South Yukon Forest Corp. et al. v. Canada, (2010) 365 F.T.R. 13 (FC)

• Judge: Heneghan, J.
• Court: Federal Court (Canada)
• Case Date: September 17, 2008
• Jurisdiction: Canada (Federal)
• Citations: (2010), 365 F.T.R. 13 (FC);2010 FC 495

South Yukon Forest Corp. v. Can. (2010), 365 F.T.R. 13 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. MY.023

South Yukon Forest Corporation and Liard Plywood and Lumber Manufacturing Inc. (plaintiffs) v. Her Majesty The Queen  (defendant)

(T-2012-01; 2010 FC 495)

Indexed As: South Yukon Forest Corp. et al. v. Canada

Federal Court

Heneghan, J.

May 5, 2010.

Summary:

South Yukon Forest Corp. (SYFC) and Liard Plywood and Lumber Manufacturing Inc. (LPL), collectively the plaintiffs, sued the Crown to recover damages for pure economic loss and punitive damages relating to the construction, operation and ultimate closure of a sawmill near the town of Watson Lake in the Yukon Territory. The plaintiffs claimed that the mill closed because it did not have an adequate supply of lumber which had been promised by officials of the Department of Indian Affairs and Northern Development (DIAND) before the mill was built. The plaintiffs alleged negligence, negligent misrepresentation (LPL), breach of contract, breach of fiduciary duty and misfeasance in public office.

The Federal Court allowed the action. The court found that the plaintiffs built the mill because the Crown made a commitment to provide an adequate supply of timber over the long-term, if a mill was built. The court stated that the making of the commitment, by itself, did not carry consequences in law; however, once it was acted upon by the plaintiffs, a unilateral contract came into existence, between the plaintiffs and the Crown. The existence of a contract gave rise to legal obligations. The Crown breached the contract by failing to provide an adequate timber supply over a 20 year term, which caused the mill to close down. The Crown's breach of contract was a direct result of the negligence and bad faith of her servants and agents in the Yukon Regional Office. The breach of contract caused direct financial loss to the plaintiffs. The Crown's promise to provide an adequate supply of timber for the mill was not only the foundation of a contract between LPL, SYFC and the Crown, it was also a negligent misrepresentation vis-à-vis LPL. The court stated that the commitment ("promise") was made to LPL during a scheduled "due diligence" meeting on July 15, 1997. The Crown's promise was intended to induce the construction of the mill. That promise, or commitment, was negligently made by the Crown's servants who knew, at the time, that the representation was untrue and would be relied upon. The other causes of action were not established. The court assessed damages, including an award of punitive damages.

Administrative Law - Topic 574

The hearing and decision - Decisions of the tribunal - Collateral attack - South Yukon Forest Corp. (SYFC) and LPL (the plaintiffs), sued the Crown for damages relating to a sawmill project in Watson Lake, Yukon Territory - The plaintiffs claimed that the mill closed because of an insufficient lumber supply as a result of administrative decisions by federal government officials - In closing statements, the Crown asserted, for the first time, that the action should be dismissed because it was a collateral attack on an administrative decision for which the plaintiffs should have proceeded by way of judicial review in accordance with Grenier v. Canada (FCA 2002) - The Federal Court observed that the Crown did not move to strike the pleadings on that basis - The court stated that "Indeed, it verges on the astonishing that at the stage of closing arguments, the defendant advanced Grenier as some kind of answer or defence to the plaintiffs' action" - Nevertheless, both parties addressed the issue - The court held that the Crown's arguments were wholly unfounded - Here, the plaintiffs were asserting common law causes of action - To the extent that the Crown relied on Grenier, that reliance was misplaced - In no way were the plaintiffs challenging the lawfulness of an administrative decision - See paragraphs 592 to 602.

Contracts - Topic 8

General principles - General - Unilateral v. bilateral contracts (incl. what constitutes a unilateral contract) - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners (plaintiffs) sued the Crown for damages for breach of contract - The plaintiffs claimed that a unilateral contract came into existence when the Crown orally promised the plaintiffs a long-term supply of wood for the mill, if the plaintiffs built the mill - The Federal Court agreed that a binding unilateral contract came into existence which the Crown breached by failing to supply an adequate supply of timber for the mill - Here, the Crown made a representation that, when acted upon by the plaintiffs, gave rise to a contract between the parties - The consideration was the construction of the mill which led to the crystallization of the unilateral contract - There was no uncertainty as to the necessary terms - The court noted that while Canadian law did not recognize an independent duty of good faith based on contract law, the Crown engaged in behaviour that would defeat the purpose of the contract which constituted prohibited behaviour according to the case law - See paragraphs 1076 to 1148.

Contracts - Topic 1103

Formation of contract - General principles - Promises or assurances - [See Contracts - Topic 3523 ].

Contracts - Topic 1104

Formation of contract - General principles - Oral contracts - [See Contracts - Topic 8 ].

Contracts - Topic 2861

Consideration - What constitutes consideration - General - [See Contracts - Topic 8 ].

