British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Supreme Court (Canada)
• Judge: McLachlin, C.J.C., Iacobucci, Major, Bastarache, Binnie, Arbour, LeBel, Deschamps and Fish, JJ.
• Citation: 2004 SCC 38,(2004), 321 N.R. 1 (SCC),240 DLR (4th) 1,[2004] 2 SCR 74,JE 2004-1230,198 BCAC 1,[2004] SCJ No 33 (QL),24 CCLT (3d) 161,[2004] 9 WWR 1,321 NR 1,8 CELR (3d) 1,28 BCLR (4th) 195
• Date: 11 June 2004

B.C. v. Cdn. Forest Products (2004), 321 N.R. 1 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2004] N.R. TBEd. JN.015

Canadian Forest Products Ltd. (appellant) v. Her Majesty The Queen in Right of the Province of British Columbia (respondent)

Her Majesty The Queen in Right of the Province of British Columbia (appellant) v. Canadian Forest Products Ltd. (respondent) and Attorney General of Canada, Forest Practices Board, Sierra Club of Canada and David Suzuki Foundation, Council of Forest Industries, Forest Products Association of Canada and Coast Forest & Lumber Association (intervenors)

(29266; 2004 SCC 38)

Indexed As: British Columbia v. Canadian Forest Products Ltd.

Supreme Court of Canada

McLachlin, C.J.C., Iacobucci, Major, Bastarache, Binnie, Arbour, LeBel, Deschamps and Fish, JJ.

June 11, 2004.

Summary:

A forest fire burned 1491 hectares of land in the B.C. interior, including areas where Canfor and other tenure holders were li­censed to log, areas of steep slopes where logging was uneconomical and watercourse areas where logging was not permitted for environmental reasons. The fire resulted from Canfor's controlled burning of logging waste. The Crown sued, as an ordinary prop­er­ty owner, for damages for (1) the cost of suppressing the fire and restoring the burned-over areas; (2) the loss of stumpage revenue from the harvestable trees; and (3) the loss of non-harvestable or pro­tected trees set aside for environmental reasons.

The British Columbia Supreme Court, in a judgment reported at (1999), 16 B.C.T.C. 110, found Canfor negligent. The court apportioned liability equally between the Canfor (negligence) and the Crown (ineffec­tive manner of suppressing the fire). The court awarded damages for the Crown's cost to suppress the fire and restore the burned-over areas, but rejected claims for loss of stumpage revenue from trees that would have been harvested in the ordinary course and for loss of trees set aside for various environmental purposes (non-harvestable or protected trees). The Crown appealed. Cana­dian Forest Products cross-appealed.

The British Columbia Court of Appeal, in a judgment reported at (2002), 166 B.C.A.C. 122; 271 W.A.C. 122, allowed the Crown's appeal in part, and dismissed Canfor's cross-appeal. The court reapportioned liability 70% to Canfor and 30% to the Crown. The court agreed that the Crown was not entitled to dam­ages respecting the harvestable trees, but awarded compensation for "diminution of the value" of the non-harvestable trees at a figure equivalent to 1/3 of their commercial value, which was to be assessed. Canfor ap­pealed the latter damage award. The Crown cross-appealed against damages, submitting that it was entitled to the "auction value" of the standing timber in both harvestable and non-harvestable areas plus a premium for the degradation of the environ­ment caused by de­struction of non-harvestable trees (i.e. environmental dam­ages). Alternatively, the Crown sought dam­ages for stumpage fees and an environmental premium on the non-harvestable trees.

The Supreme Court of Canada, LeBel, Bas­tarache and Fish, JJ., dissenting, dis­missed the Crown's appeal and allowed Can­for's cross-appeal, restoring the judgment of the trial judge.

Damages - Topic 201

Entitlement - Requirement of loss - [See Damages - Topic 4215 ].

Damages - Topic 510

Limits of compensatory damages - General - Prohibition against double recovery - [See Damages - Topic 4215 ].

Damages - Topic 513

Limits of compensatory damages - General - Defence of passing on - [See Damages - Topic 4215 ].

Damages - Topic 1003

Mitigation - General principles - Mitigation - What constitutes - [See Damages - Topic 4215 ].

