Omineca Tick Submission by Deep Blue Creative Inc.

File number:

Z?333

IN THE SUPREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL OF BRITISH COLUMBIA)

BETWEEN: Omineca Enterprises Ltd.

Applicant (on application for leave to appeal) (Appellant in Court of Appeal) AND: The Minister of Forests

Respondent (on application for leave to appeal) (Respondent in Court of Appeal)

APPLICATION FOR LEAVE TO APPEAL Filed by Omineca Enterprises Ltd. -Applicant Based on Supreme Court Act section 40 Omitleca E~~terprises Ltd. Applicant Counsel for Applicant Stephen Tick Barrister & Solicitor 410 - 1770 West 7th Ave. Vancol~ver,BC, ~ 6 4Y6 3 Phone: 604-714-1770 Fax: 604-733-6646 ernail: shtick@intergate.ca Tlle Minister of Forests Respondent Counsel for Respondent Border1 Ladner Gervais, LLP Barristers & Solicitors 1200 - 200 Burrard St. Vancouver, BC, V7X 1T2 Phone: 604-687-5744 Fax: 604-687-1415

TABLE OF CONTENTS

DESCRIPTION

DATE

PAGE

Application for Leave to Appeal (Form 25A)

August 29,2002

Certificate of Applicant (Form 25B)

August 29,2002

DECISIONS & ORDERS Shore Appeal Board majority decision

October 16, 1998

Shore Appeal Board dissent

October 16, 1998

Formal Order of Shaw J. (BCSC)

February 24,2000

Reasons of Shaw J. (BCSC) It:

.,:.&7&a '.

Formal Order of BCCA

&. ;<,:

leave

February 24,2000 " ,c November 2,2000

Reasons of Southin J.A. granting leave (BCCA)

November 2,2000

Formal Order of BCCA

Not yet perfected

Reasons of Ryan J.A. (BCCA)

June 14,2002

MEMORANDUM OF ARGUMENT Part I - facts Part I1 - issues Part I11 - argument Part IV - order for costs Part V - order sought

DOCUMENTS RELIED ON Timber Sale Harvesting License A08692

July 8, 1977

162

Timber Sale Harvesting License A08693

July 8, 1977

172

n:!9256-s\scc ZOOZ\indcx for leave bookler.doc

. .. .

...

Willcins letter to Omineca re suspension

September 27, 1983

Doyle letter to Wilkins

July 4,0986

Wilkins letter to Omineca re cancellation

- July 15, 1986

Willcins memo to file re meeting

August 5,1986

Willcins memo to Doyle

August 25,1986

Wilkins letter to Omineca re extension

October 14, 1986

Baxter letter to Omineca re cancellation

August 18,1987

Baxter letter to Omineca explaining prior letter

September 22,1987

Omineca letter to Baxter for a replacement license July 11, 1988 Baxter letter to Omineca refising replacement

August 19,1988

license APPENDICES Forest Act RSBC 1979 chap 140

as it was 1986

Forest Act RSBC 1979 chap 140

1987 with 62 (2)

/w p++ww9

Chronology of events

scc.

n:\9156-s\scc 2002\1ndex for leave bookle1.doc

File number:

2 9 333

IN THE SWREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL OF BRITISH COLUMBIA) BETWEEN: Omineca Enterprises Ltd. Applicant (on application for leave to appeal) (Appellant in Court of Appeal)

AND: The Minister of Forests Respondent (on application for leave to appeal) (Respondent in Court of Appeal)

NOTICE OF APPLICATION FOR LEAVE TO APPEAL TAKE NOTICE that Omineca Enterprises Ltd. hereby applies for leave to appeal to the Court, pursuant to Supreme Court Act section 40 (1) from the judgement of the Court of Appeal of British Columbia, file number CA026909 made on June 14,2002, and for an order granting the Applicant Omineca Enterprises Ltd. leave to appeal or such further or other order that the said Court may deem appropriate: AND FURTHER TAKE NOTICE that this application for leave is made on the following grounds: 1. The Court of Appeal erred in its interpretation of the breadth and meaning of the Forest Act RSBC 1979 chap. 140 section 62. 2. The Court of Appeal erred at law when it decided that the Forest Act RSBC 1979 Chap. 140 section 62 did not apply to limit rent on the Applicant's TSHLs; 3. The Court of Appeal erred at law when it decided that the TSHLs were not under suspension; 4. The Court of Appeal erred at law when it decided that the Applicant was obliged to make rent payments for the period during which the TSHLs cutting rights were suspended; and 5. The questions involved are by reason of public importance or the importance of the issues of law ones that ought to be decided by this Honourable Court. Dated at Vancouver, BC, on August 29,2002.

Counsel for the ~ s. .p l i c a n t Stephen Tick ~arristei"&Solicitor

410 - 1770 West 7th Ave. Vancouver, BC, V6J 4Y6 Telephone: (604) 714-1 770 Telefax: (604) 733-6646 email: shtick@intergate.ca

Original to:

The Registrar, Supreme Court of Canada

Copies to:

The Respondent, Minister of Forests, c/o His Counsel Borden Ladner Gervais LLP Banisters & Solicitors 1200 - 200 B w a r d St. Vancouver, BC, V7X IT2 Phone: 604-687-5744 Fax: 604-687-1415

NOTICE TO THE RESPONDENT: A respondent may serve and file a memorandum in response to this application for leave to appeal within 30 days after service of the application. If no response is file within that time, the Registrar will submit this application for leave to appeal to the Court for consideration pursuant to section 43 of the Supreme Court Act.

File number: 2 9333

IN THE SWREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL OF BRITISH COLUMBIA) BETWEEN:

Omineca Enterprises Ltd. Applicant (on application for leave to appeal) (Appellant in Court of Appeal)

AND:

The Minister of Forests Respondent (on.application for leave to appeal) (Respondent in Court of Appeal)

CERTIFICATE OF APPLICANT

I, Stephen Tick, Counsel for the Applicant, Omineca Enterprises Ltd., hereby certify that there is no sealing order or ban on the publication of evidence or the names or identity of a party or witness in this case. Dated at Vancouver, BC, on August 29,2002

~ a k s t e& r sofir 4 10 - 1770 West 7th Ave. Vancouver, BC, V6J 4Y6 Telephone: (604) 714-1770 Telefax: (604) 733-6646 ernail: shtick@intergate.ca

IN THE MATTER OF THE FORESTACT R.S.B.C. 1979, C. 140, - AS AMENDED

IN THE MATTER OF AN APPEAL BY OMINECA ENTERPRISES LTD. OF A DECISION OF THE CHIEF FORESTER DATED SEPTEMBER 10,1991

FOREST APPEAL BOARD:

LORRAINE SHORE, CHAIR MARGARET SASGES, MEMBER JACQUELINE L. O n , MEMBER

COUNSEL FOR APPELLANT, OMINECA ENTERPRISES LTD.:

STEPHEN TICK DICK BYL

COUNSEL FOR RESPONDENT, MINISTRY OF FORESTS:

STEPHEN ANTLE

DATES OF HEARING:

MARCH 2,3 , 4 , and MAY ll,12,13,15, and JULY 15 and 16,1998

PLACE OF HEARING

VANCOUVER, B. C.

DATE OF DECISION:

OCTOBER 16,1998

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES Lm. THE APPEAL & ISSUES

IklE APPEAL This appeal is brought pursuant to Section 154 (2) (c) the Forest Act, R.S.B.C. 1979, C. 140, as amended (hereinafter "the Acf"). This appeal by Omineca Enterprises Ltd. is from a decision of the Chief Forester dated September 10, 1991, concerning the cancellation of Timber Sale Harvesting Licences A08692 and A08693 (hereinafter the "TSHLs" or "the licences"). In that decision, the Chief Forester, J. R. Cuthbert, held that the TSHLs were rightfully cancelled by the Regional Manager, Prince George Forest Region, pursuant to s. 61 of the Act for non-payment of rentals pursuant to s. 89 of the Act. The present Board was appointed by Order in Council #213 dated February 21, 1997. Lorraine Shore, who was appointed Chair of the present Board, had earlier been appointed as a member of a previous Board dealing with the same appeal, by Order in Council #0520 dated April 18, 1996.

JSSUES 1

Did the Ministry of Forests have the legal right to cancel the licences?

Did the Ministry of Forests cancel the licences for a reason different from that set out in the letter of July 15, 1986?

Did the Ministry of Forests tell Omineca that even if they paid the rent and avoided the cancellation, the licences would still be suspended, and if so, did this mislead Omineca?

Was the notice of July 15, 1986 deficient or defective or contrary to natural justice?

Did the reference to a review in the October 14, 1986 letter create a condition precedent to cancellation?

Did the Ministry of Forests treat Omineca in a 'systematic and equitable manner" pursuant to Section 4 (e) of the Ministry of Forests Act?

Were the licences cancelled in order to rationalize the Allowable Annual Cut?

FOREST APPEAL BOARD RE: OMINECAENERPRISESLTD. HEARING

-2-

Was the November 30, 1986 cancellation deadline postponed at the meeting of November 17, 1986? If it was postponed, what was the effect of that postponement?

The hearing of the evidence and argument in this matter occurred over nine days, March 2 , 3 , 4 , and May 11,12,13 and 15, and July 15 and 16,1998. Prior to evidence being heard, the Board had made a number of procedural rulings and other procedural matters were agreed. Firstly, it was decided that all the evidence would be heard and the parties would then argue the matter of jurisdiction, specifically whether the licences had been cancelled in fact. If the Board determined that the licences had been cancelled, the Board would hear argument on whether the licences had been wrongly cancelled. The Board issued its decision on jurisdiction on June 4, 1998, finding that the licences had been cancelled and that this cancellation was done in a letter dated August 18, 1987. Secondly, the Board requested that the parties attempt to streamline the process by preparing a joint book of documents and having evidence presented in the form of affidavits. A joint book of documents was prepared which contained 119 documents. Another 34 documents (some of which were affidavits which themselves contained a number of exhibits and attachments) were tendered during the hearing. In a few instances, a party objected to certain documents and the Board ruled that some documents, either in whole or part, would not be admitted. As part of the procedural discussions before the hearing, the Board suggested that evidence could be presented by affidavit. The Ministry of Forests presented most of its evidence through affidavit and made its witnesses available for cross examination. Omineca's witnesses gave evidence viva voce. The witnesses, their positions at the relevant times and their manner of giving evidence is as follows: Roy Peterson

President, Omineca Enterprises Ltd.

Viva voce

John Peterson

Secretary, Omineca Enterprises Ltd.

Viva voce and Affidavits sworn September 27, 1994, November 1, 1994, January 10,1995, January 13.1995, March 31. 1995 and April 3, 1995

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. HEARING

Murray Morrison

Lawyer for Omineca

Statutory declaration sworn October 6, 1997 and viva voce

Mike Wilkins

Regional Manager, Ministry of Forests

Affidavits sworn November 30,1994 and September 29, 1997, and cross examination

Rich Truant

Regional Staff Manager, Ministry of Forests

Affidavit sworn March 24, 1995

R. D. Flitton

Deputy Minister of Lands and Forests

Affidavit sworn October 9, 1997 and cross examination

Ken Belik

Acting Regional Manager, Ministry of Forests

Affidavits sworn January 5,1995 and October 6, 1997, and cross examination

Dennis McPhail

Timber Tenures Officer, Ministry of Forests

Affidavit sworn March 13, 1995

Leveme Merkel

Regional Timber Officer, Ministry of Forests

Affidavit sworn January 9,1995

Allan MacPherson

Assistant Deputy Minister Viva voce and Deputy Minister of Forests

Jack Kernpf

Minister of Forests

Affidavit sworn May 7. 1998 and cross examination

Waldemar Braul

Lawyer

Affidavit sworn July 13, 1998

FOREST APPEAL BOARD

RE: OMINECA ENTERPRISES LTD. FACTS

FACTS The history of this matter is lengthy. TheBoard heard nine days of evidence and argument. Omineca Enterprises Limited is a company run by the Peterson family. It started in Prince George, then moved to Fort Nelson in 1972. Since then it has been run by John Peterson, the company's secretary, and his two sons, Roy and Leonard. Roy Peterson is president of the company. Omineca originally had a mill known as the Pankew mill which was 100 kilometers south of Fort Nelson. In 1976, the company acquired a mill site just south of the Fort Nelson city centre. That same year, Omineca applied to obtain two timber sale harvest licences ("TSHLsn) and also applied to purchase some adjacent Crown land, Lots 1288 and 1968. On July 8, 1977, Omineca was granted TSHL A08962 for the Liard area and TSHL A08963 for the Sikanni area, both within the Prince George Forest District and the Fort Nelson Timber Sale Area ("TSA"). The licences were each for a 12year term and collectively allowed and obligated Omineca to harvest 40,000 cunits of timber per year. This figure represents approximately 11 1,500~meters.' The licences also obliged Omineca to pay an annual rent and stumpage on the timber it cut. The annual rent for the two licences was $28,320. The Crown land was not, however, obtained until 1984 from the British Columbia Development Corporation by Trans North Developments Ltd., a company related to Omineca. Ornineca said this resulted in extra costs and reduced revenues. Ornineca wanted this land for two reasons - so it could obtain a B.C. Rail spur line, and for log storage. The spur line was needed so that wood chips from the mill could be loaded directly into rail cars. Omineca, in fact, never got the spur line. It burned its chips. It also had to truck its finished product from the mill one to two kilometers to the B.C. Rail track. In the Fort Nelson area, harvesting is done for a four-month period in the winter. The logs must be stored to supply the mill for the rest of the year, and therefore a large storage area is required.

After Omineca aDDlied for this Crown land, but before it obtained it, the Crown , permitted the construction of a poisonous bas pipeline across the lots. The pipeline owners advised Omineca they could not drive heavy equipment across the pipeline At the time Ornineca was granted its licence, there were two other forest

companies logging in the same area. Fort Nelson Forest Industries Ltd. ("FNFI") and Tackarna Forest Products Ltd. ("Tackama"). FNFl's licence provided for an

FOREST APPEAL BOARD RE: OMINECAE ~ R P R I S LTD ES

- 5-

FACTS

allowable annual cut ("AAC") of 403,910~meters. [Some documents refer to FNFl's AAC as 41 0,640~meters, however the more common figure is that cited. Nothing turns on this difference.] Tackama's licence was for 500,070~meters. These licences, along with the 111,500~meters allocated to Omineca and 3,500~ meters for the Small Business Enterprise Program, showed a total allocation of 1,015,480~meters which could be cut each year in the Fort Nelson Timber Supply Area. This exceeded the allowable annual cut set by the Chief Forester in 1979 of 750,000~meters of coniferous species per year. The allowable annual cut is set every five years, and is intended to establish a figure which will maintain a sustainable harvest in the long term. Under the terms of the licences, the annual harvest is averaged, but a licensee cannot cut less than 50 per cent of the annual harvest or more than 150 per cent of the annual harvest on an annual basis. Over a five-year period, the annual cut can be plus or minus 10 per cent of the allocated figure. In 1978, Omineca cut 30 per cent of its annual allowable cut. In 1979, it cut 44 per cent and in 1980,48 percent. In 1981, Omineca cut only 9 per cent of its annual allowable cut and in 1982 it did no harvesting. Under the terms of its licences, Omineca was obligated to pay an annual rent and stumpage on the timber it harvested. About mid-1980, timber prices fell drastically. Omineca, along with FNFI and Tackama, made an arrangement with the Ministry of Forests to ease the situation. There was an arrangement struck whereby each company would pay $10,000 per month on its stumpage account. The actual amount owing was based on the 1979 stumpage. The Ministry of Forests divided the 1979 stumpage figure by 12, and took this one-twelfth figure as the projected monthly stumpage for 1980. In Omineca's case, this amounted to $32,060 per month. The difference between the $10,000 which was to be paid and the actual amount owing would continue to accrue as a debt and would accrue interest In the case of FNFI, the actual monthly stumpage owing was $178,500. No amount was given for Tackama. Pursuant to an agreement set out in a letter dated June 25. 1980, Omineca was 1980 to October I , 1980. These four to pay the $10,000 monthly from July I, payments were made. In a letter dated October 21, 1980, the then regional manager wrote to Omineca offering to extend the agreement to March 31, 1981. The letter also noted that the annual rental on the licences was past due, and failure to pay would result in the licences being subject to cancellation and suspension. Omineca did not make any more payments pursuant to this extension or at any other time for annual rent, stumpage or the accruing interest.

FOREST APPEAL BOARD

-6-

RE: OMINECA ENTERPRISES LTD. FACTS

The rent continued to accumulate on an annual basis, and the stumpage debt continued to accrue interest. By 1983, Omineca was in rental arrears in the amount of $113,280 plus interest. In addition, it owed stumpage, which, according to the Ministry of Forests, amounted to approximately $666,000 by mid-1983. At the beginning of 1983, Tackama owed the Ministry of Forests $2,115,327 including interest and FNFl owed $2,336,510 including interest. Both companies made some payments to the Ministry of Forests. By February 28, 1986, Tackama owed $1,624,278. The rent it owed was $125,018 which was due in February 1986. By February 28, 1986, FNFl owed $2,038,385. It owed rent for the years 1984 and 1985 for a total of $205,320. From approximately 1981 onward, Omineca had essentially become dormant. Its sawmill had not operated at full capacity since December, 1980 and the sawmill and planer were shut down completely in December, 1981. The other two companies. FNFl and Tackama, were able to obtain some revenue from wood chips. Both of these companies, unlike Omineca had rail spur lines. While no documents were introduced which provided a complete picture of the actual logging in the Fort Nelson Timber Sale Area, a compilation of the documents which were introduced give the following picture of actual logging of eacti'company (all figures are in cubic meters) (a blank indicates no figures were provided):

Omineca made representations to the government seeking what came to be known as "sympathetic administration" of its accounts and situation. This would include a relaxation of the cut control and utilization requirements, and the

FOREST APPEAL BOARD RE: OMINECAENTERPRISES LTD. FACTS

average market value, which was one of the components of the stumpage calculation, would be calculated differently. In one letter, dated June 22, 1981, Omineca wrote "we are absolutely broke now due to Government inability to process land for spur, chip loading, and tog storage." In addition to making representations, Omineca sought an exemption to export logs. Government policy prohibited the export of logs unless they were surplus to the needs of the timber processing facilities in the province. Omineca's application was made on October 20, 1980 and was for 114,000~meters of standing timber. The Log Export Advisory Committee, which is composed of members from various segments of the lumber industry, recommended rejecting the application and the government refused to grant the application. Both FNFI and Tackama had also made applications for exemptions in the 1978-1980 period. A summary of exemptions prepared in 1987 showed that five exemptions had been granted to Tackama and four to FNFI. Tackama and FNFl each had two exemption applications rejected. Tackama in particular had been granted an exemption after its mill burned down in the fall of 1977. All of the export permits were granted fortimber which had already been felled. Omineca's application related to standing timber. Omineca also requested, on May 5, 1983, that the regional manager approve surrender of its TSHLs and replace them with a Forest Licence. A Forest Licence contains a number of different provisions from a TSHL, and is generally for a tonger period of time. OnJuly 14. 1983, the Minister said he was not prepared to replace the TSHLs with a Forest Licence until all outstanding accounts had been paid or a firm payment arrangement had been made. The Ministry of Forests gave the outstanding balance at that time as $666,000. On September 27, 1983, M. J. Wilkins, who was then the Regional Manager for the Prince George district, wrote to Omineca advising that it was in violation of Section 89 of the Forest Act and condition 7.1 of the licences in that its annual rental fees for 1980-1983 were outstanding. He advised that all existing cutting permits pursuant to the two licences were suspended effective October 14, 1983 pursuant to Section 59 of the Act. He also warned that the two licences may be subject to cancellation pursuant to Section 61 of the Act and s. 141 of the licences. At the same time that Omineca's rights under its licences were suspended, there were two other things going on in relation to the Fort Nelson timber sale area. The first was in relation to the AAC. As noted earlier, the actual commitment of the issued licences exceeded the AAC by more than 250,000~meters. The Ministry of Forests looked for various ways to deal with this discrepancy. In a memo from Assistant Deputy Minister A. C. MacPherson to Deputy Minister T. M. Apsey dated October 25, 1983, it was noted that of the three licensees, only

FOREST APPEAL BOARD RE: OMINECAENTERPRISES LiO. FACTS

-8-

Tackama had a Forest Licence while Omineca and FNFl had Timber Sale Harvesting Licences. The distinction was that, pursuant to the Forest Act, the AAC of a Forest Licence could be reduced in response to a decrease in the AAC of a Timber Supply Area, but there was no comparable legislative provision which would allow such a decrease in the AAC of a TSHL. The memo suggested amending the legislation to allow such a decrease. The AAC was reset for the next five-year period beginning January 1, 1984. It provided for an AAC of 750,000~meters of coniferous species, which was the same rate of harvest as for the previous period. The AAC also allowed for an additional 100,000~ meters of deciduous species to be cut. Two years later, in a memorandum dated April 3,1986, S. H. Osbom, a Resource Officer Timber for the Fort Nelson Forest District, wrote to Arthur Joyce, the district manager, setting out various scenarios to deal with the overcommitment issue. At that time, the licences of both Omineca and FNFl were under suspension and subject to cancellation. The scenarios involved the effect of cancelling only FNFl's licence, of cancelling only Omineca's licence, or of cancelling both. The second and related issue was the acquisition of FNFl by Tackarna. FNFl had been in receivership since April 14, 1983. Sometime in 1984, Tackama approached the Ministry of Forests to seek commitments which would facilitate its acquisition of FNFI. Some concessions were made. These included an Order in Council dated August 9, 1985 whereby the government forgave $1,119,714.99 in interest charges due on stumpage from FNFI. During the course of Tackama's attempt to acquire FNFI, Omineca also wrote to the then Premier W. R. Bennett forward its own proposal for merging Omineca and FNFI. Ultimately an arrangement was reached between Tackarna, the receivers for FNFl and the which allowed Tackama to obtain FNFI. The main features of the arrangement were that FNFl's timber rights would be transferred to Tackama, but FNFl's AAC would be reduced from 403.910~meters to 246,430~meters, Tackama would commit to repay $1,365.000 in outstanding stumpage and $750,000 of backlog forestry work under FNFl's licence during the next seven years, and Tackarna would be required to bring its own balance of its current outstanding account up to date. At that time. Tackarna owed approximately $1.5 million to the Ministry of Forests. This agreement was confirmed by the Minister of Forests J. H. Heinrich on July 15, 1986. Shortly after Mr. Wilkins suspended the cutting permits under Omineca's licences, John Peterson wrote to the then Minister Tom Waterland on October 12, 1983 making another proposal. The related company of Trans North Developments would pay the outstanding principal of $488,994.41, make a down payment of $73,280 on Ornineca's annual fees, the balance of which would be paid monthly at the rate of $6,000 with no interest accruing, and current charges would be paid. The TSHLs issued to Ornineca would be transferred to a Forest Licence in the name of Trans North. The Minister replied on November 14, 1983

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. FACTS

-9-

advising that all outstanding charges must be paid in full before the licences could be transferred. After receiving Mr. Wilkins' letter of September 27, 1983 suspending the rights under the licences, Omineca made proposals to the government, including reducing the amount owing on the outstanding account, directing that the $40,000 paid on the stumpage account in 1980 be directed to the annual rent, and transferring the licences to Trans North Developments. The Minister of Forests rejected the proposals. On April 25, 1984, Mr. Wilkins again wrote to Omineca advising that since nothing had been done in regard to the indebtedness, he intended to cancel the licences effective July 31, 1984. After a discussion with Omineca, Mr. W~lkinsagain wrote on May 24, 1984 advising that the cancellation would proceed unless there was a satisfactory resolution to the outstanding indebtedness. He said that he would be prepared to recommend to the appropriate Ministry officials in Victoria resolution which would include payment of the outstanding rent by July 31, 1984, a satisfactory repayment schedule for the balance of the outstanding account, and current stumpage charges, weight scaling fees and annual rent to be paid when due. The July 31 deadline was subsequently extended to September 28, 1984. In a memo to Mr. Wilkins dated September 17, 1984, Acting Deputy Minister MacPherson said that if a "seemingly acceptable" proposal was advanced to pay Omineca's outstanding account, it must receive his approval prior to acceptance and prior to September 28, 1984. John Peterson received the news on September 27,1984 that Omineca had been granted the Crown land which it had been seeking. In his view, this made Omineca a viable operation. Mr. Peterson obtained a certified cheque payable to the Minister of Finance in the amount of $151,600 from the Fort Nelson Indian Band. He took this cheque to the Ministry of Forests office in Prince George late in the afternoon of September 28, 1984. Neither the Regional Manager or Acting Regional Manager were there, and Mr. Peterson gave the cheque to Leverne Merkel, Timber Officer. Mr. Peterson said the cheque represented all outstanding rent through 1984185 plus $10,000 monthly payment towards stumpage. There is a conflict in the evidence as to what was said when the cheque was handed over. Mr. Peterson said Mr. Merkel did not seem to know what to do with the cheque, so Mr. Peterson suggested it be held for 30 days to allow Mr. Wilkins to get back. However, he said that if it was a matter of cancelling the licences, then to go ahead and cash the cheque. In a memo to Mr. Wilkins dated September 28, 1984, Mr. Merkel said that Mr. Peterson asked that the cheque not be cashed for 30 days because the deal with the Indian Band was not finalized. Immediately after this, there were discussions between Mr. Wilkins and Roy Peterson. Roy Peterson was advised that Omineca would have to pay the whole

RE: OMINECA ENTERPRISES LTD. FACTS

of the amount owing, which was approximately $800,000, by October 5, 1984. Omineca was unable to raise the money and effective October 17, 1984, the licences were cancelled. The Ministry of Forests returned the Fort Nelson Indian Band cheque to Omineca. . , Omineca appealed those cancellations. The matter was ultimately heard by an Appeal Board chaired by R. S. Campbell (the 'Campbell Board") which held that the Ministry of Forests had breached two provisions of the Forest Acf. Section 61 was breached when the Ministry of Forests cancelled the TSHLs for a different reason from that given to Omineca in the notice of cancellation and Section 4 (e) of the Ministry of Forests Act was breached when the Ministry of Forests demanded payment of the total indebtedness when it had not made a comparable demand on the other two companies. This demand was found to be discriminatory. Omineca argued before the Board that it had a reasonable apprehension of bias in relation to log export applications, stumpage rates and the acquisition of the land adjacent to the sawmill. The Appeal Board held these issues were irrelevant to the cancellation of the licences. The Campbell Board set aside the cancellations of the licences but ordered that the licences remain suspended unless the rental fee arrears for the years 1980-84, amounting to $141,600, were paid by October 15, 1985. The Board also made various other orders mainly dealing with Omineca's indebtedness and how and when Omineca should make payments. BothOnineca and the Ministry of Forests appealed the decision to the British Columbia Supreme Court, and the case was heard by the Honourable Mr. Justice Ruttan ( Omineca Enterprises Ltd. and An Appeal Board Appointed Pursuant to the Forest Act by Order-in-Council Number 42 dated January 23, 1985 et al, (August 2, 1985), Vancouver Registry No. A850683, Victoria Registry No. 85 07 43, hereinafter referred to as the "Ruttan decision"). In court, the Ministry of Forests did not deny that the regional manager failed to comply with s. 61 in cancelling the TSHLs. The Court upheld the Campbell Board's decision that the licences had been cancelled in breach of the Act and the Board's order that the licences would remain suspended unless the rental fees were paid by October 15, 1985. The Court, however, held that the Board had no jurisdiction to re-write the licence contracts and that its orders regarding the form of payments by Omineca was beyond its jurisdiction. The Court agreed with the Board that it had no power to grant damages or forgive Omineca its accumulated debts. The Court said that there was evidence led upon which the Board could have found bias or discrimination against Ornineca relating to the export of logs, stumpage rates, a replacement Forest Licence or the acquisition of Crown land adjacent to the mill site. The Court noted that the Board found these matters were all irrelevant to the issue of the cancellation of the licences, and in the Court's opinion, this ruling by the Board was correct.

FOREST APPEAL BOARD RE: OMINECAENTERPRISES Lm. FACTS

Omineca sought leave to appeal to the Court of Appeal in respect to two matters - whether an Appeal Board has jurisdiction to award damages for the wrongful cancellation of such licences and whether the Board has the power to make the type of order made in regard.to the paymgnt schedule. The Court of Appeal denied leave and said that Omineca has obtained the major relief in that it had obtained an order setting aside the cancellation of the licences (Omineca Enterprises Ltd. and An Appeal Board Appointed Pursuant to the Forest Act by Order-in-CouncilNumber 42 dated January 23, 1985 et al, (June 20, 1986). Vancouver Registry CA0045871. The Court of Appeal issued its decision on June 20,1986. In the meantime, Omineca had failed to remit the rental arrears of $141,600 by the October 15, 1985 deadline. Its licences therefore remained suspended. By letter dated July 15, 1986 and signed "R. Truant, For and on behalf of M. J. Wilkins Regional Manager", the Ministry of Forests advised Omineca that its licences were cancelled effective October 31, 1986 for non-payment of rentals. As required by s. 61(3) of the Forest Act, the letter gave Omineca an opportunity to be heard on the matter provided it requested a hearing within 30 days from the date the notice was served. This letter was sent the same day that the Minister of Forests confirmed that he had accepted the recommendations regarding the acquisition of FNFl by Tackama. In his affidavit sworn September 29, 1997, Mr. Wilkins said that he did make the decision to send the July 15 letter as well as a subsequent letter on October 14, 1986 extending the cancellation date from October 31 to November 30, 1986. Mr. Wilkins said that Mr. Truant drafted the July 15 letter but he was working under instructions from Mr. Wilkins and had authority under the Forest Act to sign the letters on behalf of Mr. Wilkins. In his affidavit sworn March 24, 1995, Rich Truant said he did not make the determination to cancel the licences. He said the decision was made by Mike Wilkins who instructed him to sign the notice of cancellation dated July 15, 1986 on his behalf as he was absent from the office that day. [The Board notes that Omineca objected to the wording of Mr. Truant's affidavit in two respects. The first was the wording "made that decision" in regard to Mr. Wilkins' actions (paragraph 2 of the affidavit). The Board ruled the paragraph was admissible and the objection would go to weight. The Board simply noted the second objection which was to the use of the words "notice of cancellation" in the same paragraph.] Counsel for Omineca did not require Mr. Truant to be present at this hearing for cross examination on his affidavit. Pursuant to the letter of July 15, 1986, John Peterson and Omineca's lawyer Murray Morrison met with Mr. Wilkins on August 5, 1986. There is a dispute as

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FOREST APPEAL BOARD RE: OM~NECA ENTERPRISES Lm. FACTS

to what was said at the meeting. John Peterson described the meeting as follows:

"Yeah. Well, we asked him I kked him to lay out for us what - you know; what kind of terms we could arrange so we could get back in business and get our licence lifted -- out of suspension. And he said, well, you have to bring in the outstanding rentals and make provisions for the outstanding account, or pay the full amount is what he said in two different you had to pay the full amount, and then later on he said make provisions for a substantial payment of the amount. Then I said, well, what is substantial? And he said just substantial and prompt payment will do. And then he said anything you propose, I'll have to take it to Victoria. And I went back with him and tried to find out what substantial was, and I said is it over 500,000? Yes, over that, something over that, yeah. And that's all I got out of him. I tried my best to get any kind of atermina- "

Mr. Wilkins' recollection of the meeting is contained in various places. The relevant documents and evidence are a memo Mr. Wilkins wrote to the file on the same day as the meeting, August 5, 1986; a letter to Mr. Wilkins from D. A. Doyle, a lawyer in the Ministry of Attorney General dated August 18, 1986; Mr. Wilkins' reply memo to Mr. Doyle dated August 25, 1986; a transcript of his evidence on December 16, 1987 before a previous Appeal Board (the "Forster Board") ; his affidavit swom September 29, 1997, and his cross examination before this Board. Mr. Wilkins' memo of August 5, 1986 read as follows: Re:

Omineca Enterprises J .td.

I met today with John Peterson and Murray Morrison (Barrister & Solicitor) in response to cancellation letter dated July 15, 1986. They viewed this meeting as a preliminary discussion leading to subsequent submissions to address the requirements of the Ministry for re-instatement of the

I advised that my requirements were that in order to prevent cancellation of the licences on October 31, 1986, the company would have to:

RE: OMINECA ENERPRISES LTD. FACTS

-Provide full payment of outstanding rental charges of $198,240.00; and -Make provision.for payment afthe total outstanding account which stood at $995,512.87 (including the June 1986 invoice for rental) effective June, to the satisfaction of the Ministry.

I further advised that: I was not prepared to accept any extension to the October 3 1, 1986 cancellation deadline. I would be prepared to lift the suspension of the licences upon full 2. payment of the outstanding account. J I would review any reasonable and substantial and early retirement of the total outstanding account and make appropriate recommendations to Victoria given that they were prepared to pay in full the outstanding rental charges. 4. I had no objection to financial backing by the Fort Nelson I.B., but that changes in corporate structure or ownership would require Ministerial approval. 1.

Meeting closed with the company agreeing to present me with a financial pack& at a meeting on October 6, 1986 at 10:OO hours or earlier if possible.

Mr. Doyle's letter to Mr. Wilkins read in part: "This will acknowledge receipt of a copy of your file memorandum of August 5, 1986 which was awaiting my return from holidays on August 11, 1986. I note that you have advised Mr. Peterson that settlement of all outstanding charges is a pre-condition to your revoking the cancellation notice. I assume the cancellation notice was for non-payment of rentals only as per our earlier discussions and my memorandum to you of July 4, 1986. As long as the actual cancellation notice was so restricted I think we are safe, however, it could be inferred from your advice about settlement of the entire account that notwithstanding the formal notice being for non-payment of rentals the real reason is the total outstanding indebtedness. Your advice of August 5, 1986 to Mr. Peterson and his solicitor together with the facts associated with the initial cancellation notice invalidated by the courts would tend to lead one to that conclusion. It may be more advisable to take the position that you would consider revoking the cancellation notice upon payment of rentals, however, I suppose ;you would have a bit of a dilemma on your hands if the rentals were paid. Such a position would, however, confirm the cancellation notice inasmuch as it would indicate the

FOREST APPEAL BOARD RE: OMINECA ENERPRISES LTD FACTS

conditions for lifting the cancellation were one in the same as the reasons for imposing it."

Mr. Wilkins' reply to Mr. Doyle read in part:

.....Further.to o w telephone conversation of August 20, let me restate the thrust of my comments to the Messrs. Peterson and Morrison at my meeting with them on August 5. The point I made to them was that provision of payment of the outstanding rental charges would in itself not result in reinstatement of the licences (i.e. the cancellation would be revoked but the licences would remain in suspension owing to the continuing problem of the outstanding account).

I was in effect, in all fairness to the licensee, pointing out that simply paying the outstanding rental would not solve their problems and allow them to begin operating their licences.

In his direct evidence to the Forster Board. Mr. Wilkins said:

Q A Q A

What was the contexT of the meeting? Do you recall how the discussion evolved? The general discussion was centred around what did the company have to do to put their licences in good standing, which -What do you mean by "good stand'ing", now? Well, in a position where they could get back logging, which would require, of course, the cancellation to be revoked and the suspension to be lifted. Now, I note that the third paragraph of that file memo, Exhibit B, refers to both the payment of outstanding rental charges and provision for payment of outstanding account. How do those two fit into the decision of the court that the cancellation could not take place on the basis of outstanding account: Well, my position basically was that I would have had to have revoked the cancellation of the licences on payment of the outstanding rental charges, but in my discussions with John Peterson and Marty [sic] Momson, I made it very clear to them that full re-instatement of the licences to the point where they could actually log, in other words lifting of the suspension, would require an acceptable provision be made for a payment of schedules to deal with the full outstanding account. So you were open to suggestions at the time this meeting was held, and I take it from what you say that you were looking for the long-term resolution rather than just to avoiding a cancellation?

RE:

OMINECA ENTERPRISESLTD.

FACTS

Well exactly, because you know, it was my opinion that lifting the cancellation was not going 10solve the problem for the company. There was the matter of the suspension that had to be dealt with as well.

Later a t t h e Forster 'hearing, Mr. Wilkins was questioned by Bradley Armstrong, counsel t o the. Board (page 43 of the transcript). Mr. Armstrong asked if t h e memo of August 5 s e t out t h e requirements in order t o revoke the cancellation.

Your memo of Auzust 5 says - it says:

"I advised that my requirements were ... " A

Yes.

"... that in order to prevent cancellation of the licences on October 3 1,1986, the company would have to:

Provide fuil payment of outstanding rental charges ... and make provision for payment of the total outstanding account"

I I

I I I1

I I I

Were those your requirements in order to revoke that cancellation of October 31, '86? A

No, they weren't, and you know, it's unfortunate that that file note is written the way it is. The point that I was making to them at the time was that in order to revoke the cancellation and lift the suspension, there had to be treatment of both the outstanding rentals and the outstanding accoumt, total of outstanding account. And I would like to clarify that at no time did I ever indicate to them that I would require the total payment of the outstanding account, in other words, the $995,000. The reference to make provision for payment, I was seeking some schedule of payments that would be acceptable to me that I could then recommend to the Deputy Minister for his approval, a schedule of payments, and not a payment of the full outstanding account.

You're saying, your evidence now is that your statement in the August 5 memorandum, you're saying that is not, it's not correct?

Well, that's what I'm basically saying, yes.

In his affidavit sworn September 29. 1997. Mr. Wilkins said a transcript of t h e evidence h e gave before t h e Forster Board and his memo of August 25. 1986

RE: OMINECA ENTERPRISES Lm. FACTS

"accurately state my best recollection of the August 5, 1986 meeting". In cross examination, Mr. Wilkins acknowledged that he had written the file memo of August 5.1986, the same day as the meeting. However, he said that this memo did not accurately reflect the,discussionlhat took place that day. In response to a question from the Board as to how his recollection differed from the August 5 memo, Mr. Wilkins said: That differs fiom what I wrote down in the file note, in that at the meeting that I had on August the 5th I was separating the suspension procedure and the cancellation procedure, and what had to be done to lift the or to revoke the cancellation and to lift the suspension and get the licences back into the condition where the company could then operate and cut some timber. And if you read my testimony from the Appeal Board hearing, that, I think, is essentially my recollection of what I said at this meeting.

The third person who was at the meeting was Murray Morrison, a lawyer who had done some work for Omineca but was not the lawyer most familiar with the matter. In his statutory declaration dated October 6, 1997, Mr. Morrison said he had reviewed the August 5, 1986 memo written by Mr. Wilkins and it was an accurate summary of what was stated that day. In his statutory declaration, he said:. It was stated by Mike Wilkins that in order to avoid having the TSHLs cancelled, it would be necessary for Omineca Enterprises Ltd. to both pay the rent owing and make an arrangement for substantial payments on the total debt owing to the Ministry of Forests. There was no doubt that Wilkins position was that he would cancel the TSHLs unless both these matters were accomplished.

In his direct evidence, Mr. Morrison said in reference to Mr. Wilkins' memo of August 5, 1986: Reading the third paragraph in the memorandum, commencing with the words, "I a d v i s e c my recollection is that the requirement for payment of outstanding rental charges, although I don't recall the amount specifically, and the payment of the total outstanding account with were dealt with in a conjunctive fashion by Mr. Wilkins. In other words, my recollection is that there was no -how can I put it. It wasn't treated seriously. In other words, Mr. -- Omineca, Mr. Peterson's company, was to look after both of those amounts in order to come out of suspension or be reinstated as the case may be.

RE: OMINECA ENTERPRISES Lm. FACTS

In cross examination, Mr. Morrison gave the following evidence. The "material" being referred to is the transcript of the Forster Board and Mr. Wilkins' memo to file of August 25, 1986:

Q You havejust read the material . As I understand those passages, what Mr. Wilkins is saying in his evidence and in his memorandum is that what he said at the meeting was that he required payment of the outstanding licence rent in order to prevent cancellation, but that even if that was done, the cutting rights under those licences would remain suspended. He would not lift the suspension until full payment was made or at least provision was made for full payment. Now, you've said that you don't have a detailed recollection of this meeting; it was 12 years ago. Is it possible that that is what Mr. WiIkins said at the meeting?

A It's possible. Later: -.

Q All right. And did you understand that even if a deal

was worked out as you were wing to do for your client and the licences were not cancelled, the cutting rights would remain suspended unless something further was done? Let me put that another way. It was very clear that if nothiig further was done by, I don't recall the date, a couple of months hence, that Mr. Wilkins or those of his office who were to deal with such things would basically stop the whole thing. In other words, it really, to my recollection, it really wasn't a staged arrangement, it was a package deal. To put it bluntly, deal with both of these things by date "x" or that's the end of it. That's my recollection. That's all I can say.

