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Date: |
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Docket: |
L012405 |
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Registry: Vancouver |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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Oral Reasons for Judgment |
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IN THE MATTER OF
THE COMPANIES’ CREDITORS ARRANGEMENT ACT
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IN THE MATTER OF
THE CANADA BUSINESS CORPORATIONS ACT |
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IN THE
MATTER OF THE COMPANY ACT,
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AND |
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IN THE MATTER OF
SKEENA CELLULOSE INC., |
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PETITIONERS |
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AND |
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BETWEEN: |
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GWASSLAM ALSO KNOWN AS GEORGE PHILIP DANIELS, GWINUU ALSO KNOWN AS GODFREY GOOD, GAMLAXYELTXW ALSO KNOWN AS EDGAR GOOD, SINDIHL ALSO KNOWN AS ROBERT GOOD, WIDAXHAYETSXW ALSO KNOWN AS AGATHA BRIGHT, WIILITSQUE ALSO KNOWN AS MORRIS DERRICK, MALII ALSO KNOWN AS GORDON JOHNSON, ON BEHALF OF THEMSELVES AND IN THEIR CAPACITY AS THE GITANYOW HEREDITARY CHIEFS AND ON BEHALF OF ALL MEMBERS OF THE GITANYOW FIRST NATION HAVING THEIR PRINCIPAL OFFICE AT P.O. BOX 148, KITWANGA, BRITISH COLUMBIA, V0J 2A0 |
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PETITIONERS |
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AND: |
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MINISTER OF FORESTS OF THE PROVINCE OF BRITISH COLUMBIA |
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RESPONDENT
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AND
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BETWEEN: |
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THE LAX KW’ALAAMS INDIAN BAND, BY CHIEF COUNCILLOR GARY REECE ON HIS OWN BEHALF AND ON BEHALF OF THE MEMBERS OF THE LAX KW’ALAAMS INDIAN BAND, AND THE METLAKATLA INDIAN BAND, BY CHIEF COUNCILLOR HAROLD LEIGHTON, ON HIS OWN BEHALF AND ON BEHALF OF THE MEMBERS OF THE METLAKATLA INDIAN BAND, AND THE ALLIED TSIMSHIAN TRIBES ASSOCIATION
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PETITIONERS |
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AND: |
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MINISTER OF FORESTS, AND THE ATTORNEY-GENERAL OF BRITISH COLUMBIA ON BEHALF OF HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA, AND SKEENA CELLULOSE INC.
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RESPONDENTS |
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Counsel for NWBC Timber & Pulp (L012405, L021243 & L021279)
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S.R. Ross |
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Counsel for Skeena Cellulose (L021279 and L021243) |
C.F. Willms
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Counsel for Skeena Cellulose (L012405)
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D.I. Knowles, Q.C.
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Counsel for Gitanyow First Nation (L021243) |
P.R. Grant
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Counsel for Lax Kw’alaams and Metlakatla First Nations and Allied Tsimshian Tribes (L021279)
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J.R. Rich
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Counsel for Minister of Forests (L021243 & L021279)
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P.J. Pearlman, Q.C.
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Counsel for Kitsumkalum and Kitselas First Nations(L012405)
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S.H. Ashcroft
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Counsel for 552513 B.C. Ltd. (L012405) |
C.S. Bird
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Counsel for the Attorney General of British Columbia
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G.J. McKittrick
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Counsel for the Attorney General of Canada |
L.M. Borowyk
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Counsel for the District of Port Edward
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R. Macquisten
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Counsel for Arthur Andersen Inc., Monitor
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D.R. Leigh |
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Counsel for PPWC, Local 4 |
W.E. Skelly |
[1] THE COURT: This is an application for a judicial review brought in the overall context a rather lengthy proceeding under the Companies’ Creditors Arrangement Act.
[2] On September 5, 2001, Skeena Cellulose Inc. (“SCI”) filed for protection from its creditors under the CCAA and was granted protection under that Act on that date to provide time for SCI to complete a CCAA restructuring plan.
[3] On February 20, 2002, the Province of British Columbia, the principal shareholder in SCI, signed a purchase agreement with NWBC Timber & Pulp Limited (“NWBC”) for sale of its shares in SCI to NWBC.
[4] On March 27, 2002, a series of standard letters were sent by the Minister of Forests to a range of First Nations groups. The text of those letters is attached to Mr. Harris’ affidavit filed April 29, 2002. It states, in part, as follows:
In accordance with the Forest Act, S.B.C. 1996, c. 157, as amended, and its regulations, the Minister of Forests has received a request for his consent to the transfer of control of Skeena Cellulose Inc. to NWBC Timber & Pulp Limited (NWBC).
