Decision Date: May 22, 2012

Court: BCSC Brown

Cite: 2012 BCSC 746

The Province of British Columbia (the “Province”) appealed a decision of the Forest Appeals Commission (the “Commission”) to the British Columbia Supreme Court. The decision relates to the stumpage rate that International Forest Products Limited (“Interfor”) should pay for harvesting Crown timber in a cutting permit (“CP”) area on Northern Vancouver Island. The appeal concerned the interpretation of provisions of the Coast Appraisal Manual (“CAM”). The CAM is approved by the Minister of Forests, Lands and Natural Resource Operations under section 105(1) of the Forest Act, and has the force of law.

The process for determining stumpage rates begins with the licensee sending an appraisal data submission to the Ministry of Forests, Lands and Natural Resource Operations (then the Ministry of Forests and Range)(the “Ministry”). In April 2007, Interfor sent an appraisal data submission for the CP to the Ministry. In the appraisal data submission, Interfor estimated that 34 percent of the timber volume would be harvested by cable yarding, and the rest would be harvested by ground-based methods. Cable yarding is generally more expensive than ground-based harvesting methods, and it generally causes less disturbance of moist soils. In May 2007, the Ministry used the appraisal data submission to determine that a stumpage rate of $17.59 per cubic metre applied to sawlogs harvested under the CP, effective April 30, 2007.

Subsequently, Ministry staff inspected the CP area, and observed that there had been less harvesting by cable yarding than indicated in the appraisal data submission. The Ministry determined that there had been a change in harvesting method, from cable yarding to a ground-based method, in excess of 15 percent of the total volume harvested, and therefore, a “changed circumstance” under section 3.3.1(1)(a) of the CAM had occurred and a reappraisal of the stumpage rate was required.

The Ministry requested that Interfor provide a reappraisal data submission reflecting the change in volume harvested by cable yarding. However, Interfor disputed that a “changed circumstance” had occurred, and re-sent its original appraisal data submission to the Ministry.

In May 2009, the Ministry conducted a reappraisal and determined that a stumpage rate of $19.96 per cubic metre applied to sawlogs harvested under the CP, effective May 1, 2007. The Ministry based the reappraisal on its estimate that four percent of the total volume had been harvested by cable yarding, representing a 30 percent change to the harvesting method of the total volume.

Interfor appealed the reappraisal to the Commission, and requested that the original stumpage rate be restored on the basis that: (1) there had been no “changed circumstance” under section 3.3.1(1)(a) of the CAM; and (2) even if there was a changed circumstance, section 3.3.1.2 of the CAM specified that the effective date of the reappraisal was May 1, 2007, and the original appraisal data submission should be used in a reappraisal because there was no change in the site conditions between April 30, 2007 (the effective date of the original stumpage determination) and May 1, 2007 (the effective date of the reappraisal).

The Government submitted that a changed circumstance had occurred because Interfor harvested at least 15 percent more volume by ground-based methods than was indicated in the original appraisal data submission.

In International Forest Products Ltd. v. Government of British Columbia (Decision No. 2009-FA-007, issued June 16, 2011), the Commission rescinded the reappraisal and ordered that the original stumpage rate should be restored. Specifically, the Commission considered the words in section 3.3.1(1)(a) of the CAM based on the principles of statutory interpretation. The Commission found that the words “plans” and “is planned” indicate an intention to do something, and are prospective or forward looking. The Commission considered whether there was evidence that Interfor’s plan or intentions with respect to harvesting methods had changed after it submitted the original data appraisal submission. The Commission held that Interfor’s staff estimated the percentage of harvesting by cable yarding based on their knowledge of the site and the typical weather conditions at the site when harvesting would occur. The Commission found that there was no evidence that, sometime after submitting the original data submission, Interfor planned or intended to use a different method to harvest at least fifteen percent of the total volume. Rather, the site conditions when harvesting occurred were unusually dry, and the contractor was able to do more ground-based harvesting than was originally planned. The Commission held that, if the Minister had intended that evidence of the actual volumes harvested by different methods should trigger a changed circumstance reappraisal, the Minister should have clearly said so in the CAM.

In addition, the Commission found that, if a reappraisal was required, section 3.3(2) of the CAM indicates that the reappraisal would look at the CP area as if the trees were still standing, as the area was on the effective date of the reappraisal, i.e. May 1, 2007. Given that there was no difference in the CP area conditions between April 30, 2007 and May 1, 2007, the original appraisal data submission would be used.

The Province appealed the Commission’s decision to the BC Supreme Court.

The Supreme Court first considered the standard of review that applied to the Commission’s decision. It held that the BC Court of Appeal’s decision in Western Forest Products Limited v. HMTQ, 2009 BCCA 354, [“Western Forest Products”] establishes that, where the Commission is interpreting the provisions of the CAM, the applicable standard of review is that of reasonableness, which means that the Court must defer to the Commission’s findings. In addition, the Supreme Court applied the test set out by the Supreme Court of Canada in Dunsmuir v. New Brunswick, 2008 SCC 9. The Supreme Court found that the reasonableness standard applies in this case, because the Commission is a specialized tribunal that hears appeals under forestry legislation, it has expertise in interpreting and applying the CAM that the Court does not have, and the Commission was interpreting a law that is closely connected to the Commission’s function. The Court distinguished the Court’s previous decision in Pope & Talbot v. British Columbia, 2009 BCSC 1715, on the basis that the issue in that case was one of general importance to the legal system as a whole, and did not engage the Commission’s specialized expertise.

Next, the Supreme Court considered whether the Commission’s interpretations of sections 3.1.1(1)(a) and 3.3(2) of the CAM were reasonable. It concluded that the Commission’s interpretations were reasonable, because they fell within the range of possible acceptable outcomes, and were defensible in respect of the facts and law.

The appeal was dismissed, and the Commission’s decision was upheld.