Contracts - Topic 3523

Performance or breach - Breach - What constitutes a breach - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners, LPL and SYFC (plaintiffs) sued the Crown for damages for breach of contract - The plaintiffs claimed that a unilateral contract came into existence as the result of a promise made by the Crown to the plaintiffs for a long-term supply of wood for the mill, if the plaintiffs built the mill - The Federal Court found that the plaintiffs built the mill because the Crown made a commitment to provide an adequate supply of timber over the long-term, if a mill was built - The court stated that the making of the commitment, by itself, did not carry consequences in law; however, once it was acted upon by the plaintiffs, a unilateral contract came into existence, between the plaintiffs and the Crown - The existence of a contract gave rise to legal obligations - The Crown breached the contract by failing to provide an adequate timber supply over a 20 year term, which caused the mill to close down - The Crown's breach of contract was a direct result of the negligence and bad faith of her servants and agents in the Yukon Regional Office - The breach of contract caused direct financial loss to the plaintiffs - See paragraphs 1076 to 1148 and 1425 to 1430.

Contracts - Topic 3524

Performance or breach - Breach - Bad faith - [See Contracts - Topic 3523 ].

Contracts - Topic 7952

Statute of frauds - General - When applicable - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners, LPL and SYFC (plaintiffs) sued the Crown for damages for breach of contract - The plaintiffs claimed that a unilateral contract came into existence as the result of a promise made by the Crown to the plaintiffs for a long-term supply of wood for the mill, if the plaintiffs built the mill - The Crown argued that no statement from a Minister alone was sufficient to give rise to a contract because according to s. 4 of the Statute of Frauds, this contract had to be reduced to writing since it related to an interest in land - The plaintiffs countered by arguing that the Statute of Frauds could not operate to defeat a partially performed oral contract - The Federal Court saw no principled reason why the Crown should be exempt from the application of this equitable doctrine - Here there was partial performance and, therefore, the Crown could not rely upon the Statute of Frauds to avoid the consequences of her breach of contract - See paragraphs 1108 to 1112.

Contracts - Topic 8008

Statute of frauds - Part performance - When available - [See Contracts - Topic 7952 ].

Courts - Topic 4021

Federal Court of Canada - Jurisdiction - Federal Court - Relief against federal boards, commissions or tribunals - [See Administrative Law - Topic 574 ].

Courts - Topic 4021.1

Federal Court of Canada - Jurisdiction - Federal Court - Decisions of federal boards, commissions or tribunals - [See Administrative Law - Topic 574 ].

Courts - Topic 4028

Federal Court of Canada - Jurisdiction - Federal Court - Claims against Crown and related claims - [See Administrative Law - Topic 574 ].

Courts - Topic 4039

Federal Court of Canada - Jurisdiction - Federal Court - Civil actions - [See Administrative Law - Topic 574 ].

Crown - Topic 463

Statutes affecting the Crown - Particular matters - Interest as damages - [See Interest - Topic 3518 ].

Crown - Topic 1001

Contracts with Crown - General principles - General (incl. what constitutes) - Unilateral contract - [See Contracts - Topic 3523 ].

Crown - Topic 1241

Contracts with Crown - Breach by the Crown - General - [See Contracts - Topic 3523 ].

Crown - Topic 1249

Contracts with Crown - Breach by the Crown - Damages - [See Damage Awards - Topic 2018.1 ].

Crown - Topic 1563

Torts by and against Crown - Negligence by Crown - Breach of statutory duty - [See second Torts - Topic 9165 ].

Crown - Topic 1565

Torts by and against Crown - Negligence by Crown - Issuance of permits - Following a sawmill closure in the Yukon Territory, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence by the Department of Indian Affairs and Northern Development (DIAND) in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure, resulting in an inadequate lumber supply for the mill - The Federal Court held that the Crown owed a duty of care to the plaintiffs due to the direct and proximate relationship between the parties - There were no policy reasons to negate that duty - The cumulative conduct of the Crown's servants fell below the standard of care required of a reasonably competent public servant - The DIAND staff were negligent in the manner in which permits were issued (i.e., there were inordinate delays, inadequate permits and a failure to meet timelines) - Senior departmental staff failed to familiarize themselves with their roles and responsibilities - There was also mismanagement of the DIAND personnel - Causation was established using the "but for" test (i.e., if the Crown had adequately met the standard of care, the plaintiffs' mill would not have closed due to inadequate supply of lumber) - The harm was reasonably foreseeable - The court rejected the Crown's allegation of contributory negligence - See paragraphs 651 to 928.

Crown - Topic 1576

Torts by and against Crown - Negligence by Crown - Negligent advice or misrepresentation - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners, LPL and SYFC (plaintiffs) sued the Crown for damages for pure economic loss - LPL alleged negligent misrepresentation, claiming that Department of Indian Affairs and Northern Development (DIAND) officials represented to LPL at a "due diligence" meeting in Whitehorse on July 15, 1997, that if a mill were built, an adequate supply of lumber for the operation of the mill would be made available - The Federal Court found that the Crown owed the plaintiffs a duty of care - The Crown representatives breached their standard of care by failing to reveal necessary and highly relevant information - The court held that the Crown made a negligent misrepresentation to LPL as alleged, that LPL relied on that representation to its detriment and expectation losses occurred as a result - The misrepresentation was reasonably relied upon and it was reasonably foreseeable that it would be relied upon - Causation was established because the court found on a balance of probabilities that "but for" the defendant's negligent misrepresentation, the plaintiffs would not have built the mill, the mill would not have closed and the plaintiffs would not have suffered the expectation losses - The court rejected the Crown's contributory negligence argument - See paragraphs 929 to 1075.