The third paragraph of that form letter states:
Since the potential impact of this transaction on the people and communities in northwestern British Columbia is significant, the Minister is requesting written public input. In addition to any written submissions that you wish to make in accordance with the notice enclosed, Provincial Government officials, including representatives from the Ministry of Forests and the Ministry of Attorney General would like to meet with you as well as any other representatives and members of the (identified) First Nations.
The following day, the Minister established a schedule for consultation meetings regarding change of ownership of SCI to NWBC.
[5] On April 2, the creditors voted on the CCAA restructuring plan. All five classes of creditors supported the plan. The plan was approved by this Court April 4, 2002. The implementation of the plan and closing of the sale transaction transferring ownership to NWBC was scheduled for April 29, 2002.
[6] Between April 9 and April 22, there were various consultation meetings held with First Nations groups in the northwest of British Columbia regarding this matter. The adequacy of those meetings and whether they constituted appropriate or adequate consultation is very much a live issue in the within proceeding.
[7] On April 23, 2002, the Gitanyow First Nation filed a petition for judicial review. Two days later that was followed by another petition filed by the Lax Kw’alaams Indian Band. Last week I received a letter from counsel for the Kitsumkalum and Kitselas First Nations, dated April 24, 2002, setting out their concerns to the proposed transfer of control of SCI.
[8] The Minister of Forests gave his assurance on April 26, 2002 that he would not give his final consent to a change of control in the ownership of SCI prior to noon on April 29, 2002. This deadline had to be extended because of the continuing argument on the application, which was heard yesterday.
[9] The issue in this proceeding is the sufficiency, or otherwise, of the consultation that took place with the First Nations in the northwestern portion of our province that are asserting claims of aboriginal title in areas affected by this transaction.
[10] By way of overall principle, it is clear that such duty of consultation does exist. Our Court of Appeal in Haida Nation v. British Columbia Minister of Forests (2002), B.C.J. No. 378, has held that there is such a duty. And the existence of that duty and obligation is not contested by the parties on this application.
[11] The issue before me on this interim application is whether the Court ought to grant an order under the Judicial Review Procedure Act in the nature of an injunction to restrain the Minister from giving his approval, or consent to the change in control of SCI. This approval is a precondition for the completion of the sale transaction transferring the shares of SCI from the Provincial Government to NWBC.
[12] In its submission the Provincial Government says that such an order cannot be issued against a Minister of the Crown. It takes the position that whether or not the Minister has breached or met a fiduciary constitutional obligation to consult and to seek to accommodate First Nations interests will require a full hearing of these petitions and that it would be inappropriate to decide this on an interim application. I do not choose to base my decision on that issue. I note that there is also relief sought against other non-Crown respondents.
[13] In my view, the real issue is whether an interlocutory injunction should issue in this case and, in particular, whether the applicants have met the test set out in RJR-MacDonald Inc. v. Canada (Attorney General) [1994], 1 S.C.R. 311 at 334. That test is this: First a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried; secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused; finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.
[14] Now, for the purpose of this interim application only, both the Minister and SCI concede that the petitioners, the applicants on this interim application, have raised a serious question to be tried on the question of whether the Minister has met a constitutional and fiduciary obligation to consult and to seek an accommodation with the First Nations. Simply put, the first branch of that test is conceded.
[15] That, therefore, leaves for consideration the second and third issues; that is, whether the applicants will suffer irreparable harm if the application for the order or injunction is refused, and, finally, the balance of convenience analysis.
[16] In the case at bar, the Crown and SCI take the position that the petitioners have not shown that the Minister’s approval of the change of control of SCI will cause them prejudice or irreparable harm. That irreparable harm has been described by counsel for the Gitanyow, in part, as follows. He submits that:
If this consent is given and the rights of the new ordinance of the forest tenures in question have vested, the petitioners will have lost a unique opportunity to engage in a consultation process that could lead to an effective accommodation of their aboriginal rights and title with the objectives of the Crown in granting forest tenures within their territory.
Counsel goes on to submit that such harm cannot be compensated by any amount of damages. He also says that once the Minister of Forests has exercised his consent there will be no opportunity for the Minister to add conditions to his consent that would allow for the accommodation of the interests of the petitioners or to take their concerns into account. If he attempts to add or change conditions after this consent has been granted as a result of subsequent consultation with the petitioners, counsel for the Gitanyow submits that the Minister will be prevented from doing so as the new company owners will be in a position to claim significant prejudice.