In cross examination, Mr. Morrison was asked what documents he had used to refresh his memory. Counsel for Ornineca agreed to provide those documents and did provide them. They included Mr. Morrison's notes to the file of the meeting of August 5,1986. r h e notes were handwritten and they have been retyped in this decision to reproduce the handwritten version as closely as possible.] They read:

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. FACTS

OMINECA Meeting Oct. 6/86 10 a.m. or earlier if able Aug 5 1

Payment of 01s rental

198,240.00 rental suspended because of that that m/b addressed 1st. then 01s

967,192.87

inclusive @June '86

If can satisfy relative to rentals, still -Foolish w/o 2d commitment --possibility of redn in %[?I ???? but fairly rigid on 01s --but FNFI had a 1.5 x -redn. No exTensions beyond October 31/86 Licences remain in Omineca -- Indian band O.K. as far as Mike is concerned.' Tone of meeting was skeprical -- last deal satisfied me but not Victoria --you'll need to try Feb. Mar. Apr. May June

947,218.97 947,558.17 960,647.97 see above

+ 28,320.00 for annual rent

Despite the plans to meet on October 6. 1986, no such meeting was held. Instead on October 14, 1986, Rich Truant, again writing "For and on Behalf of M. J. Wilkins Regional Manager" wrote to Omineca saying that he had been advised that the Ministry of Forests and Lands were reviewing the circumstances surrounding the operation of Omineca. The letter said that since this review was not likely to be concluded until after October 31, 1986. "notice of cancellation is herewith extended to November 30. 1986".

FOREST APPEAL BOARD

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RE: OMINECAENTERPRISES LTD. FACTS

In his affidavit, Mr. Truant said that he was instructed by Mr. Wilkins to sign this letter as Mr. Wilkins was away from the office. In his affidavit swom September 29, 1997, Mr. Wilkins said he made the decision to send the October 14, 1986 letter. A meeting was arranged for November 17, 1986 in Victoria. In the meantime, lawyers for Omineca had been involved in correspondence and discussions with lawyers from the Ministry of Attorney General and had sent a draft Statement of Claim to the Ministry. The draft Statement of Claim was a claim for damages for injuries which Omineca believed it had suffered by the conduct of various government ministries and agencies.. The November 17,1986, meeting in Victoria was attended by John Peterson and sons Roy and Leonard Peterson. Attending for the Ministry of Forests were Mike Wilkins, who had recently left the position of Regional Manager for the Prince George region and had taken a new position with the Ministry in Victoria, Bob Flitton, Deputy Minister of Forests, and the Minister Jack Kempf. What occurred at this meeting, particularly in regard to the November 30, 1986 deadline and what would happen after the meeting, is the subject of dispute. No notes of the meeting were kept, or at least produced. John Peterson recalled the meeting as follows:

.. Q Yes. Did the meeting result in anything, Mr. Peterson? A

Well, it resulted in - first we got in there. The thing was to start discussing some of our issues, our problems. And Mr. Flitton said first thing off, we don't need to get into that because we're going to provide you with a full hearing and we don't need to discuss it now. And then I remember that the November 30th deadline was coming up and we wasn't sure whether the money was -- had to be there, or whatever.

Q Yes? A

And so we talked it over and he said, well, you -- we talked about this review that was to be had, and we agreed that if we got back to him, to his staff, by November the 30th -

Yes?

-- that - and set up a time, like, that they would push the date back and not cancel any licence. They would push the cancellation date back.

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FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. FACTS

Q Did someone from the government specifically say that to you -A

Yes.

- or in your presence?

Yes.

Q Who saidit? A

Mr. Flitton said that specifically.

Q And what were the exact words, or as near as you can remember them?

A He said don't worry I said I wanted the letter first. I said I need a letter to confirm this. Q Yes? .'

He said, well, don't worry. We'll just push the date back and you don't need a letter. And Mr. Rempf was right close to the door too, and he said don't worry about it. We'll take care of it. Don't - we'll push the date back.

Q So when this meeting concluded on November 17th, what did you understand, or when did you understand you would have to have a proposal in to the government by? A

Well, there was no set date, but we feel that -- felt that - well, we had the lawyer arrange for December the 1 lth. We got back to them on the 28th, which was Friday. We got back in the afternoon on the 28th and arranged for all of us to attend a review on December the 1 lth that's November the 28th. On December the 1lth we would hold this hearing.

Roy Peterson described the meeting as follows: Q

Okay. And what took place at that meeting?

FOREST APPVU BOARD RE: OMINECA ENTERPRISES Lm. FACTS

-21 -

At that meeting we -- well, we fmdly got a chance to meet with the Minister. We had been trying to get a chance to hold this review, and as2oon as we attended the meeting, he said there was no point in conducting it right then, that they would arrange a date for holding the hearing, and they wanted us to get back to them before the end of the month to arrange a date for the review or hearing, whatever you want to refer to it as.

Q And at that point did you -- so the meeting broke up?

Yes. We left it at that we were supposed to get back to them before November 30th to arrange a date for the hearing, and that they would push back the cancellation. That was stated by Bob Flitton. And John had asked for written confirmation of that, and he says you don't need a letter, that they would push back the cancellation date and --

Robert Flitton was Deputy Minister of Lands and Forests at the time of the November 17, 1986 meeting. In his affidavit sworn October 9, 1997, he said that at the meeting John Peterson confirmed that Omineca was experiencing financial difficulty and was seeking a parcel of Crown lands from the Ministry. Mr. Flitton said that at the meeting he told Omineca he would review their file if they presented him with their written position on or before November 30, 1986, but he never received the promised submission. Mr. Flitton said that the Ministry of Forests did not agree to extend the November 30, 1986 cancellation date for the licences. In cross examination, Mr. Flitton said in regard to the November 30, 1986 deadline: This is -- in the meeting of November, that we held with the Petersons, there was a very clear and explicit requirement that was made of the Petersons, and that was Mr. John Peterson was to set out in writing to me his reason for an extension of the November 30th deadline. And that's what we were waiting for by November the 30th. I did not receive that. That was a requirement that was set out quite clearly, quite explicitly in our meeting, and we made it -- I mean, there was just no misunderstanding about that. We wanted that.

RE: OMINECA ENERPRISES LTD. FACTS

In reference to a letter written in 1989 by Mr. Kempf which said that if Omineca "contacted" his staff prior to November 30, 1986, the deadline would be extended, Mr. Fliion said that the "contatf from Omineca was to be a written submission as to what they were looking for. Mr. Wilkins at the hearing said he had no independent recollection of the meeting of November 17, although he believed that his testimony before the Forster Board concerning the meeting was accurate. A transcript of the Forster Board hearing showed that Mr. Wilkins said that his recollection of the meeting was that there was little or no discussion about the cancellation procedure itself. He said the majority of the discussion that took place related to the position that Omineca seemed to be taking that they wanted compensation from the government for various past actions of the Ministry and various government bodies and government itself. He said the Ministry's understanding of the matters discussed at that meeting were contained in a letter dated January 27, 1987 from Mr.Fliion to Roy Peterson. In cross examination before the Forster Board, Mr. Wilkins was asked if there was no discussion about the November 30 deadline. He said that he didn't say there was no discussion but that the majority, the bulk of the discussion dealt with the question of compensation, and that the Petersons seemed more concerned about the question of compensation than the deadline. Mr. Wilkins said the matter of the November 30 deadline did come up. Mr. Wilkins was not asked, and did not volunteer, what discussion there was concerning the November 30 deadline. In his affidavit sworn May 7, 1998, Jack Kempf said he had reviewed Mr. Flitton's affidavit sworn October 9,1997 and to the best of his memory, the November 1986 meeting happened as described by Mr. Flitton. He said he did not believe Mr. Flitton told the Petersons not to worry about the November 30 deadline. In cross examination, Mr. Kempf said he would find it difficult to believe that a decision was made at the November 17 meeting to push back the deadline because that is not "not the way we did business in the Ministry of Forests". He said he did not specifically recall the statements made by Mr. Flitton to the Petersons. He said that Omineca was asked for a proposal prior to the cancellation date. He had no idea of what would be contained in such a proposal. Mr. Kempf agreed that there would be an internal review of what Omineca presented to the Ministry. He was told by Ministry officials that no proposal was received from Omineca. He acknowledged that normally he met with senior Ministry of Forests officials every Monday morning, and that the Monday following the November 30 date would be December 1.

- - -

RE: OMINECA ENTERPRISESLTD. FACTS

On November 28, 1986, Mr. Kempf wrote to Mayor Richard Neufeld of Fort Nelson and said that he had promised "a senior level internal review" to Omineca, that this had been discussed with Omineca's solicitor and "we await his or the Peterson's response". He said â&#x201A;Źhe Ministry could not deal with reallocation until 'we have dealt with Omineca Enterprises Ltd., expected to be November 30.1986". Omineca's solicitor Norman McDonald phoned Jack Ebbels, solicitor with the Ministry of Attorney General, on Friday November 28, 1986 to request a meeting with the Deputy Minister on December 11 to review this matter. Mr. Ebbels wrote to Mr. McDonald on December 10, 1986 advising that his request "came too late to interrupt or even reconsider the forfeiture or cancellation proceedings". Mr. Ebbels said that the "redemption period (to recover the forfeited lands)" expired on November 30 and timber licences were cancelled on that date. The meeting would have had to occur prior to November 30. Mr. McDonald responded on December 12, 1986 by saying he had learned that Mr. Flitton said Omineca had not attempted to arrange a meeting and that there was confusion as to the Ministry's position with respect to holding a meeting. He said Omineca was still prepared to meet with the Ministry in an attempt to resolve the entire matter. The next piece of correspondence is a letter dated December 16,1986 from K. W. Belik, Acting Regional Manager to Omineca Enterprises. This letter, which is unsigned, says that the licences "are cancelled effective December 1, 1986 for non payment of rentals under Section 89 of the Forest Act". In the Board's decision of June 4, 1998, the Board held that this letter had not been sent to Omineca. On December 18, 1986, Mr. Ebbels wrote again to Mr. McDonald and said the Ministry was still prepared to entertain proposals from Omineca. Mr. Ebbels said further: "However, there is little merit in having a meeting to explore possibilities. Rather, your client should reduce any proposal to writing so that we have something concrete to consider and, in order to avoid any confusion, channel it through me." Mr. Ebbels also asked if Mr. McDonald was acting for Trans North Developments Ltd. who had requested to purchase Lot 2904 (on which the Omineca mill was located ) for $10,000, and whether that proposal represented the "extent of your client's demands". Roy Peterson wrote two letters to Mr. Flitton. both dated January 7, 1987. In one, he discussed a meeting he had with the then Premier Van der Zalm concerning the hearing which Omineca expected to receive. He said: "It was o w understanding from our discussion with you in November that the November 30th deadline would be extended to allow time for both parties to

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. FACTS

arrange a hearing date. It came as a shock that it was not extended and the hearing was called off." The other letter said:

"We have been informed by our lawyers that Jack Ebbles [sic] has requested a "concrete proposal" outlining what we would accept for a settlement. As you are aware of the fact we would like to settle this very serious problem we see this as a step in the right direction if you are serious about settling as well. Since a settlement of this nature will have to be negotiated and considered very carefully by all parties involved it is difficult to submit a comprehensive or concrete proposal until we know it has a reasonable chance of being accepted. We have submitted proposals in the past that you may or may not be aware of and nothing came of them. If you are serious about endiig this problem and making a settlement it would be fair to ask you to clearly identify your position on our land (Lot 2904) prior to our proposal being submitted. As you are well aware this would prevent further damages fiom occurring and would show us you are indeed serious. In addition to the above we would like to know what you have in ;mind as a . settlement and on what basis we should use for the settlement. Will it be possible .. to resume operations or will we have to base the settlement on a sale or relocation to some other area or province? What are your major concerns and constraints? Will you be able to deal with problems like rail facilities etc.? ,

We are presently preparing for the hearing and the work we are doing will be required prior to establishing a realistic assessment of the remedies neccesary [sic] to make a fair settlement. We will submit a concrete proposal when we have the basis on which to base the proposal, any submission made without regard to your position would be virtually meaningless and a waste of your time as well as ours. I do not want to be accused of not coming forth with a proposal that is why I am writing you now to demonstrate the fact we will be reasonable in achieving a settlement. We will discuss this with our lawyers further and they may contact you as well. I hope this will help prevent any problems that may arise from any misunderstandings of our intentions. Please advise us at your earliest convenience of your position. To speed up the process 1 suggest you to send a copy of your correspondence to us as well as our lawyers." On January 19, 1987, Mr. Kempf wrote to the new mayor of Fort Nelson. Mayor F. Parker, and said that Omineca's licences had been cancelled, but the Ministry

2 9-

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. FACTS

-25-

of Forests was still prepared to consider any reasonable proposal that the Petersons may have. On January 27, 1987, Mr. Flitton wrote t6 Roy Peterson in response to the two letters of January 7. He said:

"We had a meeting with your group in our Minister's office in November 1986, and offered to review your case. However, it was very clear there was a November 30,1986 deadline and a proposal for a review had to be made to me by that date. None was forth coming within that time frame." Mr. Flitton referred to the legal case which Omineca was preparing against the government, where the remedy sought could exceed $1 million. Mr. Fliion noted that Omineca had suggested it may proceed without lawyers and seek a fair settlement. Mr. Flitton said he could not respond until Omineca set out the basis of the dispute. He said further:

"We did not promise a judicial or formal hearing process. In fact I suggested I may review the matter myself and at this time I do not know what process may be legally or administratively appropriate. "Should you seek financial remedy, you will have difficulty proceeding outside legal channels. This matter has been before the courts, the Ombudsman and -.others, and your case has proven groundless to date. We do want to be fair and provide you with a chance, however I would expect to receive a well thought out proposal. Cancellations were made November 30, 1986, as per notifications, but that need not impede our ability to a review.

I look forward to a proposal outline fiom you and would request it be delivered to me by February 23, 1987. Thank you." There was no evidence that Omineca made a proposal as requested by February 23 or at any other time. There was some correspondence over the winter of 1987 from the Ministry of Forests to Omineca, including invoices dated June 26. 1987 for the annual rentals on the two licences. In his affidavit sworn November 30, 1994, Mr. Wilkins said the invoices had been sent by an ofice which had not been advised of the cancellations, that it was an administrative oversight and that the invoices were subsequently withdrawn by way of a credit note.

RE: OMINECA ENTERPRISES LTD. FACTS

The Petersons had a meeting on June 18. 1987 with the new Minister of Forests Dave Parker, however there was no direct evidence as to what was discussed a; that meeting. In a letter to Roy Peterson dated July 29, 1987, Mr. Parker said that Omineca had made a number of allegations of bias, discrimination and preferential treatment against the government. In his letter, he rejected those allegations and said that the licences had been cancelled effective November 30, 1986. In the August 13, 1987 issue of the British Columbia Gazette, a notice was published cancelling Omineca's licences effective November 30, 1986. On August 18, 1987, F. A. Baxter, who was now Regional Manager wrote to Omineca as follows:

"This is to confirm that pursuant to Section 61 of the Forest Acf Timber Sale Harvesting Licence A08692 and A08693 are cancelled effectiveNovember 30, 1986 for nonpayment o f rentals under Section 89 of the Forest Act." Mr. Baxter did not give evidence either directly or by affidavit. Omineca filed a Notice of Appeal of the decision on September 4, 1987. On 'September 22, 1987, Mr. Baxter again wrote to Omineca and said this letter "cancels and supercedes any letter of August 18, 1987". The letter further said 'that the licences were cancelled pursuant to Mr. Wilkins' letter of October 14, 1986, and that Omineca's appeal rights under the Forest Act had lapsed. The Chief Forester held that the Regional Manager's letter of August 18, 1987 was a "confirmation of the cancellation but not the cancellation notice as provided for in Section 61 and hence is not appealablen. Omineca appealed that decision to an Appeal Board chaired by C. K. B. Forster. At that hearing Omineca took the position that the letter of August 18, 1987 was the determination, order or decision of the Regional Manager and that Omineca's appeal was therefore timely. The Appeal Board upheld the Chief Forester's decision and found that the requirements of the Acf had been met in the cancellation proceedings by the July 15 and October 14, 1986 letters and that the November 30, 1986 deadline had not been extended. Therefore Omineca's appeal dated September 4, 1987 was not filed within the 21-day time limit. The Appeal Board decision was appealed to the Supreme Court, which upheld the Board's decision. At the Court of Appeal, Omineca met with success. There, in a 2-1 decision, the court held that the right of appeal ran from the time when notice was given of the cancellation itself, and not merely of a proposed cancellation. In this case, said the court, the cancellation itself was given in the

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FACTS

letter of August 18, 1987, and therefore Omineca's appeal was timely. The matter was referred back to the Chief Forester. As the court process was occurring, Omirreca had another meeting with Mr. Kempf, who by then had returned to being an MIA. This meeting occurred on May 19,1988 with John and Roy Peterson present as well as Omineca's lawyer Waldemar Braul. In his cross examination, Mr. Kempf said he did not recall the meeting, but he did not deny that it took place. Mr. Braul said he had prepared a draft affidavit for Mr. Kempf to sign concerning the November 17, 1986 meeting. The draft was based on what the Petersons had told him about the November 17, 1986 meeting. Mr. Braul said that Mr. Kempf agreed with the Petersons that a result of the November 17 meeting was that some form of review or consultation would be conducted and the November 30 deadline would be suspended or put aside. Mr. Braul said Mr. Kernpf was hesitant to sign the affidavit because he was in government, but he was willing to respond to a letter from the Petersons setting out their recollection of the November 17 meeting. John Peterson wrote to Mr. Kempf in a letter dated May 24, 1988, and Mr. Kempf replied on June 6, 1989 in which he advised: "1. Subsequent to the meeting in my ofice on 17 November 1986, when I was Minister, it was my understanding that if you contacted my staff prior to the cancellation date of 30 November 1986, cancellation of your TSHLs would be postponed until you were given a fair and full hearing. This, of course, w& the -.basis for my letter of 28 November, 1986 to the Village of Fort Nelson in which I say that I have promised a "senior level internal review" of your situation.

2. Your TSHLs were cancelled after 30 November, 1986 had passed after I had been advised by my then Deputy Minister, Mr. Bob Flitton, that staff had not heard fiom you prior to the 30 November deadline." Both Roy and John Peterson were recalled to give evidence concerning the meeting of May 19, 1988, and both described it similarly to Mr. Braul. The Chief Forester again reviewed the matter and in a decision dated September 10, 1991 concluded that the licences had been properly cancelled. A new Appeal Board, chaired by Richard Herring, was constituted to hear Omineca's appeal of that decision. The current Appeal Board is a successor to that Board, the current members having replaced members who resigned at various times. At the start of the hearing before the Herring Board, Omineca objected to the board's retainer of counsel. The hearing was adjourned while Omineca sought judicial review and an order prohibiting the Board from continuing the hearing with counsel. The application was dismissed by the Supreme Court. The appeal

RE: OMINECA ENTERPRISES LTD FACTS

of that decision was dismissed by the Court of Appeal, with leave to appeal to the Supreme Court of Canada denied. In April, 1995, Omineca again sought jucticial review claiming that the licences had never been cancelled and the Chief Forester and the Appeal Board were without jurisdiction to hear an appeal (Omineca Enterprises Ltd. v. Brifish Columbia (Minister of Forests), (1995) 13 BCLR (3d) 66). Drossos, J. dismissed the application and held that the Appeal Board had the power to expand its scope of inquiry beyond the issues, submissions and evidence before the Chief Forester, and that Omineca, being part way through an appeal procedure, should exhaust its remedies under that scheme. The Herring Appeal Board then attempted to resume the hearing. Omineca raised allegations of reasonable apprehension of bias against two members of that Board who subsequently resigned. The members of the present Board were then appointed. The hearing of the appeal by the above-named Board was convened on March 19, 1997 by telephone conference call, and was adjourned, with the consent of the parties. The Board dealt with a number of procedural matters, such as exchanges of documents, outlines, and defining the issues before scheduling a hearing. Omineca originally suggested that the hearing be bifurcated between the jurisdictional question and the merits question. The Board ultimately determined to hear all the evidence but to hear argument only on the jurisdictional question. A hearing commenced November 12,1997 but adjourned on November 13 without evidence being heard when Omineca asked the current Board to resign as the result of some documents having been sent by the Compliance and Enforcement Branch of the Ministry of Forests to the Board chair and counsel. In a decision dated December 19, 1997, the Board denied Omineca's request and subsequently scheduled the hearings which have led to this decision on the jurisdictional question. This Board then heard evidence and argument of the parties concerning the jurisdictional question. The Board issued its decision regarding jurisdiction on June 4. 1998 and held that the licences had been cancelled on August 18,1987.

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SUBMISSIONS OF THE PARTIES The Board heard oral argument at the conclusion of the hearing. The Board identified some areas where.case authorities in support of the argument would be useful to the Board. This resulted in additional written argument being filed by Omineca and a response being made by the Ministry of Forests. The Board has considered all of the submissions sent to the Board, and in discussing the submissions below has combined those made orally and later in writing.. Submissions on behalf of Omineca Omineca said the first reason the appeal should be allowed is that the Ministry of Forests cancelled the licences for a reason different than that set out in the letter of July 15, 1986. That letter said the licences are to be cancelled for nonpayment of rentals. However, at the meeting of August 5, 1986, Mr. Wilkins led John Peterson to believe that Omineca was required to pay the full amount owing to avoid cancellation of the licences, and led Omineca to believe that if it only paid the rental, the licences would still be suspended. Mr. Wilkins' memo of August 5,1986 was a note made the same day as the meeting and it supports what John Peterson and Mr. Morrison recall Mr. Wilkins saying at the meeting. And Mr. Doyle received a copy of the memo and he believed that a person could infer from what Mr. Wilkins had said that the real reason for cancellation was the' total outstanding indebtedness. The test of what was said is objective and'on that test, the cancellation was for the total debt. Second, Mr. Wilkins misled Omineca by failing to tell them that if they paid the rent, the suspensions would be lifted. In fact, he told them the contrary, that their licences were still suspended and they would have to deal with the stumpage and interest. That is contrary to the law, natural justice and contrary to what was happening in the logging industry in the Fort Nelson area. There the two other companies, FNFl and Tackama, were continuing to log even though they owed stumpage of millions of dollars. And on the same day Omineca was told its licences would be cancelled, the Minister of Forests approved the transference of the FNFl cut to Tackama which included forgiveness of a huge debt. Further in both 1984 and 1986, Omineca was being told that simply paying the rent would not get the licences out of suspension. In 1984, they were being forced to pay the rent plus make some proposal regarding the total debt. Third, the letter of July 15, 1986 was deficient and defective, contrary to natural justice and thus a nullity. Cancelling a licence of a timber company is serious because there is no raison d'etre for the company without the licence. The letter erred in a number of ways. It lumped two separate licences together and did not offer the ability to redeem one licence alone. It did not delineate what rent was owing. Those defects were not cured by the meeting of August 5. 1986 because

FORE= APPEAL BOARD

RE: OMINECA ENTERPRISES LTD. SUBMISSIONS OF OMINECA

the figure which Mr. Wilkins gave a t that meeting included rent owing after the suspension and Section 62 of the Act only requires rent to b e paid before the suspension. In a supplementary submission, Omineca said the notice w a s defective for three main reasons. First, the sum which Omineca w a s required to pay to put the licences in good standing was never specified. This w a s not an oversight. In 1984 John Peterson had arrived with a cheque for $151,600 and then the Crown required t h e tendering of the full amount. Mr. Wilkins w a s deliberately vague on August 5, 1986 by requiring a "substantial amount", and this was done to prevent Mr. Peterson tendering the amount. Second, a t every stage the Crown combined t h e TSHLs thus depriving Omineca of the opportun ty to perhaps redeem o n e and let the other go. The language of Section 60 of the Act refers to rights under a n agreement, not agreements. Third, the Crown cannot identify which letter is the cancellation letter and has relied on five different letters as being t h e cancellation letter. i

Fourth, t h e October 14, 1986 letter referred to a review and this created in the minds of Omineca a condition precedent to the cancellation. The condition w a s that there w a s going to b e a review by the Ministry of Forests, and that review never took place. That is a breach of the rules of natural justice. Fifth, Section 4 (e) of the Ministry of Forests Act provides that one of the , purposes and functions of the Ministry is to "assert the financial interest of the Crown in its forest and range resources in a systematic and equitable manner". Failure to d o that voids the cancellation. Here the Ministry of Forests failed to d o that by allowing FNFl and Tackama to continue logging when their accounts were in the millions of dollars, Tackama got a sweetheart deal with the acquisition of the FNFl cut, where back rent and stumpage were cancelled and interest forgiven. The not-so-hidden agenda of the Ministry of Forests was to rationalize the allowable annual cut in the Fort Nelson timber supply area. T h e words "systematic and equitable" appear separately in various statutes in the province, but the Ministry of Forests Act is the only statute where the two words a p p e a r together. This language expressly prohibits discriminatory treatment. In St. Lawrence Cruise Lines v. The Crown,[1997]FCJ No. 866, the Federal Court of Appeal dealt with the phrase "equitable treatment" in the Public Harbours and Port Facilifies Act. St. Lawrence Cruise Lines w a s being charged a higher rate than its competitors. This is comparable to the different licensees, Omineca, FNFl and Tackama being treated differently. "Systematic" means consistent and organized and the government did not apply such an approach to Ornineca. Equitable means fair and reasonable. In the case of Ornineca, there w a s n o even-handedness, no fairness. Examples of where the conduct of the Crown w a s not systematic and not equitable include the stumpage payment

RE: OMINECA EN~ERPRISES Lm. SUBMISSIONS OF OMINECA

agreement where the timber companies were paying $10,000per month. Compared to gross revenues or timber under tenure, Omineca was paying four times the amount of FNFl or Tackama. To say they were all paying the same is a crafty connivance. A further example is the failure to grant Omineca export permits when their competitors were granted these permits when they had difficulties. Another example is in 1984 when there was a demand for the full amount of stumpage and rent and the other companies were not under threat of cancellation because of not paying stumpage. And the same situation occurred again in August, 1986.The events of November 17 deprived Omineca of a hearing which was promised to them. It is clear that the AAC was overcommitted. The way in which the Crown chose to solve its overcommitment problem was not systematic or equitable. Two vehicles were used for this - the reduction of FNFl's cut and the cancellation of Omineca's licences. These events occurred twice, both in 1984 and again in 1986. In 1986,the Minister's letter agreeing to the acquisition and the cancellation letter to Omineca were both sent on the same day. Witnesses who could have testified that this was just a coincidence were not called. The spreadsheets which set out various scenarios showed that the cancellation process was used as an instrument to rationalize the overcommitment. This was an improper purpose. In regard to the November 17,1986 meeting, Omineca says that the Minister postponed the cancellation deadline of November 30,1986. Omineca said the events showed a dishonest sequence of events. Mr. Peterson asked for a letter and was told not to worry. Mr. Kempfs memory was highly selective. He remembered some earlier events more clearly than more recent events. He had no recall of the meeting of May 19,1989 or the December I, 1986 executive meeting, no recall of who was present at the November 17,1986 meeting or what the requirements of a proposal entailed. Among the documents provided to Mr. Kempf before he swore his affidavit were transcripts of the evidence of John and Roy Peterson. This Board made an order for exclusion of witnesses and this pushed that order beyond its limits. That is a factor that goes to the weight of Mr. Kempf s evidence. Further, the evidence of the Petersons has been consistent and was unshaken on cross examination. Mr. Kempf gave testimony that was internally inconsistent; on no reading can the facts set out in his letter of June 6,1989 be consistent with his affidavit. When Mr. Kempf referred to an internal review, he was meaning a full and fair hearing. What was said in the letters of June 7, 1989 and November 28,1986 are correct, they are consistent with each other and are corroborated by the testimony of the Petersons and Mr. Braul.

RE: OMlNECA ENTERPRISES LTD. SUBMISSIONS OF OMINECA

In regard to Mr. Wilkins, it is surprising that he had no recall of the November 17 meeting when he had a vivid and detailed recall of the August 5 , 1986 meeting. Of those who gave evidence regarding the November 17 meeting, both John and Roy Peterson and Mr. Kempf support Ornineca's position and only Mr. Flitton supports the Ministry of Forests. Further the Ministry of Forests has produced no memoranda, drafts, revisions or minutes of the events surrounding the November 17 meeting. Mr. Kempf was new in the job and it is obvious that some documentation exists but nothing has been produced. An adverse inference should be drawn against the Ministry of Forests as a result. The November 17 meeting is so important because pursuant to s. 152 of the Act, the Minister has the power to extend time periods. If the Minister did assure the Petersons that the November 30 deadline was postponed pending the scheduling of a full and fair review, then the deadline was adjourned sine die and has never been reset. There can be no cancellation without a cancellation date. This could be compared to Supreme Court practice where, if a matter is adjourned sine die, notice is given to counsel when it is going to be brought back on. Mr. Ebbels' letter contains an artificial and crafted explanation and it betrays the attitude of the Crown. It is likely that a decision had been made at the executive committee meeting on either December 1 or November 24. The position of the'. Crown is further tainted by the argument on the limitation issue, where it took the position that Omineca's appeal was out of time. The Crown was prepared to use any means at its disposal to support its position. Omineca said the order it is seeking is that the cancellation be set aside as being either illegal or void and therefore there was no cancellation, and an ancillary order being a declaration that Omineca properly applied for the roll over of their licences from the TSHLs into a forest licence. At the conclusion of Omineca's argument, the Board asked Omineca to supply jurisprudence dealing with the issue of collateral purpose. Omineca made a supplementary submission and cited a number of cases, including Anisminic v. Foreign Cornpensation Commission, [I9691 2 A.C. 147,Roncarelli v. Duplessis, [I9591 S.C.R. 1 21,Padfield v. Minister of Agriculture, Fisheries and Food, [I 9681 A.C. 997,Bass v. PharmaceuticalAssociation of British Columbia and AttomeyGeneral for Brifish Columbia,(1965)51 DLR (2d) 552,Mia v. Medical Services Commission of Brifish Columbia,(1985)15 Admin. L.R. 265,Prince George v. Payne, 119781 1 S.C.R. 458,Shawn v. Roberfson, [I 9641 2 O.R. 696,R.v.

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Brixton Prison, [ I 9631 2 Q.B. 243, Calgary Power Lfd. and Halmrast v. Copithome, (1958) 16 DLR (2d) 241, and Nafional Anfi-Poverty Organizafion v. Canada (A.G.) (1989) 36 Admin. L. R. 197. Omineca said that the Crown cancelled Omineca's licences for a collateral purpose, namely the rationalization of the AAC in the Fort Nelson TSA. Omineca reviewed various types of abuses of discretion, and said that where there may be more than one purpose, the courts tends to examine the dominant purpose for which an action was taken, not the 'sole purpose' for the action. Submissions on behalf of Ministw of Forests The Board should look at the big picture. The big picture was that the Ministry of Forests was legally entitled to cancel the licences. Omineca was in default of the requirements of the Act and its licences. It had never cut the required amounts of timber. There had been no cut on either licence since 1981. Four years of rent was unpaid from 1980 to 1984. There had been no stumpage since 1980, and no interest paid on the overdue accounts. Omineca had not been operating at all for two years by mid-1986. In regard to the issue of the outstanding rent versus the entire debt, there is a preliminary point and that is, that it was not Mr. Wilkins who made the decision to cancel. He had ceased to be the regional manager before November 30, 1986. Thus what Mr. Wilkins may have said or not said on August 5. 1986 is irrelevant. The decision to cancel was made by either Mr. Belik or Mr. Baxter. Because the preliminary steps had been taken, Mr. Belik's failure to do anything on November 30 resulted in the automatic cancellation on that day. Mr. Belik said he made his decision to cancel because Omineca had not paid its outstanding rent and for no other reason, and he was not cross examined on that point. If the final step in the cancellation process was the letter of August 18, 1987, it says that nonpayment of rent is the reason. Mr. Baxter was not called by either party and the letter has to be accepted at face value. At the August 5, 1986 meeting itself, Mr. Wilkins told Mr. Peterson and Mr. Morrison that to prevent cancellation of the TSHLs, Omineca would have to pay the outstanding rent, and to lift the suspension of cutting rights, it would have to pay or make provision of payment for the rest of the debt. His analysis of what Omineca had to do was correct. Omineca's position is that Mr. Wilkins made the same mistake in 1986 as he did in 1984. Mr. W~lkinswas aware of the 1984 hearings and yet Omineca asks the Board to accept that within six weeks of the Court of Appeal decision, Mr. Wilkins made the same mistake again. It is improbable that someone would have as clear a memory of a meeting 12 years ago as John Peterson claims, and there is an obvious incentive for him to have a selective memory. Mr. Morrison acknowledged on cross examination that Mr. Wilkins' version of what happened at the meeting was possible. Mr. Wilkins'

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version of events is correct. But it does not matter what Mr. Wilkins said four months before the licences were cancelled. In regard to Omineca's argument that the-licences were cancelled for the purpose of reducing the allowable annual cut, there is no direct evidence that the Ministry of Forests cancelled for that purpose. There is no document or witness which says that. Al MacPherson was the Deputy Minister of Forests at the time and he denied in chief that this was the purpose, and he was not challenged on it in cross examination. Mr. Belik, who was regional manager at the time, was not asked about it. It was put to Mr. Kempf and he denied it. In support of Omineca's position is only circumstantial evidence regarding the timing. That timing was coincidental and not surprising because the acquisition of FNFl and the cancellation of the licences were culminations of events which had begun earlier. There was no reason for the Ministry of Forests to cancel Omineca's licences in order to reduce the AAC. There was an overcommitment but it was not a problem which had to be resolved immediately. It would have to be resolved some years down the road, but it was not an immediate problem. And in fact, nobody was cutting the million-plus cubic meters of timber. It is likely that the actual cut was closer to half a million cubic meters. In any case, Omineca's licences were going to expire in three years and the volume could be adjusted at renewal. Omineca argues discrimination. It made the same argument about discrimination, arbitrariness and bias to the Campbell Board. The Campbell Board found the issue was irrelevant to the cancellation, and Mr. Justice Ruttan said that ruling was correct. Section 4 (e) of the Ministry of Forests Act is simply a section setting out policy objectives; it does not require as a matter of law that the ministry do or not do anything. Rustad Bros. & Co. Ltd. v. Minister of Forests (1988) 23 BCLR (2d) 188 is support for that. The issue in that case is whether the Minister could offer different terms to different proposed licensees. The court held that, barring an improper purpose, there is nothing in the statute to prevent that. In regard to Omineca's argument that the debt repayment schedule of $10,000 per month was discriminatory, this was something which Omineca agreed to. And it was preferable to Omineca having to pay $32,000 per month. Given the amount of money which all these companies owed, the $10,000 was trivial. Omineca argued that compared with each company's allowable annual cut, Omineca was required to pay four times as much as Tackama. However, when one compares the debt of each company to its AAC. Omineca's debt is proportionately much greater than Tackama's or FNFl's.

RE: OMINECA ENERPRISES LTD. SUBMISSIONS OF MINISTRY OF FORESTS

Further, Omineca only made four of these $10,000 payments. Nobody made all their payments but the other companies made a lot more than four. In regard to the acquisition of FNFl by Tackama, the situation was not comparable to that of 0mineka. Tackama was logging, employing people, paying revenue and Omineca was not. Omineca did not carry on business in any significant way after the early 1980s. In regard to the proposed transfer of the licences from Omineca to Trans North, the situation again was different. Omineca and Trans North were owned by the same people. Trans North was not operating a business; it was a shell company, Omineca was seeking to flip the AAC from one companv . - they owned to another and leave all the debts behind. By contrast Tackama made a proposal which would maintain employment and revenue, and which would have some benefits in terms of silviculture and the utilization of deciduous timber, which had been underlogged. There was no discrimination in regard to the export of timber. Every application by the three companies to export harvested timber was granted and every application to export standing timber was denied. That makes sense in view of the overcommitment of the AAC. If timber was to be cut, then it should be milled in British Columbia. Omineca chose only to apply to export standing timber. That was because it was not logging and had no harvested timber. Omineca also suggests there was discrimination because in 1984, everyone owed.money but only Omineca was cancelled. The 1984 cancellation is ancient history. It was appealed. A remedy was granted in that if Omineca paid the outstanding rental within one year, the suspension of the licences would be lifted. Omineca did not pay the rental. In 1986. the distinction was that Tackama was logging and FNFl was in receivership and subject to acquisition, but Omineca was not operating. Omineca suggests that the two transactions of Tackama acquiring FNFl and the cancellation of Omineca dovetailed twice, in 1984 and 1986. That is not correct. There was a proposal concerning TackamaIFNFI in 1984 but it was rejected by the Ministry of Forests. In regard to the rationalization of the AAC, the Ministry of Forests prepared scenarios which set out various possibilities. These possibilities included FNFl's cut being cancelled, Tackama's cut being increased and Omineca's cut being cancelled; these possibilities were all in train at the time. They do not provide any support for the position that one of these possibilities was chosen to rationalize the cut. The Ministry's position in regard to the issue of the November 17, 1986 meeting and the subsequent events was that the Ministry of Forests agreed to extend the November 30 cancellation deadline if, and only if, Omineca made a concrete proposal to resolve their disputes before that time. Omineca did nothing. In

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terms of estoppel, Omineca would have to show some reliance on that agreement, that they had changed their position to their detriment. Omineca did not suggest any way in which it had altered its position in reliance on what it says it was told. And it could not, because Oniineca was not in a position to pay the rent. The matter of the November 17, 1986 meeting itself was before the Forster Board which heard the matter 13 months after the fact. They heard the same witnesses and reviewed the same documents, and they reached the conclusion that at most Omineca was given the opportunity to present a proposal prior to November 30 and they did not do so. While this Board is not bound by that Board's findings, this Board should be cautious about reaching a different conclusion 12 years after the fact. What was said at the November 17, 1986 meeting is a difficult issue because one group says one thing, and another group another. Mr. Wilkins is frank that he does not remember the meeting now, but did remember it when he testified before the Forster Board. Mr. Flitton's evidence is supportive of the Ministry's position as is Mr. Kempfs. Mr. Kempf may not remember details of the meeting but he remembers important facts such as the result and the conclusion. The Petersons have a vested interest in their version of events. They remember . things which are just not so. An example is that John Peterson testified that one of the effects of Mr. Justice Ruttan's decision was to require the parties to ' mediate their differences and work out some terms by which Ornineca could get back into operation. That is not in the decision. Omineca says that the Ministry of Forests witnesses are trying to cover up a conspiracy to do Ornineca in. There is no doubt that Omineca suffered a catastrophe in the early 1980s and they cast about for a scapegoat to explain why their business failed. The Ministry of Forests witnesses have retired and do not have the same vested interest. But one would have to ask why the Ministry of Forests was out to get Omineca. There is no credible motive for that when you look at the AAC situation as it actually was. And if things happened as Ornineca suggests, then it is not credible when one thinks of how many officials, ministers, politicians and governments were involved. The May 1988 meeting between Mr. Kempf and the Petersons is of little weight. Mr. Kempf simply does not recall that. Mr. Braul was clear that Mr. Kempf did not comment on the accuracy of any of the points in the draft affidavit. He simply had a strong impression that Mr. Kempf agreed with the Peterson's version. Mr. Kempfs letter of June 6, 1989 is ambiguous. The reference to "contact" in the letter could very well mean a proposal. There are some external things which tip the weight of the evidence. In regard to the November 17, 1986 meeting. Ornineca said that after the August 5

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RE: OMINECAENTERPRISESLTD. SUBMISSIONS OF MINISTRY OF FORESTS

meeting with Mr. Wilkins, they went to Victoria and started lobbying Ministry executives. There were meetings and discussions and communications. After this it does not make sense that after all this there would be a meeting to arrange another meeting. The Ministry of Forests position is that over this five-month period it had received no concrete proposal from Omineca and had extended the deadline once to accommodate the process. Why would the Ministry agreed to a second indefinite extension when what it needed was something concrete. The correspondence from December 1986 to June 1987 is also telling. One would have expected Omineca to respond by saying that the Ministry promised to extend the cancellation date if Ornineca got back with a date for a meeting and Ornineca did that. No such response was made. Further, if Omineca were right, then Mr. Flitton and Mr. Kempf would have gone back on their word. There is no motive for that. In the May 1988 meeting, Mr. Kempf is alleged to have told Omineca that the licences were cancelled because he had been told by staff that Ornineca didn't get back to the Ministry of Forests. If the staff had misinformed the Minister, that should have set off an explosion by Omineca, but it never did. Omineca never put the accusation to Mr. Flitton or Mr. Wilkins that they had misinformed the Minister. In response to the argument that the two licences were treated as one, that is something that was raised late in the day. Omineca never sought to have the two licences treated separately. From their inception they were one account and the Ministry of Forests was under no obligation to treat them separately when it was going to cancel them. Further the Act does not set out particular format for the notice nor that it delineate the specific rent for each licence. In any case, Omineca knew how much the rent is and how much they had paid. There has been no breach of natural justice. Omineca had notice of the suspension, notice of intention to cancel and an opportunity to be heard. It was heard at the August 5 meeting, at the review after that, at the November 17 meeting, and even after the licence cancellations there were further discussions. Both parties were represented by counsel and Omineca had exercised its appeal rights. In response to Omineca's argument that the October 14, 1986 letter signed by Mr. Truant set up a condition precedent that there was to be a review before cancellation, in fact such a review was taking place. But the Petersons did not believe that such a review was required for cancellation because the November 30 deadline was one of their concerns at the November 17 meeting. It is improbable that the November 17 meeting extended the deadline in the manner suggested, that is by a comment made on the way out the door and not followed

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up in writing. Further, Omineca has never before taken the position that the cancellation deadline was extended under Section 152 of the Forest Act. Omineca has been a stickler for detail in the process, and it is not likely they would accept an over-the-shoulder remark to extend the deadline. Putting the Petersons' evidence to Mr. Kempf before Mr. Kempf swore his affidavit allowed him to read both sides of the story and therefore strengthens his affidavit evidence. Omineca has asserted a hideous conspiracy and the onus of proof is on Omineca to prove it. It is not on the Ministry of Forests to disprove it. Omineca has talked about the Ministry's "contrived and artificial explanationn and pointed the finger at Mr. Wilkins, Mr. Flitton and Mr. Ebbels as having done that. It is not open to Omineca to accuse these men of that kind of dishonest conduct without putting the accusation to them in the witness box and giving them the opportunity to respond. The Ministry of Forests filed supplementary submissions in regard to three issues. In regard to the interpretation of "systematic and equitable" in Section 4(e) of the Ministry of Forests Act, the Ministry of Forests said it could locate no authorities interpreting this provision. The provision should bear its ordinary meaning. In response to the Board's request regarding jurisprudence dealing with collateral purpose and in response to Omineca's argument, the Ministry of Forests supplied Piccinllo v. Brifish Columbia (Minister of Forest and Lands), [I9881 BCJ No. 37; Canadian Association of Regulated Importers v. Canada (Attorney-General), (1994) 17 Admin. L.R. (2D) 121; and Halfway RiverFirst Nation v. British Columbia (Ministry of Forests), (1997) 39 BCLR (3d) 227. The Ministrv of Forests said that the cancellations were for non-payment of rent and that was a legitimate purpose. In the alternative, when making an administrative decision. a decision-maker mav consider irrelevant matters. A court will onlv interfere'with such a decision if the decision-maker has relied entirely or primarily on irrelevant matters and there was no evidence supporting the decision. In this case, even if the Board could infer that rationalization of the AAC was one purpose for the cancellations, it was obviously not the only purpose. The evidence does not establish that rationalizing the AAC was the primary purpose for the cancellation. Even taking the Ministry's case in the worst light, there were two purposes for the cancellation, one legitimate and one collateral. In regard to Omineca's argument on notice, the Ministry of Forests said that the Board should apply the principle of statutory interpretation that where there is reason to believe that if the legislature had meant to include something within the ambit of its legislation it would have referred to it expressly, the legislature's

FOREST APPEALBOARD RE: OMINECAENERPRISESLTD. REPLY BY OMINECA

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failure to mention that thing is grounds for inferring that it was deliberately excluded. In this case, the Forest Act expressly mentions certain things which must be included in a notice of intent to cancel, such as the reason and the day on which the cancellation takes effect. The presumption is that silence on other matters is deliberate. The purpose of a notice is that it is a practical and effective means of communication which contains sufficient information so that Omineca was aware of the situation and had some basis to respond. Here they did respond. There-is no requirement that the notice state a redemption amount, and Omineca was not deprived of the opportunrty to redeem one of the TSHLs; it had never occurred to Omineca to make such a request.