Crown - Topic 1576

Torts by and against Crown - Negligence by Crown - Negligent advice or misrepresentation - The Federal Court referred to the test for negligent misrepresentation as set out in Queen v. Cognos (SCC 1993) - There were five general requirements, including that the representee must have relied, in a reasonable manner, on the negligent misrepresentation - The Federal Court noted that in Hercules Management v. Ernst & Young (SCC 1997), the court identified five general indicia of reasonable reliance, including that the defendant have a direct or indirect financial interest in the transaction in respect of which the representation was made - The court stated that in cases involving the Government a political interest could be found to be analogous to a financial interest, for the purpose of determining if there was a reasonable reliance - See paragraphs 929 and 1038 to 1066.

Crown - Topic 1645

Torts by and against Crown - Actions against Crown - Defences, bars or exclusions - Policies or "policy" decisions - [See fifth Torts - Topic 9165 ].

Crown - Topic 1649

Torts by and against Crown - Actions against Crown - Defences, bars or exclusions - Existence of alternate remedy - [See Administrative Law - Topic 574 ].

Crown - Topic 1701

Torts by and against Crown - Actions against Crown for breach of statutory duty - General - [See second Torts - Topic 9165 ].

Crown - Topic 4005

Actions by and against Crown in right of Canada - General - For failure to issue licences or permits - [See Contracts - Topic 3523 , Crown - Topic 1565 and Damage Awards - Topic 2018.1 ].

Crown - Topic 5145

Officials and employees - Liability of officials in tort - Misfeasance - Following a sawmill closure in the Yukon Territory due to an inadequate lumber supply, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure - Alternatively, the plaintiffs plead misfeasance in public office, specifically in respect of certain promises made by the Department of Indian Affairs and Northern Development Director of Renewable Resources - The Federal Court held that while there was misconduct on the part of the Director, the evidence was insufficient to prove the tort of misfeasance in public office as it was framed in the amended statement of claim - The court opined, however, that the evidence might have been enough to support the commission of that tort if the pleadings had been different - See paragraphs 1157 to 1164.

Damage Awards - Topic 706

Torts - Injury to economic or business relations - Inducing or causing breach of contract - [See Damage Awards - Topic 2018.1 ].

Damage Awards - Topic 708

Torts - Injury to economic or business relations - Negligent issuance of permits, licences, etc. - [See Damage Awards - Topic 2018.1 ].

Damage Awards - Topic 766

Torts - Fraud and misrepresentation - Negligent misrepresentation - [See Damage Awards - Topic 2018.1 ].

Damage Awards - Topic 1008

Contracts - General - Breach of contract - Loss of business opportunity - [See Damage Awards - Topic 2018.1 ].

Damage Awards - Topic 2018.1

Exemplary or punitive damages - Breach of contract - The plaintiffs built a sawmill in the Yukon Territory after allegedly being promised a long-term supply of lumber by federal government officials - The mill opened in 1998 and closed in 2000 due to inadequate lumber supply - The plaintiffs sued the Crown, alleging negligence, negligent misrepresentation and breach of contract - The Federal Court allowed the action in both contract and tort - The court assessed damages for pure economic loss (expectation losses) from 2001 to 2020, totalling $67,000,000, plus punitive damages of $50,000 - As to the punitive damages claim, the court found that there was misconduct on the part of the Crown which caused the breach of contract - That breach was the failure to deliver an adequate supply of lumber such that the Crown could not fulfil her contractual obligations - The Crown's conduct amounted to a breach of the obligation to discharge a contractual duty in good faith, an independent actionable wrong as discussed in Whiten v. Pilot Insurance (SCC 2002) - Further, the actions of some Crown employees and agents were "harsh, vindictive, reprehensible and malicious", the criteria identified by the Supreme Court in Honda Canada Inc. v. Keays (2008) - See paragraphs 1258 to 1339.

Damage Awards - Topic 2022

Exemplary or punitive damages - Crown - [See Damage Awards - Topic 2018.1 ].

Damage Awards - Topic 2030.2

Exemplary or punitive damages - Inducing or causing breach of contract - [See Damage Awards - Topic 2018.1 ].

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence, negligent misrepresentation and breach of contract - The Federal Court allowed the action, holding that the plaintiffs established both the contract and tort claims - The court stated that the basis for awarding damages in cases of both tort, including the tort of negligent misrepresentation, and for breach of contract was to compensate the injured party for losses flowing from the negligent act or the breach of contract, as the case may be (i.e., the approach to assessment of damages was the same) - In this case, given the nature of the plaintiffs' enterprise and the causes of action upon which they succeeded, it was not necessary to attribute those damages to a specific cause of action - Here, the plaintiffs were entitled to recover concurrently in either contract or tort because they had established a duty of care that arose independent of their contractual relationship with the Crown - The plaintiffs' claim, whether in contract or in tort, was one for pure economic loss - A claim for pure economic loss was available in both of the torts established here - The court stated that the plaintiffs' losses could be fairly and reasonably described as "expectation losses" and would be assessed accordingly - See paragraphs 1181 to 1187.

Damages - Topic 531

Limits of compensatory damages - Remoteness - Torts - Recoverable damages - Purely economic loss - [See Damage Awards - Topic 2018.1 and first Torts - Topic 9165 ].

Damages - Topic 3630

Deceit and misrepresentation - Negligent misrepresentation - [See first Damages - Topic 531 ].