[17] On April 24, 2002, the Minister wrote to counsel for NWBC and SCI and he advised of his approval in principle to the proposed change of control of SCI to NWBC. In that letter the Minister set out a number of conditions on the first page having to do with payment of costs and compliance with the timber harvesting contract and subcontract regulations. On page 2 the Minister went on to say this:
In addition, SCI and NWBC must:
1. acknowledge that SCI’s licences issued under the Forest Act and their ancillary permits may be affected by land use planning decisions, aboriginal interests and treaty negotiations with First Nations;
2. acknowledge that the change of control of SCI will be without prejudice to any aboriginal rights of title that may encumber the lands supporting the licences. For the purposes of clarity, this is not an acknowledgement that there are aboriginal rights or title in any of the affected land, rather this is an acknowledgement that the proposed change of control is neutral with respect to any aboriginal right or title that may exist or be established, either through treaty negotiations or through litigation, and;
3. agree in writing to provide within 60 days of the change in control of SCI becoming effective, copies of a business plan for SCI and NWBC to the Regional Manager, Prince Rupert Forest Region, and to a representative of each First Nation asserting aboriginal or treaty rights within the operating area of the SCI.
The letter goes on to say:
The rights and responsibilities described in this letter are for the sole benefit of and binding on SCI, NWBC and the Ministry of Forests and are subject to enforcement by them solely and may not be used or relied upon by third parties for any purpose.
[18] In response to that letter, both SCI and NWBC indicated their general agreement, subject to some changes. The changes were three. The first was:
(a) Revise condition two on page two of the AIP so that condition two reads as follows:
Acknowledge that the change of control of SCI will be without prejudice to any aboriginal rights or title that may exist in or over the land supported in the licenses. For the purposes of clarity, this is not an acknowledgement that there are aboriginal rights or title in or over any of the affected land, rather this is acknowledgement that the proposed change of control is neutral with respect to any aboriginal right or title.
(b) the deletion of the words “and NWBC” on the second line of condition number three on page two of the AIP...
which essentially restricted the provision of the business plan to the business plan of SCI itself, and not SCI and NWBC
… and;
(c) the deletion of the period after the word “purpose” in the paragraph after condition three on page two of the AIP and the addition of the following words:
except aboriginals in respect of their existing aboriginal rights or title.
[19] In my view, the Minister has proposed and both SCI and NWBC have agreed to the incorporation of conditions in the Minister’s consent, which do make it clear that the licenses and permits held or obtained by SCI may be affected by aboriginal interests and that the change of control is without prejudice to any existing aboriginal rights or title in or to the lands in SCI’s operating areas.
[20] In his submission, counsel for SCI argues that the petitioners in fact cannot show any prejudice flowing from the Minister’s decision because it expressly acknowledges that the licenses may be affected by aboriginal interests and that the change of control of SCI is without prejudice to any aboriginal rights or title that may encumber the land supporting the licenses. In addition, SCI is required to provide a business plan to a representative of any aboriginal group asserting rights within the SCI operating area.
[21] In my view, the prejudice that will flow to the petitioners if an injunction is not issued is relatively small. These are existing forest tenure licenses and authorities; no new licenses or authorities are being created. The ones that are in place that are held by SCI will continue. What is taking place, in my view, is a very explicit recognition that the change of control that is to be approved by the Minister is being effected with full recognition, by both the Minister as well as NWBC and the other parties, of the existing assertions and claims of the involved First Nations people.
[22] However, to the extent that there is some prejudice, the final issue the Court must consider is the balance of convenience. This requires the Court to weigh the potential impact of granting the injunction against refusing to put an interim injunction in place.
[23] The potential prejudice to SCI, to NWBC, to the creditors, employees and contractors dependant upon SCI, and indeed to many members of the public of British Columbia should the sale not close, in my view, considerably outweighs any prejudice that the petitioners might suffer as a consequence of the Minister giving his final consent to the change in control.
[24] The obligation on the Minister to consider a wide range of interests was raised in the Haida Nation case. In that decision, the Court of Appeal held that both the Provincial Crown and the licensee in that case, Weyerhaeuser, had a legally enforceable duty to the Haida to consult with them and to endeavour to seek workable accommodations between the aboriginal interests of the Haida people on the one hand and the short-term and long-term objectives of the Crown and Weyerhaeuser to manage the particular tree farm license in accordance with the public interest. At paragraph 26 of that decision, the Court emphasized that the Crown Provincial retains the power and indeed has an obligation to balance these interests. I would observe that the balancing of interests in this fashion is not dissimilar to the necessary balancing of interests that a court must undertake during the course of a Companies’ Creditors Arrangement Act proceedings.
[25] In this case, the petitioners have brought these proceedings on the eve of closing. I’m not critical when I say that, the matters in this case proceeded on a relatively tight timeline, but the fact of the matter is that the petitions were filed only last week.
[26] The Minister’s consent is a clear condition precedent to the closing. In my view, the petitioners have failed to demonstrate any significant prejudice or irreparable harm. It is clear that the Minister has made at least some efforts to identify the concerns of the First Nations. He has had reported back to him the consultations that were held and at least some conditions have been incorporated which were intended to address the First Nations concerns. I say that, of course, without making any comment as to whether those consultations were or were not in fact adequate, which will be the subject of the hearing of the petition itself.