R e ~ l vbv Omineca This Board's discretion is not limited by the findings of the Forster Board. The Acf in Section 156 sets out the widest discretion for the Board and Mr. Justice Drossos confirmed this in his decision [Omineca Enferprises Ltd. v. Minister of Forests et a/., supra]. There were different witnesses, different counsel and different issues before the Forster Board. Most importantly the Forster Board did not have the letter from Mr. Kempf which was written after that hearing. In regard to who cancelled the licences, the Ministry of Forests' suggestion that Mr. Wilkins did not cancel the licences is truly remarkable. The Ministry has changed its position many times on this. The Ministry of Forests argument that there was no need for the Ministry to cancel Omineca's licences to deal with the overcommitment matter falls apart when one looks at what was committed on August 28,1986 when the TackamalFNFl deal was closed. There was an overcommitment and that was not a good thing. The Ministry of Forests claimed that Omineca could not pay the rent even if it wanted to. That is false. In 1984, they had a certified cheque in the amount of the rent and handed it over to the Ministry. They did it once before and could have done it again. No demand for a specific sum was made to Omineca after July 15, 1986. The Ministry just asked for a substantial amount. The Ministry knew Omineca could raise the money to at least pay the rent. That is why they tied them together. It is one thing to pay the rent which would have been $190,000, but it is another thing to raise $950,000. Just because they were not operating does not mean they were not capable of putting their mill into operation and obtaining backing. The Ministry of Forests did not address Ornineca's argument concerning the meaning of the phrase "systematic and equitable" or the fact that the phrase appeared in the Ministry of Forests Act and no other one. Perhaps someone

FOES APPEAL BOARD RE: OMINECAENTERPRISESLm. DISCUSSION AND DECISION

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thought that the forestry industry might be a very good place where this kind of a requirement be introduced. It is correct that Omineca ha$ not previously argued that Mr. Kempf extended the deadline under Section 152 of the Act, that is because counsel had not thought of it before. Section 152 does not say that there has to be written notice of an extension. If the Board finds that Mr. Kempf and Mr. Flitton made the remarks that the Petersons say they made, then the conclusion follows that there was an extension. It would not be indefinite; it would be for a reasonable period of time. The Ministry could terminate the extension by notifying Omineca.

DISCUSSION AND DECISION The issue before this Board is whether the licences issued to Omineca were wrongfully cancelled. In order to reach that ultimate conclusion, there are a number of issues which must be decided. There are clearly significant conflicts in evidence between witnesses who were present at the same events. In making determinations on credibility, the Board has relied on the British Columbia Court of Appeal decision of Faryna v. Chomy, (1951) 4 WWR (NS) 171, which says at page 174-5: .."If a trial judge's fmdimg of credibility is to depend solely on which person he

thinks made the better appearance of sincerity in the witness box, we are left with a purely arbitrary finding and justice would then depend upon the best actors in the witness box. On reflection it becomes almost axiomatic that the appearance of telling the truth is but one of the elements that enter into the credibilitybf the evidence of a witness. Opportunities for knowledge, powers of observation, judgment and memory, ability to describe clearly what he has seen andheard, as well as other factors, combine to produce what is called credibility, see Raymond v. Bosanquer Tp. (1919) 59 SCR 452, at 460. A witness by his manner may create a very unfavourable impression of his truthfulness upon the trial judge and yet the surrounding circumstances in the case may point decisively to the conclusion that he is actually telling the truth. I am not referring to the comparatively infrequent cases in which a witness is caught in a clumsy lie. The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness canied conviction of the truth. The test must reasonably subject his story to an examination of its consistency ulth the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions. Only thus can a court

FORE=

APPEAL BOARD

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RE: OMINECA ENTERPRISESLTD. DISCUSSION AND DECISION

satisfactorily appraise the testimony of quick-minded, experienced and conf~dent witnesses, and of those shrewd persons adept in the half-lie and of long and successful experience in c o m b i i g skilful exaggeration with partial suppression of the truth. Again a witness may testify what he sincerely believes to be true, but he may be quite honestly mistaken. For a trial judge to say "I believe him because I judge him to be telling the truth," is to come to a conclusion on consideration of only half the problem. In truth it may easily be self-direction of a dangerous kind."

Did the Ministry of Forests have the legal right to cancel the licences?

The Ministry of Forests argues that Omineca was in default of the requirements under its licences. It had never cut the required amounts of timber; there had been no cut since 1981; there was four years of unpaid rent; stumpage had not been paid since 1980; no interest had been paid on the amounts owing, and Omineca was insolvent and not operating. Omineca does not dispute any of this but argues that various acts and conduct of the Ministry of Forests officials should void the cancellation. In the instant case, the Ministry of Forests relied on the failure to pay annual rents as the basis for the cancellation. Pursuant to Section 89 of the Act and Section 7.1 of the licence, a licensee is required to pay annual rent. The Act sets out the cancellation procedure in Section 61 and there is a similar provision in Section 8.14 of the licence itself. While Omineca argued that this was not the real reason for the cancellation or that the Ministry of Forests changed its grounds, Omineca does not dispute that it failed to pay annual rent for at least the years 1980 - 1984. On this initial question of whether the Ministry of Forests had the legal right to cancel the licences, the Board finds that the Ministry of Forests did have such a right to cancel the licences on the basis of Omineca's failure to pay annual rent. Omineca, however, says that the cancellation should be voided because of various actions and conduct of the Ministry of Forests. We will deal with each of these arguments below. 2. Did the Ministry of Forests cancel the licences for a reason different from that set out in the letter of July 15, 1986? This question has at times during the hearing been phrased as whether the cancellation was done for reasons different from the reason for the suspension. In substance, both questions are the same. The cutting permits issued pursuant to the licences were suspended on September 27, 1983 because annual fees were outstanding, pursuant to Section 89 of the Act and Section 7.1 of the

FOREST APPEAL BOARD

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RE: OMINEU\ ENERPRISES ~m. DISCUSSION AND DECISION

licences. Both these sections refer to annual rent. The letter of July 15, 1986 advises that the licences are cancelled effective October 31, 1986 for nonpayment of rentals under Section 89 of the Act. It is Omineca's position that the Ministry of Forests subsequently demanded that Omineca pay something beyond the rentals in order to prevent cancellation. Omineca owed, in addition to the annual rents, stumpage and accrued interest. Omineca says that this is what the Ministry of Forests did wrongly in the first cancellation, and then it made the same mistake in the second cancellation. In order to determine if the Ministry of Forests in fact repeated its error, one must look at what occurred in the first cancellation, at the meeting of August 5, 1986 and at subsequent events and correspondence. This Board heard some evidence concerning the first cancellation, and the Campbell Board decision and the subsequent court decisions were entered into evidence. A review of the Campbell Board decision shows that it reviewed much of the evidence which was before this Board-the suspension letter of September 27, 1983 for non-payment of annual rent, the notice of intention to cancel for outstanding rentals dated April 25, 1984, John Peterson's visit to the Ministry of Forests office in Prince George where he tendered the cheque for $151,600, the telex sent on October 2, 1984 to Omineca by the Regional Manager Wlkins after Deputy Minister of Forests MacPherson had failed to approve Omineca's . proposal which followed the tendering of the cheque, and the final cancellation letter of October 17, 1984. The Campbell Board cites the October 2 telex, the first paragraph of which said (at page 7 of the Campbell Board decision): "This is to confirm my advice to you today that retention of your TSHL's in good standing requires payment in full to this ofice by noon Oct. 5 of your outstanding account of 796,690.3 1 Dollars plus September interest charges." That was followed by the cancellation letter of October 17, 1984 which referred to "your outstanding account" and "your indebtedness to the Ministry". The Campbell Board held that the final letter and the October 2 telex showed that the Ministry of Forests was demanding payment of the total indebtedness rather than simply the outstanding annual rental. The Campbell Board decision was upheld in a decision by Mr. Justice Ruttan of the Supreme Court of British Columbia on August 2, 1985. The Ministry of Forests abandoned its appeal on the ground that the regional manger failed to comply with s. 61 in cancelling the licences. The Court of Appeal refused leave to appeal relating to other findings which had been made by Mr. Justice Ruttan. The Court of Appeal decision is dated June 20, 1986.

FOREmAPPEAL BWD

RE: OMINECA ENTERPRISES LTD.

DISCUSSION AND DECISION

The letter of July 15, 1986 came shortly after this decision and in fact, it specifically refers to the Court of Appeal decision. Thus at the time that the process leading to the second cancellation was commenced, the first cancellation and the reason it was overtumed would have been fresh in the minds of both parties. The letter of July 15, 1986 resulted in the meeting of August 5, 1986 attended by Mr. Wilkins, John Peterson and Mr. Morrison. What was said at that meeting is disputed. It is Omineca's contention that Mr. Wilkins once again misled Omineca by demanding that Omineca pay the stumpage as well as the rent, or at least make provision for payment of stumpage. Mr. Wilkins said he was not demanding payment of the whole account but was trying to point out to Omineca that simply paying the rental would not get them operating again. However, it is apparent that the focus of both parties going into the meeting and at the meeting was not solely on the issue of preventing the cancellation. Mr. Peterson wanted to know what he had to do to get operating again and Mr. Wilkins responded accordingly. Did Mr. Wilkins once again require Omineca to pay some or all of its stumpage owing in order to prevent cancellation of its licences? After a careful review of the evidence of Mr. Wilkins, John Peterson and Mr. Morrison and the relevant documents, the Board has concluded that he did not require any payment beyond the annual rent in order to prevent revocation of the licence. There is no doubt that Mr. Wilkins told Omineca that to get logging again they would have to deal w t h their whole outstanding account, but he did not make that a precondition to preventing revocation of the licences. The Board has reached this conclusion for a number of reasons. The meeting of August 5, 1986 was scheduled to deal with the matter of the proposed cancellation of the licences. The evidence of all three witnesses is consistent in agreeing that the meeting dealt at least in part with the larger issue of how Omineca could get back into business. That was Mr. Peterson's intent in going into the meeting. It does not make sense that the parties would have a meeting to deal with only the issue of preventing revocation of the licences if that action was meaningless in practical terms. The oral evidence of Mr. Morrison was not of particular assistance. When Mr. Morrison was shown Mr. Wilkins' memo of August 5. 1986, he thought that this was consistent with his recollection -that Mr. Wilkins had tied payment of rental and stumpage together in a conjunctive fashion. But when shown Mr. Wilkins testimony before the Forster Board, he acknowledged that it was possible that that was what Mr. Wilkins said at the meeting. Mr. Morrison acknowledges, and the Board agrees, that he has little independent recall of a meeting held 12 years ago.

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

What is of particular assistance, however, are the notes taken by Mr. Morrison at the meeting. Those notes were produced after Mr. Morrison had finished his testimony and he was not recalled to deal_withthem. Thus the notes must speak for themselves. The notes are consistent with Mr. Wilkins' evidence. Those notes suggest that the meeting first deal with the matter of rental outstanding (which was noted as $198,240.00) and that the licences were "suspended because of that". Mr. Morrison's note then says: "that mlb addressed 1st". That indicates to the Board that the issue of the rental and the rest of the Outstanding debt were being addressed separately and that the rental must be addressed first. The next few lines are equally supportive of Mr. Wilkins' evidence. The 01s 967,192.87" [emphasis added] which again suggests note refers to that the rental and the rest of the outstanding amount were being dealt with separately. The next note "Foolish wlo 2d committment" is again supportive of Mr. Wilkins' evidence that he was telling Omineca that merely paying the rent would not get them back into operation. Mr. Wilkins' own notes of the meeting were the subject of much evidence and argument. Those notes are troubling. They were made the same day as the meeting and they are detailed. They were read by Mr. Doyle of the Ministry of the Attorney General in his letter of August 18, 1986 as requiring settlement of all outstanding charges as a pre-condition to revoking the cancellation notice. Normally those notes would be strong evidence of what was said at the meeting. The difficulty with accepting those notes at face value is that Mr. Wilkins has consistently said that the notes are incorrect. In his response memo to Mr. Doyle dated August 25, 1986, he said: "The point I made to them was that provision of payment of the outstanding rental charges would in itself not result in reinstatement of the licences (i.e. the cancellation would be revoked but the licences would remain in suspension owing to the continuing problem of the outstanding account). I was in effect, in all fairness to the licensee, pointing out that simply paying the outstanding rental would not solve their problems and allow them to begin operating their licences."

Mr. Wilkins' evidence before the Forster Board and this Board was that the August 5 notes were incorrect. It is the view of this Board that if Mr. Wilkins had tied payment of the whole debt to the revocation of the cancellation notice, then Omineca would have raised that as an issue at the meeting or shortly thereafter. While Mr. Morrison may not have been particularly familiar with the issues, it is clear from hearing John Peterson give evidence at this hearing that Mr. Peterson was an active participant in the whole process and had a keen grasp of the facts and the

RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

issues involved. It is highly unlikely that just six weeks after the Court of Appeal decision, he would have let it pass If Mr. Wilkins was indeed once again setting up payment of the whole debt as a precondition to avoiding revocation of the licences. It is much more likely that both Mr. Peterson and Mr. Wilkins were talking in practical terms -what would it take for Omineca to get operating again and there was a common understanding that it would take something more than merely paying the rent.

In fact the correspondence or events which occurred in the year after the July 15, 1986 letter are consistent with Mr. Wilkins' account. The letter of October 14, 1986 which extended the deadline for cancellation from October 31 to November 30, 1986 speaks of cancellation for non-payment of rentals. There is no evidence that at the meeting of November 17, 1986 with Minister Kempf (which is discussed in more detail later), the matter of what was owing was raised. None of the correspondence flowing from that meeting deals with the matter. A letter dated December 16, 1986 from Mr. Belik to Omineca, which this Board has ruled was never sent, refers to cancellation for non-payment of rentals. A letter dated July 29, 1987 from Minister Parker to Omineca reviews various allegations made by Omineca of bias, discrimination and preferential treatment. Nowhere in that letter is there any mention of the purported demand for full payment. The letter of August 18, 1987 which this Board has ruled was the final notice of cancellation refers only to nonpayment of rentals. And the Notice of Appeal signed by Roy Peterson and dated September 4, I987 lists 10 grounds for. appeal. While some of the grounds are vaguely and broadly worded, none of them make any direct reference to the regional manager demanding that Omineca pay more than the rental or cancelling on that basis. We would contrast the situation in the second cancellation with that of the first. In the first, there was no question that the Ministry of Forests was asking for payment of more than the rent. It was set out in a letter from the minister and in the telex from Mr. Wilkins. There is no such uncontradicted evidence in regard to the second cancellation. In 1986, if the Ministry of Forests was asking for something more than simply payment of the rent, then that was done at the August 5, 1986 meeting. For the reasons stated above, the Board does not accept that Mr. Wilkins made an additional payment a requirement of preventing the revocation of the licences. The Board therefore holds that theMinistry of Forests did not cancel the licences for a reason different from that set out in the letter of July 15, 1986.

Did the Ministry of Forests tell Omineca that even if they paid the rent and avoided the cancellation, the licences would still be suspended, and if so. did this mislead Omineca?

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

Omineca argued that Mr. Wilkins misled Omineca in respect to the effect the paying of the outstanding rent would have on the suspensions. Omineca said that Mr. Wilkins should have told them that paying the rent would mean the lifting of the suspensions. Instead .he told themthe contrary, that even if they paid the rent, they could not log and their licences would still be suspended and they would have to deal with the stumpage and interest. Omineca says Mr. Wilkins' position was clearly set out in his memo to Mr. Doyle of August 25, 1986. The Ministry of Forests noted that this issue had never before been raised in the proceedings. The Ministry of Forests said that this issue really does not have anything to do with the issue of whether the cancellation was taken for the correct reasons. Even supposing that Mr. Wilkins had misled Omineca, and Omineca had tendered the rent and Mr. Wilkins had refused to "unsuspend" the licences, Omineca could go to court and seek the equivalent to a writ of mandamus. The Board recognizes that there was a large amount of evidence concerning the August 5, 1986 meeting and Omineca clearly raised the issue of whether Mr. Wilkins, at that meeting, told Omineca that in order to prevent cancellation of the licences they had to pay something more than the rentals. However, until final argument, Omineca did not raise the matter of whether Mr. Wilkins had misled Omineca in regard to the sus~ensionand whether it would be lifted by payment of the outstanding rent. As a result, the matter was not specifically addressed in evidence as it might have been had Omineca set this out as an issue in the outlines which the Board required from each party. The Board is also concerned as to whether this issue relating to suspension should properly be dealt with in an appeal of a cancellation. While Omineca did not draw a linkage to the cancellation, we believe that Omineca was trying to put forward the argument that if Omineca knew that merely paying the rental would stop the cancellation and lift the suspension as well, it would have paid that rent. But, we believe Omineca to be saying, Omineca was misled into believing that paying the rent would only stop the cancellation, but the suspension would remain, and on that basis it did not pay the rent. Even though the evidence did not specifically address this matter, there is some evidence concerning the suspension. Mr. Wllkins was cross examined about the suspension, originally in regard to 1984 and then in regard to 1986. In regard to his telex to Omineca dated October 2,1984, he was asked: Q [The telex] Doesn't say that if you pay $1 13,280, that I will lift your suspension.

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Well, the issue here, Mr. Tick, is that we're talking about suspension and cancellation.

Q Yes, we are.

A Right? Q Yes. A And my understanding of this situation is that if payment of the annual rental in whatever sum it is had been paid, then that was enough to lift the suspension. But the whole question of the outstanding account was also outstanding and had to be dealt with, and in any discussions that I had with the company over the years over these two separate issues that had to be dealt with, before essentially they could get back into operating their licence.

Q Well, did you take that same position two years later in

July of -- from the July 15th letter of 1986 and following on to the October 14th letter? I mean, we can go back and I can pull out and show you where these are again if you want to refresh your memory.

A Well --

Q But I want to know if you had the same position in the second cancellation proceedings. A

Well, exactly. In terms of the second cancellation procedure, the payment of the outstanding balance relative to annual rental would have resulted in the revocation -- if that's a word -- of the cancellation. But - and it might, due, I guess to the decision of Justice Ruttan, also resulted in the lifting of the suspension. But the fact that there was still this very large outstanding account relative to mainly outstanding stumpage charges, the licence was -- or the licences were still subject to suspension because of that outstanding account. And what I consistently told the company was that paying the outstanding rental would not resolve their long-term problem in terms of operating on their licences. Some provision had to be made for payment, not

RE: OMINECA ENTERPRISES Lm DISCUSSION AND DECISION

only of the outstanding rental, but also the substantial outstanding stumpage costs -- or stumpage charges. Q Would you go to the red book, Tab 80. [Tab 80 is Mr. Willcins' memo of August 5, 19861

Did what you just say apply to the time that you wrote Tab SO?

A The August 5 memo. Q Yes.

A Yes. Q So it applied on this 84-10-02 telex time, and it applied on August 5th,'86, the memo. What you just said applies to both of these. Correct?

A I believe so, yes. -. Q

On the -- on Tab 80, on August 5th 1986, if Ornineca had come in with $1 13,280 and given it to you, would you have lifted the suspension?

Well, no, because the outstanding rental cha&es had changed. I mean, if we're talking amounts here, the outstanding rental charges had changed in 1984 to 1986. And now, if I read my memo correctly, the outstanding rental charges have increased substantially since 1984. In other words, the outstanding rental charges in 1986 in August were $1 98,000.

Okay. So if they had come to you and paid $198,240, would you have lifted the suspension?

No.

Why not?

Because I would have revoked the cancellation consistent with the direction that the Ministr)' received from

RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

Justice Runan, but there was still the issue of the outstandig stumpage charges. Now, technically speaking, I may have had to -- and I'm not a lawyer -- I may have had to rescinded the suspension letter that was issued earlier because I believe that was tied to the outstanding rental. But then there were every grounds for me to reestablish a suspension for the outstanding account -- the total outstanding account. But that would have been a different procedure. You would have had to start again. Correct?

A Yes. A new suspension letter would have had to have been issued. It would appear from the memos of August 5 and August 25,1986 that Mr. Wilkins was of the view at that time that payment of the rent would not automatically result in the lifting of the ~"spension. When he testified before this Board, Mr. Wilkins seemed to have appreciated that legally the suspension may be lifted. But, as this testimony indicates, he also appreciated that even if that suspension were lifted, it would be re-established on the grounds of the whole outstanding account. However, it is not Mr. Wilkins*understanding of the process which is at issue. Omineca argues that Ornineca was misled by Mr. Wilkins. Neither of Roy nor John Peterson testified that if they had been told that simply paying the outstanding rent would have lifted the suspension as well as prevented the cancellation, they would have paid the rent. Neither of them testified that they were misled. In fact, there are passages in the testimony of each of them which suggests the contrary. Roy Peterson in cross examination said: Q

And as I recall if until you had made some arrangement to deal with the entire outstanding stumpage amount, your cutting permits would have stayed suspended and you wouldn't havebeen able to log on the Sikanni licence, even if you had been able to pay the outstanding rent.

That's the Ministry's position, but that's not -- that's not a proper position to take.

That's not your position.

Well, it's not -- it's not --

FOREST APPEAL BOARD RE: OMINECAENTERPRISES Lm. DISCUSSION AND DECISION

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Q It's up to the Appeal Board to determine what's proper. A No, the Forest Act sets that out. You have a suspension for non-payment of.rentals. When you pay the rentals, they're out of suspension. It's that simple.

John Peterson said in reference to events which occurred in 1984:

Q And you appreciate that under the Forest Acf a licence, before it can be cancelled, must be suspended, and this is the act of suspension. A That's my understanding, yes.

Q Has the licence ever been taken out of suspension since September 27th of 1983? A Well, I'd say it was when we tendered the cheque Q Yes. A

- and it was returned,I say that the suspension was lifted for a couple of days or three days at least.

This evidence indicates that both Roy and John Peterson believed that paying the rent would lift the suspension. That is inconsistent with their having been misled by Mr. Wilkins into believing the opposite. Further, there is the question of whether Omineca is correct in its assertion that payment of the rent automatically lifted the suspension as well as prevented the cancellation. As this matter had not been raised prior to Omineca's final argument, this question was not argued by the parties. The Board, however, would note Section 59(5) of the Act which reads:

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

Suspension of rights

(5) On the application of the holder of the agreement the regional manager or district manqger shall reinstate rights suspended under this section or section 60 where the holder is performing his obligations and is complying with this Act and the regulations. 59.

One possible reading of this provision is that the licensee must be complying with all obligations in order to achieve reinstatement even ifthe licensee has corrected the problem for which the suspension was originally given. That is the interpretation given to this process by the Campbell Board, which said at page 10 of its decision:

"Sections 59 and 61 set out a procedural framework for the Ministry to deal with defaulting licensees. The first step is suspension under section 59. While rights are under suspension, a licensee has the right to reinstatement, under section 59(5), if he has cured the default and is otherwise complying with his licence obligations, the Forest Act and regulations. That is, the Ministry may decline to reinstate a licence unless the licensee is in full compliance with all obligations. If the licensee cures the default that led to the suspension he is not necessarily eligible for reinstatement; for example, other defaults that had occurred since initial suspension might have to be rectified as well. In the meantime he is prevented from harvesting timber and exercising other rights under his licence." Because the matter was not argued before us, this Board is not prepared to decide whether Mr. Wilkins was or was not correct in his understanding of the process. Further, neither Roy nor John Peterson testified that they relied on what Mr. Wilkins' told John Peterson at the meeting of August 5, 1986 or at any other time in regard to the suspension. It cannot be ignored that Omineca had legal representation at that meeting, even though it was not the lawyer most familiar with the matter. And within three months of the August meeting, their regular lawyer was sending the draft Statement of Claim and related documents to Victoria, and was thus actively involved in representing Omineca in regard to its dealings with the government. It is surprising that if Omineca were misled in 1986, it was not raised at that time or during any of the numerous legal proceedings since. But in the absence of any evidence from Omineca that they were misled in regard to the suspension, and some evidence to the contrary, this Board is not prepared to find that the Ministry of Forests misled Omineca in this matter.

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RE: OMINECAENTERPRISES Lm. DISCUSSION AND DECISION

Was the notice of July 15, 1986 deficient or defective or contrary to natural justice?

Omineca argued that the notice was defektive in a number of ways. It lumped two separate licences together, did not offer the ability to redeem one licence alone, it did not specify the sum owing, andthe Crown cannot identify which letter is the cancellation letter, having relied on five different letters. Omineca cited passages from two texts, De Smith, Woolf, and Jowell, Judicial Review of Administrative Action, (5th Edition, 1995) and Jones and Devillars, Principles of Administrative Law, (2nd Edition, 1994) , which say that interpreting the statute is an essential factor in determining if there has been adequate notice, but the courts will supplement the statute or imply a code if the statute is silent. The Ministry of Forests says that the statute requires only that the notice contain the reason for the cancellation and the date on which the cancellation takes effect. If the Legislature had intended there to be other requirements, it would have included them in the statute. In the absence of express requirements, the courts take a practical approach, recognizing the purpose of such notices is to be a practical and effective means of communication. Section 61 of the Forest Act reads: Cancellation

61.

(1) Where rights are under suspension (a) the chief forester may cancel a tree farm licence, pulpwood harvesting area agreement or pulpwood agreement; (b) the regional manager may cancel an agreement other than an agreement referred to in paragraph (a); and (c) the district manager may cancel an agreement other than a forest licence or an agreement referred to in paragraph (a).

(2) At least 3 months before cancelling an agreement the chief forester, regional manager or a district manager, as the case may be, shall serve on its holder a written notice of cancellation specifying the grounds of cancellation and the day on which cancellation takes effect. (3) Where, within 30 days after a notice of cancellation has been served the holder so requests, the chief forester, regional manager or a district manager, as the case may be, shall give him an opportunity to be heard. (4) A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed. ( 5 ) Notice of a cancellation shall be published in the Gazette.

FOREST APPW BOARD RE: OMINECAENTERPRISES LTD. DISCUSSION AND DECISION

The Ministry of Forests gave notice in accordance with the statutory requirements in that the notice of July 15, 1986 identified the reason for the intended cancellation and the date of which it would occur and advised Omineca of their right to be heard provjded they requested such a hearing within 30 days. The question is whether the Ministry of Forests was required to go beyond the statutory requirements; or whether the failure to provide more information in the notice was in breach of natural justice. This Board is reluctant to imply the requirements which Omineca requests since the statute in question contains specific requirements in the cancellation notice. In support of its argument, Omineca cited only the two passages from textbooks but no case law. The text passages were in such broad and general terms that they are of no real assistance. The cases cited by the Ministry of Forests were of limited assistance in that they mainly dealt with situations where "notice" or "reasonable notice" was required, the question then being what was reasonable under the circumstances. None of them dealt with the instant situation, where there is a statute which has specific requirements. In regard to the specific defects alleged by Omineca, the first was that the Ministry of Forests issued one letter dealing with the two licences. In the Board's view, Omineca's argument is one of form over substance. The letter of July 15, 1986 clearly identifies both licences. Omineca could not have been in any doubt as to what licences were in danger of being cancelled. In regard to Ominecals arguriient that it was denied the opportunity to redeem one licence, there is absolutely no evidence to support this. Omineca was never told it had to redeem both, and Roy Peterson acknowledged that Omineca had never made a request to redeem only one. And even when both licences were dealt with in the same letter of July 15, 1986, there was nothing to prevent Omineca from advising that it wished to deal with them separately and redeem one. In regard to Omineca's argument that the notice should have specified the sum owing, the Board is again not convinced that natural justice requires this specificity. Omineca knew that it had to pay the outstanding rent. That is a figure it could have calculated. In the first cancellation process, the initial notice of suspension letter of September 27, 1983 did provide a figure, exclusive of interest. But the April 25, 1984 letter, which is the equivalent to the July 15 letter in the second cancellation process, contained no figure and simply referred to outstanding annual fees for the years 1980 -1983. Yet in September 1984, when John Peterson went to the Ministry of Forests office in Prince George to tender payment, there was no problem in determining the amount of the cheque. In fact, on October 1, 1984, Roy Peterson wrote to Mr. Wilkins and said that $141.600 was to be applied to annual rental charges and $10,000 was for the October 1984 payment. Similarly, in 1986, Omineca never advised the Ministry of Forests that it did not know the figure for its annual rentals, and in fact at the

FOREST APPEAL BOARD RE: OMINECAENTERPRISESLm. DISCUSSION AND DECISION

meeting of August 5, 1986, Mr. Morrison's notes indicate that the figure of $198,240 was for rentals. The issue which Omineca now raises. that the Ministry of Forests put forward a figure which included rent after the suspension contrary to section 62 of the Act, is inconsistent with its argument that the notice did not specify a sum. By making that argument, Omineca is saying that it knew the sum needed to pay the rentals, but it did not agree it was the correct sum. In regard to Omineca's argument that the Crown cannot identify which letter is the cancellation letter, this Board has found that the letter of August 18, 1986 constituted the cancellation letter. The Board therefore finds that the notice of July 15, 1986 was not deficient or defective or contrary to natural justice.

Did the reference to a review in the October 14, 1986 letter create a condition precedent to cancellation?

This letter, which was signed by Rich Truant for and on behalf of Mr. Wilkins, said in part:

"I have received information to the effect that the Ministry of Forests and Lands are reviewing the circumstances surrounding the operation of Ornineca -'Enterprises Ltd. Since this review is not likely to be concluded until after October 31,1986, notice of cancellation is herewith extended to November 30, 1986." Omineca said this letter created in the minds of Omineca a condition precedent to the cancellation, that condition being that there was going to be a review by the Ministry of Forests. No such review took place. Giving an expectation of a review and then reneging on it is a breach of the rules of natural justice. The Ministry of Forests said such a review was taking place. The Board is not prepared to find the reference to a review in the October 14, 1986 letter to be a condition precedent to cancellation. Firstly, there is simply too much uncertainty as to what was meant by a review. It was Roy Peterson's evidence that Omineca took this to be a promise to review the whole outstanding situation "and determine what we owed, if we owed anything, or who owed who what". When John Peterson was questioned by his own counsel about the October 14 letter, it was in the context of that letter leading to the meeting of November 17, 1986 with Minister Kempf. What is apparent from the evidence of both John and Roy Peterson is that in their minds the "review" was a review of all of the dealings of Omineca with the government, including the lengthy delay in

RE: OMINECAENTERPRISESLTD. DISCUSSION AN0 DECISION

Ornineca obtaining land needed for a rail spur and storage and its failure to get an export permit for logs. The Board also heard some evidence that contemporaneously with the fonnal cancellation process, there was another process going on. In this pro,cess, o m i n k was seeking to have the government take responsibility for causing Omineca's problems with various government ministries and agencies. Included in this process was the sending of a draft Statement of Claim by Omineca's solicitors to Mr. Ebbels from the Attorney ~ e n e r a l ' sdepartment. It also appears from Mr. Ebbels reply to Mr. McDonald dated November 13, 1986 that Omineca in this time period was facing the prospect of forfeiting its land for tax arrears. What is apparent is that the review which Omineca sought was not restricted to the prospective cancellation of the licence; it was much broader than that. There is no question that Ornineca was pleased they were going to have a review but the evidence is lacking that they relied on it in any way in regard to the cancellation of the licences. An alternate way of looking at it is to say that Ornineca in fact got the review when they got the meeting with Minister Kempf. Depending on whose evidence one accepts as to what occurred at that meeting and thereafter, there could well have been a continuing review being undertaken. The Ministry of Forests did not tender any evidence in regard to the meaning of . the review referred to in the October 14 letter. This is not surprising in thatthis argument was not referred to in the issues which Ornineca set out in a letter to the Bijard dated August 21,1997, its amended issues dated February 25,1998 or in its opening submissions. We would note that Mr. Wilkins, who deposed that he made the decision to send the October 14 letter, was not cross examined in regard to the reference to the "review". The Board therefore finds that the reference to a review in the letter of October 14, 1986 did not create a condition precedent to cancellation. 6.

Did the Ministry of Forests treat Omineca in a "systematic and equitable manner" pursuant to Section 4 (e) of the Ministry of Forests Act?

Omineca argues that failure to comply with Section 4 (e) voids the cancellation. Omineca said that the Ministry of Forests failed to comply in a number of ways. They allowed FNFl and Tackama to continue logging when their accounts were in the millions of dollars, and Tackarna got a sweetheart deal with the acquisition of the FNFl cut where back rent and stumpage were cancelled and interest forgiven. The not-so-hidden agenda was to rationalize the AAC in the Fort Nelson Timber Supply Area. Omineca was treated differently from FNFl and Tackama. All the companies had to pay $10,000 per month. but compared to gross revenues or timber under tenure, Omineca was paying four times the amount of the other companies. Further Ornineca failed to get export permits

RE: OMlNECA ENTERPRISESLTD.

DISCUSSION AND DECISION

when their competiiors were granted them. And in 1984 when there was a demand for payment of Omineca's full account, the other companies were not under threat of cancellation because of no: paying stumpage. The Ministry of Forests argues that Section 4(e) is simply a Section setting out policy objectives; it does not require that the Ministry do or not do anything. Baning an improper purpose, there is nothing in the statute to prevent the Ministry from treating one licensee differently from another. In regard to the $10,000 monthly payments, this was something which Omineca agreed to, and when one compared the debt of each company to its AAC,Omineca's debt was proportionately much greater than the other two companies In regard to the acquisition of FNFl by Tackama, the situation was not comparable to Omineca. Tackama was an active company whereas Omineca had not carried on business in any meaningful way since the early 1980s. The applications regarding export timber again were not discriminatory; all applications to export standing timber were denied. In terms of rationalizing the AAC,the possibilities being looked at do not provide support for the position that one of these possibilities was chosen to rationalize the cut. As indicated earlier, the Board asked the parties to provide jurisprudence dealing with the term "systematic and equitable" as found in the Ministry of Forests Act. . The parties responded with the jurisprudence and submissions referred to . earliec. The parties could not locate any case which dealt specifically with the phrase "systematic and equitable" in the Ministry of Forests Act. Omineca compared the phrase to "equitable treatment" found in the objectives of the national ports policy set out in the Public Harbours and Port Facilities Act, as cited in St. Lawrence Cruise Lines v. The Crown (supra). In that case, the Federal Court of Appeal noted that the legislative objective of "equitable treatment" is exceptional, being found in only two other federal statutes: "Given that Parliament has taken exceptional pains to add this requirement of equitable treatment to the text of the Act itself, I deduce from this that it intended to give users of Canadian harbours broader rights than the rights that stem from the implied requirement of non-discrimination which the courts generally read into enactments."

Later the Court said:

"I am of the view that imposing charges solely on overnight cruise vessels that make the same use of port facilities a s do day cruises does not comply with the principle of equitable treatment, which I interpret to mean that where use is equal,

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DISCUSSION AND DECISION

and absent any other valid objective which would permit a distinction to be made, all vessels in the same class should be treated equally."

The Ministry of Forests relied on Rustad Bros. & Co. Ltd. v. Minister of Forests (supra). In this case, the petitioner was the holder of a timber sale licence with a specified AAC for a term of five years. In the tifth year, the holder could apply for a replacement licence for a further five years. The Ministry expressed concern over the shortage of timber in the area and believed that something had to be done to encourage the harvesting of bark beetle infested stands of timber. The holder agreed to renewal on certain terms including a reduction in his AAC. Later the minister changed his policy and advised that only certain licence holders (including this petitioner) would be subject to a reduction in their AAC. The licence holder brought an application for judicial review to the B.C. Supreme Court. The first issue was whether there is anything in the Forest Act which limited the right of the Crown to offer different terms to different proposed licensees. The Court found there is nothing. The Court noted that there is a general principle that a statutory power may not be used for an improper purpose. In this case, the relevant legislative purpose is found in Section 4 of the Ministry of Forests Act which reads: The purposes and functions of the ministry are, under the direction of the minister, to 4.

(a) (b)

(c)

(d) (e)

encourage maximum productivity of the forest and range resources in the Province; manage, protect and conserve the forest and range resources of the Crown, having regard to the immediate and long term economic and social benefits they may confer on the Province; plan the use of the forest and range resources of the Crown, so that the production of timber and forage, the harvesting of timber, the grazing of livestock and the realization of fisheries, wildlife, water, outdoor recreation and other natural resource values are coordinated and integrated, in consultation and cooperation with other ministries and agencies of the Crown and with the private sector; encourage a vigorous, efficient and world competitive timber processing industry in the Province; and assert the financial interest of the Crown in its forest and range resources in a systematic and equitable manner.