Damages - Topic 4215

Torts affecting land and buildings - Nor­mal measure - Destruction of trees - Can­for's negligence resulted in the burning of 1491 hectares of Crown-leased logging lands - Canfor conceded liability for the cost of fire suppression and restoration - The Crown also claimed, as an ordinary prop­erty owner, damages for (1) lost stumpage revenue from trees that would have been harvested and protected trees that were non-harvestable or protected for environmental reasons, and (2) the loss of the environmentally protected trees - The trial judge rejected both claims - The Court of Appeal affirmed dismissal of the claim respecting harvestable trees, but awarded compensation (1/3 of commercial value) for the diminution in value of the protected trees - The Supreme Court of Canada re­stored the trial judge's decision - Since the Crown's regulatory CPV system of stump­age fee revenues resulted in the Crown suf­fering no revenue loss because of the fire (loss compensated by increased stump­age fees charged to other licensees), the Crown failed to prove a loss - The Crown was not entitled to the "auc­tion value" of harvestable timber, where, inter alia, the regulatory scheme tying up the forest as­sets was inconsistent with the "auc­tion" approach - This was not a case of the Crown mitigating its loss by increas­ing stumpage fees, because there was no "loss" to be mitigated because of the pre-existing regulatory scheme - It was also not a case of permitting Canfor to benefit from a loss passed on to other licensees - Since there was no loss, the "passing-on" defence did not apply - Awarding the Crown dam­ages for revenue not lost would result in a windfall and violate the double recovery rule - Finally, the Crown was not entitled to damages equivalent to the stumpage on non-harvestable or protected trees - Non-harvestable trees on a steep slope (too expensive to log) had no com­mercial value - Protected trees surrounding watercourses also had no commercial value - Finally, a claim for an environmental premium on non-harvestable trees was rejected as being not grounded in the pleadings or the evi­dence, where the Crown's case proceeded only on the basis of lost commercial value.

Damages - Topic 4510

Torts causing environmental damage - Gen­eral - Crown's right to sue for - The Supreme Court of Canada stated that "there is no legal barrier to the Crown suing for compensation as well as injunctive relief in a proper case on account of public nui­sance, or negligence causing environmental damage to public lands, and perhaps other torts such as trespass, but there are clearly important and novel policy questions raised by such actions. These include the Crown's potential liability for inactivity in the face of threats to the environment, the existence or non-existence of enforceable fiduciary duties owed to the public by the Crown in that regard, the limits to the role and func­tion and remedies available to governments taking action on account of activity harm­ful to public enjoyment of public re­sour­ces, and the spectre of imposing on private interests an indeterminate liability for an indeterminate amount of money for eco­logical or environmental damage. This is not a proper appeal for the Court to em­bark on a consideration of these diffi­cult issues. The Crown's own expert evi­dence treated the Crown as owner of Crown forests seeking compensation on the same basis as any other landowner for stumpage and "diminution of the value of the tim­ber". ... The groundwork for a claim on some broader "public" basis was not fully argued in the courts below. The Crown now suggests that it claimed "com­mercial value as a proxy" for environment­al dam­age but, with respect, the pleadings suggest otherwise. It would be unfair to the other parties to inject such far-reaching issues into the proceedings at this late date. I therefore proceed on the basis that the Crown's entitlement in this particular case is limited to entitlement in the role the Crown adopted in its statement of claim, namely that of the landowner of a tract of forest." - Because the Crown chose to sue only as a landowner for the commercial value to it of the trees lost, and the case was defended on that basis, the Crown was limited to the damages a private landowner could receive and it was not an appropriate case to determine the Crown's entitlement, pursuant to its parens patriae jurisdiction, to damages for the environmental damage caused - See paragraphs 81 to 82.

Cases Noticed:

R. v. Hydro-Québec, [1997] 3 S.C.R. 213; 217 N.R. 241, refd to. [para. 7].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, refd to. [para. 7].

Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031; 183 N.R. 325; 82 O.A.C. 243, refd to. [para. 7].

114957 Canada ltée (Spraytech, Société d'arrosage) et al. v. Hudson (Town), [2001] 2 S.C.R. 241; 271 N.R. 201; 2001 SCC 40, refd to. [para. 7].