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - Following a sawmill closure in the Yukon Territory due to an inadequate lumber supply, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure - Alternatively, the plaintiffs alleged that the Crown breached a fiduciary duty to the plaintiffs - The plaintiffs claimed that a fiduciary duty arose because the Crown, in her capacity as the trustee of the mill fund, invested some $500,000 in the mill, on behalf of another participant in the joint venture (KFR) - The plaintiffs argued that once the investment was made, the Crown owed the same duty to the other joint venture participants as it did to KFR, to act for the benefit of all participants in the joint venture - The Federal Court dismissed this cause of action - The court stated that in the circumstances of this case and in light of the Perez v. Galambos decision (SCC 2009), concerning the essential requirements to ground a fiduciary relationship, no fiduciary relationship arose between the plaintiffs and the Crown - See paragraphs 1149 to 1156.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - [See Equity - Topic 3606 ].

Equity - Topic 3611

Fiduciary or confidential relationships - General principles - Crown - [See Equity - Topic 3606 ].

Evidence - Topic 4705

Witnesses - Examination - Cross-examination - Effect of failure to cross-examine - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners, the plaintiffs, sued the Crown for general and punitive damages - The plaintiffs led expert evidence on damages, including the expert's report - In closing argument, the Crown challenged aspects of the expert's evidence, upon which Crown counsel had not cross-examined - The Federal Court commented that this failure to cross-examine the expert was problematic - The failure to cross-examine was unfair to the expert witness and contrary to the rule in Browne v. Dunn (H.L. 1893) - In closing argument, Crown counsel put the expert's reputation, if not his credibility, in question, and in that situation the expert should have been given a chance to explain his report and his testimony - Further, the failure to cross-examine the expert denied the court the benefit of the expert's evidence - In the result, the court found that the evidence of the expert, on those aspects that were not tested by cross-examination, remained unchallenged - The court accepted the expert's evidence as reliable and credible - See paragraphs 1198 to 1207.

Forests and Forest Products - Topic 2461

Forest Regulation - Timber harvesting - Cutting permits and harvesting agreements - General - [See Crown - Topic 1565 ].

Fraud and Misrepresentation - Topic 2502

Misrepresentation - General principles - Elements of actionable misrepresentation - The Federal Court referred to the test for negligent misrepresentation as set out in Queen v. Cognos (SCC 1993) - There were five general requirements: "(1) There must be a duty of care based on a 'special relationship between the representor and the representee; (2) The representation in question must be untrue, inaccurate or misleading; (3) The representor must have acted negligently in making the misrepresentation; (4) The representee must have relied, in a reasonable manner, on the negligent misrepresentation; and (5) The reliance must have been detrimental to the representee in the sense that damages resulted" - The court noted that in Cognos the Supreme Court said that a claim in negligent misrepresentation may lie even if the parties were in a contractual relationship - See paragraphs 929 and 930.

Fraud and Misrepresentation - Topic 2502

Misrepresentation - General principles - Elements of actionable misrepresentation - The Federal Court referred to the test for negligent misrepresentation as set out in Queen v. Cognos (SCC 1993) - There were five general requirements, including that the representee must have relied, in a reasonable manner, on the negligent misrepresentation - The Federal Court noted that in Hercules Management v. Ernst & Young (SCC 1997), the court identified five general indicia of reasonable reliance: "(1) The defendant had a direct or indirect financial interest in the transaction in respect of which the representation was made; (2) The defendant was a professional or someone who possessed special skills, judgment or knowledge; (3) The advice or information was provided in the course of the defendant's business; (4) The information or advice was given deliberately, and not on a social occasion; and (5) The information or advice was given in response to a specific inquiry or request" - See paragraphs 929 and 1038.

Fraud and Misrepresentation - Topic 2502

Misrepresentation - General principles - Elements of actionable misrepresentation - [See second Crown - Topic 1576 ].

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - [See first Crown - Topic 1576 ].

Fraud and Misrepresentation - Topic 2512

Misrepresentation - General principles - Action for economic loss arising from misstatement - [See first Crown - Topic 1576 ].

Fraud and Misrepresentation - Topic 2535

Misrepresentation - Elements - Reliance - [See second Crown - Topic 1576 ].

Fraud and Misrepresentation - Topic 2829

Misrepresentation - Defences - Contributory negligence - Following a sawmill closure in the Yukon Territory due to inadequate lumber supply, the mill owners, LPL and SYFC (plaintiffs) sued the Crown for damages, alleging negligence in the manner in which it issued timber permits and negligent misrepresentation - The Crown argued contributory negligence - The Federal Court found no evidence of contributory negligence - See paragraphs 896 to 927 and 1067 to 1074.

Interest - Topic 3518

Statutory interest - On judgments - Claims by or against Crown - The plaintiffs built a sawmill in the Yukon Territory after allegedly being promised a long-term supply of lumber by federal government officials - The mill opened in 1998 and closed on August 4, 2000, due to inadequate lumber supply - The plaintiffs sued the Crown, alleging negligence, negligent misrepresentation and breach of contract - The Federal Court allowed the action in both contract and tort - The court assessed damages for pure economic loss (expectation losses) of $31,000,000 for 2000 to 2010 and $36,000,000 for 2011 to 2020, plus punitive damages of $50,000 - The court awarded pre-judgment interest from the date the cause of action arose (August 3, 2000) until the date of judgment (May 5, 2010) (i.e., on the $31,000,000) - The court, however, refused the plaintiffs' request for compound interest because that would result in overcompensation - The court held that given the dramatic change in the national economic situation over the last 10 years and the lengthy time in completing this litigation, it would exercise its discretion with respect to the interest rate to prevent overcompensation to the plaintiffs - The court invited submissions respecting the interest rate to be dealt with at a later time - The court stated that post-judgment interest would be paid from the date of judgment until the judgment was paid in accordance with s. 36 of the Judicature Act (Yuk. Terr.) - See paragraphs 1340 to 1360.

