was an error or when the Appellants specifically identified the error in a letter to the Ministry.

The companies argued that the Chambers Judge erred in affirming the decision of the Board: the Judge had found that the language of the Coast Appraisal Manual ("CAM") dealing with mathematical errors was unambiguous, but that giving effect to the plain meaning would lead to an absurd result. The companies also argued that the Chambers Judge applied the wrong standard of review to the Board’s decision on notice, giving too much deference to the Board. The financial consequences of these errors to the companies was said to total approximately $17 million.

The Court of Appeal allowed the appeal on both grounds. The Court found that the section of the CAM addressing mathematical errors was clear and unambiguous and, as such, it must be "enforced" however harsh or absurd or contrary to common sense the result may be. It held that the finding of a mathematical error made reappraisal mandatory. The Court also found that it was an error to conclude that administrative costs and inconvenience amounted to an absurdity.

The Court also found that the effective date of the correction was essentially a question of law which should have been reviewed by the Chambers Judge on a standard of correctness. Applying this standard, the Court found that the Board erred in holding that the initial letter by the companies to the Ministry did not constitute notice in conformity with the legal requirements of s. 2.3.4 of the CAM.

The appeal was allowed on both issues.


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