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RE: OMINECA ENTERPRISESLTD. DISCUSSION AND DECISION

After citing the statute, the Court said:

"These are very broad purposes. As to the best way of carrying them out, there will be profound differences of opinion. I cannot think of a concept more capable of giving rise to differences of opinion than that of "social benefits". The letter of 19th June discloses a purpose of "social benefit". The petitioner may not agree with the "social benefits" of the minister's policy or may think that some other policy would have been of greater "social benefit". Such matters are matters upon which reasonable men may differ. There is no evidence at all from which I could infer that the minister had any ulterior purpose. Mr. Stewart, for the petitioner, said that one of the licensees who, by this new policy, is going to be able to retain 100 per cent of its annual allowable cut is a large British Columbia company. This sort of anomaly does from time to time arise in the administration of government policy. But this sort of anomaly, if anomaly it truly is, is a matter to be addressed by the legislature and not by the courts unless the anomaly shows that the minister is using his powers for an improper purpose. This anomaly does not." These cases are not totally reconcilable. But on review, there is some commonality. The general principle is that statutes ought to be applied without discrimination. But there may be discrimination if there is a valid objective which would permit a distinction to be made and the distinction is made without improper or ulterior motive. There is no doubt that in certain respects Ornineca was treated differently from Tackama and FNFI. But was Omineca treated in a discriminatory manner where there was either no valid reason for the different treatment or where the different treatment resulted from an improper or ulterior motive? In the Board's view there were significant differences between Omineca and the other two companies which would provide a reason for the Ministry of Forests treating Omineca differently. Allan MacPherson, who was Assistant Deputy Minister of Forests from 1980 to October, 1984 and then Deputy Minister to the end of August, 1986, said that the main reason that the Ministry of Forests did not suspend the cutting rights or cancel licences of the other two companies was that the other two continued to attempt to log, to mill and employ people. That view is supported by the evidence. In 1986, Omineca was not operating and had not been operating in any fashion since 1981. (There was a mention that Omineca had done some small amount of private harvesting, but there is no dispute that Omineca had not been doing any harvesting under its licences in these years.) Omineca was insolvent and in receivership. By contrast Tackama was still operating and providing employment in the Fort Nelson area. FNFI had ceased to operate in 1986, but it had operated minimally in 1985 and actively in

63 FOREST APPEAL BOARD RE: OMINECA ENTERPRISESLTD. DISCUSSION AND DEClSlON

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1984 (based on its cut figures). It was an operating company when Omineca had already been dormant for some years. Secondly, Omineca's debt tathe Ministry of Forests compared with the size of its operation was several times the size of the other two companies. In calculations presented by the Ministry of Forests in argument, Omineca's debt in mid-I 986 was $995,513. FNFI, which had almost four times the AAC of Omineca, owed $2,078,777.Tackama, whose AAC was almost five times that of Omineca, owed

$1,480,533. Thirdly, Omineca paid $40,000in 1980 toward its account. It made no further offer of payment until it tendered the cheque for $151,600in September 1984 as the result of the first attempt to cancel the licences. There is a dispute as to whether this cheque was tendered conditionally, but it is not necessary for this Board to determine that. In any case, after the cheque was refused, Omineca made no further payments. While complete payment schedules were not introduced, documents which were produced show that Tackama was paying $10,000each month from February 1983 until December 1984 when the record ends, and that it paid $20,000in April 1983. This was apparently on its stumpage account. Its 1983 and 1984 rentals were paid. FNFI paid $20,000in early 1983 and made no further stumpage payments at least to the end of the . . record in December 1984. It did pay its rentals for 1981,1982 and 1983. . ~ o u i h lthe ~ , negotiations by which Tackama would eventually acquire FNFI had been going on for at least two years by 1986. There was some prospect of the Ministry of Forests receiving some payment of the debt owed as a result of those discussions. It was not sensible to suspend or cancel Tackama's licence when it was actually logging as such action would cut off its source of revenue and the likelihood of repaying its debt. And in fact, as a part of the ultimate resolution, Tackama did undertake to pay its stumpage account of $1,365,000at the rate of $25,000per month and to pay $750,000for silviculture on behalf of FNFI. FNFl's stumpage account of approximately $1.7million was written off. Mr. MacPherson testified that getting this money for silviculture was important. Whether this was an advantageous settlement for the government is not the question before this Board. Taken together all of these things showed that there was some realistic prospect of the Ministry of Forests receiving payment of the debts or some portion thereof of Tackama and FNFI. Omineca asserted that there was no evidence that it could not pay its account or some portion thereof. But its actual payment record and the fact that it was insolvent suggests otherwise. In fact, Omineca would have had much of the remedy it seeks here if it had taken advantage of the grace period given it by the Campbell Board and paid the annual rent before October I, 1985. The fact that it did not pay the $141,600owing at that time

FOREST APPEAL BOARD RE: OMINECA ENTERPRISESLTD. DISCUSSION AND DECISION

suggests that Omineca was not able to pay. In the view of this Board, the possibility of repayment of the Tackama and FNFl accounts was a valid reason or cancelling the licences of for the Ministry of Forests to hold off suspending those other two companies. . Omineca alleges that the provision for payment of $10,000 per month from each of the three companies in 1980 is discriminatory towards Omineca when gross revenues or timber under tenures of the companies are compared. The simple fact is that Omineca agreed to pay this figure. If it was an unfair figure the time to protest it was in 1980, not 18 years later. Omineca argues that it was treated in a discriminatory manner when its competitors received export permits while it did not. The evidence shows that Omineca's application was to export standing timber while the applications from the other companies were for timber which had already been felled and was surplus to local needs. Standing timber is not surplus to local needs, the normal test applied when an application is made to export timber. Further, with one exception, all permits were issued consistently with the recommendations of the Log Export Advisory Committee. That exception was a permit issued to Tackama in 1978 after its mill had burned down. The fact that Omineca wanted to export standing timber is a clear distinction and a valid reason for not allowing it to export this timber. The matter of whether there was a reasonable apprehension of bias in regard to exporting timber was also argued before the Campbell Board. That Board found that issue to be irrelevant to the cancellation of,the TSHLs. In the British Columbia Supreme Court decision, Mr. Justice Ruttan said in his opinion this ruling by the Board was correct. Omineca blended its argument concerning the rationalization of the AAC into its argument concerning Section 4 (e) of the Ministry of Forests Act. For ease of reference, the Board has separated them and deals with the AAC argument below. In regard to whether the Ministry of Forests treated Omineca in a "systematic and equitable manner" pursuant to Section 4 (e) of the Ministry of Forests Act, the Board holds that the Ministry of Forests did not breach this provision. While Omineca may have been treated differently, it was not discriminated against in that there were valid reasons for different treatment.

Were the licences cancelled in order to rationalize the Allowable Annual Cut?

Omineca's main argument under this ground is that the not-so-hidden agenda of the Ministry of Forests was to cancel Omineca's licences in order to rationalize

RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

the AAC. The AAC for the Fort Nelson Timber Supply Area was 750.000~ meters, but the issued licences allowed a cut of 1,015,480~meters. There is no dispute that the Ministry of ~orestswanted to bring the actual licence allocation in line with the AAC. But the urgency which Omineca suggests was happening is not supported by the evidence. In cross examination, Mr. MacPherson acknowledged that an overcommitment was not a good thing and should be corrected in a "reasonable short period". When questioned by the Board about the period of time in which the problem needed to be corrected, he responded that if something were not done in 20 years, there would be a serious problem. Elsewhere in cross examination, Mr. MacPherson was asked about the inability of the Ministry of Forests to reduce the AAC under a TSHL, when it could make such a reduction under a Forest Licence. Mr. MacPherson's response was that in such a case, the Ministry would just have to wait until the TSHL expired, that there was no immediacy, there was time to get it back into balance. Omineca focused on two items in its argument. The first was the timing. There was the timing in 1984 and again in 1986. Omineca suggested in argument that the TackamalFNFl matter and the Omineca cancellations had dovetailed twice in . time. In 1984, the cancellation letter of October 17, 1984 was sent within two days of a Treasury Board submission from the Ministry of Forests regarding the acquisition of FNFI by Tackama. In 1986, the TackamalFNFl acquisition was dealt with by the minister on July 15, 1986, the same day that Mr. Wilkins gave notice of intention to cancel to Omineca. While Omineca made much of this timing, there is no evidence that links the two events. In 1984, the Treasury Board submission did not result in the acquisition of FNFI by Tackama. In fact, there was a second proposal on November 18, 1985 and what is referred to as a further preliminary proposal on April 7, 1986. The April 7, 1986 proposal was not acceptable to the region or the executive. In cross examination, Mr. MacPherson was asked the following, apparently in regard to 1984 although the date is not stated: Q Now, I'm going to suggest to you that we have two processes occurring here, both of which affect the commitments of volume in the Fort Nelson AAC. We have the transfer or the intended transfer of FNFI, the FNFI licence to Tackama and a reduction of volume, and we have the cancellation of the Omineca licence. Both of those events when taken together would reduce the AAC commitment to 750,000 cubic meters, wouldn't they? A

I do not believe the two are related. One is done by Mike Willcins as an administrative thing he was in charge

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DISCUSSION AND DECISION

of. The other was done by a special study group who looked after business and prepared this document. They may have talked, I don't @ow. But to tie the two together, I don't believe.

By 1986, the TackamalFNFI matter had been the subject of negotiations for at least two years. There is a flurry of correspondence on July 8,9 and 11, 1986 between Laventhal & Howath, the chartered accountants who were the receivers for FNFI, and the Ministry, establishing the final terms of the arrangement. It is not surprising that within a few days the Minister would confirm his acceptance. Similarly, the court proceedings regarding the first cancellation concluded on June 20, 1986. Given that nothing had changed in terms of Omineca's situation, it is not surprising that the Ministry of Forests acted again to initiate the cancellation process. Mr. MacPherson was asked about the July 15,1986 cancellation letter in the following exchange: Q Now, this cancellation letter comes just a few days aftex your letter to MI. Bolton of Laventhol & Horvath. Is that just coincidence, Mr. MacPherson? A

I believe it is.

Was this letter also sent at your direction?

I do not believe so. It was a normal thing to do.

Q Now, can I take you to the next tab, which is Tab 74 of the red book. This is a telex also dated July 15th, and this is from M i s t e r Heinrich, then the M i s t e r of Forests, to both Tackama and Laventhol 8:Howath. Do you see that?

And Laventhol Br Horvath, for the record, was the receiver for FNFI?

Right.

And this telex of the Minister is prepared on exactly the same day as the cancellation letter. Would that, too, be a coincidence?

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DISCUSSION AND DECISION

A I really honestly can't answer that question. I don't know.

Q Well, do you have any explanation for this Board as to why it is that Mr. Heinrich's telex and Mr. Truant's letter, the cancellation letter, were sent on exactly the same day? A I'm SOIT-. Again, I cannot answer. I don't know. It's just a coincidence, I guess, or whatever. I don't know. Omineca certainly had its suspicions in regard to the timing. But the evidence before this Board was insufficient to establish that there was some common design. Omineca did not establish that Mr. MacPherson, who was involved in the TackamalFNFl matter, even knew that the cancellation letter of July 15, 1986 was being sent. Certainly Mr. MacPherson denied that it was sent at his direction. Mr. Wilkins was cross examined at length. He acknowledged he had had discussions with Mr. Doyle about the proposed second cancellation in July and there is a reference to a memorandum sent by Mr. Doyle to Mr. Wilkins dated July 4, 1986 [this memorandum was not produced at the hearing]. But Mr. Wilkins was never asked if he initiated the second cancellation process, or if he received instructions from Victoria to do so. The second focus of Omineca's argument was the scenarios prepared for Arthur Joyce, District Manager of the Fort Nelson Forest District by S. H. Osbom, Resource Officer Timber in the same district and dated April 3, 1986. The memorandum begins by observing that both FNFl and Omineca were under suspension and subject to cancellation. It then sets out three main scenarios. The first is the situation if FNFl's licence is cancelled and Omineca and Tackama continue to hold their licences. In the first scenario, the commitment is less than the AAC. The second scenario is the situation if Omineca's licence is cancelled and FNFl and Tackama continue to hold their licences. In the second, there is an overcommitment of 157,480~meters. The third scenario, which contains several variations, is the situation if the licences of both FNFl and Omineca are cancelled. In the third scenario, the AAC exceeds the commitment by 246,430~ meters. In the first variation, the surplus cut goes to the Small Business Enterprise Program ("SBEP") and to increase Tackama's cut. In the second variation, it goes to the SBEP and "new company or on hold for Tackama". In the third variation, a lesser amount of the surplus goes to the SBEP and more to "new company or on hold for Tackama". The Board does not share the view that these scenarios show an ulterior or improper motive. They are simply setting out various alternatives based on the realities of the situation at the time. Those realities were that there was an

RE. OMINECAENTERPRISES LTD DISCUSSION AND DECISION

overcommitment, and that Omineca and FNFl could possibly lose their licences, thus making their shares of the cut available for reallocation. The demise of Omineca and FNFl certainly presented an opportunity for the Ministry of Forests to bring the AAC into line, but the ini is try of Forests did not create the demise of those companies. It simply took advantage of the opportunity created. It is clear from a memo written by Mr. Wilkins to Mr. Biickert, the Director, Strategic Studies, on April,29,1986,that the Ministry of Forests was not prejudging what would happen. In that memo, Mr. Wlkins makes recommendations in regard to the surplus cut, but says that if the FNFl assignment does not proceed and if Omineca's cut is not cancelled, then he wanted to reconsider his recommendations. If FNFl's licence is cancelled, he recommended that the surplus be held in abeyance pending a court decis.ion on Omineca's appeal. The Ministry of Forests has a legal right to reduce the AAC. It can do so under a Forest Licence during its term, and it can do so when a TSHL expires. In this case, Omineca's TSHLs would have expired in July, 1989. Even if rationalizing the AAC was in the minds of Ministry of Forests officials when dealing with Omineca, that is not improper. The Board requested that the parties provide jurisprudence dealing with collateral purpose. Of the cases provided, two were of assistance: Piccirilo v. Brifish Columbia (Minister of Forest and Lands) [I9881 BCJ No. 37,and Nafional Anti-Poverfy Organization v. Canada (A.G.), (1989)36 Admin. L.R. 197. In Pidcirillo, the petitioners were the owners of private property. The Weyerhaeuser company sought to buy some of the property in order to build a more direct road to its timber; the petitioners declined to sell. Subsequently, the Ministry of Forests expropriated the land needed for the road. It said the land was not solely for Weyerhaeuser's benefit but was also needed for recreational and fire and pest control access. The petitioners submitted that the acquisition was for an improper or collateral purpose amounting to an abuse of discretion. The British Columbia Supreme Court did not agree. The court said at page 4: "In the case at bar, the purposes cited by the respondent Ministry for acquiring the land are all consistent with the purposes laid out in the Forest Act. Even if the petitioners could be said to have established that the sole purpose for the expropriation was to allow a private corporation to access timber, in my view, this is entirely consistent with the purpose laid out in s. 102 of the Forest Act. ..... Even if one takes a view of the facts in this case which would be most favourable to the petitioners, i.e. that the central purpose of the expropriation was to provide access for Weyerhaeuser, it cannot be said that the power was exercised for a collateral or improper purpose, because provision of access to timber is an express purpose stated in s. 102 of the Forest Act. Furthermore, the Minister's actions are legitimized by the other purposes underlying expropriation."

RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

Section 9 of the Act provides that "rights to harvest Crown timber shall not be granted by or on behalf of the Crown except in accordance with this Act and the regulations." Section 7 requires the chief forester to determine the AAC every five years. Among the things which the chief forester is required to consider are "the rate of timber production that may be sustained on the area" (Section 7(3)(a). The Acfcontains numerous provisions regarding the reduction or increase of the AAC, and sets out the process for suspending or cancelling a licence when the Acf or the licence is not complied with. The purpose of the ~ c f as a whole is to govern who can cut timber owned by the province and how they can do it. When a company which has been granted the privilege of cutting Crown timber not only ceases to perform its obligation to cut timber but defaults on the payments which it owes the province, there is a legitimate reason, consistent with the Acf, for the province to bring an end to that situation. The National Anti-Poverty Organization case, cited by Omineca, is equally supportive in that the Federal Court of Appeal did not find it furthered the respondent's case if the Governor in Council acted with a dual purpose in mind, one falling within his mandate and the other falling outside his mandate (at page 26). The Board therefore holds that the licences were not cancelled for the purpose of rationalizing the AAC.

Was the November 30, 1986 cancellation deadline postponed at the meeting of November 17, 1986? If it was postponed, what was the effect of that postponement?.

Omineca argues that in this meeting, Minister Kempf postponed the cancellation deadline. Mr. Peterson asked for a letter to that effect and was told not to worry. Mr. Kempfs recollection was highly selective. He could not remember other meetings; he could not remember who was present on November 17 or what the requirements of a proposal were. And he bases his recall on transcripts which should not properly have been shown to him. By contrast, the evidence of the Petersons has been consistent and unshaken. Pursuant to s. 152 of the Act, the Minister has the power to extend time periods. That is what he did here and the deadline has never been reset. Without a cancellation date, there can be no cancellation. The Ministry of Forests argued that the matter was before the Forster Board which heard the matter 13 months after the fact and heard the same witnesses and reviewed the same documents. They reached the conclusion that at most Omineca was given the opportunity to present a proposal prior to November 30

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RE: OMINECAENTERPRISES LTD. DISCUSSION AND DECISION

and it did not do so. There is a clear conflict between the witnesses. Some external things tip the weight of the evidence. It did not make sense to have the November 17 meeting simply to arrange another meeting. The correspondence is telling. Ornineca did not write back and-say that the Minister had not kept his word. Nor at this hearing, did Omineca put to Mr. Flitton or Mr. Wilkins that they had misinformed the Minister about whether Ornineca had got back to them. In the view of this Board, several questions arise concerning the November 17 meeting. Was the November 30 deadline extended? Was there any condition attached, and if so, was that condition met? This Board has reviewed the finding of the Forster Board. The Ministry of Forests said that the Forster Board heard the same witnesses and reviewed the same documents. A transcript of the Forster Board shows that is not totally correct. The Forster Board heard only John and Roy Peterson and Mr. Wilkins; Roy Peterson was not questioned about the meeting. The Forster Board appears to have had most, but not necessarily all, of the documents before this Board. This Board has reached the same conclusion as the Forster Board but has done so based solely on the evidence before this Board. The starting point is the context of the meeting. There is no question that Omineca had long been seeking a meeting toput its case before the Minister in Victoria. Its case, however, was not restricted to the impending cancellation of its licences. It dealt with all of the wrongs which 0mineca believed had been done to it by the government and its officials. An example of the breadth of Omineca's case is found in a letter from John Peterson to the then Premier W. R. Bennett, dated December 13,1985 where Omineca was proposing a merger of Omineca and FNFI. The letter sought an admission by the government of wrongdoing and compensation which would include the government satisfying outstanding property taxes owed by FNFI and Ornineca, roll over of the existing TSHLs of both companies into Forest Licences and start up funds of approximately $6 million and a loan guarantee for $10 million. The letter said that Ornineca could prove $15 million damage to Omineca by the government plus $40 - $100 million to the rest of the province and Canada. At the time of the November 30, 1986 meeting, Omineca's solicitor had recently sent a draft Statement of Claim to the Ministry of the Attorney General. It is this big picture which Omineca sought to deal with at the meeting and, while the evidence is scanty, it appears that the meeting to some extent did this. The evidence of what was said at the meeting in regard to the November 30 deadline is in direct conflict. John and Roy Peterson said that the deadline was extended if Omjneca got back to Ministry officials before November 30 to

FOREST APPEAL BOARD RE: OMINECA ENTERPRISES LTD. DISCUSSION AND DECISION

- 67 -

arrange a date for a review or hearing. Mr. Flitton said that the Ministry of Forests required a submission be made by November 30. Mr. Kempf adopted - recollection of the meeting. Mr. Flitton's recollection. Mr. Wilkins had no All agree that something hadto be done by November 30. The issue is whether that something was simply setting up the date for another meeting or whether it was a submission or proposal. The Board is of the view that it was the latter. It simply is not reasonable to say that the deadline would be extended if Omineca made a phone call to set up another meeting. If that was all it took, why not extend the deadline at the meeting they were already at? The requirement that there be a proposal is more consistent with the probabilities. Mr. Wilkins' memo of the August 5 meeting said the meeting closed with the company agreeing to present him with a financial package at a meeting on October 6. That October 6 meeting never took place. The original October 31, 1986 deadline was extended to November 30 on the basis that a review was taking place. At the November 17 meeting, there is no evidence that Omineca put forward any sort of proposal. The probabilities are that the Ministry of Forests was not prepared to go on having meetings - it wanted something concrete from Omineca to deal with. The correspondence after the meeting is more consistent with the Ministry of Forests' position than with Omineca's. On December 10, 1986, Mr. Ebbels wrote to Omineca's solicitor Norman McDonald saying Omineca's request for a meeting, which had been made in a phone call on November 28, 1986, cake too late. o n December 12. 1986, Mr. McDonald wrote to Mr. Ebbels saying there appeared to be some confusion over the Ministry's position over a meeting. On December 18, 1986, Mr. Ebbels again wrote to Mr. McDonald and said the Ministry of Forests is still prepared to entertain proposals. "However, there is little merit in having a meeting to explore possibilities. Rather, your client should reduce any proposal to writing so that we have something concrete to consider....". If Omineca were correct and the only thing required was to arrange a date for a meeting, one would have expected a much stronger response than Omineca's solicitor sent. One would have expected protestations that Omineca had been misled, that Omineca had asked for a letter extending the deadline and was told it did not need it, that the government had broken its promise, or the like. But even the two letters from Roy Peterson to Mr. Flitton, both dated January 7, 1987, do not say that. In one, Mr. Peterson said that it was "our understanding" that the November 30 deadline would be extended to allow time for both parties to arrange a hearing date. The letter then goes on to ask specific questions as to the nature of a hearing. On January 27, 1987, Mr. Flitton wrote to Roy Peterson and said: "We had a meeting with your group in our Minister's office in November 1986, and offered to review your case. However, it was very clear there was a

FOREST APPEAL BOARD RE:OMINECA ENTERPRISES LTD DISCUSSION AND DECISION

- 68 -

November 30,1986 deadline and a proposal for a review had to be made to me by that date. None was forthcoming within that time frame." There is no record of any response by ~ m i n e c a . The next correspondence is stamped July 29, 1987 and is from the new Minister, Dave Parker, to Roy Peterson. It refers to a June 18, 1987 meeting at which Omineca made a number of allegations of bias, discrimination and preferential treatment against the government. The letter responds to these allegations. There is nothing in this letter concerning any allegation by Omineca that it was misled regarding the November 30 deadline. And there is a single paragraph at the end of the four-page letter confirming the cancellation of the licences effective November 30, 1986. On May 19, 1988, the Petersons and their lawyer Waldemar Braul met with Mr. Kempf, who was now an MLA, to review Mr. Kempfs recollections of the November 17, 1986 meeting. It was Mr. Braul's strong impression that Mr. Kempf agreed with the Petersons' recollection of the meeting. Mr. Kempf refused to sign an affidavit to that effect, but did more than a year later, on June 6, 1989 write a letter to John Peterson saying that it was his understanding that if Omineca "contacted" his staff prior to November 30, the cancellation would be postponed until they were given a fair and full hearing. Mr. Kempf then said that the TSHLs were cancelled after he was advised by Mr. Flitton that the staff had not heard from Omineca prior to the deadline. This latter statement was not put to Mr. Flitton when he gave evidence. Omineca did not dispute that it did not make a proposal to the Ministry of Forests after the November 17, 1986 meeting. Roy Peterson suggested in evidence that Omineca's receiver had made a proposal in about 1985 and there was also the draft Statement of Claim. The Board does not accept that the draft Statement of Claim was a proposal, and finds that no proposal was made. For the reasons set out above, the Board finds that Omineca was required to submit a proposal prior to November 30,1986 in order to postpone the cancellation of the licences. Omineca did not submit the required proposal. At the end of its argument, Omineca said that in addition to seeking that the cancellations be set aside, it was seeking an ancillary order being a declaration that Omineca properly applied for a roll over of their licences from the TSHLs into a forest licence. There was virtually no evidence in regard to this ancillary matter and no argument was made to the Board. Further, the Board is not convinced that this matter is within the scope of this appeal. The Board therefore declines to deal with this ancillary matter.

RE: OMINECAENTERPRISES LTD CONCLUSION

The Board has concluded as follows:

The Ministry of Forests had the legal right to cancel the licences.

The Ministry of Forests did not cancel the licences for a reason different from that set out in the letter of July 15, 1986

The Ministry of Forests did not mislead Omineca by telling them that even if they paid the rent and avoided the cancellation, the licences would still be suspended.

The notice of July 15, 1986 was not deficient or defective or contrary to natural justice.

The reference to a review in the letter of October 14, 1986 did not create a condition precedent to cancellation.

The Ministry of Forests did not breach Section 4(e) of the Ministry o f Forests Act in regard to treating Omineca in a "systematic and equitable manner".

The licences were not cancelled in order to rationalize the Allowable. Annual Cut.

The November 30, 1986 cancellation deadline was not postponed at the meeting of November 17, 1986.

Therefore the decision of the Chief Forester dated September 10, 1991 is upheld, and the appeal is dismissed. Dated at Vancouver this 16th day of October, 1998.

forrbine Shore, Chair

Margaret Sasges, Member

Jacqueline L. Ott, Member Ms. Ott dissents from the majority decision on several points, and her decision accompanies the majority decision.

10/16/9S

FRI 10:21 F.U

60a 682 3555

FOREST APPEIL BWRD RE: OMUIECA E ~ R P R I S ELTD. S CONCLUSION !

CON-ION The Board has concluded as follows:

T h e Ministry of Forests had the legal right to cancel the licences.

The Ministry of Forests did not cancel the licences for a reason different from that set out in the letter of July 15, 1986

The Ministry of Forests did not mislead Omineca by telling them that even if they paid the rent and avoided the cancellation. the licences +uld still

be suspended. 4.

The notice of July 15, 1986 was not deficient or defective or contrary to natural justice.

T h e reference to a review in the letter of October 14, 1986 did not create a condition precedent to cancellation.

T h e Ministry of Forests did not breach Section 4(e) of the Ministry of F o p s t s Act in regard to treating Omineca in a *systematic and +uitable manner".

The licences were not cancelled in order to rationalize the Allowable Annual Cut.

T h e November 30, 1986 cancellation deadline was not postponed a t t h e meeting of November 17,1986.

Therefore the decision of the Chief Forester dated September 10, 199l:is upheld, and the appeal is dismissed.

Dated at Vancouver this 16th day of October, 1998. Lorraine Shore, Chair

Jacqueline L. Ott. Member dissents from the majority decision o n several points, and her decision accompanies the rnajorii decision.

Ms. Ott

10/16/98

FRI 10:26

[TX/RX NO 56701

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent 4

-m&&!-

In'de Matter of the Forest Act R.S.B.C. 1979, C. 140, as Amended

In the Matter of an Appeal by Omenica Enterprises Ltd. from the Decision of the Chief Forester dated September 10, 1991 Regarding Timber Sale Harvesting Licences A08692 and A08693

INTRODUCTION

I have had the benefit of reviewing the Majority's Decision, including the Majority's exhaustive treatment of the factual history of this matter. With respect, I have come to a different conclusion, in relation to the third issue addressed by the Board, relating to the validity of the suspension procedure. I have attempted to limit my review of the facts of this matter to those facts which form the basis of my dissenting opinion. Certain facts addressed herein are supplementary to the facts reviewed in the Board's Decision. As to the remaining issues, with respect to issues 1, 4 and 5 addressed by the Board, I concur in both the reasons and the result of the Board Decision. With respect to issues 6, 7, and 8, I concur in the result only.

I I l I

THE FACTS

I I

On July 8, 1977, Omenica Enterprises Ltd. ("Omenica") and the Ministry of Forests (the "Ministry") entered into Timber Sale Harvesting Licences ("TSHLs" or "licences") A08692 and A08693, respectively.' By letter dated September 27, 1983 from M.J. W i , Regional Manager to Omenica to the attention of John Peterson,' Omenica's cutting rights were suspended pursuant to section 89 of the Forest Act and section 7.1 of TSHL A08692 and A08693, respectively, for non-payment of annual rental fees ("rentals" or "rental pay~nents"):~ In reviewing again your outstanding account with the Ministry, I note that the annual fees for 1980 - 1983 relative to T.S.H.L's A08692 and A08693 are still outstanding. You are thereby in violation of Section 89 of the Forest Act and condition 7.1 of the above mentioned licences. I

Appeal Board Exhibit (hereafier. "Exhibit") 1. Tabs 1 and 2. Exhibit 1. Tab 29

Exhibit 1. Tab 29

Forest Appeal Board Re: Omineca Enterprises ~ t d . 2 Dissent Your total indebtedness in this regard is $113,280.00 exclusive of interest. This cannot continue any longer. I m-ust therefore regretfully advise that I have instructed Mr. Joyce, Dismct Manager, Fort Nelson, that no further cutting permits are to be issued to your company. In addition all existing cutting pennits pursuant T.S.H.L.'s A08692 and A08693 are suspended effective October 14, 1983, subject to Section 59 of the Forest Act.

Please note also that T.S.H.L.'s A08692 and A08693 may be subject to cancellation pursuant to Section 61 of the Forest Act and condition 8.141 of the licence docllments. On April 25, 1984,Mr. W i i wrote to advise Omenica that "as the matter of [Omenica's] indebtedness to the Crown seems no closer to resolution", he intended to canceI the TSHLs effective July 31, 1984 for violation of section 89 of the Forest Act and condition 7.1 of the TSHLS.~This deadline was extended to September 12, 1984 and further extended to September 28, 1984. On September 17, 1'984,A.C. MacPherson, Acting Deputy Minister, wrote to the Regional Manager, Mr. Willcins, ~ t a t i n g : ~

b]ou are hereby instructed that you may not give any further extension of time to the Forest Licence or any other form of licence held by Omenica... .Any actions to reinstate the licence must be completed by this date. If they are not completed by this date, then they will be formally terminated. as of that date. If a seemingly acceptable proposal is advanced to pay their outstanding account, it must receivemy approval prior to acceptance and prior to September 28, 1984..

Mr. MacPherson testified before this Board, that "in frustration and to bring the thing to a head", he wrote the letter dated September 17, 1984? I said that we have gone through this extension, extension, extension, Exhibit 1. Tab 35

Exhibit 27, Tab 35.

Transcript of Procedings, p. 418..lines 3-21

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

extension. Some at my insistence, by the way. I would think I had some say in it, but not altogether, I just was very merely involved. Mr. Wilkins was the man. In this case I said we must bring this matter to a head.

On September 28, 1984, John Peterson delivered a certified cheque to the office of the Regional Manager in the amount of $151,600, representing $141,600 in unpaid rentals and $10,000 for outstanding stumpage and interest. The cheque was payable by the Fort Nelson Indian Band.' The Regional Manager, Mike W i , was not present at the time the cheque was delivered, and Mr. Peterson therefore left the cheque with Laverne Merkel of the Ministry of Forests. The discussion which occurred at the h e Mr. Peterson provided the cheque to the Ministry is the subject of dispute. Mr. Peterson testified that he wished the cheque to be held by the Ministry and not cashed for 30 days, but "if it's a matter of cancelling the licence, you absolutely cash the cheque. " Mr. Peterson testified that he repeated this position on two or three different occasions.' Mr. Merkel wrote a memorandum to the Regional Manager, Mr. Willcins, on the date of his meeting with Mr. Peterson, which provides, in part:' Mr. John Pederson (sic) came into the office today and hand delivered a certified cheque in the amount of $151,600.00 being the outstanding annual fees plus $10,00() as part of the scheduled payment against his outstanding stumpage account....

At the time he delivered the cheque he also delivered a verbal request that the cheque not be cashed for 30 days.

His concern of course is that we accept the cheque and do not cancel the licences. If we cancel the licence then the whole deal falls through. However, he is also-concerned that if we cash the cheque and in the meantime he cannot satisfy the requirements of the Indian Band and the proposed deal does not go ahead, then the Indians will seek compensation from him for those funds. I called A. MacPherson ,and informed h i and he advised the deal was to be completed by today. We should bring the deal to a head by not accepting the cheque....

Exhibit 3. The description on the cheque provides. iruer alia, "Re-instate Omenica TSHL's Licence in good standing."

I I

Transcript of Proceedings, p. 267. lines 12 - 17. EXhibi~1. Tab 39.

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

The cheque was held for Mr. W i return the following Monday. On that date The payment schedule Roy Peterson and Mr. Willcins met and discussed a payment sched~le.'~ discussed and arrived at is quoted in full by the Campbell Board Decision." Mr. Roy Peterson was asked about these events, and testified that the events were fully set out in the transcript of the Campbell Appeal Board, including the handwritten memorandum reflecting the deal being negotiated.'' Instead of approving the payment schedule, by telex dated October 2,1984, Mr. Willcins provided that in order for Omenica to retain its TSHLs in good standing, it would have make full payment "by noon Oct. 5" of its "outstanding account of 796.690.31 dollars plus September interest charges". "Failure to comply with the noon Oct. 5 deadline will leave me no other option but to cancel your TSHL's".I3The telex was copied to Acting (then Assistant) Deputy Minister MacPherson. Mr. MacPherson testified before this Board that he could not "actually" recall if he instructed Mr. Willcins to demand payment of $796,690.31 or not."" By letter dated October 17, 1984, from Mr. W i to Omenica, Omenica's licences were formally cancelled "effective immediately".I5 Omenica appealed the decision of the Regional Manager to cancel its licences to Chief Forester R.W. Robbins. The Chief Forester confirmed the decision of the Regional Manager.16 Omenica appealed the decision of the Chief Forester to an appeal board chaired by R.S. Campbell (the "Campbell Board"). By decision dated March 4, 1985, the Campbell Board revoked the cancellation of the licences for two reasons, the Regional Manager's failure to comply with section 61 of the Forest Act and his failure to comply with section 4(e) of the

Transcript of Proceedings, p. 133,lines 27 47: p. 134,lines 1-18

Exhibit 1, Tab 47, p. 6. A copy of a letter dated October 1. 1984, from Roy Peterson to M.J. Wilkins, embodying these terms is contained in Exhibit 16. I2

Transcript of Proceedings, p. 133. lines 27-47; p. 134. limes 1-18;p. 166, lines 7-34.

Exhibit 27. Tab 36

Transcript of Proceedings, p. 420. lines 26-27. See Transcript of Procedmgs, pp. 419420. Mr. Wilkins was questioned as to whether by the memorandum dated September 28, 1984, Mr. MacPhenon was once again directing Mr. Wilkins. Mr. Wilkins testified in response that. to his knowledge, he was never advised by Mr. MacPherson not to accept the cheque but that he was receiving advice and direction from Mr. MacPherson. He testified that the Regional Manager did not have the authority to approve a schedule of payments and that he was gening direction on that panicular issue. Transcript of Proceedings. p. 500, lines 20-31. The Campbell Board found as fact that following the meeting between Roy Peterson and Mr. Wilkins. Mr. Wilkjns telephoned Deputy Minister MacPherson, who did not approve the proposed payment terms. Exhibit 1. Tab 47. pp. 6-7. "

Exhibit 4.

"'Exhibit

1. Tab 43

Forest Appeal Board Re: Omineca Enterprises Ltd Dissent

Ministry of Forest Act."

In relation to section 61 of the Forest Act, the Board held that the TSHLs were cancelled as a result of Omenica's failure to pay its total indebtedness contrary to the express terms of the cancellation letter. Section 61(2) of the Foresr Act requires that the cancellation notice specify the grounds of cancellation. The Board noted that a cancellation notice "is an exceptional remedy that, according to the Regional Manager's testimony, has been used rarely if ever in relation to the TSHLs". The Board held:" The reason why subsection (2) requires a cancellation notice to specify the "grounds of cancellation" is to formally draw to the licensee's attention all defaults that he must remedy, including those that might have occurred since the initial suspension, to avoid losing his rights permanently...It would be inconsistent with this framework and unfair to licensees if, having cured the default within the required period, the Regional Manager could cancel a licence for other reasons. We have concluded that a licence may be cancelled under section 61 for only the reasons set out in the cancellation notice. The Campbell Board held further that the Regional Manager failed to comply with section 4(e) of the Minisrry of Forests Act by demanding full payment by Omenica of its total indebtedness while permitting other licensees in the Fort Nelson Area time to. pay their indebtedriess and "in that sense was inequitable and discriminated against Omenica". In relation to the differential treatment, the Board held that while the evidence indicated some differences in the circumstances of Omenica compared with the remaining licensees in the Fort Nelson area, such differences did not justify the "severity of treatment accorded Omenica by the Regional Manager in demanding payment in full".I9 The Board held that the Regional Manager should reinstate Omenica's TSHLs,where Omenica paid outstanding rentals of $141.600, in the event payment occurred prior to October 1, 1985. Omenica did not pay the outstanding rentals, and so the suspension notice dated September 27, 1983 remained in effect. Ruttan J. of the B.C. Supreme Court upheld the decision of the Campbell Board. Certain orders made by the Campbell Board relating to a purported variation in the terms and conditions of the TSHLs were overturned. Leave to appeal to the Court of Appeal was dismissed on June 17, 1986.

Exhibit 1. Tab 47. In the Mazier ofthe Forest Act and In the Maner of an Appeal by Omenica Enterprises Dd.. Timber Sale Harvesting Licences Nos. A08692 and A08693. Is

Exhibit I . Tab 47. pp. 11-12.

Exhibil 1. Tab 47. pp. 13-14

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

On July 15, 1986, the Ministry issued a new cancellation letter against Ornenica. The stated basis for the cancellation, was, as in 1984, non-payment of rentals contrary to section 89 of the Forest The cancellation letter further notified Omenica that section 61(3) of the Forest Act provided Omenica with an "oppbrtunity to be heard on this matter", where the request for such a hearing is made within 30 days of service of the notice.''

On August 5, 1986, a meeting was held between Mr. W i ,John Peterson and Murray Momson, a lawyer for Omenica, in response to the notice made July 15, 1986. On the same day, in a memorandum to fiie, Mr. Willcins wrote that he met with Mr. Peterson and Mr. Morrison. He noted that they viewed the meeting as a preliminary discussion leading to subsequent submissions to address the requirements of the Ministry for reinstatement of the TSHLs." Mr. Wilkins wrote that, in the meeting, he had advised Omenica of his requirements to "prevent cancellation" of the licenses on October 31, 1986, namely, Omenica was required to make full payment of the outstanding rental charges and make provision for payment of the total outstanding debt. He further advised that (1) he would not accept any extension to the October 31, 1986 cancellation deadline; (2) he would be prepared to lift the suspension upon "full payment of the outstanding account"; (3) he would review proposals for retirement of Omenica's debt and make recommendations to Victoria, where Omenica was prepared to pay in full the outstanding rental charges;. (4) he had no objection to financing from the Fort Nelson Indian Band. The meeting closed with Omenica agreeing to present a f m c i a l package to Mr. Wilkins on October 6, 1986. No further meeting of this nature ever took place. Mr. Wilkins' memorandum dated August 5, 1986 was copied to D. Doyle of the Ministry..of the Attorney General. Mr. Doyle wrote to Mr. Wilkins on August 18, 1986, relaying his concerns about the advice described in Mr. Wilkins's memorandum to fiie:I3 I note that you have advised Mr. Peterson that settlement of all

outstandiig charges is a pre-condition to revoking the cancellation notice. I assume the cancellation notice was for non-payment of renrals only as per our earlier discussions and my memorandum to you of July 4, 1986. As long as the actual cancellation notice was so restricted I think we are safe, however, it could be inferred from your advice about settlement of the entire account that notwithstanding the formal notice being for nonpayment of rentals the real reason is the total indebtedness. Your advice of August 5, 1986 to Mr. Peterson and his solicitor together with the facts associated with the initial cancellation notice invalidated by the

Exhibit 1. Tab 73.

Exhibit 1. Tab 73. Exhibit 14. Exhibit 1. Tab 80. Exhibit 14

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent courts would tend to lead one to that conclusion, It may be more advisable to take the position that you would consider revoking the cancellation notice upon payment of rentals, however, I suppose you would have a bit of a dilemma on your hands if the rentals were paid. Such a position would, however, confirm the cancellation notice inasmuch as it would indicate the conditions for lifting the cancellation were one in the same as the reasons for imposing it. While is would appear that after default on the suspension notice the right to cancel is an absolute one and the licensee is not entitled to reinstatement on conditions, I am somewhat troubled by the fact that the licensee has a right to be heard under the statute which implies that he might be entitled to have the cancellation notice rescinded on certain conditions. I would agree that there is no requirement that the reason for rescinding a cancellation be one in the same as the reason for making the cancellation in the first place because of the history of this file I would be a little wary of bringing additional considerations into the review process.

I uust these comments will be of some assistance. D.A. Doyle, Barrister and Solicitor

Mr. Willcins responded to Mr. Doyle first by telephone on August 20, 1986 and then by written memorandum dated August 25, 1986. In his memorandum, Mr. Willcins advised Mr. Doyle as to the differences between the written record of his advice and his oral advice to Mr. Peterson and Mr. Monison. He "restated the thrust" of his comments to Mr. Peterson and Mr. Morrison in the August 5th meeting as follows:24

I I I I I

The point I made to them was that provision of payment of the outstanding rental charges would in itself not result in reinstatement of the licences (i.e. the cancellation would be revoked but the licences would remain in suspension owing to the continuing problem of the outstanding account).

