Teal Cedar Products Ltd. v. British Columbia (Minister of Forests), (2013) 449 N.R. 1 (SCC)

• Judge: LeBel, Fish, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.
• Court: Supreme Court of Canada
• Case Date: March 21, 2013
• Jurisdiction: Canada (Federal)
• Citations: (2013), 449 N.R. 1 (SCC);2013 SCC 51

Teal Cedar v. B.C. (2013), 449 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: [2013] N.R. TBEd. OC.006

Her Majesty the Queen in Right of the Province of British Columbia as represented by the Ministry of Forests (appellant) v. Teal Cedar Products Ltd. (respondent)

(34769; 2013 SCC 51; 2013 CSC 51)

Indexed As: Teal Cedar Products Ltd. v. British Columbia (Minister of Forests)

Supreme Court of Canada

LeBel, Fish, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.

October 4, 2013.

Summary:

In April 1993, Teal Cedar Products Ltd. purchased a forest licence. Logging was suspended in part of the area covered by the licence as the creation of a park was being considered. In July 1995, the province created the park. Logging became prohibited in the parklands. In April 1999, due to the park's creation, Teal's annual allowable cut was reduced. Teal claimed compensation for losses beginning in April 1993 under s. 60 of the Forest Act. An arbitrator awarded compensation for losses suffered after April 1999 with compound interest. Teal sought leave to appeal the decision refusing compensation for the period from April 1993 to April 1999. The province sought leave to appeal regarding the inclusion of compound interest.

The British Columbia Supreme Court, in a decision reported at [2011] B.C.T.C. Uned. 360, denied Teal leave to appeal regarding the period from April 1993 to July 1995. The court granted Teal leave to appeal regarding the period from July 1995 to April 1999 and allowed the appeal. The province was denied leave to appeal regarding the inclusion of compound interest. Teal appealed regarding the period from April 1993 to July 1995. The province appealed regarding the period from July 1995 to April 1999 and from the denial of leave to appeal regarding the inclusion of compound interest.

The British Columbia Court of Appeal, in a decision reported at (2012), 317 B.C.A.C. 97; 540 W.A.C. 97, allowed the province's appeal regarding the period from July 1995 to April 1999, set aside the order below and reinstated the arbitrator's award. The province's appeal from the denial of leave to appeal regarding the inclusion of compound interest was dismissed. Teal's appeal regarding the period from April 1993 to July 1995 was dismissed. The province appealed regarding the denial of leave to appeal.

The Supreme Court of Canada allowed the appeal, setting aside the award of compound interest and substituting an award of simple interest.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Compound interest was prohibited under the Court Order Interest Act (COIA) - Section 28 of the CAA provided that, for the purposes of the COIA and the Interest Act, "a sum directed to be paid by an award" was a "pecuniary judgment of the court" - The effect of s. 28 was that the arbitrator had to apply the COIA's provisions - The ordinary meaning of s. 28 was that simple, rather than compound, interest was to be added to the sum directed to be paid by an award - This conclusion was supported by the legislative history of s. 28 - By enacting s. 28, the legislature had adopted the Law Reform Commission's recommendation that court judgments and arbitration awards should be on equal footing regarding interest awarded under the COIA - Arbitrators operating under the CAA could not award compound interest on a sum directed to be paid because the power to award interest was limited by the COIA - See paragraphs 7 to 16.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Having concluded that s. 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act, which prohibited compound interest, the court rejected the company's argument that it was possible for arbitrators to include compound interest as part of the award, rather than on top of the award - This would result in double recovery with respect to interest because s. 28 would then operate to add interest on top of an award that already included interest, which was an untenable result - See paragraphs 17 to 20.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Having concluded that s. 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act (COIA), which prohibited compound interest, the court rejected the company's argument that it was possible for arbitrators to include compound interest as part of the award, rather than on top of the award because this would result in double recovery - The court rejected the company's argument that s. 28 only imposed the post judgment provisions of the COIA on sums directed to be paid by awards - If the legislature had intended to restrict s. 28's operation, it could have done so expressly - No such restrictive language was present - See paragraphs 21 to 23.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Having concluded that s. 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act (COIA), which prohibited compound interest, the court rejected the company's argument that it was possible for arbitrators to include compound interest as part of the award, rather than on top of the award because this would result in double recovery - The court rejected the company's interpretation of s. 28 that would limit the operation of the COIA's prejudgment provisions to the time period between the award's issuance and the time when a court entered the award as a judgment as part of a CAA enforcement proceeding - Then, because s. 1 of the COIA spoke to interest running from the time when the cause of action arose, s. 1 as applied to an arbitration award would only apply after the award was issued because the award, itself, was a "cause of action" - This was an unnatural and strained interpretation - Further, it rendered s. 28 meaningless - An accepted principle of statutory interpretation was that legislative provisions should not be interpreted as "mere surplusage" - See paragraphs 24 to 28.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Having concluded that s. 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act (COIA), which prohibited compound interest, the court rejected the company's argument that it was possible for arbitrators to include compound interest as part of the award, rather than on top of the award because this would result in double recovery - The court rejected the company's assertion nothing in s. 28 deemed an arbitrator to be a "court" and s. 1(1) of the COIA only imposed the duty to award interest on a court, not on an arbitrator - For s. 28 to have any practical effect, it had to be the arbitrator who was directed to award interest - If a court had to be involved, any efficiencies obtained through arbitration would be undermined - Further, the company's argument made an enforcement proceeding under s. 29 of the CAA a prerequisite for receiving interest - This rendered s. 28 "mere surplusage" - See paragraphs 29 to 34.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Having concluded that s. 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act, which prohibited compound interest, the court rejected the company's argument that s. 28 was not the final answer on interest for arbitration awards because s. 22 of the CAA stated that the British Columbia International Commercial Arbitration Centre (BCICAC) rules, which permitted arbitrators to award compound interest, applied to arbitrations under the CAA - Under s. 22(3), where the BCICAC rules were inconsistent with the CAA, the CAA prevailed - There was such an inconsistency here because s. 28 foreclosed the possibility of awarding compound interest - Arbitrators operating under the CAA could not award compound interest - See paragraphs 35 and 36.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1999, a British Columbia forestry company's annual allowable cut was reduced due to the creation of a provincial park - The province and the company could not agree on the appropriate compensation - Under s. 60 of the Forestry Act, the dispute was to be governed by the Commercial Arbitration Act (CAA) - An arbitrator awarded the company compensation since 1999 with compound interest - On the province's appeal, the Supreme Court of Canada set aside the award of compound interest, substituting an award of simple interest - Section 28 of the CAA had the effect of requiring arbitrators to apply the Court Order Interest Act, which prohibited compound interest - The court rejected the company's argument that, because this case was a type of expropriation, the principle of full compensation applied such that compound interest had to be awarded - While compound interest was a better measure of the true cost of the company's loss, there was a statutory requirement to restrict the company's compensation by imposing simple interest - Legislative intention to the contrary rebutted the presumption of full compensation for expropriations - Further, under the CAA, arbitrators could only consider equitable grounds where the parties specifically agreed to this - The agreement between the parties here did not permit the arbitrator to deal with equitable grounds - See paragraphs 37 to 40.

