Decision Date: April 24, 2013

Court: BCCA; Justice Hinkson

Cite: 2013 BCCA 185

Her Majesty the Queen in Right of the Province of British Columbia (the “Province”) sought leave from the BC Court of Appeal to appeal a decision of the BC Supreme Court, which had dismissed the Province’s appeal of a decision issued by the Commission.

On July 29, 2005, hot metal fragments from the brakes of a train operated by Canadian National Railway (“CNR”) caused a wildfire. The fire spread to Crown land and destroyed 25,010.8 cubic metres of Crown timber. At the time of the wildfire, the Province had no plans to harvest the timber.

In the Fall of 2006, the salvageable timber was harvested. A total of $4,874.80 in stumpage was paid for 19,809.79 cubic metres of timber.

In 2008, the Fire Centre Manager (the “Manager”), Ministry of Forests and Range (the “Ministry”), determined that CNR had contravened the Wildfire Act and the Wildfire Regulation in causing the fire. Section 27(1)(c) of the Wildfire Act and section 30(a) of the Wildfire Regulation provide that a cost recovery order may be issued when a wildfire is caused by a contravention, and if a cost recovery order is issued, the value of damaged or destroyed Crown timber must be calculated by ascertaining the amount of stumpage applicable under the Forest Act. The Manager ordered CNR to pay $254,680.38 for the damaged or destroyed Crown timber, which was 75 percent of the timber’s stumpage value at the time of the fire, as calculated by the Manager. CNR appealed to the Commission.

In the appeal before the Commission, the parties agreed that the amount of stumpage applicable to the timber based on the rate that applied from July 1, 2005, to September 30, 2005, would be $280,299.19. The parties also agreed that the amount of stumpage applicable to the timber based on the rate that applied from April 1, 2006, to 2009 would be $6,252.50. The issue before the Commission was when to value the timber, which would determine the appropriate stumpage rate. The Province argued that the value should be calculated using the stumpage rate that applied when the timber was damaged or destroyed by the wildfire, which is the 2005 rate. CNR argued that the value should be based on the stumpage rate that applied on April 1, 2006, based on the date when the timber would have been scaled or harvested, which is the 2006 to 2009 rate.

In Canadian National Railway v. Government of British Columbia (Decision Nos. 2008-WFA-001(a) & 2008-WFA-002(a), issued June 27, 2011), the Commission determined that the applicable stumpage payable by CNR was $6,250.50. Specifically, the Commission found that, under section 103(1) of the Forest Act, if a harvesting agreement had been in place, the damaged timber would have been valued based on the stumpage rate when the timber was scaled. The Commission also considered section 103(3) of the Forest Act, which describes the procedure for calculating the stumpage owing when a person “cuts, damages, destroys or removes Crown timber without authorization”. Section 103(3) contemplates using the stumpage rate that “would likely have applied to the timber” under section 105(1) of the Forest Act “if rights to the timber had been granted under an agreement entered into under” the Forest Act. The Commission interpreted this to mean that the applicable stumpage rate is the one that would have applied when the timber might have been harvested. The Commission concluded that the appropriate stumpage rate is not the one that applied when the fire occurred, given that there were no plans to harvest the timber at that time. Rather, it is the rate that would likely have applied when the timber was cruised or scaled. In addition, the Commission found that the Manager had no statutory authority to reduce the cost recovery order to 75% of the timber’s value. Accordingly, the Commission concluded that the cost recovery order should be for $6,252.50.

The Province appealed the Commission’s decision to the BC Supreme Court. In British Columbia v. Canadian National Railway, 2012 BCSC 1856, the Court held that the Commission’s conclusion on the valuation date was a reasonable exercise of its specialized expertise in relation to forestry statutes, and was also correct. The Commission reasonably concluded that the common law principles on damages did not apply, because the legislation creates a complete scheme for valuing lost Crown timber, and there is clear legislative intent not to follow the common law principles on damages. The Commission clearly and rationally explained its decision. The Commission’s specialized skill and experience qualified it to interpret the legislation and reach a different conclusion than the Manager. Accordingly, the Province’s appeal was dismissed, and the Commission’s decision was upheld.

The Province sought leave from the BC Court of Appeal to appeal the Supreme Court’s decision on the basis that the Commission went beyond the statutory scheme, and rather than interpreting the statutory wording, instead read wording into the statute that altered the plain meaning of the subsection into which the wording was read.

The Court of Appeal granted leave to appeal. The Court held that the proposed appeal involves the interpretation and application of statutory provisions, which is important to the Province and to others who may be affected by those provisions. The decisions of the Commission and the Supreme Court are markedly different from that of the Manager. The issue on appeal does not appear to have been considered by other appellate bodies, and the benefit to be derived from the appeal is the clarification of the statutory scheme.