I was in effect, in all fairness to the licensee pointing out that simply paying the outstanding rental would not solve their problems and allow them to begin operating their licences. In this regard we have the advice contained in your memo dated July 4,

Exhibit 14. Exhibii 1. Tab 82

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

1986. We will so proceed in the unlikely event that the licensee remits

the outstanding rental charges, but does not satisfy our requirements relative to the balance of the outstanding account.

Please let me know if you have any problem with the foregoing. If not. do you concur that it might be advisable to clarify the matter with the licensee in writing.

. -

The memorandum concluded with Mr. Wilkins attaching "copies" of the cancellation letter dated July 15, 1986. Mr. Wilkins never clarified his advice with Ornenica. By his affidavit dated Sept. 29, 1997, Mr. Willdns gave evidence that his memorandum to Mr. Doyle dated August 25, 1986 and his testimony before Forster Appeal Board were accurate. Mr. Wilkins testifled before the Forster Board that he "made it very clear to m.Peterson and Mr. Momson] that full re-instatement of the licences to the point where they could actually log, in other words lifting the suspension, would require an acceptable provision to be made for a payment of schedules to deal with the full outstanding account. "= As noted above, in Mr. Wilkins memorandum to file dated August 5, 1986, he indicates that he informed OmeGca, that he "would be prepared to lift the suspension of the licences upon full payment of the outstanding account". In response to a question from the Chair of this Board as to whether this sentence of his memorandum, the words "outstmd'mg account" referred to the "rental account" or "the whole amount owing" by Ornenica, Mr. Wilkins replied "[tlhat's the whole,.amount. "26 In relation to such requirement, Mr. WilkiDs testified before the Forster Board as follows:27

... And I would like to clarify that at no time did I ever indicate to them that I would require the. total payment of the outstanding account, in other words, the 9995.000.... ... ..

In reply to questioning by Mr. Armstrong, Counsel for the Forster Board, as to whether the requirements stated in Mr. Willcins' memorandum to file were truly his requirements, Mr. Wilkins testified as follows:"

Ex. 20. Affidavh of Mike Wilkins sworn September 29. 1997. Ex. 'E", P. 33, lines 30-39. Ib

Transcript of Proceedings. p. 527. limes 18 to 30. Exhibit 1. Tab 11 1. Transcript of Proceeding before the Fonter Board. p. 44, lines 9-17.

Exhibit 1. Tab 111. Transcript of Proceeding before the Forsier Board. p. 44, lines 1-7.

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

No, they weren't... The point that I was making to them at the time was that in order to revoke the cancellation and lift the suspension, there had to be treatment of both the outstanding rentals and the outstanding account, total of the outstanding a m t .

Under cross-examination relating to the continued obligation of a licensee to make rental payments while under suspension, Mr. Wjlkins contradicted his advice to Omenica as follows:29

Q. A.

..Why was the Ministry charging rent during a period of time when they had taken the position that the licences were cancelled? If Omenica had paid the outstanding rental, the suspension would have been lifted and they would have been in a position to operate.... .

At another point under cross-examination, Mr. W i offered a further explanation as to what would occur if Omenica had complied with the requirements of the suspension notice, by payment of the outstanding rental^:'^ ..

A. Q. A.

Q. A.

Okay. So if they had come to you and paid $198,240, would you have lifted the suspension. No. Why not? Because I would have revoked the cancellation consistent with the direction that the Ministry received from Justice Runan, but there would still be the issue of the outstanding stumpage charges. Now technically speaking, I may have had to - and I'm not a lawyer I may have had to rescinded (sic) the suspension lener that was issued earlier because that was tied to the outstanding rental. But then there were every grounds for me to reestablish a suspension for the outstanding account - the total outstanding account. But that would have been a different procedure. You would have had to start again. Correct? Yes. A new suspension lener would have had to have been issued.

Transcript of Proceedings. p. 504. lines 9-15.

Transcript of Procecdings, p. 503..lines 15-32

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

When questioned by Counsel for Omenica as to the certainty of the terms of the suspension, Mr. Wilkins testified that the suspension notice given in 1983 "spells out very clearly the reason for the suspension". In acc6rdance with the terms of the suspension notice (and contrary to the Ministry's express "requirements" conveyed to Omenica on August 5, 1986), Omenica was permitted to operate on payment of its outstanding rentals alone:31

Q. A.

You see, what I'm concerned about is in this - in document 36 in the red book, in document 80 of the red book, in this telex, 94-10-02 (sic) of Exhibit 16, nowhere in those three documents does it say, if you pay me the rent outstanding, which you say changes from time to time and whatever it is, it is - if you pay me the rent outstanding at this point in time, your licences are no longer suspended. It doesn't say that anywhere, does it? Well, if you go back to the suspension letter. I think, which dates back to 1983, it seems to me that spells out very clearly the reason for the suspension. Right. But you don't say Now, if that reason is resolved, then presumably the suspension gets lifted. And the suspension was never lifted because the annual rental payments were never paid. Because you always tied the annual rental payments to the rest of the stumpage, or at least the rest of the debt. No, we didn't do that.

Mr. Wilkins went on to state that the memorandum to file which he authored on August 5th, 1986 was not accurate and thata review of his testimony before the Forster Appeal Board (cited above) makes that "fairly clear".

Mr. John Peterson testified that he was informed by Mr. Wilkins, in order for Omenica to "begin logging again", it would have to pay both outstanding rentals and stumpage fees. He testified under cross-examination by Counsel for the Ministry, however, it "came across clear" that the requirements for Omenica to avoid cancellation and the requirements to avoid suspension were one and the same.32

Transcripr of Proceedings. p. 505. lines

Transcript of Proceedings. pp. 316-317.

Forest Appeal Board Re: Omineca Enterprises ~ t d .

Dissent Mr. Peterson testified further that in the meeting, Mr. Wikins initially stated that the full amount of the outstanding debt must be repaid, and later stated that Omenica must make "provisions for a substantial payment of the amount". Mr. Peterson testified that he was unsuccessful in gaining specifics as to what corkituted "substantial payment", notwithstanding an attempt to quantify this amount by Mr. Peterson with Mr. ViYkin~.Mr. Wilkins informed Ornenica that any amount would be subject to approval by Victoria:"

Q. A.

And you asked h i to quantify what is substantial, Mr. Wilkins. Right. And then anything we had proposed would have to go to Victoria for approval. And we went through this process just a year or two before that on the other cancellation, and they rejected any payment schedule we proposed.

Mr. Momson testified that he recalled the meeting lasting slightly over one half hour and his general impression of the meeting was that it was "uncompromisinggg.He recalled i was "somewhat arrogant, and certainly being "quite upset" by the meeting. Mr. W uncompromising" ." On cross-examination, Counsel for the Ministry questioned Mr. Momson of the events of the August 5th meeting, by reference to a transcript of Mr. WIUinr' testimony before the Forster Appeal Board:

... As I understand those passages, what Mr. Wilkins is saying in his evidence and in his memorandum is that what he said at the meeting was that he required payment of the outstanding licence rent in order to prevent cancellation, but that even if that was done, the cutting rights under those licences would remain suspended..... It's possible. All right. And did you understand that even if a deal was worked out as you were trying to do for your client and the licences were not cancelled, the cutting rights would remain suspended unless something further was done? Let me put it another way. It was very clear that if nothing further was done by, I don't recall the date, a couple of months hence. that Mr. Wilkins or those of his

Transcript of Proceedings. p. 273 Transcript of Proceedings. p. 157. lines 19-25

I I I

I I

1 1

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

off~cewho were to deal with such things would basically stop the whole thiing. In other words, it really, to my recollection, it really wasn't a staged arrangement, it was a package deal. To put it 6luntly. deal with both of these things by date "x" or that's the end of it.

. .

By letter dated October 14, 1986, the date for cancellation of Omenica's TSHLs was extended from October 31, 1986 to November 30, 1986.35 The reason provided for the extension was that the Miistry was "reviewing the circumstances surrounding the operation of Omenica". A meeting was subsequently held on November 17, 1986, between then Minister Jack Kempf, Deputy M i t e r Flitton, MI. Wilkins, then Executive Director, Forest Operations, and three representatives of Omenica, John Peterson, Roy Peterson and Leonard Peterson. John and Roy Peterson testified that, at that meeting, then Deputy M i s t e r Mr. Flitton indicated that the cancellation deadline would be extended to give Omenica a hearing. Mr. Flitton testified that he did not give this advice to Omenica. In an affidavit of Mr. Flitton sworn October 9, 1997, Mr. Flitton stated that he informed Omenica he would review its fde if Omenica presented him with its written position on or before November 30, 1986.36 He further stated a letter dated January 27, 1987, which he wrote to Omenica set out his recollection of the meeting." The letter refers to Mr. Flitton's expectation that Omenica provide a proposal for review. MI Flitton testified before the Board that he told Omenica it must provide a proposal to him prior to November 30, 1986, of the following nature:38

...in the meeting of

November, that we held with the Petersons, there was a very clear and explicit requirement that was made of the Petersons, and that was Mr. John Peterson was to set out in writing to me his reason for an extension of the November 30th deadline. And that's what we were waiting for.. .

Mr. Flitton was. questioned as to whether or not the Petersons were informed on November 17, 1986, as to how much money Omenica had to put up in order to prevent the impending cancellation. Mr. Flitton replied, "No. That to my understanding, had been explained to them by Minisny officials in previous correspondence or meeting".3g

Exhibit 1, Tab 86.

Exhibit 23. Exhibit 23, Affidavit of Roben D. Flitton sworn October 9, 1997. paras. 11-12.

Transcript of Proceedings. p. 534. lines 31-40. When asked about the existence of notes concerning the meering in the Ministry files. Mr. Flitton testified that there should be notes in the Ministry files, bur no one has obtained them. Transcript of Proceedings. p. 533, lines 27-36. l9

Transcript of Proceedings. p. 535. lines 27-33

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

Former Minister Jack Kempf provided an affidavit, stating that, to the best of his recollection, the November 17th meeting happened as described by Mr. Flitton in his affida~it.~ Mr. Kempf testified that he could not recall enough of the November 17, 1986 meeting to state whether or not an extension 6-f the cancellation deadline was granted to the Petersons, and the basis for his statement was instead his recollection Of the "way we did business in the Ministry of Forests" 3' Mr. Kempf gave evidence that he occupied the position of Minister of Forests from the end of August, 1986 to some time in March, 1987. .

In testimony before this Board, Mr. Wilkins stated that he had no recall of the November 17, 1986 meeting, but that he had testified on this meeting before the Forster Board.42 As to the extent to which the cancellation of the licences was addressed in the November 17th meeting, Mr. Wilkins testified before the Forster Board as follows:43 My recollection is that there was little or no discussion about the cancellation procedure itself. The majority of the discussion took place related to the position that the company seemed to be taking that they wanted compensation from the government for past actions of the M i stry.... I

Under cross-examination before the Forster Board, Mr. W i was asked if the Petersons voiced concern with respect to the upcoming cancellation deadline of November 30,

Exhibit 32, Affidavit of Jack Kempf sworn May 7. 1998. While this was a reference to the requirement by Mr. Flitton for a "proposal", Mr. Kempf testified that he did not know what the proposal would consist of, or what would happen ro the cancellation deadline, if a proposal were received from Omenica.

...I can't

Q. A. Q.

A. Q. A.

speak for Mr. Flinon, but I can tell you at such a meeting no such undenaking would be -- would be forthcoming from me as Minister. Do you recall that? Do you recall enough of the meeting for you to be able to say that? Perhaps I don't recall enough of the meeting for that, but it is not the way we did business in the Ministry of Forests. sir. Well, now, your testimony then is based on what your understanding of the standard c o m e of business of the Ministry of Forests would be in such a situation. Yes. Do you specifically recall the statements Flitton made to Peterson at the meeting. No, sir. I don't.

I I I I I

Transcript of Proceedings. p. 610. lines 3 7 4 3 .

Transcript of Proceedings. p. 509. lines 2443.

Exhibit 20. Afidavi~of Mike Wilkins. Ex. "Em.lines 11-18.

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

1986. Mr. Wilkins responded, "[tlhe issue I think did come up, yes"." On August 18, 1987, Regional Manager Baxter wrote to John Peterson of Omenica, to notify Omenica that Omenica's T ~ H L Swere cancelled effective November 30, 1986. Omenica thereafter Ned a notice of appeal. By letter dated September 22, 1987, Mr. Baxter wrote again to Omenica, stating that the August 18, 1997 letter was cancelled and superseded, and that by way of the September 22nd letter, "we are advising the Chief Forester of these matters since we consider all appeal rights under the Forest Act have lapsed. "4s On appeal to the Chief Forester, the Chief Forester found, in accordance with the letter dated September 22nd, that Omenica's appeal rights had lapsed. While the Ministry was successful on subsequent appeal of this decision to the Supreme Court, the Court of Appeal held in favour of Omenica. The matter was then referred back to the Chief Forester. By decision dated September 10, 1991, from which the instant appeal is taken, Chief Forester Cuthbert held that Omenica's TSHLs were rightfully cancelled for non-payment of rentals pursuant to section 89 of the Forest This Board was provided with internal Ministry memoranda and other correspondence relating to the period 1984 to early in 1987, highlighting a concern within the Ministry for an overcommitment of actual cutting rights extended to the three licensees in the Fort Nelson Timber Supply Area (or "TSA") beyond the annual allowable cut (or "AAC") of 750,000 cubic meters4' set by the Chief F~rester.'~ In a memorandum dated April 29, 1986, i considered various from Mr. Willcins, to J.A. Biickert, Director, Strategic Studies, Mr. W scenarios to reduce the overcommitment of the AAC. He recommended in the event of an assignment of assets from Fort Nelson Forest Industries ("FNFI")to Tackama Forest Products, that "we should get the A.A.C. to the proper level while we have the oppormnity. Please note, the proposed recommendation above assumes the Omenica allocation disappears". Counsel for Omenica questioned Mr. Willcins on this portion of his rnemorand~rn:~~ Q. A.

Omenica still had licences, albeit under suspension, in 1986, in April, 1986. Correct? Correct.

Exhibit 20. Affidavit of Mike Wilkins sworn September 29. 1997, Exhibit "E", p. 40, lines 1-16.

Exhibit 1. Tab 109.

Exhibi~1. Tab 118.

Increased in 1984 to 750,000 cubic meters of coniferous species and 100.000 cubic meters of deciduous

species. '8

Examples of the correspondence and memoranda referred to are found in Exhibil 1 at Tabs 34, 53. 58. 61. 63. 64.67. 97 and 98. 49

Transcript of Proceedings. p. 478. lines 3 0 4 3

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

Q. A.

So why are you assuming at this April that OmeNca's allocation would disappear? Because it was still the intention, it was still my intention to proceed with cancellation of OmeNca's licences.

Asked if there was anything Omenica could have done at this stage, Mr. W replied, "Absolutely. Pay the outstanding rental, which they never did. "'O

In a memorandum dated May 5, 1986, from J.A. Biickert to Mr. MacPherson, Deputy Minister, the proposed acquisition of FNFI by Tackama was discussed. Relevant to this acquisition, according to "regional and disfrict staff was "the need to bring the commitment into line with the AAC in the F o a Nelson TSA." In one passage of the memorandum, Willcins' recommendation is quoted on this issue, which foresaw FNFI's allocation reduced and Omenica "gone". When questioned in the hearing before this Board, in relation to this particular passage of the memorandum, as to whether Omenica was in fact gone, Mr. MacPherson responded that Omenica was "gone probably in 1980. They were fmcially insolvent. They had not produced. They did not perform, and they were for all intents and purposes gone. They may still be there, but they were gone.""

I 1 I

When asked whether it was not obvious that Mr. W i , Mr. Biickert and Mr. MacPherson himself were addressing the overcommitment of the AAC, Mr. MacPherson replied that it was obvious an acquisition proposal was in existence and that "[tlhis is an attempt to pick up part.pf that, whatever we could of that AAC at that time if this thing went thrb~gh".'~

I I

In a memorandum dared June 17, 1986, from then Acting Deputy Minister Cheston to Minister of Forests Jack Heinrich, relating to the proposed acquisition of FNFI assets by Tackarna, the Acting Deputy Minister wrote that the Ministry was "adamant" about bringing the AAC of the Fort Nelson TSA into line at 750,000m3".53

Transcripr of Proceedings, lines 38-43 "

Traoscript of P r o d m g s . p. 429. lines 15-30.

Transcripr of Proceedings, p. 429. lines 40-47; p. 430, line 1. When asked whether the M i s r r y was treating Omenica as gone, Mr. MacPhmon replied that he "didn't think so" and that when Mr. Biicken described Omenica as gone. he was "out of line". Transcript of Proceedings, p. 429, lines 34-39. Exhibil 1. Tab 67. p. 2.

I I I

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

The most direct reference to a link between the efforts of the Ministry to "pick up part of" the Fort Nelson TSA overcommitment and Omenica, is found in a letter dated January 19, 1997, from Minister of Forests JacE Kempf, to the Mayor and Council of the City of Fort Nelson." The former Mayor had written the Premier concerning the second cancellation of Omenica's licences. The Minister replied, in part, as follows:55 You suggest in your letter that the [Omenica's] timber harvesting licences should be re-activated as soon as possible. I would like to bring to your attention that the current allowable annual cut has been set by the Chief Forester at 750 000 m3 for the Fort Nelson Timber Supply Area, and that this volume is cornmined to Tackama Forest Products. The volume in Omenica's licence was in excess of the allowable annual cut, and it would seem to be in the long tern interest of your community, and of good forest management. that the actual cut and the sustainable cut be in harmony. Thus the volume in Omenica's cancelled licences should perhaps not be offered for new proposal(s).

" "

Exhibir 1. Tab 97

In spite of the concern expressed relating 10 the Annual Allowable Cut. the Minister's letter noted that the Ministry was prepared lo consider any reasonable proposal Omenica may have. Exhibit 1. Tab 97.

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

DECISION

Validity of the Suspension Procedure; Section 59 of the Forest Act

As set forth above, Omenica's cutting rights were suspended by letter dated September 27, 1983 for non-payment of rentals. Yet, Mr. Wilkins testified to instructing Omenica that in the event of payment of the outstanding rentals, the suspension would not be lifted and Omenica would not be able to operate. This posifion, Counsel for Omenica argued, was contrary to law, natllral justice and the Ministry's practice towards the other licensees logging contemporaneously in the Fort Nelson Timber Supply Area.s6 Counsel for the Ministry argued in response that this specific issue had never before been raised in this proceeding. Counsel for the Ministry argued further, in the event that Omenica had been misled by Mr. Willcins, it would have a remedy against the Ministry in the form of a writ of mandamus:" [sluppose Mr. WiIkins had misled Omenica. Suppose Omenica had gone back and read the documents and realized that the notice of suspension was for unpaid rent only and suppose they had come in and said, "Here is the unpaid rent in full. No strings attached. Now. revoke your notice of cancellation and unsuspend our licences." Well, Omenica would have its remedy. It could seek the equivalent of a writ of mandamus, requiring the Ministry to do what Omenica said in law it was required to do. It doesn't have to do with the cancellation. Several issues arise under this head of argument, including, the following: should Omenica now be precluded from raising the argument; what effect did the imposition of additional oral "requirements" placed, or purportedly placed, upon the lifting of the suspension of Omenica's TSHLs, have on the lawfulness of the suspension; what is the effect of such conduct, if any, on the cancellation procedure which followed; and if Omenica may now raise the argument, and the suspension and cancellation are rendered unlawful by such additional requirements, what remedies are available to Omenica in the circumstances.

Transcript of Proceedings. p. 707

Transcript of Proceedings. p. 775. lines 14-26.

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

(i)

Issue of Notice

In relation to the notice provided-by Omenica to the M i t r y as to its intention to raise this argument, by decision dated August 8, 1997, this Board requested that O m e n i ~ provide a statement of its grounds of appeal. In response to the decision of the Board, Omenica's outline of issues dated February 25, 1998, alleged "a denial of natural justice and procedural fairness in the cancellation process". While it is arguable as to whether or not the suspension, being the first step in any cancellation, is encompassed in the cancellation process, Counsel for Omenica raised its objection relating to the suspension late in the hearing before this Board. The prejudice to the Respondent due to the failure of Counsel for Omenica to address this issue specifically in its outline of issues, and to raise this issue earlier in the hearing process, must be balanced against the significance of the rights at stake. As against any element of surprise, there was a thorough presentation of evidence relating to this issue before the Board and, in my view, a startliig parallel, in general terms, of the actions of the Regional Manager in 1984 relating to the cancellation and the actions of the Regional Manager in relation to the suspension procedure in 1986. In light of the importance of the rights at stake, and the exhaustive treatment of the evidence pertaining to this issue, I do not believe that the Appellant should be precluded from addressing this argument before the Board.

(a)

Effect of the Imposition of the Regional Manager's Additional Requirements Relevant Provisions of the Forest Act and of the TSHLs

Section 59 of the Forest Acr relates to the suspension of rights under an agreement. Section 59 provides as follows: 59(I) Subject to section 60 and in addition to any penalty under this Act or the regulations, the regional manager may suspend, in whole or in part, rights in an agreement where its holder (a)... (b) fails to perform an obligation to be performed by him under the agreement; or (c) fails to comply with this Act or the regulations. (2) Before the rights are suspended, the regional manager shall serve a notice on the holder (a) specifying the alleged failure of performance or compliance; and (b) allowing the holder at least 14 days to remedy the failure of performance or compliance. (3) Subject to section 60 a suspension of rights rakes effect on the expiry of the time allowed in the notice and continues until the rights are

Forest Appeal Board 19 Re: Omineca Enterprises Ltd. Dissent reinstated by the regional manager or cancelled under this Act. (4) On request of the holder, the regional manager shall allow him an oppoltunity to be heard and shall rescind the notice where he considers that the holder is not subject to subsection (1). (5) On the application of the holder of the agreement the regional manager shall reinstate rights suspended under this section or section 60 where the holder is performing hi obligations and is complying with this Act and the regulations.

Section 61 of the Forest Act addresses cancellation of an agreement in the event rights are subject to suspension: Section 61(1) Where rights are under suspension....

(2) At least 3 months before cancelling an agreement the chief forester or the regional manager, as the case may be, shall serve on its holder a written notice of cancellation specifying the grounds of cancellation and the day on which the cancellation takes effect. (3) Where, withiin 30 days after a notice of cancellation has been served the holder so requests, the chief forester or regional manager, as the case may be, shall give h i an opportunity to be heard. (4) A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed. (5) Notice of a cancellation shall be published in the Gazette. Sections 7.1, 8.13 and 8.141, of the TSHLsS8, respectively, provide as follows:

FINANCIAL

The Licensee shall pay to the Licensor the following sums at the times specified herein. 7.1 Rental

An annual rental at the rates as provided in the "Department of Forests Act" and Regulations when the same becomes due and payable.

8.13

Suspension

The Foresr Officer may suspend any operation conducted pursuant to this

Exhibit 1. Tabs 1 and 2

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

licence by notice in writing thereof given to the Licensee or to the person in charge of the operation for breach of any of the covenants, provisoes, terms or conditions of this licence and may require the breach to be remedied within a stated time. 8.14

Cancellation

8.141 . Breach of Conditions

The Minister of Forests may cancel this licence on giving sixty (60) days notice in writing to the Licensee for the breach of any covenants, provisoes, terms or conditions of the licence, or for failure to pay any charges, including stumpage. royalty, rental or tax.

(b)

Analysis

Section 59(2) of the Forest Act requires that a suspension notice be served upon a licensee setting forth the "alleged failure of performance or compliance" and providing the licensee with a period of fourteen days within which to cure the alleged failure. Section 59(4) specifically provides that the licensee is to be afforded an oppormnity to be heard, where the licensee so requests. Section 59(5) provides that, on application from a licence holder, the regional manager or district manager shall reinstate rights suspended under section 59 "where the holder is performing his obligations and is complying with this Act and the reg~lations".'~ Section 61 permits the cancellation of a licence where "rights are under suspension", that is, of course, a lawful suspension. As noted above, section 8.13 of the TSHLs governing suspension, provides that the licensee is entitled to wrinen notice relating to "breach of any of the covenants, provisoes, terms or conditions of this licence and may require the breach to be remedied withim a stated time."

Provisions of section 59 of the Forest A a should be read together with section 61 and, in light of the policy objectivesm of the Ministry. It is clear that contrary to the specific wording of the suspension notice, additional requirements of an indeterminate nature were relayed by the Regional Manager to Omenica in the meeting held on August 5, 1986.61 I S9

Section 59(5) was no1 addressed by either parry in the hearing before this Board. I interpret section 59 as removing any discretion from the regional manager where (i) rights are under suspension; (ii) an application is made; and (iii) the licensw is in full compliance with the Forest Acr. This provision should nor be read. in my view. as undermining the rights to wrinen notice of the grounds for suspension and the licensee's opportunity to be heard. Given the significance of the rights ar stake. an unsuccessful application under section 5 9 6 ) would cenainly be followed by notice to a licensee of the reasons for the refusal to lifi the suspension. Discussed, infra 61

See further Transcript of Proceedings, p. 526, lines 20-47, p. 527. lines 1-17

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

accept the evidence that the Ministry's "requirements", to use Mr. Wilkins' word, were conveyed to Omenica in an inexact, tentative, and to use Mr, Morrison's word, "uncompromising" manner. In my view, there is no evidence to support the argument that Omenica was given an opportunity to fully addrecs such requirements with the Regional Manager in any subsequent meeting. Mr. W i tesMied that he was "very clear" when he told instructed Omenica that payment of the outstanding rentals would not cause the suspension to be lifted and that Omenica's total outstanding debt, including stumpage arrears, would have to be addressed. While the Mr. Wilkins may have spoken in terms of a "satisfactory schedule of payments", no clarification of what this amounted to was ever provided to Omenica by the Ministry. Licensees subject to the statutory scheme in question are, in general, going Pursuant to both to the concerns, employing people and operating significant busine~ses.~~ Forest Act and principles of natural justice, a licensee is entitled to certainty as to the bases upon which a suspension of rights occurs, and the basis or bases on which a suspension will be lifted.63 If it were otherwise, the rights to notice and the opportunity to be heard afforded in relation to a suspension of rights, or equally, a cancellation of rights, could be easily ~ n d e r m i n e d . If ~ the addition of tentative, vague preconditions to lifting the suspension of a licensee's cutting rights were held to be vires the Forest ~ c t ,then a licensee may refrain from seeking to avert cancellation (although it was capable of doing so) of a licence, because of its uncertainty over whether it could meet conditions for lifting the suspension of its rights.66

In my view, the imposition of additional conditions on the lifting of the,suspension by the Regional Manager was ulrra vires section 59 of the Forest Act and contrary to corresponding principles of naturaljustice. As noted above, section 61 of the Forest Act provides for a cancellation of rights, where rights are under suspension. I disagree that a suspension of rights under the Forest Act is somehow severable from a cancellation, as the latter is necessarily premised on the lawful existence of the former. In the circumstances, Omenica should be neither restricted from raising this issue in the hearing before this Board nor restricted

Licensees, l i e the appellant Omenica, seeking to regain this status, should be accorded no fewer, or lesser.

rights. Regardless of wbethcr the basis is imposed in the suspension notice made pursuam to section 59(2) or pursuant to any decision resulting from an application under section 59(5). As noted, supra, Section 61 pennits cancellation of "rights under suspension". This can only relate to lawful suspension of rights under the Form A a . BY vinue of, for example, section 59(5) of the Form Acf. 66

Counsel for Omenica noted thal. while it was one rhing to pay Omenica's outstanding rent, $190.000, it was "anorher thing to raise a million dollars or %950,000", to repay Omenica's outstanding debt. Counsel noted elsewhere that at no time alier July 15. 1986 was the amount owing by Omenica ever specified. Transcript of Proceedings. p. 794. lines 18-37. See also Transcrip~of Proceedings, p. 732, lines 5-38.

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

to the discretionary remedy of mandamus, in light of the existence of a statutory right of appeal.

Validity of the Cancellation ~rocedur6Section 61 of the Forest Act

II.

Counsel for Omenica argued that the Regional Manager erred in requiring Omenica to pay both the outstanding rentals and to make provision for the stumpage debt, contrary to the express terms of the cancellation notice. This error was contrary to the decision of the Campbell Appeal Board and to the decision of Ruttan J. of the Supreme Court. Counsel argued further that while Mr. Willcins inquired with Mr. Doyle, if Mr. Doyle thought clarification of Mr. Wilkins's advice to Omenica in the August 5 , 1986 meeting should occur, no clarification was given. Counsel for the Ministry argued fmtly, that Mr. Wilkins did not make the decision to cancel as he ceased to be Regional Manager prior to November 30, 1986. What representations Mr. Willcins made on August 5, 1986, were irrelevant for this reason.67 In a decision dated June 4, 1998, this Board has previously held that Mr. Wilkins made the decision to cancel the TSHLs. Counsel for the Ministry argued in the alternative that "the important thing that emerges from Mr. Peterson's evidence is that what he took from the [August Sth] meeting was correctly the thrust of it. The whole outstanding account had to be dealt with. That was the main point and he understood that".68 Counsel for Ministry argued that it didn't matter if clarification did not occur, because Omenica could not pay the outstanding

" "

Transcript of Proceedings, p. 736, limes 4047; p. 737, limes 1-7. Transcript of hoceedigs, p. 741.

" He argued as follows: [Counsel for Omenica] referred to correspondence benvecn Doyle and Wilkins in August 1986, which is the last couple of pages of Exhibit 14. His comment on Doyle's August 18. '86 letter to W i l k i , the second paragraph of that letter, Doyle says: "I suppose you would have a bit of a dilemma on your hands if the rentals were paid."

And Mr. Tick made something of that. And when he got to the August 25th, '86 memo from Wilkins to Doyle, he focused on the second-to-last paragraph where Wilkins says: "If not, do you concur that it might be advisable to clarify the matter with the licensee in writing."

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

I disagree that there is any nexus between a licensee's entitlement to notice of its rights and its ability to pay.

I I 1 I I

Counsel for the M i t r y argued-additionally that Mr. W i could not have made the same mistake twice. The Campbell Board had found Mr. Wilkins erred in suspending the licences for one reason(ie., non-payment of rentals) and cancelling the licences for another (ie., by demanding that Omenica pay the total amount of its outstanding debt to the Ministry). As to the plausibility of an oral repetition of the same error by Mr. Wilkins, two years hence, he was at least capable of writing a memorandum on the same day of the meeting, which purported to be a record of his requirements to Omenica, incorporating this error without ' In addition, Mr. Willcins was sufficiently concerned as to apparent recognition of the fact.O the legality of the "requirements" for averting cancellation conveyed to Omenica on August 5th, that he asked legal counsel if clarification to Omenica should occur. I am, however, ununvinccd on the totality of evidence" that Mr. Wilkins did in fact state the reason for cancellation of the TSHLs as being the failure to address the outstanding debt, as he had done two years earlier.

In response to a written outline of issues provided by Counsel for the Ministry argued that the cancellation of the licences invokes the requirements of natural justice. "It's obviously a very serious thing." The requirements of natural justice depend,

And Mr. Tick said well, that was never done and that's why the cancellation should be set aside.

My response to that is that there may have been a theoretical dilemma, as outlined by Mr. Doyle, that theoretically Omenica could have paid the outstanding rent and avoided cancellation. But it's clear from the evidence of A1 MacPherson as least. thz the Misuy didn't think Omenica was likely to be able to pay the outstandiing rent. And it's clear from the evidence of the Petersons that in fact it was not able to pay the outstandiing rent, so there was no real dilemma. And if Mr. Wilkins had clarified the situation, it wouldn't have made any difference because Omenica couldn't have paid the clarified amount either.

There is. moreover, in my view. a marked resemblance between Mr. Wilkins' representations to the Petersons in 1984 relating to cancellation and those to which he testified to making in 1986 relating to suspension. h 1986. MI.Wkim was certain in his remarks to Omeniu that the suspension made for one reason, would be lified only if some other reason, was addressed.

In contrast with the Majority decision. 1 decline to find that the handwritten page of nores of Mr. Momson made concerning the Augusr 5th meeting, which were not the subject of testimony, or correspondence herween Omenica and the Ministry, which followed cancellation of the TSKLs on November 30. 1986. is determinative of this issue. Counsel for the Minisrry noted that his response in this case was to the outline of issues filed by Omenica "last yeara. Transcript of Proceedings. p. 772. lines 32-47; p. 773. lines 1-20.

I I I

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

however, on the circumstances. As to the present case, Counsel arped that Omenica had "notice, notice of suspension, notice of intention to cancel. Omenica had an opportunity to be heard. There was the August 5th meeting. There was a review at Omenica's instance that followed that. There was the November 17th meeting, and something that tends to be forgotten in all of this. Even after the cancellation there were six or seven months of further discussions. A proposal was made by Omenica.. . .The Ministry was taking the position that the licences were cancelled but they said, that doesn't mean we can't talk. " As to whether or not the requirements of natural justice were met in the circumstances, I am seriously troubled by the process which commenced with the August 5, 1986 meeting. Both by virtue of the express terms of section 61 of the Forest Act, and principles of natural justice, Omenica was entitled to an opportunity to be heard. There was, in my view, very limited evidence before the Board, to support compliance with this requirement. Mr. WiIkins met with Omenica on August 5, 1986, and in his memorandum to file written on that day, indicated that he advised Omenica of his requirements to prevent the cancellation and to lift the suspension. The evidence is that the meeting was brief in duration and that it was considered, in some sense by both parties, to be preliminary in nature. A meeting between Omenica and Mr. W i n s which was to follow the August 5th meeting never occurred. There was a form of internal review referred to in the letter dared October 14, 1986 from Mr. Willcins to Omenica, in relation to which scant evidence was led, which cannot, in the circumstances, constitute an opportunity to be heard. A meeting was held between the Minister, the Deputy Minister and Mr. Wilkins and representatives of Omenica on November 17, 1986." According to Mr. Wilkins little or no discussion was devoted in this meeting to the cancellation of the TSHLs. Notwithstanding the foregoing evidence on this issue, I decline to make any finding on the basis of this argument, due to the election of Omenica to not to address this issue further in the hearing before this Board.

The then Deputy Minister testified thar the requirements for averting a cancellation were not discussed. these were, he believed. provided to Omenica in previous correspondence or "mee~ing". Mr. Wilkins testified before the Forster Appeal Board thar there was 'little or no discussion" in that meering about the November 30th deadline.

Forest Appeal Board Re: Omineca Enterprises Ltd. Dissent

III.

Reasons for Concurring in the Result of Issues 6, 7 and 8 of the Board Decision

Section 4(e) of the Ministry of Forests Act

(i)

Section 4(e) of the Ministry of Forests Act provides as follows: "The purposes and functions of the ministry are, under the direction of the minister, to do the following:. ..(e) assert the financial interest of the government in its forest and range resources in a systematic and equitable manner." The Campbell Appeal Board found that the "severity" of discriminatory trearment afforded to Omenica by the Mr. WiIkins, the Regional Manager, amounted to a violation of section 4(e) of the Ministry of Forests Act. Counsel for the Appellant argued that discrimiion occurred in the period following the Campbell Board Decision and that such action was in breach of section 4(e). A failure to comply with section 4(e) of the Minis- of Forests Act renders the cancellation of Omenica's TSHLs void. Counsel for the Appellant cited St. h r e n c e Cruiselines, in which the Court interpreted the expression "equitable treament" to mean that vessels in the same class should be treated equally." Counsel also submitted dictionaql definitions of the terms "systematic" and "equitable". Systematic is defined to mean, inter alia, "acting according to a system, regular and methodical, thorough.. . ". The term "equitable" is defmed to mean, inter alia, "...equal in regard to the rights of persons; distributing equal justice.. .just; impartial; as, an

Counsel for the Appellam referred to several cases, including Sf. Lawrence Cruiseliner (cite). From this case. Counsel cited the following passage from the judgment of D m . J.A.:

... We must be careful not to apply the principles of interpretation laid down in case law to the regulations without first considering the scope of this specific grant of regulatory power made by the legislation. As Lord Reid observed in Padfield v. Minister of Agriculrure and Foodr [I9681 A.C. 997 (H.L.) at page 1030: "Parliament must have c o n f e ~ ~ ethe d discretion with the intention that it should he used to promote the policy and the objects of the act; the policy and objects of the act must be determined by construing the act as a whole and construction is always a matter of law for the coun. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the act or for any other reason. uses his discretion as to thwm or to run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the coun.. ."

I I I 1

I 1 I

Forest Appeal Board Re: Ornineca Ente~prisesLtd. Dissent

equitable judge..."; "in accordance with law and justice;"; and f~rtheras a concept which defends the law from evasions "whereby such as have the undoubted right are made remedyless". -

Counsel for the Ministry argued that section 4(e) set out policy or political objectives, and did not impose any form of actionable duty upon the Ministry. "It does not require as a matter of law that ministry or any employee or officer of it to do or not do anything."75 In support of this position, Counsel for the Ministry cited Rustad Bros. & Co. Lrd. v. Minister of Forests (1988) 23 B.C.L.R. 188 (B.C.S.C.) In relation to the defintion of the expression "systematic and equitable", Counsel argued that such expression should bear its o r d i i meaning, namely, "a system which is fair".

I agree with the submission by Counsel for the Ministry that section 4(e) of the Ministry of Foresrs Act does not create an actionable duty upon the Minister of Forests. The law prohibits arbitrary and discriminatory behaviour. While there is evidence in this case, that the obIigations that Omenica was required to met were greater than those imposed upon other licensees, several factors weigh against a fmding of discriminatory conduct by the Ministry, including the insufficiency of comparable evidence in relation to each of the three licensees and the differences in their respective circumstafices. Cancellation of the TSHLs for an Improper Purpose

(i)

In the period 1985 to 1987, at least, certain officials within the Ministry were concerned with the extent to which the actual (or assigned) cut of the Fort Nelson Timber Supply Area surpassed the Annual Allowable Cut set by the Chief Forester. Some were, indeed, "adamant", to use the term of the Acting Deputy Minister of the day, that a rationalization should occur. There is further linle doubt that Ministry officials were seizing upon this opportunity by considering the outcome of the licence cancellation process relating to 0menica and acquisition of the assets of FNFI by Tackarna. Whether or not the rationalization being anempted was in fact urgent, it is undeniable that officials were seeking to capitalize on76what they perceived as an opportunity. While it may be that, as Minister Kempf wrote, the Ministry would not consider a reinstatement of Omenica's TSHLs after cancellation as it did not want a repetition of the overcomrniment, I am unconvinced on the totality of evidence that officials' actions were improperly motivated toward Omenica on the basis of their commitment to rationalization prior to the cancellation deadline.

' '6

Transcript of Proceedinss. p . 748. lines 9-21 Or "pick up pan o f .

Forest Appeal Board Re: Omineca Enterprises ~ t d . Dissent

(ii) Effect of the November 17, 1986 meeting on the November 30th Cancellation Deadline

John and Roy Peterson each testified that Mr. Flitton agreed to delay or "push back" the cancellation deadline for the TSHLs. I am unpersuaded that Mr. Flitton intended to extend the deadline without some communication from Omenica outlining the reason why the extension should occui. In coming to this conclusion, I am aware of only one document, a letter authored by Mr. Flitton after the cancellation deadline, that, in my view, provides direct support his testimony.

I I

Forest Appeal Board Re: Omineca Enterprises Ltd Dissent

CONCLUSION For the reasons set forth above, I would revoke the cancellation of Omenica's TSHLs on the basis that the Regional Manager failed to comply with sections 59 and 61 of the Foresr Act. In relation to the issues set forth on the final page of the Majority Decision of this Board, my findings are as follows: 1.

I concur.

I concur in the result for the reasons provided herein.

I dissent for the reasons provided herein.

I concur.

I concur in the result for the reasons provided herein.

Dated at Vancouver, this

day

October,

Order of Shaw, 3. March 28, 2000

JPREME COURT

No- A981665

:.BRITISH COWUIIA

S E-AL

Vancouver Regimy

VANCOUVER

h the Suprane Court of British Columbia

REGISTRY

Omineca hterprises Lrh, -

Appellant

-. .

The .vLinirrer of Forens and The Appeal Board Appointed Pumant to the Foresr d a by O r d a i n Council Number 213 Dated February11,1997. Respondents

ORDER

B =ORE THE HONOURABLE iMR SHAW

1 1 1

Thursday, the 24th day of F e b r u q . 2000. -

THE .QPE4LS of the appellanr Omineca Enterprises Ltd fium the decisions o i h e -4ppeal Board appointed to the Forerr Acr by order in council no. 213 dared

Febmary 11. 1997, pronounced June 4 and October 16, 1998. coming on for hearing at Vancouver on February 14 - 16,1000; and on hexing Stephen Tick and Dick Byl. counsel for the appellanr, and Stephen Antle and Dario Fracca, articled student, counsel for the respondent the M i s t e r of Forests; and on nading the appeal books, transcripts and .rvrinn submissions filed herein; and judgment being reserved to this dare:

THIS COURT ORDERS that the appeals of the appellant be dismissed,

Order of Shaw, J. March 28, 2000

AND THIS COURT FURTHER ORDERS that the appellanr:pay to the rrspondent the Ministcr of Forsts his party and party costs of these appeais, aseaed under scale 3.