Interest - Topic 5008

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Entitlement - [See Interest - Topic 3518 ].

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - [See Interest - Topic 3518 ].

Interest - Topic 5010

Interest as damages (prejudgment interest) - General principles - Calculation of interest - Simple or compound - [See Interest - Topic 3518 ].

Interest - Topic 5119

Interest as damages (prejudgment interest) - Breach of contract - Crown - Claims against - [See Interest - Topic 3518 ].

Interest - Topic 5148

Interest as damages (prejudgment interest) - Torts - Crown - Claims against - [See Interest - Topic 3518 ].

Limitation of Actions - Topic 1902

Actions - General - When time begins to run - LPL was involved in a sawmill project near Watson Lake, Yukon Territory - LPL purportedly assigned all of its rights to South Yukon Forest Corp. (SYFC) - The mill opened in 1998 and closed on August 4, 2000, allegedly because the mill did not have an adequate supply of lumber as promised by officials in the Department of Indian Affairs and Northern Development (DIAND) - On November 9, 2001, SYFC sued the Crown based on the assignment, alleging negligence, misrepresentation, breach of contract, breach of fiduciary duty and misfeasance in public office - On January 27, 2006, LPL was added as a party by court order on the basis that if the assignment was not effective, then full recovery against the Crown would not be possible unless LPL was joined as a party - A second amended statement of claim was filed on February 6, 2006, naming LPL as a plaintiff along with SYFC - The Crown asserted the six year limitation period in s. 2(1) of the Limitation of Actions Act (Yuk. Terr.) against LPL - The Crown argued that the limitation period commenced on June 4, 1996, when a letter respecting the project was written to LPL by the Regional Director General for DIAND in the Yukon - The Federal Court rejected the Crown's argument because the letter did not constitute a "constituent element" of any of the causes of action advanced by LPL or indeed, of both plaintiffs - The court held that the causes of action arose when the mill closed on August 4, 2000 such that the six year limitation period expired on August 4, 2006 - Therefore, the action was not barred - See paragraphs 567 to 586.

Limitation of Actions - Topic 7521

Actions against the Crown - When limitation period commences - General - [See Limitation of Actions - Topic 1902 ].

Torts - Topic 54

Negligence - Causation - Test for (incl. "but for" test and "material contribution" test) - SYFC and LPL were involved in a sawmill project near Watson Lake, Yukon Territory - The mill opened in 1998 and closed in August, 2000, allegedly because it did not have an adequate supply of lumber as promised by government officials - The plaintiffs, sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure by way of timber harvesting agreements - The Federal Court (Heneghan, J.) discussed the test for causation in this context - Heneghan, J., stated that "In the result, it is sufficient for me to determine that the defendant's negligence was a substantial cause. It is not necessary that the defendant be the only cause. If but for the defendant's negligence, the plaintiffs would not have been harmed, liability for that negligence will flow. As I have previously discussed, the harm in this case was the expectation losses that occurred when the mill closed due to the lack of timber supply" - See paragraphs 853 to 857.

Torts - Topic 54

Negligence - Causation - Test for (incl. "but for" test and "material contribution" test) - [See Crown - Topic 1565 and first Crown - Topic 1576 ].

Torts - Topic 60

Negligence - Causation - Foreseeability - LPL was involved in a sawmill project near Watson Lake, Yukon Territory - LPL purportedly assigned all of its rights to South Yukon Forest Corp. (SYFC) - The mill opened in 1998 and closed in August, 2000, because it did not have an adequate supply of lumber which was allegedly promised by officials in the Department of Indian Affairs and Northern Development - SYFC and LPL, collectively the plaintiffs, sued the Crown for damages, alleging negligence in issuing commercial timber permits (CTPs) and an inordinate delay in implementing a policy to provide long-term tenure by way of timber harvesting agreements (THAs) - The Crown argued that although it might have been reasonably foreseeable that if CTPs or THAs were not issued the plaintiffs would suffer damages, the same could be said for any applicant for CTPs or THAs - Foreseeability in that sense, the Crown claimed, was not sufficient to ground a prima facie duty of care - The Federal Court held that the injury to the plaintiffs was foreseeable - The court stated that throughout the course of this relationship, there was reasonable foreseeability of harm, or actual foresight of harm, flowing to the plaintiffs if CTPs were issued negligently or if the implementation of the long-term tenure was inordinately delayed - See paragraphs 719 to 733.

Torts - Topic 77

Negligence - Duty of care - Relationship required to raise duty of care - [See Crown - Topic 1565 and first Torts - Topic 9165 ].

Torts - Topic 81

Negligence - Duty of care - Requirement that duty be owed to plaintiff - [See first Torts - Topic 9165 ].

Torts - Topic 9162

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Misfeasance in or abuse of public office - The Federal Court referred to the test for establishing the tort of misfeasance in public office and to the elements of that tort - See paragraphs 1158 and 1159.

Torts - Topic 9162

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Misfeasance in or abuse of public office - [See Crown - Topic 5145 ].