Arbitration - Topic 5704

The award - Interest - Pre-award interest - [See all Arbitration - Topic 5702 ].

Expropriation - Topic 1322

Measure of compensation - Elements of compensation - Interest - [See seventh Arbitration - Topic 5702 ].

Expropriation - Topic 1667

Measure of compensation - Interest - Compound interest - [See seventh Arbitration - Topic 5702 ].

Interest - Topic 811

Equity - General - Calculation of interest - Simple or compound - [See seventh Arbitration - Topic 5702 ].

Statutes - Topic 502

Interpretation - General principles - Intention of Parliament or legislature - [See third and seventh Arbitration - Topic 5702 ].

Statutes - Topic 516

Interpretation - General principles - Ordinary meaning of words - [See first Arbitration - Topic 5702 ].

Statutes - Topic 1646.1

Interpretation - Extrinsic aids - Legislative history - Law reform material - [See first Arbitration - Topic 5702 ].

Statutes - Topic 2280

Interpretation - Presumptions and rules in aid - Against surplusage - [See fourth and fifth Arbitration - Topic 5702 ].

Cases Noticed:

McKechnie v. McKechnie (2005), 218 B.C.A.C. 299; 359 W.A.C. 299; 47 B.C.L.R.(4th) 228; 2005 BCCA 570, overruled [para. 5].

Morriss v. British Columbia (2007), 246 B.C.A.C. 26; 406 W.A.C. 26; 69 B.C.L.R.(4th) 1; 2007 BCCA 337, dist. [para. 5].

Hongkong Bank of Canada v. Touche Ross & Co. (1989), 36 B.C.L.R.(2d) 381 (C.A.), refd to. [para. 18].

R. v. Proulx (J.K.D.), [2000] 1 S.C.R. 61; 249 N.R. 201; 142 Man.R.(2d) 161; 212 W.A.C. 161; 2000 SCC 5, refd to. [para. 28].

Irving Oil Co. v. R., [1946] S.C.R. 551, refd to. [para. 37].

Inglewood Pulp & Paper Co. v. New Brunswick Electric Power Commission, [1928] A.C. 492 (P.C.), refd to. [para. 37].

British Pacific Properties Ltd. v. British Columbia, [1980] 2 S.C.R. 283; 33 N.R. 98, dist. [para. 39].

Statutes Noticed:

Commercial Arbitration Act, R.S.B.C. 1996, c. 55, sect. 22 [Appendix]; sect. 28 [para. 12].

Authors and Works Noticed:

Law Reform Commission of British Columbia, Report on Arbitration (1982), pp. 2, 3 [para. 31]; 50 [para. 15]; 51 [para. 14].

Law Reform Commission of British Columbia, Report on the Court Order Interest Act (1987), pp. 31, 32 [para. 10].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), p. 210 [para. 28].

Counsel:

Karen A. Horsman, Barbara A. Carmichael and Johnny Van Camp, for the appellant;

John J. L. Hunter, Q.C., and K. Michael Stephens, for the respondent.

Solicitors of Record:

Attorney General of British Columbia, Vancouver, British Columbia, for the appellant;

Hunter Litigation Chambers, Vancouver, British Columbia, for the respondent.

This appeal was heard on March 21, 2013, by LeBel, Fish, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ., of the Supreme Court of Canada. On October 4, 2013, Rothstein, J., delivered the following reasons for judgment for the court in both official languages.