May 17, 2020

The case involves a claim against the Province of British Columbia and Canada for unlawfully frustrating the plaintiff’s efforts to obtain regulatory approval of a proposed mining project.

The plaintiff proposed the development of a mining project that was subject to environmental approval by the British Columbia Environmental Assessment Office (‘BCEAO’) and Canadian Environmental Assessment Agency (‘CEAA’). After a process lasting several years during which the plaintiff submitted environmental assessment documents that were rejected on various grounds, BCEAO advised the plaintiff that if it did not withdraw the application for environmental assessment, it would be rejected. The plaintiff withdrew the application. The following year, BCEAO termination the assessment process.

According to the plaintiff, an unidentified employee of the province instructed the BCEAO and CEAA at the commencement of the assessment process to “engage in a process of review that would ensure the failure of [the plaintiff's] application for an environmental assessment certificate.”

The plaintiff commenced an action by filing a Notice of Civil Claim (NOCC) on five causes: misfeasance in public office; negligence; de facto expropriation or regulatory taking; breach of contracts; and conspiracy. The defendants applied for the NOCC to be struck for not disclosing a reasonable claim.

Misfeasance in public office

The defendants claimed, inter alia, that the claim failed because it did not state a violation by them of any statutory obligation. The Court found that there is no requirement that a statutory obligation be violated for such a claim to arise, abuse of statutory discretion provides sufficient grounds. Deliberate steps to delay and frustrate an environmental assessment, if true as alleged, would fall outside the scope of the discretion conferred under the statute.

While there were certain other defects in the NOCC, the Court concluded that these defects were not fatal to the claim and, instead of dismissing the action, stayed the action to allow the plaintiff to rectify the defects.

Negligence

The plaintiff claimed that the public authorities owed a statutory duty to the plaintiff to consider the application, and they failed to do so in good faith and in a timely manner, causing damages to the plaintiff. Particularly, the plaintiff claimed that a duty of care arose “as a result of direct interactions” between the plaintiff and the regulatory agencies.

While Canada did not challenge this claim on substantive grounds, BC claimed that no duty of care existed. The Court found the fact of “direct interactions” between the plaintiffs and regulators to be crucial and sided with the plaintiff. The Court relied on Carhoun & Sons Enterprises Ltd. v. Canada (Attorney General), 2015 BCCA 163 (CanLII), which held that a relationship of proximity may arise where interactions between the regulator and the regulated party give rise to a clear set of expectations that the regulator will consider the interests of the regulated party. The statutory scheme may nonetheless foreclose existence of a duty of care, but the statutory scheme here did not do so.

De facto expropriation or regulatory taking

The plaintiff claimed that the defendants imposed such burdens on its property by their actions – the environmental assessment requirements – as to deprive it of its interest in the property, though leaving its paper title undisturbed.

The Court noted that under Canadian Pacific Railway Co. v. Vancouver (City), 2006 SCC 5 (CanLII), the plaintiff had to plead facts indicating (1) an acquisition by the defendant of a beneficial interest in the property or flowing from it, and (2) removal of all reasonable uses of the property. The claim here failed on the second element because it was based on the aborted environmental assessment of a single proposed project; the plaintiff had not pleaded facts showing that all reasonable exploitation of their subsurface rights over the land had been foreclosed. This claim was dismissed.

Breach of contract

The plaintiff claimed that it has rights under contracts made at the time of the original Crown grants and the defendants were liable for breach of contract. The claim was dismissed because the contracts upon which the claim was grounded were not clearly pleaded.

Conspiracy

The plaintiff claimed that the defendants “agreed or acted in concert to commit and promote the acts described herein with the predominant purpose of causing injury” to the plaintiff. The defendants applied to have the claim dismissed because it did not plead specifics.

The Court found that it is common for allegations of conspiracy to be pleaded in general terms. When defendants apply to strike them, a common approach is to permit the pleading to stand pending discovery, and to entertain a further application to strike it if it is still not properly particularized following discovery. Accordingly, the Court refused to strike the conspiracy claim.