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - LPL and SYFC (the plaintiffs) were involved in a sawmill project near Watson Lake, Yukon Territory - The mill opened in 1998 and closed in August, 2000, because it did not have an adequate supply of lumber which was allegedly promised by officials in the Department of Indian Affairs and Northern Development - The plaintiffs sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide a long-term supply of timber - The Federal Court held that the claim in this case fell within an existing category of negligence claims for which a duty of care had been found with respect to pure economic loss (i.e., based on the independent liability of statutory public authorities) and therefore a detailed analysis of the duty of care issue need not be conducted - Nevertheless, after conducting a complete duty of care analysis, the court concluded that a duty of care existed - Here, there was ample evidence to show that the relationship between the plaintiffs and the Crown was direct and proximate and the injury to the plaintiffs was foreseeable - The Crown failed to establish that there were policy reasons for not imposing a duty of care, and in any event, the Crown could not claim an exemption from the duty of care because there was evidence of bad faith - See paragraphs 652 to 818.

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - Following the closure of a sawmill in the Yukon Territory, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure by way of timber harvesting agreements - The Crown argued, based on A.O. Farms Inc. v. Canada (F.C.T.D. 2000), that the basis for finding a duty of care had to be found in the governing statutes - The Federal Court held that the Crown's reliance of A.O. Farms was misplaced - The A.O. Farms decision had limited relevance - The decision in A.O. Farms concerned a legislative decision by the Minister and not an operational decision - See paragraphs 667 to 668.

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - Following the closure of a sawmill in the Yukon Territory, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure by way of timber harvesting agreements - The Crown, relying on Cooper v. Hobart and Edwards v. Law Society of Upper Canada (SCC 2001), argued that since the duty of care, under the relevant statutes and regulations, was owed to the public at large, the plaintiffs could not establish proximity, which was the first essential element for the recognition of a duty of care - The Federal Court held that the Crown was misguided in relying on the Cooper and Edwards decisions to argue a lack of proximity between the parties to this action - Those cases dealt with issues of regulatory negligence where the Supreme Court found that the defendants were engaged in third-party relationships with plaintiffs and there was no proximate relationship - Here, the case involved direct negligence where the emphasis, in considering proximity for the purposes of recognizing a duty of care, was upon the direct relationship between the parties - See paragraphs 665 and 669 to 673.

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - Following the closure of a sawmill in the Yukon Territory, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence in issuing commercial timber permits and an inordinate delay in implementing a policy to provide long-term tenure by way of timber harvesting agreements - The Crown claimed that there was no duty of care, relying on Design Services v. Canada (2008 SCC) - The Federal Court held that the Crown's reliance on Design Services, to vitiate the proximity on policy grounds, was misplaced - In that decision, the Supreme Court rejected a prima facie duty of care due to its finding on a policy consideration, being the failure of the appellant to protect itself by contract from the economic loss - The court noted that the case of Design Services arose in a very different factual context from the present action - Design Services was a tendering case where the subcontractors sought to impose liability on the owners - It was a case of third party liability - There was no third party liability in the case at bar - See paragraphs 674 to 679.

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - Following the closure of a sawmill in the Yukon Territory, the mill owners (plaintiffs) sued the Crown for damages, alleging negligence by the Department of Indian Affairs and Northern Development (DIAND) in issuing commercial timber permits (CTPs) and an inordinate delay in implementing a policy to provide long-term tenure - The Crown argued that no duty of care should be imposed because any decisions of the DIAND relating to the issuance of CTPs or otherwise were policy decisions and accordingly immune from review - The Federal Court held that the Crown did not discharge its burden on this issue - The negligent issuance of CTPs was an administrative act or the implementation of policy - The decision to implement policy was operational in nature - The Crown was therefore not immune from a finding that a duty of care existed for the manner in which her policies were implemented - Further, as to the other complaints, inordinate delay could not be a policy - The court opined that, in any event, even if there were policy decisions, the Government could not claim an exemption from the duty of care because there was evidence of bad faith on the part of the Crown - See paragraphs 739 to 818.

Torts - Topic 9165

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Forest authorities - [See Torts - Topic 60 ].

Cases Noticed:

R. v. Khan, [1990] 2 S.C.R. 531; 113 N.R. 53; 41 O.A.C. 353, refd to. [para. 31].

Farmer Construction Ltd. v. R. (1983), 48 N.R. 315 (F.C.A.), refd to. [para. 41].

Wewayakum Indian Band v. Canada and Wewayakai Indian Band (1995), 99 F.T.R. 1 (T.D.), affd. (1999), 247 N.R. 350 (F.C.A.), affd. [2002] 4 S.C.R. 245; 297 N.R. 1, refd to. [para. 41].

Carrier Lumber Ltd. v. British Columbia (1999), 18 B.C.T.C. 241; 30 C.E.L.R.(N.S.) 219 (S.C.), refd to. [para. 561].

Stewart v. Canadian Broadcasting Corp. et al. (1997), 38 O.T.C. 345; 152 D.L.R.(4th) 102 (Gen. Div.), refd to. [para. 577].

Grenier v. Canada, [2006] 2 F.C.R. 287; 344 N.R. 102 (F.C.A.), refd to. [para. 593].

F.H. v. McDougall, [2008] 3 S.C.R. 41; 380 N.R. 82; 260 B.C.A.C. 74; 439 W.A.C. 74, refd to. [para. 605].

Folch v. Canadian Airlines International (1992), 17 C.H.R.R. D/261 (C.H.R.T.), refd to. [para. 607].

Minister of Employment and Immigration v. Satiacum (1989), 99 N.R. 171 (F.C.A.), refd to. [para. 608].

Faryna v. Chorny (1951), 4 W.W.R.(N.S.) 171 (B.C.C.A.), refd to. [para. 610].