Wood v. Grand Valley Railway Co. (1915), 51 S.C.R. 283, refd to. [para. 55].

Penvidic Contracting Co. v. International Nickel Co. of Canada Ltd., [1976] 1 S.C.R. 267; 4 N.R. 1; 53 D.L.R.(3d) 748, refd to. [para. 55].

Ratych v. Bloomer, [1990] 1 S.C.R. 940; 107 N.R. 335; 39 O.A.C. 103; 69 D.L.R.(4th) 25, refd to. [para. 56].

Prince Rupert (City) v. Pederson et al. (1994), 50 B.C.A.C. 249; 82 W.A.C. 249; 98 B.C.L.R.(2d) 84 (C.A.), refd to. [para. 64].

Ryan v. Victoria (City) et al., [1999] 1 S.C.R. 201; 234 N.R. 201; 117 B.C.A.C. 103; 191 W.A.C. 103, refd to. [para. 66].

Stein v. Gonzales (1984), 14 D.L.R.(4th) 263 (B.C.S.C.), refd to. [para. 67].

Bazley v. Curry - P.A.B. v. Children's Foundation et al.

P.A.B. v. Children's Foundation et al., [1999] 2 S.C.R. 534; 241 N.R. 266; 124 B.C.A.C. 119; 203 W.A.C. 119, refd to. [para. 68].

R. v. Ship Sun Diamond, [1984] 1 F.C. 3, refd to. [para. 69].

Ontario v. Fatehi, [1984] 2 S.C.R. 536; 56 N.R. 62; 6 O.A.C. 270, refd to. [para. 70].

Glasgow Corp. v. Barclay Curle & Co. (1923), 93 L.J.P.C. 1, refd to. [para. 70].

Scarborough v. R.E.F. Homes Ltd. (1979), 9 M.P.L.R. 255 (C.A.), refd to. [para. 73].

North Dakota v. Minnesota (1923), 263 U.S. 365, refd to. [para. 78].

Missouri v. Illinois (1901), 180 U.S. 208, refd to. [para. 78].

Kansas v. Colorado (1907), 206 U.S. 46, refd to. [para. 78].

Georgia v. Tennessee Copper Co. (1907), 206 U.S. 230, refd to. [para. 78].

New York v. New Jersey (1921), 256 U.S. 296, refd to. [para. 78].

Illinois Central Railroad Co. v. Illinois (1892), 146 U.S. 387, refd to. [para. 79].

New Jersey, Department of Environmental Protection v. Jersey Central Power and Light Co. (1975), 336 A.2d 750 (N.J. Sup. Ct. App. Div.), refd to. [para. 80].

State of Washington, Department of Fisheries v. Gillette (1980), 621 P.2d 764 (Wash. Ct. App.), refd to. [para. 80].

State of California, Department of Fish and Game v. S.S. Bournemouth (1969), 307 F. Supp. 922 (C.D. Calif.), refd to. [para. 80].

State of Maine v. M/V Tamano (1973), 357 F. Supp. 1097 (D. Maine), refd to. [para. 80].

State of Maryland, Department of Natural Re­sources v. Amerada Hess Corp. (1972), 350 F. Supp. 1060 (D. Md.), refd to. [para. 80].

Toronto Transportation Commission v. R., [1949] S.C.R. 510, refd to. [para. 82].

Cunningham v. Wheeler - see Cooper v. Miller (No. 1).

Cooper v. Miller (No. 1), [1994] 1 S.C.R. 359; 164 N.R. 81; 41 B.C.A.C. 1; 66 W.A.C. 1, refd to. [para. 84].

Sunrise Co. v. Ship Lake Winnipeg, [1991] 1 S.C.R. 3; 117 N.R. 364; 77 D.L.R.(4th) 701, refd to. [para. 84].

British Columbia (Minister of Forests) v. Bugbusters Pest Management Inc., [2003] B.C.T.C. 77; 2003 BCSC 77, refd to. [para. 85].

Kelliher (Village) v. Smith, [1931] 1 S.C.R. 672, refd to. [para. 102].

