Decision Date: October 13, 2006

Court: BCSC, Registrar

Cite: Victoria Registry No. 052945

The Province of British Columbia, as represented by the Minister of Forests (the “Province”), appealed a decision of the Forest Appeals Commission issued on May 20, 2005 (Teal Jones Forest Ltd. and Teal Cedar Products Ltd. v. Government of British Columbia, Decision Nos. 2004-FA-072(a) to 074(a), 080(a) to 083(a), 089(a), 2005-FA-031(a) & 041(a)).

The Commission’s decision involved ten separate stumpage rate determinations that were issued to Teal Jones Forest Ltd. and Teal Cedar Products Ltd. (collectively, “Teal”) by the Regional Appraisal Co-ordinator, Coast Forest Region, Ministry of Forests.  The determinations applied to timber harvested under ten cutting permits held by Teal near Port Renfrew on Vancouver Island.  As part of the stumpage appraisal process, Teal submitted data to the Regional Appraisal Co-ordinator that designated the Shoal Island log dump and sorting facility as the “appraisal log dump” for the purpose of determining the stumpage rates applicable to the cutting permits.  An appraisal log dump is used to determine haul distances, towing and barging points of origin, and road use charges in appraising stumpage rates under Coast Appraisal Manual (the “CAM”).  The choice of an appraisal log dump can significantly affect the amount of stumpage payable by the licensee.  In determining the applicable stumpage rates, the Regional Appraisal Coordinator rejected Shoal Harbour as the appraisal log dump, and substituted the Jordan River log dump.  This resulted in significantly higher stumpage rates for the ten cutting permits.

On appeal to the Commission, Teal requested that the determinations be rescinded and the Regional Appraisal Co-ordinator be directed to reappraise the stumpage rates using Shoal Island as the appraisal log dump.

The Commission first considered whether the Regional Appraisal Co-ordinator exercised discretion under the CAM when selecting the appraisal log dump.  The Commission found that the process of selecting the appraisal log dump is an exercise of discretion that must be exercised in a reasonable manner, and must be consistent with the objectives and intent of the CAM.  The Commission held that it was not a reasonable exercise of discretion to select Jordan River as the appraisal log dump for the ten cutting permits, and the stumpage rates should have been assessed using Shoal Island as the appraisal log dump.  The evidence showed that, although the Jordan River facility was closer to the areas covered by Teal’s cutting permits, that facility was unavailable to Teal because it was being used to its full capacity by another forest company.  The Shoal Island facility was the closest functioning log dump that was available for use by Teal.

Consequently, the Commission referred the matter back to the Regional Appraisal Co-ordinator with directions to recalculate the stumpage rates based on Shoal Island as the appraisal log dump.  Accordingly, the appeals were allowed.

The Province appealed the Commission’s decision to the British Columbia Supreme Court, on the grounds that the Commission erred in interpreting the CAM and in finding that the Regional Appraisal Coordinator’s selection of Jordan River was an unreasonable exercise of discretion.

Before the appeal was heard by the Court, the parties negotiated an agreement to settle the matter.

By consent of the parties, the Court ordered that the appeal was dismissed, with each party bearing their own costs.