Premakumaran v. Canada, [2007] 2 F.C.R. 191; 351 N.R. 165 (F.C.A.), refd to. [para. 652].

Design Services Ltd. et al. v. Canada, [2008] 1 S.C.R. 737; 374 N.R. 77, dist. [para. 653].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241, refd to. [parea. 653].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 658].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 658].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 659].

Childs v. Desormeaux et al., [2006] 1 S.C.R. 643; 347 N.R. 328; 210 O.A.C. 315, refd to. [para. 660].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1, refd to. [para. 662].

Brewer Bros. et al. v. Canada (Attorney General) (1991), 129 N.R. 3 (F.C.A.), refd to. [para. 663].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 664].

A.O. Farms Inc. v. Canada (Minister of Agriculture) et al., [2000] F.T.R. Uned. 510; 28 Admin. L.R.(3d) 315 (T.D.), refd to. [para. 667].

Renova Holdings Ltd. et al. v. Canadian Wheat Board et al. (2006), 286 F.T.R. 201 (F.C.), refd to. [para. 668].

Edwards et al. v. Law Society of Upper Canada et al., [2001] 3 S.C.R. 562; 277 N.R. 145; 153 O.A.C. 388, refd to. [para. 669].

Attis et al. v. Canada (Minister of Health) et al. (2008), 254 O.A.C. 91; 300 D.L.R.(4th) 415 (C.A.), leave to appeal refused (2009), 396 N.R. 397; 260 O.A.C. 394; 303 D.L.R.(4th) vi (S.C.C.), refd to. [para. 671].

Heaslip Estate v. Mansfield Ski Club Inc. et al. (2009), 252 O.A.C. 1; 310 D.L.R.(4th) 506 (C.A.), refd to. [para. 672].

Brown v. British Columbia (Minister of Transportation and Highways), [1994] 1 S.C.R. 420; 164 N.R. 161; 42 B.C.A.C. 1; 67 W.A.C. 1, refd to. [para. 744].

Comeau's Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), [1995] 2 F.C. 467; 179 N.R. 241 (F.C.A.), refd to. [para. 750].

Comeau's Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), [1997] 1 S.C.R. 12; 206 N.R. 363, refd to. [para. 751].

Atlantic Leasing Ltd. v. Newfoundland (1998), 164 Nfld. & P.E.I.R. 119; 507 A.P.R. 119 (Nfld. C.A.), refd to. [para. 761].

WCC Containers Sales Ltd. v. Haul-All Equipment Ltd. (2003), 238 F.T.R. 45 (F.C.), refd to. [para. 815].

Milliken & Co. et al. v. Interface Flooring Systems (Canada) Inc. (2000), 251 N.R. 358 (F.C.A.), refd to. [para. 816].

Keeping v. Canada (Attorney General) - see Keeping v. Canada (Minister of Fisheries and Oceans).

Keeping v. Canada (Minister of Fisheries and Oceans) (2003), 224 Nfld. & P.E.I.R. 234; 669 A.P.R. 234; 226 D.L.R.(4th) 285 (Nfld. T.D.), refd to. [para. 821].

Snell v. Farrell, [1990] 2 S.C.R. 311; 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94, refd to. [para. 853].

Athey v. Leonati et al., [1996] 3 S.C.R. 458; 203 N.R. 36; 81 B.C.A.C. 243; 132 W.A.C. 243, refd to. [para. 854].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 929].

Moin v. Collingwood (Township) (2000), 135 O.A.C. 278 (C.A.), refd to. [para. 998].

Spinks v. Canada, [1996] 2 F.C. 563; 195 N.R. 184 (F.C.A.), refd to. [para. 1004].

Meates v. Attorney General, [1983] N.Z.L.R. 308 (C.A.), refd to. [para. 1040].

Avco Financial Services Realty Ltd. v. Norman (2003), 170 O.A.C. 229; 64 O.R.(3d) 239 (C.A.), refd to. [para. 1069].

United Dominions Trust (Commercial) Ltd. v. Eagle Aircraft Services Ltd., [1968] 1 All E.R. 104 (C.A.), refd to. [para. 1077].

Hubrisca Enterprises Ltd. et al. v. Canada (Attorney General), [2001] B.C.T.C. 238; 85 B.C.L.R.(3d) 126 (S.C.), refd to. [para. 1077].

Sail Labrador Ltd. v. Ship Challenge One - see Sail Labrador Ltd. v. Navimar Corp. et al.

Sail Labrador Ltd. v. Navimar Corp. et al., [1999] 1 S.C.R. 265; 235 N.R. 201, refd to. [para. 1077].

Esso Petroleum Co. v. Mardon, [1976] 2 All E.R. 5 (C.A.), refd to. [para. 1091].

Daulia Ltd. v. Four Millbank Nominees Ltd., [1978] 2 All E.R. 557 (C.A.), refd to. [para. 1106].

Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69; 206 N.R. 299; 157 N.S.R.(2d) 81; 462 A.P.R. 81, refd to. [para. 1109].

R. v. Woodburn (1898), 29 S.C.R. 112, refd to. [para. 1115].

Schluessel et al. v. Maier et al., [2001] B.C.T.C. 60; 85 B.C.L.R.(3d) 239 (S.C.), revd. in part [2003] B.C.A.C Uned. 120; 15 B.C.L.R.(4th) 209 (C.A.), refd to. [para. 1145].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 1150].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 1151].