Aerlinte Eireann Teoranta et al. v. Canada, (1990), 107 N.R. 129; 68 D.L.R.(4th) 220 (F.C.A.), refd to. [para. 103].

British Westinghouse Company Electric and Manufacturing Co. v. Underground Electric Railways Co. of London Ltd., [1912] A.C. 673 (H.L.), refd to. [para. 106].

Andros Springs v. World Beauty, [1970] P. 144 (C.A.), refd to. [para. 107].

Bellingham v. Dhillon, [1973] Q.B. 304 (C.A.), refd to. [para. 107].

1874000 Nova Scotia Ltd. et al. v. Adams et al. (1997), 150 N.S.R.(2d) 260; 461 A.P.R. 260; 146 D.L.R.(4th) 466 (C.A.), refd to. [para. 107].

Karas v. Rowlett, [1944] S.C.R. 1, refd to. [para. 107].

Cemco Electrical Manufacturing Co. v. Van Snellenberg, [1947] S.C.R. 121, refd to. [para. 107].

Windmill Place v. Apeco of Canada Ltd., [1978] 2 S.C.R. 385; 19 N.R. 124, refd to. [para. 107].

Asamera Oil Corp. v. Sea & Oil General Corp. - see Baud Corp., N.V. v. Brook.

Baud Corp., N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271, refd to. [para. 107].

Southern Pacific Co. v. Darnell-Taenzer Lumber Co. (1918), 245 U.S. 531, refd to. [para. 111].

Oshawa Group Ltd. v. Great American Insurance Co. et al. (1982), 36 O.R.(2d) 424 (C.A.), refd to. [para. 111].

Nova Scotia (Attorney General) v. Christian (1974), 9 N.S.R.(2d) 209; 49 D.L.R.(3d) 742 (C.A.), refd to. [para. 111].

Hussain v. New Taplow Paper Mills Ltd., [1988] 1 All E.R. 541; 86 N.R. 308 (H.L.), refd to. [para. 113].

Bilambil-Terranora Pty Ltd. v. Tweed Shire Council, [1980] 1 N.S.W.L.R. 465 (C.A.), refd to. [para. 123].

State of Ohio v. U.S. Department of the Interior (1989), 880 F. 2d 432 (D.C. Cir.), refd to. [para. 132].

Soutzo v. Canterra Energy Ltd., [1988] A.J. No. 506 (C.A.), refd to. [para. 147].

Kates v. Hall (1991), 53 B.C.L.R.(2d) 322 (C.A.), refd to. [para. 147].

Chappell et al. v. Barati et al. (1982), 30 C.C.L.T. 137 (Ont. H.C.), refd to. [para. 147].

Andrews et al. v. Grand & Toy (Alberta) Ltd. et al., [1978] 2 S.C.R. 229; 19 N.R. 50; 8 A.R. 182, refd to. [para. 151].

Woelk v. Halvorson, [1980] 2 S.C.R. 430; 33 N.R. 232; 24 A.R. 620, refd to. [para. 152].

Bradburn v. Great Western Rail Co., [1874-80] All E.R. 195 (Ex. Div.), refd to. [para. 189].

Browning v. War Office, [1962] 3 All E.R. 1089 (C.A.), refd to. [para. 190].

Parry v. Cleaver, [1969] 1 All E.R. 555 (H.L.), refd to. [para. 190].

Law Society of Upper Canada et al. v. Ernst & Young et al., [2002] O.T.C. 227; 59 O.R.(3d) 214 (Sup. Ct.), refd to. [para. 194].

Air Canada v. British Columbia, [1989] 1 S.C.R. 1161; 95 N.R. 1; 36 B.C.L.R.(2d) 145, refd to. [para. 195].

Garland v. Consumers' Gas Co. (2004), 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 199].

Air Canada et al. v. Liquor Control Board (Ont.) et al. (1995), 82 O.A.C. 81; 24 O.R.(3d) 403 (C.A.), refd to. [para. 202].

Hanover Shoe Inc. v. United Shoe Machinery Corp. (1968), 392 U.S. 481, refd to. [para. 205].

Dykhuizen v. Saanich (District) (1989), 63 D.L.R.(4th) 211 (B.C.C.A.), refd to. [para. 215].