[27] The Minister is clearly making a decision which engages the public interest in the broadest sense. There is in this case a very real prejudice to a wide range of individuals if the approval is not allowed to go forward. Finally, there has at this early stage been no assessment of the strength of the petitioners’ claims. Under Haida, until that occurs, there can be no precise determination of the extent of the Minister’s obligation to consult and to seek accommodations.
[28] It is in my view important when considering the Haida decision to examine carefully what the decision says and perhaps also to consider the limitations on the decision. As I indicated earlier, the Haida decision was a case where there was an application for a transfer of a forest tenure, or the re-issuance of a license, and the Haida Nation sought to consult with the Provincial Crown and with the respondent Weyerhaeuser because of the Haida Nation’s assertion of aboriginal title to the lands in question. The position taken by both the Provincial Crown and Weyerhaeuser was that they were under no obligation to consult with the Haida Nation until such time as they had established aboriginal title to the lands. They said that until some form of aboriginal title were established in the courts, there was no duty on either the Crown or Weyerhaeuser to consult.
[29] The Court of Appeal disagreed. The Court held that both the Crown Provincial and Weyerhaeuser were in breach of an enforceable, legal and equitable duty to consult with the Haida people and to seek an accommodation with them at the time when the processes were underway for a replacement of Tree Farm License 39 and Block 6 and for a transfer of Tree Farm License 39. But in paragraph 58 of the judgment the Court also went on to hold that:
… it does not necessarily follow that the replacement of T.F.L. 39 in 2000 and the transfer to Weyerhaeuser are either invalid or void. That question was not, in my opinion, sufficiently argued on this appeal. And it could much more readily be argued after the extent of any infringement of aboriginal title and rights by T.F.L. 39 had been determined by a Court of competent jurisdiction.
The Court of Appeal, in the next paragraph, 59, went on to say:
For those reasons I would not now make an order about the validity, invalidity, or partial validity of T.F.L. 39 and Block 6. That does not mean that, if circumstances change, there cannot be consideration of that question as an interim matter in these proceedings on the basis of proper argument and full facts. But it seems to me that the proper time to determine that question would be at the same time as the determination of aboriginal title, aboriginal rights, prima facie infringement, and justification, by a Court of competent jurisdiction. At that time also the question of whether the Provincial Crown title is encumbered by aboriginal title and rights is likely to be determined and argument could be directed to the effect of any such encumbrance on T.F.L. 39.
[30] So the Haida Nation case was an appeal of a judicial review. It was not an appeal of an interim injunction decision. And, notably, the Court of Appeal, while finding that there was a duty to consult nevertheless declined to make any order with respect to the validity, invalidity, or partial validity of the forest licenses or tenures in question as a consequence of that failure to consult. Rather, the Court held that while there was a duty to consult, the final decision on the extent of that duty and the impact, if any, on the validity of the licences would not be made until the issue of the aboriginal title and rights were tried.
[31] At paragraph 61, the Court said this:
In the end, the manner in which the duty to consult and reach accommodations is discharged in the immediate and the long-term future will have a very significant impact on the final determinations by a Court of competent jurisdiction which is considering the aboriginal title and aboriginal rights of the Haida people, about whether that title or those rights have been infringed, or continue to be infringed, and, particularly, about whether any infringement was justified.
At paragraph 62, the Court said:
The extent to which any further remedies may be required or may properly be claimed at a later but still interim stage in these proceedings cannot now be predicted. Much may depend on the quality of the consultation and accommodation processes. So, to the extent it may be thought necessary, I would order that the parties have liberty to apply to a judge of the Supreme Court of British Columbia for whatever orders they may be instructed to seek, pending the conclusion of the proceedings with respect to the determination of aboriginal title and aboriginal rights, infringement and justification.
[32] In my view, while the Haida Nation case stands for the proposition that consultation is required, the limitations of that decision must also be carefully considered. In my view, the balance of convenience in the case at bar does not favour granting the interim relief sought by the petitioners, and, accordingly, the application will be dismissed.
[33] The second branch of the application is for the production of documents. Having regard to the disposition of the interim application, the matter of document production will be referred to the judge assigned to hear the judicial review. And counsel will of course be at liberty to apply in the event that they cannot reach an accommodation on appropriate document production.
[34] Costs will be in the cause.
“D.I. Brenner,
C.J.S.C.”
The Honourable Chief Justice D.I. Brenner
April 30, 2002 – Corrigendum to the Reasons for Judgment issued by Chief Justice D.I. Brenner advising that J.R. Rich and F.M. Kirchner are counsel for Lax Kw’alaams and Metlakatla First Nations and Allied Tsimshian Tribes (L021279).