Fairford First Nation v. Canada (Attorney General), [1999] 2 F.C. 48; 156 F.T.R. 1 (T.D.), refd to. [para. 1154].

Harris v. Minister of National Revenue, [2002] 2 F.C. 484; 214 F.T.R. 1 (T.D.), refd to. [para. 1155].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272, refd to. [para. 1156].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201, refd to. [para. 1158].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 1183].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241, refd to. [para. 1185].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381, refd to. [para. 1186].

Marigold Holdings Ltd. and Riverview Place Apartment Ltd. v. Norem Construction Ltd., Pendergast (Barry) Architect Ltd. and Sovereign General Insurance Co. et al., [1988] 5 W.W.R. 710; 89 A.R. 81 (Q.B.), refd to. [para. 1192].

Abraham v. Wingate Properties Ltd., [1986] 1 W.W.R. 568; 36 Man.R.(2d) 264 (C.A.), refd to. [para. 1196].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161, refd to. [para. 1197].

Redpath Industries Ltd. v. Ship Cisco et al., [1994] 2 F.C. 279; 163 N.R. 161 (F.C.A.), refd to. [para. 1197].

Browne v. Dunn (1893), 6 R. 67 (H.L.), refd to. [para. 1203].

Fraser River Pile & Dredge Ltd. v. Empire Tug Boats Ltd. et al. (1995), 95 F.T.R. 43 (T.D.), refd to. [para. 1212].

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 1311].

Merck & Co. et al. v. Apotex Inc. et al. (2005), 274 F.T.R. 113 (F.C.), refd to. [para. 1311].

Keays v. Honda Canada Inc., [2008] 2 S.C.R. 362; 376 N.R. 196; 239 O.A.C. 299, refd to. [para. 1321].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201, refd to. [para. 1322].

LaPointe et al. v. Canada (Minister of Fisheries and Oceans) et al. (1992), 51 F.T.R. 161 (T.D.), refd to. [para. 1331].

Brooks et al. v. Stefura (2000), 266 A.R. 239; 228 W.A.C. 239; 192 D.L.R.(4th) 40 (C.A.), refd to. [para. 1346].

Tridan Developments Ltd. et al. v. Shell Canada Products Ltd. (2002), 154 O.A.C. 1 (C.A.), refd to. [para. 1348].

Jefford v. Gee, [1970] 2 Q.B. 130 (C.A.), refd to. [para. 1351].

Alberta v. Nilsson (2002), 320 A.R. 88; 288 W.A.C. 88 (C.A.), refd to. [para. 1355].

Perreault v. Churchill, [1994] Y.J. No. 121 (S.C.), refd to. [para. 1366].

Richardson International Ltd. v. Ship Mys Chikhacheva et al. (2002), 220 F.T.R. 81 (T.D. Protho.), refd to. [para. 1368].

Lower Similkameen Indian Band v. Allison et al. (1995), 99 F.T.R. 305 (T.D.), refd to. [para. 1368].

Gaudet v. Canada et al. (1998), 148 F.T.R. 13 (T.D. Protho.), refd to. [para. 1384].

Mueller (Karl) Construction Ltd. v. Canada (1992), 59 F.T.R. 161 (T.D.), refd to. [para. 1385].

Clarke v. Minister of National Revenue (2000), 189 F.T.R. 76 (T.D.), refd to. [para. 1386].

Statutes Noticed:

Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, sect. 3, sect. 10 [para. 604]; sect. 31(1) [para. 1342]; sect. 31.1(1) [para. 1343].

Department of Indian Affairs and Northern Development Act, R.S.C. 1985, c. I-6, sect. 4, sect. 5 [para. 199].

Federal Courts Act, R.S.C. 1985, c. F-7, sect. 36(1) [para. 1340]; sect. 37(1) [para. 1341]; sect. 39(1) [para. 571].

Interpretation Act, R.S.C. 1985, c. I-21, sect. 35 [para. 572].

Judicature Act, R.S.Y. 1986, c. 96, sect. 35, sect. 36 [para. 1344].

Limitation of Actions, R.S.Y. 2002, c. 139, sect. 2(1) [para. 574].

Territorial Lands Act, R.S.C. 1970, c. T-6, sect. 4, sect. 13 [para. 245].

Territorial Lands Act, R.S.C. 1985, c. T-7, sect. 8 [para. 240]; sect. 17, sect. 18(1)(a) [para. 216].

Territorial Lands Act Regulations (Can.), Yukon Timber Regulations, C.R.C. 1978, c. 1528, sect. 3 [para. 217]; sect. 3.1 [paras. 244, 246]; sect. 4 [paras. 217, 227]; sect. 5(1) [para. 217].

Yukon Timber Regulations - see Territorial Lands Act Regulations (Can.).

Counsel:

Lenard M. Sali, Q.C., and Andrew Wilson, for the plaintiffs;

Gary Whittle and Malcolm Florence, for the defendant.

Solicitors of Record:

Bennett Jones, Calgary, Alberta, for the plaintiffs;

Whittle & Company, Whitehorse, Yukon and John H. Sims, Q.C., Deputy Attorney General of Canada, Vancouver, British Columbia, for the defendant.

This action was heard in Vancouver, British Columbia, on March 31, April 1-4, 7-11, 14, May 5-9, 12-16, 28-30, June 2, 3, 21, July 4, 7-11, 14-18, 21 and September 17, 2008, by Heneghan, J., of the Federal Court, who delivered the following reasons for judgment on May 5, 2010.