Decision Date: November 24, 2006

Panel: Alan Andison

Keywords: Forest Practices Code of British Columbia Act – ss. 62(1); Forest and Range Practices Act – s. 71(1), (4); corporate director or officer liability; fair hearing; notice; opportunity to be heard; procedural fairness; karst

Darren Smurthwaite appealed a determination made by the District Manager, Queen Charlotte Islands Forest District, that Mr. Smurthwaite, in his capacity as president and the sole director of a corporate licensee, was responsible for contravening sections 62(1) of the Forest Practices Code of British Columbia Act.  The contravention involved the failure to construct a road in accordance with a road permit and road layout and design.  The contravention led to damage to special features that had been identified in the road permit and other documents; namely, karst features.  The District Manager levied a penalty of $45,000 for the contravention.

Mr. Smurthwaite argued that the District Manager erred by making a determination against him in his capacity as president of the licensee, and failing to give him notice of the possibility of a determination against him rather than the corporate licensee.  Mr. Smurthwaite requested that the Commission rescind the determination.

The Commission considered the legal test required under section 71(4) of the Forest and Range Practices Act (the “Act”) for finding a corporate director or officer liable for a contravention, and whether the District Manager had applied that test.  The Commission found that section 71(4) requires that: (1) there must be sufficient evidence to establish, on a balance of probabilities, that a corporation contravened the Acts, and the corporation cannot claim a statutory defence; and, (2) there is sufficient evidence to establish, on a balance of probabilities, that a director or officer of the corporation failed to prevent a foreseeable occurrence which led to the contravention.

The Commission found that the District Manager failed to properly apply the test set out in section 71(4).  There was no evidentiary basis for the determination against Mr. Smurthwaite in his capacity as president, nor was there a basis upon which the Commission could evaluate the case against him.  On this basis alone, the Commission would have allowed the appeal.

The Commission also considered whether there were breaches of procedural fairness in the proceedings before the District Manager, and if so, whether the appeal process could correct those errors.  The Commission found that section 71(1) of the Act indicates that a determination may be made against a person after that person has been given an opportunity to be heard.  Failure to provide an opportunity to be heard is a breach of a statutory right and may render a subsequent decision a nullity.  The Commission noted that, where a corporation has only one director and officer, as in this case, that person could participate in an opportunity to be heard as both a representative of the corporation and in their capacity as a director and/or officer.  The Commission also found that it is important that a director or officer be given clear notice of the dual nature of the proceedings before the opportunity to be heard occurs.  Although providing notice of an opportunity to be heard is not a mandatory statutory requirement, it is a requirement of procedural fairness.  Without notice of the allegations against a person, an opportunity to be heard is ineffective.

The Commission found that, although Mr. Smurthwaite received notice of an opportunity to be heard, the notice was inadequate because it did not clearly notify him that the District Manager was considering making a determination regarding his liability as president of the licensee.  The lack of proper notice of the case to be met led Mr. Smurthwaite to misapprehend the purpose of the proceedings and the potential penalty that he faced.  Consequently, there was a breach of section 71(1) of the Act as well as a breach of the requirements of procedural fairness.  Given the nature of the errors in this case, the Commission found that the determination was a nullity, and therefore, the Commission had no jurisdiction to correct the errors or to send the determination back to the District Manager.

Consequently, the Commission rescinded the determination and penalty against Mr. Smurthwaite.

The appeal was allowed.