APPROVED -%S

ENTEF u2aa

,. lJ

.f..:&

Counse@r the respondent the Miriser of F o r m

VANCOUVER

YO SOL

/U5 KeaSons for J u d p e n r of Shaw. J. February 24,2000

Indexed as:

Omineca Enterprises Ltd. v. British Columbia (Minister of Forests) ~e&een Omineca Enterprises Ltd., appellan~and The Minister of Forests and the Appeal Board appointed pursuant to the Forest Act by Order in Council Number 2 13 dated February 21, 1997, respondents

[2000]B.C.J. No. 394 2000 BCSC 301 Vancower R e g i m Nos. A981665 and A982927 'British Columbia Supreme Court Vancouver, British Columbia Shaw J. Heard: February 14 - 16,2000. Judgment: Febntary 24,2000. (88 p m . 1

Counsel:

Stephen Tick and Dick Byl,for the appellant. Stephen Antle, for the respondens. SHAW J. :- These reasons deal with two appeals fiom two decisions of an Appeal Board established under the Forest Act. Ode appeal is under No. A982927 and the other under No. A981665. For all intents and purposes, they were argued as one appeal.

The essentid contention of the appellant Omineca Enterprises Ltd ("Omineca") is that the Miiimy of Forens, in purporting to cancel two Timber Sale Hamesting Licences ("TSHLs") of Ornineca, failed to do so in accordance with law. The Appeal Board disagreed with Omineca's contention and held that the cancellation was valid Omineca seeks to have that ruling set aside on this appeal.

3 In addition, should Omineca's appeal fail on the legal merits of the TSHL cancellations, Omineca has certain procedural arguments aimed at setting aside the Appeal Board's decisions.

This Court's power on appeal is restricted to questions of law or jurisdicrion: s-s. 156(8) of the Forest Act, 14 R.S.B.C.1979, c. 140, and s-s. 150(1) ofthe Foresl Act, R.SB.C. 1996, c. 157. Then is a long and detailed history of the use which Omineca made of the TSHLs, rentals which Omicca B5 failed to pay, stumpagc which Omineca failed to pay, silviculnvt work which Omincca failed to carry out, proceedings taken by the M i of Forests to suspend Omineca's cutting permits and cancel its licences, and numerous appeals and coun pro-dings taken by Omineca. This history is set out in a number of Appeal Board decisions, particularly the two decisions under appeal. I need not repeat the history except where necessary for t h e decisions I must make..

On September 27, 19S3, the Regional Manager of the Minisq of Forests suspended the cutting permits of

QUICKLAW

106

Reasons for Judgment of Shaw, J. February 24. 2000 Omineca under the TSHLs. The ground for this suspension was tbe non-payment of rentals as required under rhe TSHL agreements. The text of the letter rea&:

In reviewing again your outstanding account with the Ministry, I note that the annual fees for 1980 - 1983 relative to T.S.H.L.'s A08692 and A08693 are still o~tstandiig. You are thereby in violation of Section 89 of the Forest Act and condition 7.1 of the above mentioned licences. Your total indebtedness in this regard is $1 13,280.00 exclusive of interest.

This cannot continue m y iongtr. I must therefore regetfully advise that I have insmctcd Mr. Joyce, Disrrict Manager, Fort Nelson, that no further curting permits are to be issued to your company. In addition all existing cutting permits pursuant to T.S.H.L.'s A08692 and A08693 are suspended effective October 14,1983, subject to Section 59 of the Forest A d Please note also that T.SH.L!s A08692 and A08693 may be subject to cancellation pursuant to Section 61 of the Forcst Ad and conditim 8.141 of the licence documents.

ll 7

As the non-payment situation was not recfified by Omineca, the RegionaI ~ a n a ~purported & to cancel the licences by Norjcc of Cancellation given on April 25,1984.

ll 8

Through appeal proceedings, Omineca was successlid in having the Notice of Cancellation set aside on the ground that the cancellation was Ebr non-payment of rentals and stumpage, whereas the suspension of September 27, 1983 was only for non-payment of rentals.

The setting aside of the Notice of Cancellation did not affect the suspension of the curdng permits. The suspension remained in force.

a lo Afta the appeal proceedings, the Regional Manager again ~ e fodcancel the TSHLs. He did so by -1 of July 15, 1986 addressed to Omineca. This time the Nqrice was restricted to non-payment of r e d s . The Nodce reads: In view of the decision of the Cow of Appcal in refuring leave to appeal, 1 must r@lly advise that pursuant to Section 61 of the Forest Act, Xmber Sale Harvesting Licences A08692 and A08693 are cancelled effective October 31,1986 for non-payment of rentals under Section 89 of the Forest Act Section 61(3) of the Forest Act gives you the oppommity to be heard on rhis matter, providing you request such a hearing within 30 days fiom the date this notice is served 1I

It will be noted that the letter set October 31, 1986 as the effective date of cancellarion.

12 By letter dated October 14, 1986, the Regional Manager extended thc effective date of cancellation to November 30,1986. The rext of this letter nads:

Reference is made to my learn dared July 15, 1986 which advised that T.S.H.L!s A08692 and A08693 would be cancded effective October 31, 1986 for non-payment of rentals under Section 89 ofthe Forest Act.

I have received information to the effect that the M i n i of Forests and Lands arc reviewing the circumstances smoundig the operation of Omineca Enterprises Ltd. Since this review is not likely to be concluded until after October 31, 1986, notice of cancellation is herewith ex~endcdto November 30,1986.

On ~ o v c m b e r7,i 1986, represenracives of Ornineca met with representarives of the Minisny of Forests,

QUl CKLA W

LO?

Reasons for Judgment of Shaw. J. February 24. 2000

page 3

including the Minister of Forests, Tbe Honourable Jack Kempf. Omineca alleges that at this meeting the of Forests extended the date of cancellation beyond November 30, 1986. The Minisby of Forcsts denies this allegation. The Appeal Board decided that the date of cancellation was not extended. Whether this decision of the Board Was supported by the evidence is an issue I will deal with later in these reasom for judgment J[ 14

On August 13, 1987, the. M i n i s t r y published a notie of the cancellation in the British Columbia Gazetk. The notice reads:

g 15

Take notice that, pursuant to section 61(5) of the Forest Act, Timber Sale Licences A08692 and A08693, held in the name of Omineca Enrerprises Ltd., were cancelled effective November 30, 1986. By letter to Omineca of August 18, 1987, the Regional Manager confirmed the cancellation effe&ve q 16 November 30,1986. This letter reads:

This is to confirm that pursuant to Section 61 of the Forest Act, Timber Salt Harvesting Licence A08692 and A08693 are cancelled effective Novcmbcr 30,1986 for nonpayment of rentals under Section 89 of the Fonst Act. Notice to Omineta of the cancellation e f f d v e November 30, 1986 was repeated in a letter from the 117 Regional Manager dated September 22, 1987. It reads:

This lener cancels and superccdcsany letter of August 18,1987. Upon review of our files it is apparent that Liccncs A08692 and A08693 were cancelled pursuant to h41. Wilkins cancellation letter of October 14, 1986. Although no appeal was taken fiom that cancellation notice we are aware that ceriajn inf-1 negotiations were taking place with the Ministry with nspecr ro both the tax forfeiture of the mill site and cancellation of the licences. My l e t k of August 18, 1987, was simply to c o n f i i the cancellation took effective [sic] Novemher 30, 1986, sccordiig to Mr. WiUEins cancellation lener. By way of this letter we are advising the Chief Forester of these matters since we consider all appeal rights under the Forest Act have lapsed. Please be advised that any advities on the former licence area will be considered in trespass and dealt with accordingly.

a 18

While the second letter purports to a c e 1 and supercede the first, each letter notifies Ominem of the cancellation of its TSHLs effective November 30,1986.

3LTNE 4,1998 APPEAL BOARDDECISION

In its decision of June 4, 1998, the Appeal Bozd de.cided that it had jurisdiction to hear Omineca's appcal 7 19 and that Omineca's TSHLs had been cancelled.

7 20

On appeal to this Court from the June 4,1998 decision, Omineca mists two issues.

Issue 1: Does the Appeal Board have jurisdiction to make a decision as the result of a decision, order or 7 21 determination pmuant to s. 154(2) and the Act? The Board held that it did have jurisdiction. On the bearing of the appeal to this Court, Omineca took the position that it "does not appeal this finding". Accordingly, Omineca, in effect, abandoned its appeal on Issue 1.

9 22

Issue 2: ~ a ; ' t h e r ea cancellation of the TSHLs effected pursuant to s. 61 of the Act? The Board held

Reasons for Judynent of Shaw. J. February 24. 2000

that the TSHLs were cancelled pursuant to s.61 of the Act. Omineca contens this f i n h g .

omineca's position is tbat then has neva been a formal order of cancellation of the TSHLS. Omjneca 7 23 contends that s. 61 of the Act requires that such an order be made and that withou~ir, the licences have never b m cancelled Tbe Crown's position is that it cmied out all of the requirements of s. 61 of the Act to cancel the licences. The Crown contends that a fad act of cancellation is not required by s. 61. Alternatively, if such a requimem can be read into s. 61, the correspondence from the Miistry and the B.C. Gazette notice fulfilled the n q u i m m t

124 25

Section 61 of the ores st ~ c t RSB.C. , 1979, c. 140 reads: 61.

(1)

Where rights are under suspension

(a) the chief forester may cancel a tree fanu licence, pulpwood harvesting area agcecmmt or pulpwood agreemenr; (b) the regional manager may cancel an agreement other than a forest licence or aa agreement referred to in paragxaph (a). (2)

At least 3 months before cancelling an agreement the chief forester, regional manager or a district manager, as the case may be, shall serve on irs holder a written notice of canceIlation specifying the grounds of cancellation and the day on which cancellation taks effect

(3)

Where, within 30 days afm a norice of cancellation bas been served the holder so requests, the chief forester, ngional manager or a diinict manager,as the case may be, shall give hi an oppommity to be heard.

(4)

A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed

(5)

Notice of a cancellation shall be published in the Gazette.

B 26

in my opinion, s. 61 sea out a procedure which, if followed, will result in cancellation of licences or agreemenrs. Under s-s. (I) the authority' to cancel is predicated upon "rights" being under suspension. In this case, Ornineca's cutting rights were under suspension. Under s-s. (2), at least three months notice of cancellation must be given, specifying the grounds of cancellation and the day on which the cancellation will take effect This requirement was fulfilled by the Regional Managds letter of July 15, 1986. Under s-s. (3) the licence holdcr must be given an opportunity to be heard if the holder so requests within 30 days after the notice of cancellation was served. While there is an issue raised by Omineca on this point, I find later in these reasons that there is no merit 10 Omineca's position. Under s-s. (4) a notice of cancellation may be rescinded or its effective date postponed. In this case, there was no rescinding of the notice of cancellation. The effective date, however, was emended to November 30, 1986 by the Regional manager's letter of October 14, 1986. Later in these reasons I address and reject an argument by Ominax that there was a postponement beyond November 30, 1986. Under s-s. (5) notice of a cancellation is to be published in the Gazene. This was done on August 13, 1987. There is one further requirement under s. 61. The British Columbia Court of Appeal in OminQ 27 Enterprises Ltd. v. Minister of Forests, [1990] B.CJ. No. 2594, interpreted s. 61 as requiring that notification be given to the licensee of the cancellation as a prerequisite to the running of the appeal time provided for in S. 154 of the Act.The Court of Appeal, by a 2:l majority, held tha* the appeal time m e d to run &om the date upon which Omineca was notificd of the cancellation. The C o w held that this notice was given in the Regional Manager's lener of August 18, 1986, the text of which I have quoted above. QUICKLAW

Reasons for Judsment of Shaw. I. February 24,2000

p 28

page 5

In his majoriv decision, Lambert J.A. said at p. 5:

The appeal section wiich confers the right of appeal, namely section 154(2)@), says that an appeal lies h m a determination, order or decision of a regional manager under paragraph 61(1)@) to the chief forester. So the appeal is-rn appeal from the cancellation. It is not an appeal from the decision to issue a notice of cancellation. And funher, at p. 7:

. . . I consider that the right to appeal given by s. 155 starts to run when notice of the cancellation itself is given. Thc oncellation itself in this case was given in the lener to which 1 have referred dated 18 August, 1987. The notice of appeal was filed on 4 September, 1987, within the 21 &v period

As I read the Court of Appeal's decision, it finds that the notice given August 18, 1987, which said that 29 the TSHLs "are canceIled effective November 30, 1986", constimed the canccllatio~ In effect, the notice ~ m p l e t e dthe cancellation pmcess.

in s m q , all the stated rquirernents set out in s. 61, plus the notice of cancellation implied by the T[ 30 Court of Appeal into s. 61, have been fulfilled by the Ministry of Forests. Omineca asks rbat I read into s. 61 a requirement of a formal order of cancellation in addition to d l the 131 prescribed steps and the notice of canccllation required by the Court of Appeal. I cannot agree. & I read the scheme set out in s. 61, as intetpreted by the Court of Appeal's decision, the method of cancelling licences is clear and fair. Nowhere in s. 61 is to be found a futther requirement of an order of amcellation. Omineca contends that the Court ofAppeal was not called upon 10 address the question of whether s. 61 32 requires a formal order of cancellation. That, I believe, is so. However, it is helpful to note .why the Court of Appeal implied the requirement of a notice of cancellation into s. 61. The reason was a lack of clariry in s. 61 and s. 155 (the appbal provision) as to the date of cancellation. Coun clarification was needed in order to provide a date for the commencement of the appeal process. Lamben J.A. said, at p. 7 of h is reasons:

. . . It would be a moce readily understandable statutory scheme if the opportuniry to be heard under subsetion 61(3) ran fiom the giving of the notice of impending cancellation, and if the right of appeal under s. 155 ran fiom the time when notice was given of the cancellation itselt and not merely of a proposed cancellation. The statutory provisions to which I have referred not clear and cannot be resolved by resort to any of the related sections of the statute. In those circumstances the proper rule to follow is that the ambiguity should be resolved against the person whose rights are being taken away by administrative action.

in my opinion, there is no similar justification for reading into s. 61 a furihcr requirement of the making of a formal cancellation order. I decline to do so.

B 33

n 34 Ornineca refers to s. 59, the suspension provision, to support its in~erprerationof s. 61. Ornineca contrasts s-s. (3) of s. 59 which specifically provides that a suspension of rights "takes effect on thc expiry of the time allowed in the notice", with s-s. (2) of s. 61 which requires that the notice specify "the day on which the cancellauon rakes effect". 35 in my view, the differences in the wording of s. 59 and s. 61 are of no assistance to Omincca, panicdarly in view of the Court of Appeal's decision as to when canccllation occun.

7 36 the

The Crown a&es that thc effective date of the cancellation was Novernbzr 30, 1986, the date stated in letters of August 18, 1987 and September 22, 1987 and the Gazettenotice of August 13, 1967. I do not think it

11 QP_

Reawns for Judgment of Shaw. J. February 24,2000

page 6

is necessary to decide the effective date of the cancellation because in any event the cancellation process was completed by Omineca being notified of the cancellation. This occurred by way of either or both of the leam of August 18,1987 and September 22,1987.

7 37

For the foregoing reasons, I rejecr Omineca's contentions on I m e 2.

OCTOBER 16,1998 APPEAL BOARD DECISION

In its decision of October 16, 1998, the Board addressed rlumerous issues raised by Omin- c o n e g 38 the merits of the cancellation The Board decided all of the issues against Omineca The decisions wm unanimous except for one, which was by a 2:l majority. 39

On appeal to this Court Omineca raises eight specific issue.

40 Issue 1: Did the Minisay have the legal right to cancel the licences? In its submission to this Court Omineca advised that it did not contest the Board's finding that the Minisuy had the right to cancel the Iicenccs.

will therefore consider this point as abandoned.

Issue 2'. Did *e hGnkq catlcel the licences for a reason differtnt from that set out in the letter of ~ u l y 41 15, 1986? The Appeal Board found that the M h i q did not canml the licences for a reason differeat from that stated in the letter of July 15, 1986.

Ommeca contends that l 5 i s fmdinp is wholly unsupported by the evidence or, alternatively, that the Board ( 42 erred in law in making its determination.

I have reviewed the findings of the Board on this issue and the evidence upon which the finding were Y! 43 made. In my view, all the Board's findings of fan are supported by the evidence. The Board's &dings are clear and detailed They show that a careful weighing process took place. Moreover, Omineta failed to demonstrate any error of law on Issue 2. 44

Therefore, I decline to interfere with the Board's decision on this issue.

7 45

Issue 3 Did the Ministry of Forests tell Omineca that even if it paid the rent and avoided the cancellarion, its licences would still be suspeided? If so, was this a brtach of natural justice? The Board, by a majority, held against Omineca 46 justice.

The position of Ommeca is that the Ministry misled Omineca and that this constituted a breach of natural

The Board, by a majority, found that the Ministry did not mislead Omineca I have reviewed the majority's decision and the evidencc upon which it is based. The majority's findings are fully supported by the evidence. As with Issue 2, the majoritfs fmdings ate clear and detailed and reflecr a careful weighing process.

q 47

The minority member of the Board disagreed. Her evaluation of the evidence was different &om that of ( 48 the majority. However, rhe essential question is whether the majority's decision is supported by the evidence, and I have found that it is. In view of the foregoing finding, the gound upon which Omineca's allegation of breach of natural justice is based is eliminated

1 49

n SO

For rhe foregoing reasons, I. decline to interfere with the majority's decision on Issue 3.

Issue 4: Was the notice of July 15, 1986 deficient or defective or c o n w to nanval justice? The Board found against ~rni<icaon this issue.

11 51

Reasons for Judgment of Shaw, J. February 24,2000

g 52

Omineca's position now is that it "does not appeal this iinding". I will therefore meat it as abandoned.

Isnrc 5: Did the refercn=e to a review in the letter of October 14,1986 create a condition precedmt to a review? The Board found a g W Chnimeca on this issue.

g 53

At the hearing of the appeal to this Court, O i h e c a e x p ~ l confined y its position on this issue to its submission on Issue 8. I will deal with Issue 8 after I have addressed Issues 6 and 7.

g 54

Issue 6: Did the Minimy of Form neat Omineca in a "systemafic and equitable manner" as required by s. 4(e) of the Act? The Appeal Board held against O h e c a on this issue.

7 55

Omineca's position in this Court is that it "does not appeal this fmding." 1 find, therefore, that has abandoned tbi point

9 56

Issue 7: Were the licences cancelled in order to rationalize the Annual Allowable Cut? The Board held 57 against Omineca on this issue.

Omieds position in this Court is that this finding is not supported by the evidcnce or, altemativcly, that 7 58 the Board's wnclusion i s not supportableat law. Again, this is a matter on which the Board gave careful and detailed reasons for i?s findings. and they are g 59 fully supported by the evidence. Also, the Board committed no disccmible enor of law.

11 60

Therefore. I decline to interfere witb the Board's decision on Issue 7.

n 61

Xssue 8: Was the November 30, 1986 canccIlation deadline postponed at the meeting of November 17, 1986? If it was postponed, what was the effect of that posponement? The Board held that the November 30, 1986 deadline was not postponed ar the November 17,1986 meeting. The position of Omineoa is that the B o d s findimgs are not supported by the evidenke or, alternatively, that they are contrary to law.

7 62

After reviewing the careful reasons of the Board and the underlying evidence, I find that the Boar85 findings are a l l y s u p p o M by the evidence. Further, no error of law has been demonstrated by Omineca.

g 63

Accordingly, f decline to interfere with the Board's decisions in respect of both Issues 5 and 8.

PROCEDURAL ISSUES Ornineca also alleged certain procedural defects which it contended should vitiate the Appeal Board's decisions. Omineca raises two issues.

7 65

7 66

Issue 1: Omineca complains that the Board received materials that were not sent to the parties.

The mataials were a book containing 34 documents and a precis of earlier appeal decisions involving 167 Omineca. The book of documents came from the Compliance and Enforcement Branch of the Forest Minimy, and the precis was prepared by the Board's Chair. Because of this complaint, Omin- asked the Board to resign. The Board declined to do 68 reasons in a decision made on December 19, 1997.

SO,

stating its

Omineca could not poinl to any possibility of prejudice arising *om what occurred

1have reviewed the Board's ruling on this issue. In my view, it is correct. Omineca has not succeeded in demonstrating error in the Board's ruling. For the reasons stated in the Board's ruling, I find there is no merit to this

7 70

Reasons for Judgment of Shaw, 3. February 24.2000 ground of appeal. Issue 2: Omineca complains that from time to time, when the Board retired to consider procedural or 71 evidcnriary issues, counsel to fie Board retired with the Board. Ominax ~0nthldsthat this was a breach of the audi altemn partcm rule and that thc Appeal Board proceedings should therefore be set aside. 72 The Minkky does not take issue with the fact that h n time to time counsel to the Board did meet with the Board when it retired to consider procedural and tvidentiary issues. However, the Ministry contends that this procedure did not breach the audi alterem pmnn rule and there is no evidence to suggest that the Board's counsel raised any arguments with.the Board in the absence of the parties or that the Board did anything but make its own decisions. All three Board mcmbers arc lawyxs.

The appaintmmt of counsel to the Board was held to be permissible by the Court of Appeal in Omineca Enterprises Ltd. v. B.C. ( M i n i q of Forests) (1993),85 B.C.L.R. (2d) 85 at 91.

7 73

On August 7. 1997, the Board made several rulings procedural issues in advance of the main h-g. 7 74 One of the rulings was on the subject of counsel to the Board. The Board said: Parties to thii appeal made various submissions on the necessity and the role to be taken by Counsel for the Board. By lencr dated March 25, 1997, Counsel for the Appellant took the position that Mr. Voith's role as counsel to this Board is redundant given that the Board members themselves happen to be lawyers, but that if the Board w m to be permitted Counsel, that such counsel should never meet privately with the Board, and that every "submission" by m m e l to the Board should be before the parties. Counsel for the Respondent submined that the Cowi of Appeal bas previously determined that the Board is permitted Counsel, but that rules of natural justice dictate that the patties be given an opportunity to respond to advicz of Counsel on any point before the Board makes a dtciion. C o w p l for the Respondent provided guidelines for cunducl of hibunal counsel (found at Tab 10 of Exhibit l), stating that if it were necessary to follow guidelines, such guidelines were appropriate. The Board has cmefuIly reviewed and considered all submissions of the parcies bearing upon the necessity for Counsel and limits, if any, to be placed upon Counsel's role. The Board is sensitive to the concerns of parties in this issue. On the basis of this review and considerarion, the Board has determined that it shall continue to retain Counsel in this appeal and is not persuaded of the necessity to issue specific guidelines. Counsel for the Respondent referred us to the C o w of Appeal decision in Omineca Enterprises Ltd v. Minister of Forests a al., arising from this appeal and addressing this very issue. In the appeal, the Court adopted the following wording of Mr. Justice Cameron of the Saskatchewan Court of Appeal in Pasiechnyk v. Procrane Inc., [I 9921 3 W.W.R. 374: "[slo long as the board is still able to perform its duty -to hear the parties out fully, with a mind open to persuasion, to consider their positions carefully, and to decide matters at issue in light of the facts as it fairly finds them and according to the law as it wnscientiously takes ir to be - there can be no complaint ...". The Board is highly conscious of the responsibility of Board members to make all decisions in this appeal, and shall carry out its duties in accordance wirh the above-cited decision. Following a thorough revicw of all submissions by Counsel, the Board has nor been persuaded of a need to adopt specific guidelines governing the role of wunsel to the Board, beyond a careful and conscious adherence to the words of d ~ Court e ofAppeal cited above.

Rearons for Judgment of Shaw, I. February 24, 2000 During the course of rhc main hearin& and after the Board had retired with its counsel on several 9 75 occasions to considtc rulings on evidence or procedure, counsel for Omineca raised an objection. c ~ ~ objection and the response of the B o d ' s Chair are as follows:

MR.TICK: Well, I havc another comment 1haven't had the opportunity, or Omineca hasn't had the advantage or opportunity to respond to my of Mr. Voith's submissions on this issue.

THE CHAIR:

What are you saying, ~ r~ .i k ?

MIL TICK: Well,, I'm saying that Nr. Voith was with you when you were making this d d a t i o n in cam= and I assume he made submissions regarding this, and we haven't had the opportunity of mpondiig to whatever he had to say. And not just on this. There have been scvcral in camera sessions over the last days of hearing, where a similar thing has occurred. 1don? warn you to think that I'm getling off this hobby hone, because I'm not J f thert's any submissions to be made by your lawyer, ag&I say that they have to be made in o p forum.

THE C H A R

Mr. Antle, do you have any comment?

MR.ANTLE: I think my only comrncnt is that I'm aware that there is law, and I assume that the Board is aware thar t h m is law that suggests that Mr. Tick's position is correct. If the Board is receiving legal advice, the parties should have an oppommity to respond to it.

... THE CHAIR:

We will reconvene.

The Board has reviewed the W ~ o ofn the Court of Appeal of British Coimbia dated November the 18th, 1993 regarding the role of counsel to the Board. We have also reviewed the decision which this Board made on August the 8th 1997, particularly on page 13 and 14, where we discuss the role of counscl to the Board At that h e we said, and I quote from that decision:

"The Board is highly conscious of the responsibility of Board members to make all decisions in this appeal and shall carry om its duties in accordance with the above-cited decision."

The above-cited decision is that from the Saskatchewan Court of Appeal in I'm not sure

of the pronunciation Pasicchnykv. Procane hc.: "FolIowing a thorough review of all submissions by counsel, the Board has not been persuaded of a need to adopt specific guidelines governing the role of counsel to the Boafd beyond a careful and conscious adhcrcncc to the words of the C o w of Appeal citd above." And I think thar was cited actually from the earlier Omineca Enterprises case.

The Board has proceeded on that basis since we issued that decision last August. And we would assure the parries that all advice which we have received from counsel to the Board has been procedural and not substantive. The issue. has been raised again today as to the M k e of advice being given lo the Board by counsel to the Board The Board is concerned that this is still a matter of concern to

114

Reasons for J u d p e n t of Shaw. J . February 24.2000

page I o

the parties. We believe thar the decision we reached in August of 1997 was correct on the law, but we're smitive to the feelings of the p d s in this particuhly sensitive case. We have decided to henceforth allow Mr. Voith, or w w e l to the Board, to provide you with any advice that he is giving to the Board and allow the partie to c~mmcnton that before the Board wiIl make its decision. And we will assure you once again that it is always the Board which is making the decision and not counsel to the Board So &at will. bc thc proccss which wc will wntinuc with from this point forward. And I would add that one of the reasons that we have made this decision is that we have five days set aside for the hearing this week. We do not have unlimited time, Wc want to get et h d g heard imd the substance of the evidence heard. So that's one of the reasons that we're particularly mterested in getting the evidence in and not getting bogged down in procedural objections. As noted by the Board in its decision of August 7, 1997, quoted above, its duty was to hear out the q 76 parries fully and decide all matters in light o f the facts and in a ~ ~ ~ ~ dwith a n cthe e law. I find nothing in the proceedings to suggest that the Board evtr deviated &om this approach. It is evident from the Board's d i g s that the Board acted with great care and fairness throtlghout. There is no suggestion that the Board's w m e l met with the B o d on any matters other than procedural or tvidentiary.

II 76a

In the Omineca case, supra, Gibbs SA. for the majority, said at p. 95:

Reauning ro rhe reEirement ro consider adjo-ent, given the heightened sensitivities of Omieca it may have been more prudent not to include Mr. Webset. However, Omineca obtained what it wanted and so onnot claim prejudice arising. And it is undmtandable that the Bosrd might wish to have the assistance of counsel while discussing the options open to it4aswell as the amninimtive or housekeeping consequences of an adjoummenr We do not know what matters were discussed but we do h o w that the subject matter of the dispute bemeen Omineca and the M i i m of Forests had not yet been reached. There are, therefore, no grounds for wncluding that the private discussion had adverse impact upon Omintca's cause. [The Cow did not number this paragtzph. Quicklaw has assigned number 76a.l

n 77

In Consolidated-Bathurst Packaging Ltd v. International Woodworkers of America, Local 2-69, [I9901 1 S.C.R. 282, a three member panel of the Ontario Labour Relations Board conducted a hearing and, before rendering irs decision, it consulred with other members of the Board who were not on the panel. Objection was takcn to this having been done. ?ha Supremc Coun of Canads hcld that this did not vitiate the proceedings. Gonthiw 3. forthe majoriq said, at p. 339: Since itz earlier development, the essence of the audi alteram p* rule has been to give the parries a "fair opportunity of answering the w e against [them]": Evans, de Smith's Judicial Review of Admiinimative Actions, supra, at p. 158. It is m e that on factual marters the parties must be given a "fair opportrmiry ... for correcting or contradicting any relavant statement prejudicial to their view": Board of Education v. Rice, [I911J A.C. 179. ax p. 162; see also Local Government Board v. Midge. [I9151 A.C. 120, at pp. 133 and 141, and Kane v. Board of Governors of the University of British Columbia, [1980] 1 S.C.R 1105, at p. 1113. However, the ~ l with e respect to legal or policy arguments not raising issues of fact is somewhat more lenient because the parties only have the right to state their case adequately and to answer contmry arguments.

Page 1I 78 In Kuntz v. College of Physicians and Surgeons (British Columbia) (1996), 21 B.C.L.R. (3d) 219 (c.A.), it was held that there must be an evideniiary foundation to establish a breach of the audi alterem pmem rule. Hollinrake J.k, writing for rwo members of the five judge Court, said at paras. 139 to 141:

I do not say the c o w should presume the College has always carried out its responsibilities to the public in a manner thar neither offends the Act nor&e herules of natural justice. I say only that the court should not sit in judgment on the College, or for that naa!ter on any other adminisnative tribunal, presuming some want of propriety, in the absence of any evidentiary foundation to the

con-. Southm J., sai4 a! para. 98: Although Mr. Justice Hollinrake and 1 may not be in accord on the significance, or lack thmof, of antecedent knowledge, I do not differ from him when he says, in effect, that we should not start with the presumption that the Council of rhe College may have done that which is contrary to natural justice. in the case of the College and all other tribunals, I start with the maxim: "omnia praesumuntur rite et solennita esse aeta coneo pmbentr in connarium".

In my view, the circumstances set out above do not &t an inference of any breach or likelihood of 7 79 any breach of the audi alterem partem mle. Omineca speculates that t h m may have been such a breach. T h a in ~ my view, is not enough to wanant setting aside the h b g s before the Appeal Board.

a 80

I decline to sa aside the Board's ruligs on Issue 2.

NEW ISSUE

During the hearing of the appeal, Omineca raised a new argtunent. Omineca contends that tbe 81 cancellation is invalid because the Ministry claimed more back rentals than were actually owing.

7 82

Omineca's argument stems fiom an assertion that Omincca's obligation to pay rent ceased upon the Ministry suspending Omineca's cutting permits on September 27, 1983. Thus, Ornineca wntends, when, in 1986, the Ministry claimed rentals owing through to 1986, it claimed monies Uat were not in facr owing.

1 83

Omineca basis its position upon s. 62 of the Forest Act, which reads:

62.

Notwithstanding the acpj, surrender, suspension or cancellation of his agreement the holder is liable (a)

to pay the rent fees, costs and penalties owing to the Crown in respect of the agreement, and

(b) to perform all other obligations under the agreement incurred before its expiry, surrender, suspension or cancellation.

a 84

In my opinion, s. 62 has no application to cutting pennits. By its plain wording s. 62 applies to agreements, such as Omineca's TSHL agreements. Cuning permits are quite different. A cutting pennit is not an agreement; rather it is authority, granted by the Ministry to a licence holder, to enter designated lands in a licence area and harvest the timber thereon. The nature of cutting permits is set out in paragaph 221 of each of Cknineca's TSHLs as follows:

The cutting permits shall constitute the Licensee's authority to enter on b e lands to which the cutting permit applies and the right to hatvest the timber therefrom according to the terns and conditions of the permit. Any cutting of timber not authorized by a permit will be deemed to be QUICKLAW

/fh Keasons tor Judgment of Shaw. J. -

page 12

February 24. 2000

It will be rcmnnbered that only Ornineca's cunirtg permits wen suspended Its TSHL agreements were g 85 never suspended. It follows, in my view, that Omineca cannot claim any benefit h m s. 62.

In addition, s. 62 says that an agnement holder is liable for rent incurred before the cancellation of the 86 agreement In my opinion, the cancellation aspect of s. & applies to the cancellation of Ominem's TSHLs. nus, Omineca i s liable for rent accrued up to the time of cancellation which took place in 1986.

Ti 87

Accordingly, 1 do not ackept Omincca's submissions regarding s. 62 of the ACL

CONCLUSION 88

Omineca'sappeals are dismissed.

SHAW J.

QL Update: 20000307 cpriqldrk'qltMqlkIa

Omineca v. Min. of.Forests 2000 BCSC 301

4 r 9 1 f l ~ ~c

Date: Docket:

20000224 A981665 A982927

Registry:

IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: OMINECA ENTERPRISES LTD.

APPELLANT AND: THE MINISTER OF FORESTS AND THE APPEAt BOARD APPOINTED PURSUANT TO THE FOREST ACT BY ORDER IN COUNCIL NUMBER 213 DATED FEBRUARY 21, 1997

RESPONDENTS

REASONS FOR JUDGMENT OF THE

HONOURABLE MR. JUSTICE SHAW

Counsel for the Appellant: Counsel for the Respondents: Dates and Place of Hearing:

Stephen Tick Dick By1 7/q- :..,770 Stephen Antle

C$C,S '. // dd..-e& h/JJ F'ebruary 14 - 16, 2000 Vancouver, B . C .

O m i n e c a v. Min. o f F o r e s t s

Page

[I] These reasons deal with .two appeals from two decisions of an Appeal Board established under the F o r e s t A c t .

One appeal

is under No. A982927 and the otlier under No. A981665.

For all

intents and purposes, they were argued as one appeal. [2] The essential contention of the appellant Omineca Enterprises Ltd. ("Omineca") is that the Ministry of Forests, in purporting to cancel two Timber Sale Harvesting Licences ("TSHLs") of Omineca, failed to do so in accordance with law. The Appeal Board disagreed with Omineca's contention and held that the cancellation was valid.

Omineca seeks to have that

ruling set aside on this appeal. [3] In addition, should Omineca's appeal fail on the legal

merits of the TSHL cancellations, Omineca has certain procedural arguments aimed at setting aside the Appeal Board's decisions.

[4]

This Court's power on appeal is restricted to questions

of law or jurisdiction: s-s.156(8) of the F o r e s t A c t , R.S.B.C. 1979, c.140, and s-s.150(1) of the F o r e s t A c t , R. S.B.C. 1996, c.157. [5] There is a long and detailed history of the use which Omineca made of the TSHLs, rentals which Omineca failed to pay, stumpage which Omineca failed to pay, silviculture work

Omineca v . Min. of Forests

Page

which Omineca failed to carry out, proceedings taken by the Ministry of Forests to suspend Omineca's cutting permits and cancel its licences, and numeroGs appeals and court proceedings taken.by Omineca.

This history is set out in a

number of Appeal Board decisions, particularly the two decisions under.appeali I need not repeat the history except where necessary for the decisions I must make. [6]

On September 27, 1983, the Regional Manager of the

Ministry of Forests suspended the cutting permits of Omineca under the TSHLs.

The ground for this suspension was the non-

payment of rentals as required under the TSHL agreements.

The

text of the letter reads: In reviewing again your outstanding account with the Ministry, I note that the annual fees for 1980 - 1983 relative to T.S.H.L.'s A08692 and A08693 are still outstanding. You are thereby in violation of Section 89 of the Forest Act and condition 7.1 of the above mentioned licences. Your total indebtedness in this regard is $113,280.00 exclusive of interest. This cannot continue any longer. I must therefore regretfully advise that I have instructed Mr. Joyce, District Manager, Fort Nelson, that no further cutting permits are to be issued to your company. In addition all existing cutting permits pursuant to T.S.H.L.'s A08692 and A08693 are suspended effective October 14, 1983, subject to Section 59 of the Forest Act. Please note also that T.S.H.L.'s A08692 and A08693 may be subject to cancellation pursuant to Section 61 of the Forest Act and condition 8.141 of the licence documents.

Omineca v. Min. o f F o r e s t s

[7]

Pdqe

As the non-payment situation was not rectified by

Omineca, the Regional Manager purported to cancel the licences by Notice of Cancellation given-on April 25, 1984. [8] Through appehl proceedings, Omineca was successful in having the Notice of Cancellation set aside on the ground that the cancellation was for non-payment of rentals and stumpage, whereas the suspension of September.27,1983 was only for non-payment of rentals. [9] The setting aside of the Notice of Cancellation did not affect the suspension of the cutting permits.

The suspension

remained in force. [lo] After the appeal proceedings, the Regional ~anageragain tried to cancel the TSHLs. 1986 addressed to Omineca.

He did so by letter of July 15,

his time the Notice was

restricted to non-payment of rentals.

The Notice reads:

In view'of the decision of the Court of Appeal in refusing leave to appeal, I must regretfully advise that pursuant to Section 61 of the Forest Act, Timber Sale Harvesting Licences A08692 and A08693 are cancelled effective October 31, 1986 for non-payment of rentals under Section 89 of the Forest Act.

Section 61(3) of the Forest Act gives you the opportunity to be heard on this matter, providing you request such a hearing within 30 days from the date this notice is served.

Gmineca v . Min. of Forests

Page

[ll] It will be noted that the letter set October 31, 1986 as the effective date of cancellation.

[12] By letter dated October 14, 1986, the Regional Manager extended the effective date of cancellation to ~ovembe'r3 0 , 1986.

The text of this letter reads:

Reference is made to my letter dated July 15, 1986 which advised that T.S.H.L.'s A08692 and A08693 would be cancelled effective October 31, 1986 for non-payment of rentals under Section'89 of the Forest Act.

I have received information to the effect that the Ministry of Forests and Lands are reviewing the circumstances surrounding the operation of Omineca Enterprises Ltd. Since this review is not likely to be concluded until after October 31, 1986, notice of cancellation is herewith extended to November 30, 1986.

[13] On November 17, 1986, representatives of Omineca met with

representatives of the Ministry of Forests, including the Minister of Forests, The Honourable Jack Kempf. [14] Omineca alleges that at this meeting the Minister of Forests extended the date of cancellationbeyond November 30, 1986.

The Ministry of Forests denies this allegation.

The

Appeal Board decided that the date of cancellation was not extended.

Whether this decision of the Board was supported by

Omineca v . Min. of Forests

Page

the evidence is an issue I will deal with later in these reasons for judgment.

[15] On August 13, 1987, the Ministry published a notice of the cancellation in the British Columbia Gazette.

The notice

reads: Take notice that, pursuant to section 61(5) of the Forest Act, Timber Sale Licences A08692 and A08693, held in the name of Omineca Enterprises Ltd., were cancelled effective November 30, 1986.

[16] By letter to Omineca of August 18, 1987, the Regional Manager confirmed the cancellation effective November 30, 1986.

This letter reads:

This is to confirm that pursuant to Section 61 of the Forest Act, Timber Sale Harvesting Licence A08692 and A08693 are cancelled effective November 30, 1986 for nonpayment of rentals under Section 89 of the Forest Act

[I71 Notice to Omineca of the cancellation effective November 3 0 , 1986 was repeated in a letter from the Regional Manager

dated September 22, 1987. It reads: This letter cancels and supercedes any letter of August 18, 1987. Upon review of our files it is apparent that Licences A08692 and A08693 were cancelled pursuant to Mr. Wilkins cancellation letter of October 14, 1986. Although no appeal was taken from that cancellation notice we are

Omineca V. Min. of Forests

Page

aware that certain informal negotiations were taking place with the Ministry with respect to both the tax forfeiture of the mill site and cancellation of the licences. My letter of August 18, 1987, was simply to confirm the cancellation t6ok effective [sic] November 30, 1986, according to Mr. Wilkins cancellation letter. By way of this letter we are advising the Chief Forester of these matters since we consider all appeal rights under the Forest Act have lapsed. Please be advised that any activities on the former licence area will be considered in trespass and dealt with accordingly.