Authors and Works Noticed:

Arrow, Kenneth, Report of the NOAA Panel on Contingent Valuation: National Oceanic and Atmospheric Administra­tion, NOAA Report (1993), pp. 9, 10 [para. 142].

Benidickson, Jamie, Environmental Law (2nd Ed. 2002), pp. 187 to 189 [para. 155].

British Columbia, Law Reform Commis­sion, Report on Civil Litigation in the Public Interest (1980), No. 46, pp. 7 [para. 67]; 70, 71 [para. 71].

de Bracton, Henry, Laws and Customs of England (1968), vol. 2, pp. 39, 40 [para. 75]; 166, 167 [para. 76].

Estey, Wilfred, Public Nuisance and Standing to Sue (1972), 10 Osgoode Hall L.J. 563, pp. 566, 576 [para. 67].

Klar, Lewis N., Tort Law (3rd Ed. 2003), p. 647 [para. 68].

Maguire, John C., Fashioning an Equitable Vision for Public Resource Protection and Development in Canada: The Public Trust Doctrine Revisted and Reconceptu­a­lized (1977), 7 J.E.L.P. 1, generally [para. 74].

McGregor on Damages (17th Ed. 2003), para. 7-097 [para. 116].

Ontario, Law Reform Commission, Report on Damages for Environmental Harm (1990), pp. 11 to 13 [para. 71]; 30, 31 [para. 139]; 37, 38 [para. 135].

Ontario, Law Reform Commission, Report on the Law of Standing (1989), p. 10 [para. 67].

Osborne, Philip H., The Law of Torts (2nd Ed. 2003), p. 364 [para. 68].

Sandars, Thomas Collett, The Institute of Justinian (5th Ed. 1876), p. 2.1.1 [para. 74].

Waddams, Stephen M., Law of Damages (4th Ed. 2004), paras. 15.730, 15.800 [para. 107].

Waddams, Stephen M., Law of Damages (1991) (Looseleaf), pp. 15-4 [para. 176]; 15-38 [para. 198]; para. 1.1410 [para. 123].

Counsel:

G. Bruce Butler and Birgitta von Krosigk, for the appellant/cross-respondent, Cana­dian Forest Products Ltd.;

J. Douglas Eastwood, Karen Horsman and J. Gareth Morley, for the respondent/­cross-appellant, Her Majesty the Queen in Right of British Columbia;

Donald J. Rennie and Mark Kindrachuk, for the intervenor, Attorney General of Canada;

John R. Pennington, for the intervenor, Forest Practices Board;

Jerry V. DeMarco, Anastasia H. Lintner and Robert V. Wright, for the inter­ve­nors, Sierra Club of Canada and David Suzuki Foundation;

John J.L. Hunter, Q.C., and K. Michael Stephens, for the intervenors, Council of Forest Industries, Forest Products Associ­ation of Canada and Coast Forest & Lumber Association.

Solicitors of Record:

Harper Grey Easton, Vancouver, B.C., for the appellant, Canadian Forest Products Ltd.;

Ministry of the Attorney General of British Columbia, Vancouver, B.C., for the respondent, Province of British Colum­bia;

Attorney General of Canada, Ottawa, Ontario, for the intervenor, Attorney Gen­eral of Canada;

Forest Practices Board, Victoria, B.C., for the intervenor, Forest Practices Board;

Sierra Legal Defence Fund, Toronto, Ontario, for the Sierra Club of Canada and the David Suzuki Foundation;

Hunter Voith, Vancouver, B.C., for the intervenors, Council of Forest Industries, Forest Products Association of Canada, and Coast Forest & Lumber Association.

This appeal and cross-appeal were heard on October 16, 2003, before McLachlin, C.J.C., Iacobucci, Major, Bastarache, Binnie, Arbour, LeBel, Deschamps and Fish, JJ., of the Supreme Court of Canada.

On June 11, 2004, the judgment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:

Binnie, J. (McLachlin, C.J.C., Iacobucci, Major, Arbour and Deschamps, JJ., concurring) - see paragraphs 1 to 156;

LeBel, J. (Bastarache and Fish, JJ., con­curring), dissenting - see paragraphs 157 to 229.