[18] While the second letter purports to cancel and supercede the first, each letter notifies Omineca of the cancellation of its TSHLs effective November 30, 1986. JUNE 4 , 1998 APPEAL BOARD DECISION

[19] In its decision of June 4, 1998, the Appeal Board decided that it had jurisdiction to hear Omineca's appeal and that Omineca's TSHLs had been cancelled. [20] On appeal to this Court from the June 4, 1998 decision, Omineca raises two issues. [21] Issue 1: Does the Appeal Board have jurisdiction to make a decision as the result of a decision, order or determination pursuant to.s.154(2) and the Act? have jurisdiction.

The Board held that it did

On the hearing of the appeal to.this

Court, Omineca took the position that it "does not appeal this

Omineca

finding".

Min. of Forests

Page

Accordingly, Gmineca, in effect, abandoned its

appeal on Issue 1

[22] Issue 2: Was there a cancellation of the TSHLs effected pursuant to s.61 of the Act?

The Board held that the TSHLs

were cancelled pursuant to s.61 of the Act.

Gmineca contests

this finding. [ 2 3 ] Omineca's position is that there has never been a formal

order of cancellation of the TSHLs.

Gmineca contends that

s.61 of the Act requires thatsuch an order be made and that without it, the licences have never been cancelled. [ 2 4 ] The Crown's position is that it carried out all of the

requirements of s.61 of the Act to cancel the licences. Crown contends that a formal act of cancellation is not required by s. 61.

The ,

Alternatively, if such a requirement can be

read into s.61, the correspondence from the Ministry and the B.C. Gazette notice fulfilled the requirement. [25] Section 61 of the Forest Act, R . s . B . C . 61.(1)

1979, c.140 reads:

Where rights are under suspension (a). the chief forester may cancel a tree farm licence, pulpwood harvesting area agreement or pulpwood agreement; (b) the regional manager may cancel an agreement other than a forest licence or an agreement referred to in paragraph (a).

Omineca v . Min. of F o r e s t s

Page

(2)

At least 3 months before cancelling an agreement the chief forester, regional manager or a district manager, as the case may be, shall serve on its holder a written notice of cancellation spetifying the grounds of cancellation and the day on which cancellation takes effect.

(3)

Where, within 30 days after a notice of cancellation has been served the holder so requests, the chief forester, regional manager or a district manager, as the case may be, shall give him an opportunity to be heard.

(4)

A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed.

(5)

Notice of a cancellation shall be published in the Gazette.

[ 2 6 ] In my opinion, s.61 sets out a procedure which, if

followed, will result in cancellation of licences or agreements.

Under s-s.(l) the authority to cancel is

predicated upon'rights"

being under suspension.

In this

case, Omineca's cutting rights were under suspension.

Under

S-s.(2), at least three months notice of cancellation must be given, specifying the grounds of cancellation and the day on which the cancellation will take effect.

This requirement was

fulfilled by the Regional Manager's letter of July 15, 1986. Under s-s.(3) the licence holder must be given an opportunity to be heard if the holder so requests within 30 days after the notice of cancellation was served.

While there is an issue

Omineca v. Min. of Forests

Page

raised by Omineca on this point, I find later in these reasons that there is no merit to Omineca's position.

Under s-s.(g) a

notice of cancellation may be rescinded or its effective date postponed.

In this case, there was no rescinding of the

notice of cancellation. The effective date, however, was extended to November 30, 1986 by the Regional manager's letter of October 14, 1986.

Later in these reasons Iaddress and

reject an argument by Omineca that there was a postponement beyond November 30, 1986.

Under s-s.(5) notice of a

cancellation is to be published in the Gazette.

This was done

on August 13, 1987. 1271 Th'ere is one further requirement under s.61.

The

British Columbia Court of Appeal in Omineca Enterprises Ltd. v. Minister of Forests, [I9901 B.C. J. No. 2594, interpreted

s.61 as requiring that notification be given to the licensee of the,cancellation as

a prerequisite to the running of the

appeal time provided for in 5.154 of the Act.

The Court of

Appeal, by a 2:l majority, held thatthe appeal time started to run from the date upon which Omineca was notified of the cancellation.

The Court held that this notice was given in

the Regional Manager's letter of August 18, 1986, the text of which I have quoted above. [28] In his majority decision, Lambert J.A. said, at p.5:

Omineca v . Min. of Forests

Page

The appeal section which confers the right of appeal, namely section 154(2) (b), says that an appeal lies from a determination, order or decision of a regional manager under paragraph 61(l)(b) to the chief forester. So the appeal is an appeal from the cancellation. It is not an appeal,from the decision to issue a notice of cancellation, And further, at p.7:

. . . I consider that the right to appeal given by s.155 starts to run when notice of the cancellation itself is given. The cancellation itself in this case was given in the letter to which I have referred dated 18 August, 1987. The notice of appeal was filed on 4 September, 1987, within the 21 day period. [291 As I read the Court of Appeal's decision, it finds that the notice given August 18, 1987, which said that the TSHLs 'are

cancelled effective November 30, 1986", constituted the

cancellation.

In effect, the notice completed the

cancellation process. [301 In summary, all the stated requirements set out in s.61, plus the notice of cancellation implied by the Court of Appeal into s.61, have been fulfilled by the Ministry of Forests.

[311 Omineca asks that I read into s.61 a requirement of a formal order of cancellation in addition to all the prescribed steps and the notice of cancellation required by the Court of Appeal.

I cannot agree.

As I read the scheme set out in

Omineca v . Min. of Forests

Page

s.61, as interpreted by the Court of Appeal's decision, the method of cancelling licences is clear and fair.

Nowhere in

s.61 is to be found a further rkquirement of an order of cancellation.

[321 Omineca contends that the Court of Appeal was not called

upon to address the question of whether s.61 requires a formal order of' cancellation.

That, I believe, is so.

However, it

is helpful to note why the Court of Appeal implied the requirement of a notice of cancellation into s.61.

The reason

was a lack of clarity in s.61 and s.155 (the appeal provision) as to the date of cancellation.

Court clarification was

needed in order to provide a date for the commencement of the appeal process.

Lambert J.A. said, at p.7 of his reasons:

. . . It would be a more readily understandable statutory scheme if the opportunity to be heard under subsection 61(3) ran from the giving of the notice of impending cancellation, and if the right of appeal under s.155 ran from the time when notice was given of the cancellation itself, and not merely of a proposed cancellation. The statutory provisions to which I have referred are not clear and cannot be resolved by resort to any of the related sections of the statute. In those circumstances the proper rule to follow is that the ambiguity should be resolved against the person whose rights are being taken away by administrative action.

Omineca v . Min. of Forests

Page

[33] In my opinion, there i s n o similar justification for reading into s.61 a further requirement of the making of a formal cancellation order.

I decline to do so.

[34] 0mineca refers to s.59, the suspension provision, to support its interpretation of s.61.

Omineca contrasts s-s.(3)

of s.59 which specifically provides that a suspension of rights "takes effect on the expiry of the time allowed in the notice", with s-s.(2) of s.61 which requires that the notice specify'the

day on which the cancellation takes effect".

[351 In my view, the differences in the wording of s.59 and s.61 are of no assistance to Omineca, particularly in view of the Court of Appeal's decision as to when cancellation occurs. [36] The Crown argues that the effective date of the cancellation was November 30, 1986, the date stated in the letters of August 18, 1987 and September 22, 1987 and the Gazette notice of August 13, 1987.

I do not think it is

necessary to decide the effective date of the cancellation because in any event the cancellation process was completed by Omineca being notified of the cancellation.

This occurred by

way of either or both of the letters of August 18, 1987 and September 22, 1987.

Omineca v . Min. of Forests

Page

[ 3 7 ] For the foregoing reasons, I reject Omineca's contentions

on Issue 2. OCTOBER 16, 1998 APPEAL BOARD DECISION

[38] In its decision of October 16, 1998, the Board addressed numerous issues raised by Omineca concerning the merits of the cancellation. The Board decided all of the issues against Omineca.

The decisions were unanimous except for one, which

was by a 2:l majority. [39] On appeal to this Court Omineca raises eight specific

issues. [40] Issue 1:

Did theMinistry have the legal right to cancel

the licences? I n its submission to this Court Omineca advised that it did not contest the ~oard's finding that the Ministry had the right. to cancel the licences.

I will therefore

consider this point as abandoned. [41] Issue 2: Did the Ministry cancel the licences for a reason different from that set out in the letter of July 15, 1986? The Appeal Board found that the Ministry did not cancel the licences for a reason different from that stated in the letter of July 15, 1986.

Omineca v . Min. o f Forests

Page

[ 4 2 ] Omineca contends that this finding is wholly unsupported

by the evidence or, alternative1y;that in making its determination.

the Board erred in law

[ 4 3 ] I have reviewed the' findings of the Board on this issue

and the evidence upon which the findings were made.

In my

view, all the Board's findings of fact are supported by the evidence.

The ~oard's findings are clear and detailed.

show that a.careful weighing process took place.

They

Moreover,

Omineca failed to demonstrate any error of law on Issue 2. [ 4 4 ] Therefore, I decline to interfere with the Board's

decision on this issue. [ 4 5 1 Issue 3: Did the Ministry of Forests tell Omineca that

even if it paid the rent and avoided the cancellation, its licences would still be suspended? of natural justice?

If so, was this a breach

The Board, by a majority, held against

Omineca. [ 4 6 ] The position of Omineca is that the Ministry misled

Omineca and that this constituted a breach of natural justice. [ 4 7 ] The Board, by a majority, found that the Ministry did not

mislead Omineca.

I have reviewed the majority's decision and

the evidence upon which it is based.

The majority's findings

are fully supported by the evidence.

As with Issue 2, the

Omineca v. Min. of F o r e s t s

Page

majority's findings are clear and detailed and reflect a careful weighing process. 1481 The minority member of the Board disagreed.

Her

evaluation of the'evidence was different from that of the majority.

However, the essential question is whether the

majority's decision is supported by the evidence, and I have found that it is. 1491 In view of the foregoing finding, the ground upon which Omineca's allegation of breach of natural justice is based is eliminated. [SO] For the foregoing reasons, I decline to interfere with the majority's decision on Issue 3. 1511 Issue 4:

Was the notice of July 15, 1986 deficient or

defective or contrary to natural justice?

The Board found

against Omineca on this issue. [52] Omineca's position now is that it "does not appeal this finding".

I will therefore treat it as abandoned.

[531 Issue 5:

Did the reference to a review in the letter of

October 14, 1986 create a condition precedent to a review? The Board found against Omineca on this issue.

Omineca v . Min. of F o r e s t s

Page

[54] At the hearing of the appeal to this Court, Omineca expressly confined its position on this issue to its submission on Issue 8.

I will deal with Issue 8 after I have

addressed Issues 6 and 7. [55] Issue 6:

Did the Ministry of Forest treat Omineca in a

"systematic and equitable manner" as required by s.4(e) of the Act?

The Appeal Board held against Omineca on this issue.

[56] Omineca's position in this Court is that it "does not appea1.thi.s finding."

I find, therefore, that Omineca has

abandoned this point. [57] Issue 7:

Were the licences cancelled in order to

rationalize the Annual A l l o w a b l e Cut?

The Board held against .

Omineca on this issue. [58] Ominecars position in this Court is that this finding is not supported by the evidence or, alternatively, that the Board's conclusion is not supportable at law. 1591 Again, this is a matter on which the Board gave careful and detailed reasons for its findings, and they are fully supported by the evidence. discernible error of law.

Also, the Board committed no

Omineca v . Min. of Forests

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[60] Therefore, I decline to.interfere with the Board's decision on Issue 7.

[61] Issue 8:

Was the November 30, 1986 cancellation deadline

postponed at the meeting of November 17, 1986? If it was postponed, what was the effect of that postponement?

The

Board held thatthe November 30, 1986 deadline was not postponed at the November 17, 1986 meeting. [62] The position of Omineca is that the Board's findings are

not supported by the evidence or, alternatively, that they are contrary'to law. 1631 After reviewing the careful reasons of the Board and the underlying evidence, I find that the Board's findings are fully supported by the evidence.

Further, no error of law has

been demonstrated by Omineca. [64] Accordingly, I decline to interfere with the Board's decisions in respect of both Issues 5 and 8. PROCEDURAL ISSUES

[651-Ominecaalso alleged certain procedural defects which it contended should vitiate the Appeal Board's decisions. Omineca raises two issues.

Omineca v. Kin. of Forests

Page

[ 6 6 1 Issue 1: Omineca complains that the Board received

materials that were not sent to the parties. [ 6 7 ] The materials were a book containing 34 documents and a

precis of earlie; appeal decisions involving Omineca.

The

book of documents came from the Compliance and Enforcement Branch of the Forest Ministry, and the precis was prepared by the Board's Chair. [ 6 8 ] Because of this complaint, Omineca asked the Board to

resign.

The Board declined to do so, stating its reasons in a

decision made on December 19, 1997. [ 6 9 ] Omineca could not point to any possibility of prejudice

arising from what occurred. 1701 I have reviewed the Board's

view, it is correct.

ruling on this issue.

In my

Omineca has not succeeded in

demonstrating exror in the Board's ruling.

For the reasons

stated in the Board's ruling, I find there is no merit to this ground of appeal. [71] Issue 2: Omineca complains that from time to time, when

the Board retired to consider procedural or evidentiary issues, counsel to the Board retired with the Board.

Omineca

contends that this was a breach of the audi a l t e r e m p a r t e m

Omineca v . Min. o f Forests

Page

rule and that the Appeal Board proceedings should therefore be set aside. [ 7 2 ] The Ministry does not take issue with the fact that from

time to time counsel to the Board did meet with the Board when it retired to consider procedural and evidentiary issues. However, the Ministry contends that this procedure did not breach the audi alterem partem rule and there is no evidence to suggest that the Board's counsel raised any arguments with the Board in the absence of the parties or that the Board did anything but make its own decisions.

All three Board members

are lawyers. [73] The appointment of counsel to the Board was held to be permissible by the Court of Appeal in Omineca Enterprises L t d . v . B.C.

( M i n i s t j o f Forests) (1993), 8 5 B.C.L.R. (2d) 85 at

[74] On August 7, 1997, the Board made several rulings on procedural issues in'advance of the main hearing. rulings was on the subject of counsel to the Board.

One of the The Board

said: Parties to this appeal made various submissions on the necessity and the role to be taken by Counsel for the Board. By letter dated March 25, 1997, Counsel for the Appellant took the position that Mr. Voith's role as counsel to this Board is redundant given that the Board members themselves happen to be lawyers, but that if the

Omineca v . Min. of Forests

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Board were to be permitted Counsel, that such counsel should never meet privately Gith the Board, and that every "submission" by counsel to the Board should be before the parties. Counsel for the Respondent submitted that the Court of Appeal has previously determined that the Board is permitted Counsel, but that rules of natural justice dictate that the parties be given an opportunity to respond to advice of Counsel on any point before the Board makes a decision. Counsel for the Respondent provided guidelines for conduct of tribunal counsel (found at Tab 10 of Exhibit 11, stating that if it were necessary to follow guidelines, such guidelines were appropriate. The Board has carefully reviewed and considered all submissions of the parties bearing upon the necessity for Counsel and limits, if any, to be placed upon Counsel's role. The Board is sensitive to the concerns of parties in this issue. On the basis of this review and consideration, the Board has determined that it shall continue to retain Counsel in this appeal and is not persuaded of the necessity to issue specific guidelines. Counsel for the Respondent referred us to the Court of Appeal decision in Omineca Enterprises Ltd. v. Minister of Forests et dl., arising from this appeal and addressing this very issue. In the appeal, the Court adopted the following wording of Mr. Justice Cameron of the Saskatchewan Court of Appeal in Pasiechnyk v . Procane Inc. (at page 17): "[s]o long as the board is still able to perform its duty - to hear the parties out fully, with a mind open to persuasion, to consider their positions carefully, and to decide matters at issue in light of the facts as it fairly finds them and according to the law as it conscientiously takes it to be there can be no complaint ...'I.

The Board is highly conscious of the responsibility of Board members to make all decisions in this appeal, and shall carry out its duties in accordance with the abovecited decision. Following a thorough review of all submissions by Counsel, the Board has not been persuaded of a need to adopt specific guidelines governing the role of counsel to the Board, beyond a careful and conscious

Omineca v. Win. of Forests

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a d h e r e n c e t o t h e words of t h e C o u r t o f Appeal c i t e d above.

[ 7 5 ] During t h e c o u r s e of t h e main h e a r i n g , and a f t e r t h e

Board had r e t i r e d w i t h i t s c o u n s e l on s e v e r a l o c c a s i o n s t o c o n s i d e r r u l i n g s on e v i d e n c e o r p r o c e d u r e , c o u n s e l f o r Omineca r a i s e d an objection.

C o u n s e l ' s o b j e c t i o n and t h e r e s p o n s e of

t h e Board's Chair a r e a s follows: MR. T I C K : Well, I have a n o t h e r comment. I h a v e n ' t had t h e o p p o r t u n i t y , o r Omineca h a s n ' t had t h e a d v a n t a g e o r o p p o r t u n i t y t o r e s p o n d t o any o f M r . V o i t h ' s s u b m i s s i o n s on t h i s i s s u e . .

THE CHAIR:

What a r e you s a y i n g , M r . T i c k ?

MR. TICK: Well, I ' m s a y i n g t h a t M r . V o i t h was w i t h you when you were making t h i s d e t e r m i n a t i o n i n camera, and I assume he made s u b m i s s i o n s r e g a r d i n g t h i s , and we h a v e n ' t had t h e o p p o r t u n i t y o f r e s p o n d i n g t o w h a t e v e r he had t o s a y . And n o t j u s t on t h i s . There have been s e v e r a l i n camera s e s s i o n s o v e r t h e l a s t d a y s o f h e a r i n g s , where a s i m i l a r t h i n g h a s occurred. I d o n ' t want you t o t h i n k t h a t I ' m g e t t i n g o f f t h i s hobby h o r s e , b e c a u s e I ' m n o t . I f t h e r e ' s a n y s u b m i s s i o n s t o b e made by your l a w y e r , a g a i n , I s a y t h a t t h e y have t o b e made i n open forum. THE C H A I R :

M r . A n t l e , d o you have any comment?

MR. ANTLE: I t h i n k my o n l y comment i s . . t h a t ' I ' m ,aware t h a t t h e r e i s law, and 1 . a s s u m e t h a t t h e Board i s . aware t h a t t h e r e i s law t h a t s u g g e s t s t h a t M r . T i c k ' s p o s i t i o n i s c o r r e c t . I f t h e Board i s r e c e i v i n g l e g a l a d v i c e , t h e p a r t i e s s h o u l d have a n o p p o r t u n i t y t o respond t o i t . ...,

Gmineca v . Min. of Forests

THE CHAIR:

Paue

We will reconvene.

The Board has reviewed the decision of the Court of Appeal of British Columbia dated November the 18th, 1993 regarding the role of counsel to the Board. We have also reviewed the decision which this Board made on August.the 8th, 1997, particularly on page 13 and 14, where we discuss the role of counsel to the Board. At that time we said, and I quote from that decision: "The Board is highly conscious of the responsibility of Board members to make all decisions in this appeal and shall carry out its duties in accprdance with the above-cited decision." The above-cited decision is that from the Saskatchewan Court of Appeal in - I'm not sure of the pronunciation - Pasiechnyk v. Procane Inc.: '

"Following a thorough review of all submissions by counsel, the Board has not been persuaded of a need to adoptspecific guidelines governing the role of counsel to the Board beyond a careful and conscious adherence to the words of the Court of Appeal cited above."

And I think that was cited actually from the eailier Omineca Enterprises case. The Board has proceeded on that basis since we issued that decision last August. And we would assure the parties that all advice which we have received from counsel to the Board has been procedural and not substantive. The issue has been raised again today as to the nature of advice being given to the Board by counsel to the Board. The Board is concerned that this is still a matter of concern to the parties. We believe that the decision we reached in August of 1997 was correct on the law, but we're sensitive to the feelings of the parties in this particularly sensitive case. We have decided to hencef,orth allow Mr. Voith, or counsel to the Board, to provide you with any advice that he is giving to the Board and

Omineca v. Win. of Forests

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allow the parties to comment on that before the Board will make its decision. And we will assure you once again that it is always the Board which is making the decision and not counsel to the Board. So that will be the process which we will continue with fromthis point forward. And I would.add that one of the reasons that we have made this decision is that we have five days set aside for the hearing this week. We do not have unlimited time. We want to get this 'hearing heard and the substance .of the evidence heard. So that's one of the reasons that we're particularly interested in getting the evidence in and not getting bogged down in procedural objections.

[ 7 6 ] As noted by the Board in its decision of August 7, 1997,

quoted above, its duty was to hear out the parties fully and decide all matters in light of the facts and in accordance with the law.

I find nothing in the proceedings to suggest

that the Board ever deviated from this approach.

It is

evident from'the Board's rulings that the Board acted with great care and fairness throughout.

There is no suggestion

that the Board's counsel met with the Board on any matters

other than procedural or evidentiary. I n t h e Omineca case, supra, Gibbs J.A. for the majority, said at p.95: Returning to the retirement to consider adjournment, given the heightened sensitivities of Omineca it may have been more prudent not to include Mr. Webster. However, Omineca obtained what it wanted and so cannot claim prejudice arising. And it is understandable that the Board might wish to have the assistance of counsel while discussing the options open to it as well as the

Omineca v. Min. of Forests

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administrative or housekeeping consequences of an adjournment. We do not know what matters were discussed but we do know that the subject matter of the dispute between Omineca and the Minister of Forests had not yet been reached. There are, therefore, no grounds for concluding that the private discussion had adverse impact upon Omineca' s cause.

[77] In consolidated-Bathurst Packaging Ltd. v . International Woodworkers of America, Local 2-69, [1990] 1 S.C:R.

282, a

three member panel of the Ontario Labour Relations Board conducted a hearing and, before rendering its decision, it consulted with other members of the Board who were not on the panel.

Objection was taken to this having been done.

The

Supreme Court of Canada held thatthis did not vitiate the proceedings.

Gonthier J. for the majority said, at p.339:

Since its earlier development, the essence of the audi alteram partem rule has been to give the parties a "fair opportunity of answering the case against [them]": Evans, de smith's Judicial Review of Administrative Actions, supra, at p.158. It is true that on factual matters the . parties must be given a "fair opportunity ... for correcting or contradicting any relevant statement prejudicial to their view": Board of Education v. Rice, [I9111 A.C. 179, at p.182; see also Local Government Board v. Arlidge, [I9151 A.C. 120, at pp. 133 and 141, and Kane v. Board of Governors of the University of British Columbia, supra, at p.1113. However, the rule . respect to legal or policy arguments not raising . with issues of fact is somewhat more lenient because the parties only have the right to state their case adequately and to answer contrary arguments.

Omineca v. Min. of Forests

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[ 7 8 ] In Kuntz v. College of Physicians and Surgeons (British

Columbia) (1996), 2 1 B.C.L.R. (3d) 219 (C.A.), it was held

that there must be an evidentiary foundation to establish a breach of the audi alterem partem rule.

Hollinrake J.A.,

writing for two members of the five judge Court, said at paras. 139 to 141: I do not say the court should presume the College has always carried out its responsibilities to the public in a manner that neither offends the Act nor the rules of natural justice. I say only that the court should not sit in judgment on the College, or for that matter on any other administrative tribunal, presuming some want of propriety, i n t h e absence of any evidentiary foundation to the contrary.

Southin J., said, at para.98: Although Mr. Justice Hollinrake and I may not be in accord on the significance, or lack thereof, of antecedent knowledge, I do not differ from him when he says, in effect, that we should not start with the presumption that the Council of the College may have done that which is contrary to natural justice. In the case of the College and'all other tribunals, I start with the maxim:'omnia praesumuntur rite et solenniter esse acta conec probetur in contrarium" .

[79] In my view, the circumstances set out above do not warrant an inference of any breach or likelihood of any breach of the audi alterem partem rule.

Omineca speculates that

there may have been such a breach.

That, in my view, is not

Omineca v . Min. of Forests

Page

enough to warrant setting aside the hearings before the Appeal Board [80] I decline to set aside the Board's rulings on Issue 2. NEW ISSUE

[el] During the'hearing of the appeal, Omineca raised a new argument.

Omineca contends that the cancellation is invalid

because the Ministry claimed more back rentals than were actually owing. I821 Ominecars argument stems from an assertion that Omineca's obligation to pay rent ceased upon the Ministry suspending Omineca's cutting permits on September 27, 1983.

Thus,

Omineca contends, when, in 1986, the Ministry claimed rentals owing through to 1986, it claimed monies that were not in fact owing. [83] Omineca basis its position upon s.62 of the Forest

Act,

which reads: 62.

Notwithstanding the expiry, surrender, suspension or cancellation of his agreement the holder is liable (a)

to pay the rent, fees, costs and penalties owing to the Crown in respect of the agreement, and

(b) to perform all other obligations under the agreement

Omineca v . Min. of Forests

Page

incurred before its expiry, surrender, suspension or cancellation.

[ 8 4 ] In my opinion, s.62 has no application to cutting

permits.

By its plain wording s.62 applies to agreements,

such as Omineca's TSHL agreements. different.

Cutting permits are quite

A cutting permit is not an agreement; rather it is

authority, granted by the Ministry to a licence holder, to enter designated 1ands.in a Licence area and harvest the timber thereon.

The nature of cutting permits is set out in

paragraph 2.21 of each of Omineca's TSHLs as follows: The cutting permits shall constitute the Licensee's authority to enter on the lands to which the cutting permit applies and the right to harvest the timber therefrom according to the terms and conditions of the permit. Any cutting of timber not authorized by a permit will be deemed to be in trespass.

[ 8 5 ] It will be remembered that only Omineca's

were suspended.

cutting permits

Its TSHL agreements were never suspended.

follows, in my view, that Omineca cannot claim any benefit from s.62. [ 8 6 ] In addition, s.62 says that an agreement holder is liable

for rent incurred before the cancellation of the agreement. In my opinion, the cancellation aspect of s.62 applies to the cancellation of Omineca's TSHLs.

Thus, Omineca is liable for

Omineca v. Min. of Forests

Page

rent accrued up to the time o f cancellation - which took place in 1986. [87] Accordingly, I do not accept Omineca's

submissions

regarding s. 62 of the Act. CONCLUSION

[88] Omineca's

appeals are dismissed.

Mr. Justice

Shaw

$17

. J.A., Saunders, J.A. & Low. J.A Ord r Southln November 27,2000

No. CA026909 Vancouver Regism

Appellant (Applicant) and The Minister of Forests, Respondent (Respondent) CORAM:

The Honourable Madam Justice Southin The Honourable Madam Justice Saunders The Honourable Mr. Justice Low

Vancouver, British Columbia, Thursday the 2"dday of November, 2000.

THE APPLICATION of the Applicant Omineca Enterprises Ltd. to vary the order of the Honourable Mr. Justice Hall pronounced June 15,2000 in this appeal coming on for hearing on Monday, the 16th day of October, 2000, AND UPON HEARING Charles F. Willms, counsel for the Applicant, and Stephen Antle, counsel for the respondent The Minister of Forests; AND UPON READING the Applicant's motion book, filed July 10, 2000, and the Respondent's reply book, filcd July 17,2000,

AND UPON judgment being

reserved to this date:

THIS COURT ORDERS.that the order of the Honourable Mr. Justice Hall be discharged and the Applicant be granted leave to appeal to the Court of Appeal fiom the order pronounced by the Honourable Mr. justice Shaw of the Supreme Court of British

i 118

Order of Southin J.A., Saunders. J.A. Br Low. J.A. November 27,2000

Columbia on February 24,2000 in Supreme Court of British Colurnbi< Vancouver R e g i q , actions no. A981665 and A982927, only on the question raised in paragraphs 81 through 87 of Justice Shaw's reasons for judgment

DEPUTY DISTRICT REGISTRAR

Counsel for the Applicant

%id

CO&

/Ld

or the Respondent

~~ REGlSTRI NOV 2 7 2000

VANCOUVER

I s

a44-...- -..id.

VOL.---

FOL.-&~~.. & B ..Y.

Citation: Omineca Enterprises Ltd. V . British Columbia (Minister- of Porests I 2000 BCCA 591

Date: 20061102 Docket: CA026909 Registry: Vancouver

COURT OF APPEAL FOR BRITISH COLUMBIA

OEIINECA ENTERPRISES LTD.

PLAINTIFF (APPELLANT) AND:

HINISTER OF FORESTS

DEFENDANT (RESPONDENT)

BeÂŁore:

The Honourable Madam Justice Southin The Honourable Madam Justice Saunders The Honourable Mr. Justice Low

Charles F. Willms

Counsel for the Appellant Counsel for the Respondent

Stephen Antle Place and Date of Hearing:

Vancouver, British Columbia 16th October, 2000

Place and Date of Judgment:

Vancouver, British Columbia 2nd November, 2000

Written Reasons by: The Honourable Madam Justice Southin Concurred i n by: The Honourable Madam Justice Saunders The Honourable Mr. Justice Low

VANCOUVER NOV

- 2 2000

.COUZT !IF APPEAL REGiSTRY

120

&eca Enternrises Ltd. v. ~ritishColumbia (Minister of Porests)

Page

Reasons for Judgment of the Honourable Madam Justice Southin: [I] This is an application to review an order of a chambers judge of 15th June, 2000, refusing leave to appeal from a judgment of Shaw J. dismissing two appeals to him from decisions of an appeal board established under the Forest Act,

R.S.B.C. 1996, c. 157, and preceding Forest Acts.

[z]

In the words of the chambers judge: [21 As Shaw J. noted in his reasons, Omineca Enterprises Ltd. ("Omineca") sought before the Appeal Board and before him to argue that the Ministry of Forests in purporting to cancel two timber sale harvesting licences ("THSLsn)failed to act in accordance with law. Essentially, it was argued that the process was flawed and failed to conform with the statutory requirements. It was also alleged that the Ministry had not observed the principles of natural justice in its dealing with Omineca. As Shaw J. noted, there was a dissenting opinion by one member of the three person Appeal Board that heard the matters.

[3] As s. 150 of the Forest Act read up to 16th April, 1999: 150

(1) The appellant or the minister, by application to the Supreme Court made within 21 days after the decision of an appeal board is served on the appellant or the minkter, may appeal the decision of the appeal board on a question of law or jurisdiction. (2)

A decision of the Supreme Court may be appealed to the Court of Appeal with leave of a justice of the Court of Appeal.

Chnineca E n t e r p r i s e s ~ t d v. . B r i t i s h Columbia (ELinister o f F o r e s t s )

Page

So far as we were told, there have been no changes in this section at any time material to these proceedings which are quite ancient. [4] As appeals to the Supreme Court are limited to questions of law or jurisdiction, it follows that appeals to this Court are similarly limited. 151

Applications for leave are generally considered

applications to the discretion of the judge.

Thus, a division

of the court exercising the power conferred by s. 9(6) of the C o u r t o f Appeal A c t , R.S.B.C. 1996, c . 77, to "discharge or

vary any order made by a justice" is subject to the usual constraints on interference with discretionary orders. [61

If, however, a justice proceeds upon an erroneous

principle, those constraints do not apply. [71

From a reading of the reasons for judgment of the learned

chambers judge, it appears he proceeded on the footing that the applicable authority (the only case cited to him on leave applications) was C h a v e z v . S u n d a n c e C r u i s e s C o r p . (19931, 77 B.C.L.R. (2d) 328 (C.A.). I81

I derive that from the concluding paragraphs of the

learned judge's reasons:

1 22

omineca Enterprises Ltd. v. ~ritishColumbia (Minister of Forests)

Page

191 As noted in the case of Chavez v. Sundance Cruises Corp. (1993), 77 B.C.L.R. (2d) 328, the four factors to be considered in dealing with a leave application are set out in the case of Power Consolidated (Chinal Pulp Inc. v. British Columbia Resources -vestment Corp. (June 16, 1988), Doc. Vancouver CA009236 (C.A. : [I] . whether the point on appeal is of

significance to the practice; I21 whether the point raised is of significance to the action itself; 131 whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous; and [4] whether the appeal will unduly hinder the progress of the action. [lo] Having considered the history of this matter and the reasons of the Forest Appeal Board and the reasons of Shaw J., I do not consider that this appeal has any realistic possibility of success. While it is undoubtedly of importance to Omineca, I am not of the view that it has any particular importance relating to practices under the Forest Act. I believe the matter was carefully considered bj; the'majority of the Forest Appeal Board and by Shaw 3. on appeal from that Board and I am not of the view it has been demonstrated that there is any basis that could support a successful appeal to this court. Having reached that conclusion, it follows that this application for leave to appeal must be dismissed. In these circumstances, no issue arises concerning the application for directions.

191

But the applicable authority when the issue is whether

leave should be given'for a statutory appeal is not Chavez v. Sundance Cruises Corp. but Queens Plate Development Ltd. v. Vancouver Assessor, Area 09 (19871, 16 B.C.L.R. (2d) 104, Taggart J.A. in Chambers

j.23

Omineca E n t e r p r i s e s L t d . v. B r i t i s h C o l u m b i a ( M i n i s t e r of P o r e s t s )

Page

[lo1 As neither counsel before us, as I understood them, was

even aware of the Q u e e n s P l a t e case, this division did not have the benefit of an analysis of the issues in this case against the principles there enumerated. [Ill In Q u e e n s P l a t e , Taggart J . A . said, in part, at 109:

... it seems a justice may have regard for one or more of the matters listed below: (a) whether the proposed appeal raises a question of general importance as to the extent of jurisdiction of the tribunal appealed from... ; (b) whether the appeal is limited to questions of law involving: (i) the application of statutory provisions . ;

(ii) a statutory interpretation that was particularly important to the litigant ... ; or (iii) interpretation of standard wording which appears in many statutes, for example the in force provisions of retroactive legislation; (c) whether there was a marked difference of opinion in the decisions below and sufficient merit in the issue put forward ... ; (d) whether there is some prospect of the appeal succeeding on its merits ...; although there is no need for a justice before whom leave is argued to be convinced of the merits of the appeal, as long as there are substantial questions to be argued; (e) whether there is any clear benefit to be derived from the appeal ...; and ( ÂŁ 1 whether the issue on appeal has been considered by a number of appellate bodies....

1 24

Omineca Enterprises Ltd. v. ~ritishColumbia

(Xinister of Forests)

Page

Leave to appeal has consistently been denied where the court is asked to retry a case a third or fourth time on issues involving judgment exercised by tribunals with specialized expertise where no error of principle has been shown, ... [lZI Before I come to the facts of the case before us, I

eliminate from further consideration as having no possible application, (a), (b)(iii), (c) and (ÂŁ1. [13]

As I understand the learned chambers judge, his

conclusion was really founded on the proposition that there was "no realistic possibility of successn which is analogous to the test in Queens Plate Development v. Assessor, "whether there is some prospect of the appeal succeeding on its meritsn. There is, however, a subtle difference between the test "realistic possibility of successn and "substantial questions to be arguedn;so this case resolves itself, in my opinion, to this question: Is there here a "substantialn question of law to be argued? [I41 Counsel for the applicant, who was not counsel before the

chambers judge or below, essentially rested before us on the issue of "lawn which he says is inherent in this passage of the reasons for judgment of Shaw J.: [81] During the hearing of the appeal, Omineca raised a new argument. Omineca contends that the

125

d n e c a Enterprises ~ t d v . . B r i t i s h Colwnbia (Minister o f Porests)

page

cancellation is invalid because the Ministry claimed more back rentals than were actually owing. [82] Omineca's argument stems from an assertion that Omineca's obligation to pay rent ceased upon the Ministry suspending Omineca's cutting permits on September 27, 1983. Thus, Omineca contends, when, in 1986, the Ministry claimed rentals owing through to 1986,'it claimed monies that were not in fact owing. [83] Omineca basis [sic] its position upon s. 62 of the Forest A c t , which reads: 62. Notwithstanding the expiry, surrender, suspension or cancellation of his agreement the holder is liable (a) to pay the rent, fees, costs and penalties owing to the Crown in respect of the agreement, and (b) to perform all other obligations under the agreement incurred before its expiry, surrender, suspension or cancellation. ..I841 In

my opinion, 6. 62 has no application to

cutting permits. By its plain wording s. 62 applies to agreements, such as Omineca's TSHL agreements. Cutting permits are quite different. A cutting permit is not an agreement; rather it is authority, granted by the Ministry to a licence holder, to enter designated lands in a licence area and harvest the timber thereon. The nature of cutting permits is set out in paragraph 2.21 of each of Omineca's TSHLs as follows: The cutting permits shall constitute the Licensee's authority to enter on the lands to which the cutting permit applies and the right ..to--harvest&he..timber therefzom-according to the terms and conditions of the permit. Any cutting of timber not authorized by a permit will be deemed to be in trespass. I851 It will be remembered that only Omineca's cutting permits were suspended. Its TSRL agreements

1 6 U

Qmineca E n t e r p r i s e s L t d . v . ~ r i t i s hColumbia f h i s t e r of F o r e s t s )

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were never suspended. It follows, in my view, that Omineca cannot claim any benefit from s. 62. [861 In addition, s. 62 says that an agreement holder is liable for rent incurred before the cancellation of the agreement. In my opinion, the cancellation,aspect of s. 62 applies to the cancellation of omineca's TSHLs. Thus, Omineca is liable for rent accrued up to the time of cancellation - which took place in 1986. 1871 Accordingly, I do not accept Omineca's submissions regarding s. 62 of the Act.

1151 During the hearing of this application, I inquired of

counsel whether they would consent to this application being treated as the appeal. I did so because the only issue of any substance is essentially one of law founded on events which are not in dispute. It appeared to me, and I do not understand my colleagues to hold a different view, that as what the applicant wanted was to put before three judges of the Court of Appeal the point in issue, and as there were three judges now present who would address the merits, they might as well do so. I had in mind the somewhat analogous practice followed at one time in England of turning by consent an application for an interlocutory injunction when the issue was primarily one of law into the trial of the action. Counsel for the Minister declined the invitation. Had he accepted it, we should have to go carefully through his

127

Omineca Entearises Ltd. v . ~ritishColumbia (Minister of &rests)

page

submission to ascertain whether he is right that in the end the applicant's proposition is wholly without merit. I161 At the end of counsel's submission, I was not persuaded

that that was so. To my mind, if a proposition is not wholly devoid of merit, it raises a substantial question to be argued.

Coupling that proposition with the undoubted fact

that if the applicant succeeds it will derive a "clear benefitn, I would discharge the order refusing leave and grant leave on the question raised in the passage of Shaw J.'s reasons which I have quoted. To make it quite clear, I do not consider there is any merit at all in the various other propositions put forward by the applicant.

I AGREE t h

I AGREE t

Clourr ofAppeal Anneal File Kle Cow

COURTOF APPEAL FOR BRll7SB COLUMJHA

Omineca Enterprises Ltd.,

The M i n h x of Forests, Respondent

&spondart)

BIJFORE: 'lhe Honourable Madam Justice Ryan The Honourable Mr. Justice Braidwood The Honourable hfr. Justice Low Vanoouvo~,British Columbia, June 14,2002

THE APPEAL fiom the judgment of the HonourableMr. Justice Shaw of dlc S u p ~ Coun c of

British Columbia at Vanwnver, British Columbia datedFebruary24,2000 coming on for

hearing on May31,2002,AM)ON ,@WUNG C.F. Wi1lms and S.H. Tick,counsel for rhe appellant, and P.G.Foy, Q.C., and S. AntIe, counsel for the respondent,AND ON READING the materials filed herein, AND ON NDGMENT BEING RESERVED TO THE DATE, THIS COURT ORDERS rhar the appeal be and is hereby dismissed

AND THIS COURT FURTHER ORDERS that the respondent do recover the costs of ?haappeal h m the appeilaiitforth%& &er assesmz.&

Counscl for the Appellant

7f*r kA,

'5.6 AUG 1 6 2002

D m n ~ l l 9P)llB:OI r

F O L =

2;::

BY.-F-

Citation: Omineca Enterprises Ltd. v. British Columbia (Minister of Forests) 2002 BCCA 375

Date: 20020614 Docket:

CA026909

COURT OF APPEAL FOR BRITISH COLUMBIA

OMHECA ENTERPRISES LTD.

APPELLANT (APPELLANT) AND:

THE XINISTER OF FOBESTS

RESPONDENT (RESPONDENT) Before:

The Honourable Madam Justice Ryan The ono our able Mr. Justice Braidwood The Honourable Mr. Justice Low

C.F. Willms and S.H. Tick

Counsel for the Appellant

P.G. Foy, Q.C. and S. Antle

Counsel for the Respondent

Place and Date of Hearing:

Vancouver, British Columbia May 31, 2002

Place and Date of Judgment:

Vancouver, British Columbia June 14, 2002

Written Reasons by: The Honourable Madam Justice Ryan Concurred in by:

The Honourable Mr. Justice Braidwood The Honourable Mr. Justice Low

--..

VANC0';IVER t i 1- 3 2002 JX!K CF /\??L!iL R-"I"-nV

I \ L L . ~11: I

131. -

Gmineca Enterprises Ltd. v. ~ritishColumbia (Minister of Forests)

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Reasons for Judgment of the Honourable Madam Justice Ryan: Introduction On November 2, 2000, a division of this Court granted the

[I]

appellant, Omineca Enterprises Ltd., leave to appeal the February 24, 2000 decision of a Supreme Court justice dismissing the appellant's appeal from the October 16, 1998 decision of a Forest Act Appeal Board. Leave to appeal to this Court was granted under s. 150(2) of the Forest Act, R.S.B.C. 1996, c. 157.

The appeal is limited to a question of

law. [21

This appeal arises out of the cancellation of timber sale

harvesting licences (nTSHLs")which had been granted to

Omineca Enterprises Ltd. (nominecan)under the provisions of the British Columbia Department of Forests Act as it stood in 1977.

That Act became the Forest Act after the 1979

revisions. All further references to the "Forest Actn in these reasons for judgment are to the Forest Act, R.S.B.C.

[3] The appellant's position is that the Minister of Forests

made an improper demand for rent allegedly owing under the TSHLs, and that the cancellation of the TSHLs was therefore

unlawful.

122 . .

amineca Enterprises Ltd. v. ~ r i t i s hColumbia (Minister of Forests)

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Background

[41

The litigation background is protracted.

I51

In July 1977 Omineca obtained two TSHLs, A08692 and

AO8693.

Each licence had a term of 12 years. They were

identical in content except that the first applied to the Liard, and the second to the Sikanni, Public Sustained Yield Units. [61

Section 25 of the Forest Act required a timber licence to

contain the following: 25.

A timber licence shall (a) describe an area of Crown land over which it is to apply; (b) be for a term determined under this Division; (c) grant to its holder the exclusive right during its term to harvest all merchantable timber in the area of Crown land described in it; (d) where the timber licence is in a tree farm licence area, require its holder to harvest timber in accordance with the tree farm licence and the management and working plan approved under it; (e) where a timber licence is not in a tree farm licence area, require its holder to submit, for the approval of the regianal manager-as often as the licence requires, an operating plan prepared by a professional forester as defined in the Foresters Act; (ÂŁ1 provide for cutting permits to be issued by the Crown to its holder authorizing timber to be harvested

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chmineca E n t e r p r i s e s L t d . v. ~ r i t i s hColambia f h i s t e r of Forests)

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from specific areas of land described in the timber licence; (g) require its holder to pay to the Crown, in addition to other amounts payable under this Act and the regulation-.., stumpage or royalty under Part 7 in accordance with the election made under section 23; (h) require its holder to apply to the land described in the timber licence reforestation or other treatment for the re-establishment of forest on the land determined by the regional manager; and (i) include other terms and conditions, consistent with this Act and the regulations, determined by the regional manager. I71

Section 89 of the A c t provided for an annual rent.

read: 89. (1) Notwithstanding another Act or an . ..agreement,the holder of (a) an old temporary tenure, tree farm licence, timber sale licence or timber sale harvesting licence entered into under the former Act, that is in force on January 1, 1979; and (b) a forest licence, timber sale licence, timber licence, a tree farm licence or woodlot licence entered into under this Act shall pay to the Crown on or before a date specified by the minister, annual rent at the rates in Schedule B. (2) Where an old temporary tenure or timber licence expires under Part 3, Division ( 4 1 , and is replaced by a timber licence, annual rent that is paid and attributable to the unexpired portion of its term shall be credited to the annual rent

Omineca Enterprises Ltd. v. British Columbia (Xinister of Forests)

page

payable for the first year of the term of the timber licence. (3) Notwithstanding subsection (11, where the annual rent payable in respect of a timber sale licence is less than $25, the regional manager shall exempt the holder from the payment of the annual rent.

[El

In accordance with s. 25 (ÂŁ1 of the Forest Act, the

licences provided for cutting permits. The licences required an approved "development plan" before a cutting permit would be issued. 2.2

Clause 2.2 of the licences read, in part:

Cutting Permits

2.21 Application for and Issuance of Cutting Permits

Unless otherwise authorized by the Licensor the ..application for the initial cutting permit or permits shall be made within twelve (12) months following the date of issue of this licence and at least three (3) months prior to the proposed date of commencement of operations; subsequent applications for cutting permits shall be made not less than six (6) months prior to the proposed commencement of operations on the areas applied for. The term of a cutting permit may be for any period of years up to a maximum of three (3) years commensurate with the estimated volume of timber in the area covered by the permit and the rate of cutting referred to hereafter in clause 2.32, provided that cutting permits issued to authorize the harvesting of timber from road rights-of-way within the area of an approved development plan may be issued to expire with the term of the licence.

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2.22 Survey of Boundaries

2.23 Form of the Cutting Permit -

The cutting permit shall be in the form of and subject to such terms and conditions as the Licensor approves consistent with the provisions and intent of the licence, the "Department of Forests Actn and any amendments thereto and regulations thereunder and the permit shall set forth therein the specifications of the timber that must be harvested. [91

Clause 7 of the licences dealt with payment of fees and

other charges. It read in part: 7.

FINANCIAL

The Licensee shall pay to the Licensor the following sums at the times specified herein. 7.1

Rental

An annual rental at the rates as provided in the "Department of Forests Act" and Regulations when the same becomes due and payable. 1101

Clauses 7.2 through 7.73 required payment for scaling,

weighing, measuring, counting and stumpage as well as assessments for such things as excess volume, damage and waste.

I l l 1 Clause 8.14 dealt with cancellation of the licence:

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0m.ineca Enterprises ~ t d .v. ~ritishColambia

(Hinister of &rests) .

Page

8.14 Cancellation 8.141

Breach of conditions

~ h Minister s of Forests may cancel this licence on giving sixty (60) days-notice in writing to the Licensee for the breach of any covenants, provisoes, terms ox conditions of the licence, or for failure to pay any charges, including stumpage, royalty, rental or tax. 1121 Omineca obtained cutting permits and logged the TSKLs in 1977 through to 1981.

No timber was harvested in 1982, 1983

1131 By letter dated September 27, 1983 Regional Manager M.J.

Wilkins wrote to Omineca. He said: Attention:

Mr. J. Peterson

..DearSir: Subject: Outstanding Annual Fees In reviewing again your outstanding account with the Ministry, I note that the annual fees for 1980 1983 relative to the T.S.H.L.'s A08692 and A08693 are still outstanding. You are thereby in violation of Section 89 of the Forest Act and condition 7.1 of the above mentioned licences. Your total indebtedness in this regard is $113,280.00 exclusive of interest. This cannot continue any longer. I must therefore regretfully advise that I have instructed Mr. Joyce, District Manager, Fort Nelson, that no further cutting permits are to be issued to your company. In addition all existing cutting permits pursuant to T.S.H.L.'s A08692 and A08693 are suspended effective October 14, 1983, subject to Section 59 of the Forest Act.

Omineca Enterprises Ltd. v. British Columbia (Hinister of Porests)

page

Please note also that T.S.H.L.'s A08692 and A08693 may be subject to cancellation pursuant to Section 61 of the Forest Act and condition 8.141 of the licence documents. [I41 This letter refers to ss. 59, 61 and 89 of the Forest Act. Section 89 has been set out in para. 7 of these reasons.

For convenience I will reproduce ss. 59 and 61 here: (1) Subject to section 60 and in addition to any penalty under this Act or the regulations, the regional manager may suspend, in whole or in part, rights in an agreement where its holder (a) made a material misrepresentation, omission or misstatement of fact in his application for the agreement or in information furnished with it; (b) fails to perform an obligation to be performed by him under the agreement; or (c) fails to comply with this Act or the regulations. 59.

Before the rights are suspended, the regional manager shall serve a notice on the holder (a) specifying the alleged failure of performance or compliance; and (b) allowing the holder at least 14 days after the date of service to remedy the failure of performance or compliance. (2)

Subject to section 60 a suspension of rights takes effect on the expiry of the time allowed in the notice and continues until the rights are reinstated by the regional manager or cancelled under this Act. (3)

(4) On request of the holder, the regional manager shall allow him an opportunity to be heard and shall rescind the notice where he considers that the holder is not subject to subsection (1).

138

O m h e c a Enterprises Ltd. v. British Columbia (Minister of Forests)

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On the application of the holder of the agreement the regional manager shall reinstate rights suspended under this section or section 60 where the holder is performing his obligations and is complying with this Act- and the regulations. (5)

61.

(I) Where rights are under suspension (a) the chief forester may cancel a tree farm licence, pulpwood harvesting area agreement or pulpwood agreement; and (b) the regional manager may cancel an agreement other than an agreement referred to in paragraph (a).

( 2 ) At least 3 months before canceling an agreement the chief forester or the regional manager, as the case may be, shall serve on its holder a written notice of cancellation specifying the grounds of cancellation and the day on which cancellation takes effect.

(3) Where, within 30 days after a notice of cancellation has been served the holder so requests, ..the chief forester or the regional manager, as the case may be, shall give him an opportunity to be heard. (4) A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed. Notice of a cancellation shall be published in the Gazette. (5)

I151 Negotiations followed the letter from the Regional

Manager, but nothing was -resolved between Omineca and the Ministry of Forests. On April 25, 1984 the Regional Manager wrote to Omineca:

1 39

amineca Enterprises Ltd. v. British Columbia (Hinister of Forests) Attention:

page

Mr. John I. Peterson

Dear Sir: On September 27, 1983, I wrote to you expressing concern about your indebtedness to the Crown specifically the outstanding annual fees for the years 1980 -,I983 inclusive. In addition, I advised that no new cutting permits would be issued and all existing cutting permits pursuant to T.S.H.L.'s A08692 and A08693 were suspended effective October 14, 1983. The matter of your indebtedness to the Crown seems no closer to resolution. As a result, I must regretfully advise that pursuant to Section 61 of the Forest Act, I intend to cancel effective July 31, 1984 T.S.H.L.'s A08692 and A08693 for violation of Section 89 of the Forest Act and Condition 7.1 of the above mentioned licences. Section 61(3) provides that you may request a meeting within 30 days of the date of this letter to review and discuss with me the cancellation notice. -.Ifyou wish to so proceed, please contact me so that we can arrange a mutually acceptable date before May 25, 1984.

[I61 Discussion between Omineca and the Ministry followed this

letter. In those discussions Omineca's total indebtedness to the Crown was mentioned from time to time. By this time Ominecaqsentire debt amounted to over $700,000.

$141,600 of

it represented annual rent outstanding; the remainder consisted of stumpage arrears and interest. 1171 Omineca tendered a cheque to the Ministry in the amount

of $151,600. This represented the full amount payable for

1 40

Chmineca E n t e r p r i s e s L t d . v. B r i t i s h Columbia

(Minister o f F o r e s t s )

Page

rent and $10,000 towards the payment of outstanding stumpage and interest. The Deputy Minister of Forests refused to accept this amount. He sent a -message to the company in which he stated that the TSHLs would not be reinstated unless the company remitted the total outstanding amount by October 5, 1984. [la] In a letter dated October 17, 1984 the Regional Manager formally cancelled the TSHLs, effective immediately.

The

reason given was that the Ministry had not received a satisfactory offer to discharge Ominecatsindebtedness. Thus, although Omineca had been notified that its cutting permits were suspended for failure to pay rent, and that its TSHLs would be cancelled for failure to pay rent, the Ministry cancelled the TSHLs for Omineca's failure to nextinguishnits total indebtedness. 1191 Omineca appealed to the Chief Forester under s. 155(3) of the F o r e s t A c t .

It lost its first appeal but was successful

at the next level of appeal, an appeal board appointed under the F o r e s t A c t .

The appeal made its way to the Supreme Court

of British Columbia and tben to this Court where on June 20, 1986 Macfarlane J.A. (in Chambers) refused leave to appeal. In the end, the cancellation of the licences was set aside on

1 41

Qmineca Enterprises Ltd. v. British Columbia (Minister of Forests)

Page

the basis that the licences had been cancelled for reasons which differed from those set out in the notice. 1201 Following the decision of-~acfarlane J.A., the Ministry wrote to 0mineca.onJuly 15, 1986. The letter from the Regional Manager read: Attention:

Mr. John I. Peterson

Dear Sir: In view of the decision of the Court of Appeal in refusing leave to appeal, I must regretfully advise that pursuant to section 61 of the Forest Act, Timber Sale Harvesting Licences A08692 and A08693 are cancelled effective October 31, 1986 for nonpayment of rentals under section 89 of the Forest Act. Section 61(3) of the Forest Act gives you the opportunity to be heard on this matter, providing ' -.yourequest such a.hearing within 30 days from the date this notice is served. I211 Negotiations continued between Omineca and the Ministry with the date for cancellation being extended from time to time. On August 18, 1987 Mr. Baxter, who was by then the Regional Manager, wrote to Omineca stating: Attention:

Mr. John I. Peterson

Dear Sir: This is to confirm that pursuant to Section 61 of the Forest Act, Timber Sale Harvesting Licence A08692 and A08693 are cancelled effective November 30, 1986 for nonpayment of rentals under Section 89 of the Forest Act.

1 42

Gmineca Enterprises Ltd. v. British Columbia (Minister of Forests)

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1221 By this time the Ministry calculated that the amount of

rent owing had increased to $198,240. 1231 This last cancellation wag appealed to the Chief

Forester, who dismissed the appeal on the basis that the notice of appeal had not been served in time. The appeal made its way once again through an appeal board, the Supreme Court, and finally this Court.

On October 23, 1990 this Court held

that Ominecalsappeal to the Chief Forester had been served in time and referred the matter back to the Chief Forester for decision on the merits. [24] On September 9, 1991 the Chief Forester dismissed the

appeal finding that the licences had been rightfully cancelled by the Regional Manager on August 18, 1997 pursuant to s. 61 of the Forest Act for non-payment of rentals pursuant to s. 89 of the Forest Act.

Omineca appealed to the appeal board.

Before the appeal board Omineca objected to the retention of counsel by the board and attempted to obtain judicial review before a Supreme Court justice under the Judicial Review Procedure Act, R.S.B.C. 1979, c. 209.

Omineca also appealed

under s. 156(8) of the Forest Act. Those appeals were dismissed on June 12, 1992.

A further appeal to this Court

was taken and dismissed on November 18, 1993.

Leave to appeal

to the Supreme Court of Canada was dismissed on June 16, 1994.

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Ontineca Enterprises Ltd. v. British Columbia (xinister of Forests)

Page

1251 Omineca brought a second petition under the Judicial

Review Procedure Act, alleging that the TSHLs had never been

cancelled, that the Chief Forester was without jurisdiction to

hear an appeal or make an order under the Forest Act, and that the appeal board was without jurisdiction to hear the appeal. The petition was dismissed in the Supreme Court on September 18, 1995.

[26] Eventually an appeal board heard the appeal from the

September 10, 1991 decision of the Chief Forester. The board first determined whether the licences "were actually cancelledn, then reconvened to determine whether they were properly cancelled. On October 16, 1998 the board dismissed the appeal. This decision was appealed to the Supreme Court in February 2000. I271 In the February 2000 appeal to the Supreme Court Omineca

took the position that there has never been a formal order cancelling the TSHLs. It contended that s. 61 of the Act required that such an order be made and without it, the licences have never been cancelled. This issue was resolved against them. 1281 Omineca raised a new ground of appeal at the Supreme

Court hearing.

It was stated to be this: That the

cancellation is invalid because the Ministry claimed more back

14 4

&eca Enterprises Ltd. v. British Columbia (Minister of Forests)

Page

rentals than were actually owing. The basis for this claim lay in the proposition put forth by Omineca that its obligation to pay rent ceased upon the Ministry suspending Omineca's cutting permits on September 2 7 , 1983.

Omineca

claimed that not only the cutting permits but the TSHLs themselves were suspended.

Thus, when in 1986 the Ministry

claimed rentals owing through to 1986, it claimed monies that were not in fact owing. The Supreme Court justice found that only the cutting permits, not the TSHLs, were suspended on September 2 7 , 1983. 24,

He dismissed Omineca's appeal on February

2000.

Ground of Appeal in this Court

1291..The appellant was granted leave on the following ground: That the learned Supreme Court justice erred in law in concluding that the TSHL agreements were not suspended and that Omineca was obliged to make rent payments for the period during which the TSHLS were suspended. Analysis 1301

The appellant's argument goes back to the letter of

September 27, 1983, suspending the cutting permits under the TSHL.

I will reproduce the letter again for convenience:

145

omineca Enterprises &td. v. British Columbia (Kinister of Forests)

Attention:

Page

Mr. J. Peterson

Dear Sir: Subject: Outstandinq Annual Fees In reviewing again your outstanding account with the Ministry, 1,notethat the annual fees for 1980 1983 relative to the T.S.H.L.'s A08692 and A08693 are stiil outstanding. You are thereby in violation of Section 89 of the Forest Act and condition 7.1 of the above mentioned licences. Your total indebtedness in this regard is $113,280.00 exclusive of interest. This cannot continue any longer. I must therefore regretfully advise that I have instructed Mr. Joyce, District Manager, Fort Nelson, that no further cutting permits are to be issued to your company. In addition all existing cutting permits pursuant to T.S.H.L.'s A08692 and A08693 are suspended effective October 14, 1983, subject to Section 59 of the Forest Act. Please note also that T.S.H.L.'s A08692 and A08693 may be subject to cancellation pursuant to Section "61 of the Forest Act and condition 8.141 of the licence documents. [Emphasis added.I Counsel for Omineca submitted that the effect of this

letter was not only to suspend the cutting permits granted under the licence, but to suspend the licence itself. Counsel says that if the licence was suspended then by operation of s. 62

of the Forest Act, then rent ceased to accumulate on

suspension. [321

Section 62 provides:

1 46

amineca Enterprises Ltd. v. British Columbia

(Waister of Forests)

Page

62. Notwithstanding the expiry, surrender, suspension or cancellation of his agreement the holder is liable (a) to pay the rent, fees, costs and penalties owing to the Crown - in respect of the agreement; and (b) to perform all other obligations under the agreement incurred before its expiry, surrender, suspension or cancellation.

1331 Counsel for Omineca contended that by requiring payment

for rent incurred before the suspension, s. 62 impliedly does not require payment of rent after a suspension. 1341 The difficulty faced by counsel is that there is no mention of suspension ofthe TSHLs in any of the correspondence between the Ministry and Omineca.

On the face

of the notices to Omineca the cuttinq permits, not the TSHLs, were..suspended. When Omineca's accounts were not brought up to date the TSHLs were cancelled. (The letters from the Ministry to Omineca dated October 17, 1984; July 15, 1986; and August 18, 1997. ) 1351 Counsel submitted that the TSHLs were suspended by the

letter of September 27, 1983 even though such language is absent from the letter.

Counsel directed the court to

numerous passages in the reasons for judgment of every level of decision made in these lengthy proceedings. In many places tribunals and courts have referred to the fact that the

147

m i n e c a E n t e r p r i s e s L t d . v. B r i t i s h C o l u m b i a (Xinister o f F o r e s t s !

nlicences were suspended."

Page

Counsel for Omineca says that this

issue is 'res j u d i c a t a n and that we are bound by the findings of fact in the lower courts. (361

I would not.accedeto this submission. The question of

licence suspension has never been adjudicated in any tribunal or court. The issue was raised for the first time in the February 2000 proceedings in Supreme Court.

A reading of the

reasons for judgment of the various tribunals and courts below demonstrates that these bodies conflated the idea of suspension of cutting permits with suspension of the TSHLs Given the arguments before them there was no reason to differentiate between the two. [371 -,Next,counsel submitted that the letter of September 27, 1983 if not directly, in effect, suspended the TSHLs.

Counsel

postulated that if existing cutting permits are suspended, and the right to obtain future permits is suspended, the licence itself must be said to be suspended because the purpose for. which the licence exists, its very essence, is temporarily inoperative. I381 Counsel for the Ministry relied on the language of the

September 27, 1983 letter and the statute itself for the proposition that only the cutting permits were suspended.

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[391 I have already referred to the language of the September

27 letter.

The suspensions were made under the authority of

portions of which s. 59 of the Forest Act, the relevant provided: Subject to section 60 and in addition to any penalty under this Act or the regulations, the regional manager may suspend, in whole or in part, rights in an agreement where its holder 59.

(1)

(b) fails to perform an obligation to be performed by him under the agreement; or fails to comply with this Act or the (c) regulations. [Emphasis added.1 I401 Section 59 does not appear to contemplate the suspension

of the agreement itself; but only rights in the agreement. When..s.59 is read in conjunction with the letter of September 27, counsel for the Ministry submitted, it is clear that only

the cutting permits were suspended. [411 I agree with this analysis.

Even if the Forest Act did

provide the authority to suspend a licence, that is not what happened in this case. 1421 In further support of his argument, counsel for the

Ministry submitted that even if licences can be suspended under the Act, it does not follow from the fact that the "very

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Omineca E n t e r p r i s e s ~ t d v. . B r i t i s h Columbia (Minister o f Forests)

essence" of the licence, the right,tocut, is suspended that the licence itself is suspended. [431

The TSHLs alone did not provide a right to Omineca to

actually harvest timber. Only if Omineca obtained all the other necessary authorizations, such as approved development plans, cutting permits and approved cutting plans could Omineca convert its potential to harvest timber into an actual right to log.

The TSHLs provided Omineca with the potential

right to harvest a certain volume of timber from a particular area provided it met the appropriate requirements. The TSHL issued to Omineca reserved Omineca's right to meet the requirements of the licence. Even though its cutting rights were suspended, the TSHL continued to preserve Omineca's' superior position over non-licence holders while it held the licence. While counsel for Omineca is right that the TSHL did not preserve timber for Omineca, it did in fact preserve a volume of timber supply for Omineca even when it was not entitled to cut'. As counsel for the Ministry put it, the TSHL rent was payment for the security of a reserved supply of timber. 1441

I would dismiss this ground of appeal

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The Respondent's Alternative Argument [45]

Counsel for the Ministry shmitted that even if the

effect of s. 62 of the Forest Act were to relieve Omineca of its obligation to pay TSHL rent after the suspensions, that would not invalidate the cancellations. [46]

Omineca argued that because the Ministry of Forests

charged it more than was due, the cancellation could not be justified. Omineca cited no authority supporting that proposition, and identified no legal principle requiring the cancellations be set aside. 1471

There is no dispute that at the very least Omineca owed

rent from 1980 to 1983.

Omineca disputed that it owed rent

from.'1983 to the date of the cancellation in 1986. [481

I agree with counsel for the Ministry. In my view the

dispute over the amount due is irrelevant to the question of whether notice of the cancellation was properly given. 1491

Section 61(2) of the Forest Act sets out the requirements

for notice: ( 2 ) At least 3 months before cancelling an agreement the chief forester or the regional manager, as the case may be, shall serve on its holder a written notice of cancellation specifying the grounds of cancellation and the day on which the cancellation takes effect.

Omineca Enterprises ~ t d v . . B r i t i s h Columbia (Minister o f F o r e s t s ) 1501

Page

In the case at bar the notices were written and delivered

to the licence holder.

They specified the grounds for

cancellation, i.e., that the TSHLs were cancelled for nonpayment of rent under s. 89 of the A c t .

They specified the

date the cancellation was to take effect. The provisions of the Act were met and the notice was valid. Any later dispute over the amounts actually owing could not affect the validity of the notice. Conclusion 1511 I would dismiss the appeal

[.a.

The

ono our able

I AGREE: 4

I AGREE:

The H o h w r . Jugtice Low

3.G.

Madam Justice Ryan

152 Applicants argument File number: 293 33

IN THE SUPREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL OF BRITISH COLUMBIA) BETWEEN:

Omineca Enterprises Ltd. Applicant (On application for leave to appeal) (Appellant in Court of Appeal)

AND: The Minister of Forests Respondent (On application for leave to appeal) (Respondent in Court of Appeal)

APPLICANT'S ARGUMENT -

PART I - STATEMENT OF FACTS 1.

All page references are to this application for leave to appeal booklet.

This application is for leave to appeal the judgement of the British Columbia Court of Appeal delivered on June 14,2002.

Omineca Enterprises Ltd. ("Omineca") owned and operated a sawmill in Fort Nelson, situated in the northeast part of British Columbia.

The greatest part of the forest in the area is on Crown Land and a license from the BC Ministry of Forests is required to harvest the trees.

Omineca obtained 2 Timber Sale Harvesting Licences ("TSHL'sl') in 1977. for logging in the Fort Nelson timber supply area (TSA). These licenses allowed Omineca to harvest 111,500 cubic metres per year.

Two other saw mills had licenses to log in the TSA. They were Tackama Forest Products Ltd. ("Tackama") and Fort Nelson Forest Industries Ltd. ("FNFI")

"39256-s\scc 2002\leave application aug 22.02.doc ~

153

Applicants argument

The Chief Forester set the Allowable Annual Cut ("AAC")at 750,000 cubic metres for the TSA. But the total cut issued in the licenses to the three sawmills was 1,015,480 cubic metres substantially in excess of the AAC. (Reasons of Shore pages 9)

In the early 1980s there was great economic hardship for all of the sawmills. All were in debt to the Crown for assessed past stumpage and both FNFI and Omineca had outstanding rental charges.

9. .

On September 27, 1983 the Regional Manager (Mike Wilkins) of the Ministry of Forests singled out Omineca fiom among the 3 license holders and sent a letter to Omineca suspending its present and future cutting permits because of non-payment of rent. This action in effect suspended the TSHLs. The rental charges due were stated to be $113,240. (Letter at page 182)

10.

On April 25, 1984, the Regional Manager sent a letter to Omineca giving notice of his intention to cancel the TSHLs.

11.

On September 28, 1984, Omineca tendered a certified cheque for $1 51,600 to the Ministry of Forests to be applied to all rental billed with the balance towards stumpage. The Ministry declined to accept the cheque.

12.

On October 17, 1984 the Regional Manager sent a letter cancelling the TSHLs. Omineca appealed this cancellation.

13.

On March 4, 1985, an Appeal Board established under the Forest Act set aside this cancellation (the Campbell Board). The BC Supreme Court upheld this decision on August 6, 1985. The reasons given to set aside the cancellation was that the Ministry of Forests cancelled for a different reason than what was contained in the notice. The Campbell Board also ordered a settlement of the issues on specific terms, but the BC Supreme Court on the Crown's cross appeal set this aside as being outside their jurisdiction.

14.

On July 15, 1986 the Regional Manager recommenced the cancellation process with a letter to Omineca giving notice of his intention to cancel the TSHLs. (Letter at page 185)

15.

On August 5, 1986 Omineca took up the statutory right to be heard and met with the

Regional Manager who advised at that time that the rental charges due were $198,240. (Memorandum of Regional Manager at page 186) n:\9256-sbcc 2002\leave applicarion aug 22.02.doc

154 Applicants argument According to the Regional Manager in his evidence set forth by the Shore Appeal Board at page 52, even tendering the rent no matter what-the correct legal amount would not have taken the licenses out of suspension. On October 14, 1986 the date for the proposed cancellation was extended to November 30, 1986.

(Letter at page 188)

On August 18, 1987 Fred Baxter, the then Regional Manager, gave notice to Omineca that the TSHLs had been cancelled on November 30,1986.

(Letter at page 189)

Omineca immediately appealed the cancellation by notice dated September 4, 1987. After receipt of the notice of appeal, Fred Baxter sent a letter dated September 22, 1987 explaining his earlier letter.

(Letter at page 190)

Thereafter, the Ministry of Forests took the position that the appeal was out of time to appeal. The BC Court of Appeal finally resolved the time issue in favour of Omineca. Eventually an Appeal Board established under the Forest Act heard the matter and that appeal board (the Shore board) delivered its judgement on October 16, 1998 and dismissed Omineca's appeal of the cancellation of the licenses with one member dissenting. (IZeasons of majority at page 4 and dissent at page 75) .,

Omineca appealed to the BC Supreme Court on questions of law. On February 24,2000, the BC Supreme Court (Shaw J.) dismissed the appeal. (Reasons of Shaw J. at page 105) Omineca applied for leave to appeal to the BC Court of Appeal on questions of law and on November 27,2000 was granted leave to appeal on an issue of law. (Reasons of Southin J.A. at page 119) The BC Court of Appeal delivered judgement on June 14,2002. (Reasons of Ryan J.A. at page 130) (Formal order not yet processed or entered - to be placed at page 128)

n:;')2S(,-s\scc 2002\leavc application aug 22, O2.doc

155 Applicants argument PART I1- QUESTIONS IN ISSUE

26.

Should leave to appeal be granted on the questions before the BC Court of Appeal?

27.

The issue of law is contained at paragraph 14 in the reasons for judgement of the BC Court of Appeal panel that granted leave to appeal and is reproduced here for convenience. [I41 Counsel for the applicant, who was not counsel before the chambers judge or below, essentially rested before us on the issue of "law" which he says is inherent in this passage of the reasons for judgment of Shaw J.: [811 During raised a new cancellation claimed more owing.

the hearing of the appeal, Omineca argument. Omineca contends that the is invalid because the Ministry back rentals than were actually

[821 Omineca's argument stems from an assertion that Omineca's obligation to pay rent ceased upon the Ministry suspending Omineca's harvesting permits on September 27, 1983. Thus, Omineca contends, when, in 1986, the Ministry claimed rentals owing through to 1986, it claimed monies that were not in fact owing. [831 Omineca basis [sic] its position upon s. 62 of the Forest Act, which reads: 62. Notwithstanding the expiry, surrender, suspension or cancellation of his agreement the holder is liable (a) to pay the rent, fees, costs and penalties owing to the Crown in respect of the agreement, and (b) to perform all other obligations under the agreement incurred before its expiry, surrender, suspension or cancellation. [84] In my opinion, s. 62 has no application to harvesting permits. By its plain wording s. 62 applies to agreements, such as Omineca's TSHL agreements. Harvesting permits are quite different. A harvesting permit is not an agreement; rather it is authority, granted by the Ministry to a licence holder, to enter designated lands in a licence area and harvest the timber

9256-siscc 2002\leavc appllcatlon aug 22.02 doc

156 Applicants argument

thereon. The nature of harvesting permits is set out in paragraph 2 . 2 1 of each of Omineca's TSHLs as follows: The harvesting permits shall constitute the Licensee's authority to enter on the lands to which the harvesting permit applies and the right to harvest the timber therefrom according to the terms and conditions of the permit. Any harvesting of timber not authorized by a permit will be deemed to be in trespass. It will be remembered that only Omineca's harvesting permits were suspended. Its TSHL agreements were never suspended. It follows, in my view, that Omineca cannot claim any benefit from s. 62. [851

[861 In addition, s. 62 says that an agreement holder is liable for rent incurred before the cancellation of the agreement. In my opinion, the cancellation aspect of s. 62 applies to the cancellation of Omineca's TSHLs. Thus, Omineca is liable for rent accrued up to the time of cancellation - which took place in 1986.

I 8 7 1 Accordingly, I do not accept Omineca's submissions regarding s. 62 of the A c t .

(Reasons of Southin J.A. page 124) 28.

The Court of Appeal decision being appealed restated the above as follows:

Ground of Appeal in this Court I291 The appellant was granted leave on the following ground :

That the learned Supreme Court justice erred in law in concluding that the TSHL agreements were not suspended and that Omineca was obliged to make rent payments for the period during which the TSHLs were suspended. (Reasons of Ryan J.A. page 144 para. 29)

n 0256-s.scc 2003lcavc application aug 22, O2.doc

157 Applicants argument

PART J II- ARGUMENT

WHY LEAVE SHOULD BE GRANTED 29.

Importance a)

The questions involved in this case deal with issues of law relating to the interpretation of statutes generally and section 62 of the Forest Act RSBC 1979 chap: 140 in particular. (This is now section 79 of the Forest Act RSBC 1996 chap. 157.)

The concepts of law inherent in the legal issue are important issues the determination of which requires guidance fkom this Court not just for the parties but the general public and business community.

This concept involves reading a statutory section in context of the act in which it is found. In the instant case this means finding that it make no sense to refer to suspension of an agreement (the TSHLs) in section 62 when there is no reference to suspension of an agreement anywhere else, only a reference to suspension of rights in an agreement (the cutting permits).

30.

Importance to Omineca a)

Omineca is fighting to set aside the cancellation of its 2 TSHLs. The TSHLs were replaceable on expiry by Forest Licenses. (Forest Act section 15). Omineca took the mandated steps to maintain its rights to the replacement.

The BC Court of Appeal found that if Omineca succeeds in the appeal then it would derive a "clear benefit." (Reasons of Southin J.A. page 5, paragraph 16)

Obtaining leave to appeal on the interpretation of the section 62 of the Forest Act is important to Omineca in the circumstances because the demands for rental payment are unlawful and the wrongful cancellation of the TSHLs has prevented Omineca from operating by removing the substratum of its business.

3 1.

Prospects of success a)

This test was set out by Southin J.A. for the BC Court of Appeal on the application for leave to appeal from the BCSC on the same issues for which

n:\9256-s\scc 2002\leavc application aug 22. O2.doc

158

Applicants argument

leave to appeal to the Supreme Court of Canada is now sought. In deciding to grant leave to appeal she stated that: "To my mind, $a proposition is not wholly devoid of merit, it raises a substantial question to be argued. "

(Reasons of Southin J.A. page 127, paragraph 16) b)

While a different panel of the same court dismissed the appeal, it does not detract from the fact that a 3-member panel of the court found that the propositions sought to be argued raised a substantial question to be argued.

ARGUMENTS ON ISSUES 32.

Suspension of cutting permits equals suspension of the TSHLs or Suspension of cutting permits is sufficient to obtain the benefit of Section 62 a)

The basis of the argument is that the suspension of the cutting permits was a suspension of the licenses for the purposes of the Forest Act section 62. Or, a suspension of the cutting permits is sufficient to trigger the application of section 62.

The Court of Appeal dismissed the constant and consistent references to the licenses (instead of the cutting permits) being suspended as a conflation of the two concepts with no one prior to Shaw J.A. drawing the distinction between the two. (Reasons of Ryan J.A. page 147, para. 36) Maybe so, but all parties and various appeal boards proceeded with references to the suspension of cutting permits as meaning that the licenses were suspended. That is because of the obvious effect of such suspension. Even the Regional Manager and the Ministry of Forests lawyer made continual references to the licenses being "under suspension". Some examples are contained in the correspondence of July 4, 1986 from the lawyer Doyle to Wilkins and the memo of Wilkins dated August 5, 1986 and the letter from Wilkins to Doyle dated August 25, 1986. (Pages 183, 186, 187)

The cutting permits are the only permits that authorize harvesting, which makes them the very essence of the licenses. Omineca had cutting permits in place.

n:!9256-s\scc 2002\leave applicarion aug 22. O2.doc

159 Applicants argument

The development plans and all prerequisites required to harvest had been approved and cutting permits that were already issued were being suspended and ultimately cancelled along with the licenses. d)

Forest Act section 62 refers to "suspension... of his (holder's) agreement." The word "agreement" in these proceedings refer. to the 2 TSHLs issued to Omineca. The submission is that the interpretation of "suspension... ofhis

agre.&ment"by necessity includes the suspension of a holder's cutting permits. It must be so because there is no specific provision of the Forest Act or the TSHLs relating to a suspension of an agreement per se. So the section would have no meaning without the inclusion of suspension of the cutting permits. Furthermore, this is not a far-fetched interpretation. It is an included interpretation. Even the BC Legislature recognized the inclusive nature of the words when in 1987 it added section 62 (2) that stated, "...references to an

agreement are to be read as including references to a cuttingpermit...

(Page 197) 33.

Rent after suspension a)

Omineca's submission is that the interpretation of section 62 means that past rent remains due and payable but license holders are not liable for rent while the licenses are suspended.

Section 62 by requiring payment for rent for the period before the suspension, impliedly prevents and specifically does not require payment of rent for the period after a suspension.

Since the Ministry has denied Omineca the benefit of the licenses and thereby the ability to its service debt, it is only right that rent for the period after suspension is also suspended.

Thus when the Regional Manager demanded rent for the period after the suspension, he made an illegal demand.

34.

Notice of Cancellation a)

The submission is that the amount of rent required to maintain the license and stave off cancellation became a part of the notice of cancellation.

160 Applicants argument b)

The notice of July 15,1986 was given to Omineca. It was a demand to pay the rent or the licenses would be cancelled. The meeting of August 5, 1986 as contemplated by the statute (section 61 (3)) took place and the Regional Manager stated the amount of rent to be $198,240. This amount included rent after the suspension date of September 17, 1983. The rent billed up to the suspension date was $113,240.

The premise is that the once the amount of the demand for rent was quantified and told to Ornineca, such amount perforce became a part of the demand and

thus joined to the notice. The notice cannot be isolated fiom the amount. It is not a question of whether the notice was properly given, it is a question of what comprises the entire notice. d)

If the Regional Manager demands an amount of rent that is not proper because of the operation of section 62 then the entire notice is tainted and improper and if the cancellation took effect on an improper notice then both the notice and the cancellation must be set aside as being unlawful.

Put another way, because'section 62 operates to prevent liability for rent for the period during suspension, the TSHLs cannot be cancelled for non-payrhent of amounts not lawfully due.

35.

The Purpose of Rent a)

The Court of Appeal stated that rent preserved a supply of timber and gave Omineca a superior position over non-license holders. But, as argued above, with the enactment of section 62 (2) the suspension of cutting permits now will stop the rent from being payable for the period after the suspension. This refites the Court of Appeal's statement.

If cutting rights are suspended then there was no right for Omineca to access the timber supply until the cutting permits were reinstated. There is thus no preserve of timber supply. This is the reality of why the suspension of cutting rights is a suspension of the licenses.

When rent is not paid, the cutting permits and the TSHLs are suspended. The rent is the annual fee to harvest a volume of timber specified in the rental invoices and the licenses. Payment of rent buys permission to proceed with

n:9?56-s!scc 2001\leave application aug 22. O2.doc

16 1 Applicants argument harvesting operations, subject to normal terms and conditions. Payment of rent is not for the reservation of uncertain and unspecified timber.

PART IV- ORDER CONCERNING COSTS 36.

Costs should follow the event.

PART V - ORDER SOUGHT 37.

The application for leave to appeal should be granted on the issues of law raised.

PART VI - TABLE OF AUTHORITIES 38.

NIA

PART VII - STATUTES RELIED ON 39.

Forest Act RSBC 1979 chap. 140 sections 15 and 59 to 62

Page

(93

40.

Forfst Act RSBC 1979 chap. 140 section 62 (2).

Page

/?7

RESPECTFULLY SUBMITTED BY

Stephen Tick Counsel forihe Applicant - Omineca Enterprises Ltd.

n:\9256-skcc 2002\leave application aug 22,OZ.doc

EXWINCE Of POlEsI SERVICE

-nmZj.

-7

OF FORESTS

~m.e~? SALE IMIVESS~G LICE:?Q

PEEX D I s l a I R

Public Surcained Yield UniC

A 0 8 69 2

MI; limEimm. Between: Rcr ijajescy chc Ween represented h e r e i n and a c t i a g by her D i s t r i c t P o r e s c e r , of t h e abuve aamed d i s t r i c c (hereiuafte= called t h e 'Ycewor")

OP T E ONE PART. and 0-ca

E n t e r p r k c s Lcd., coeethcr uich

d.l?.*f.

--PolcM89; P o r t tielson. B. C.

ie - s r e c u t o r a , addnfscr.to:s,

VOC

1m ,

s u c c e s r o r s a d asrigrrz,

( b c r e i ~ f t e rc a l l e d Che 'Ycearee")

:IIEI%SEIH t t u c . i n consideraciom of t h e paymcncs c o be l u d c snd t h e condiciozs t o be c o ~ l p l i e du i c h by and on t h e p a r t of t h e Licensee, end of +he Licensee's o f f e s co purchase c 5 c under a n t s u b j e c c t o C5c provisions af Par: TI1 of t h e 'Deprrtmenc of Forescs Acr", CSe Licensor does hereby granc uncu che L l c c n r c c a l i c e n c e t o c u t am3 z r e v e q u a n t i t i e s o f ciabe- f r o n C ~ o v nlands u i c t i n the Llard R i > l i z S t s t a i n e d Yield U n i t a = c c r d i n c t o an a p p r w c i plan and p e r n i t s a s h e r e i n r f c e r zentioced; subjecc K O t h e provisions of s a i d "Acc" and f o r t h e cerm and s u b j e c t ca rh? :cservacloca and cocdi:ions hereina:ccr a>cioncrl follov.:

I h e Licensee i s zuchor-ired acd e n t i t l e d t o harvesc 30.000 cvnLts of t i a b e r per y e a r frorr che s a i d Liard ". Ebb:ic S w t a b e d Y i e l d Unit a c c o r d i q i o approved d e v e l r p e n c plan5 as k r e a f t e r i e s c r i b e d and co p e m i c s issued a s hereafce- providat. Ihe v o b e of timber k r v e s r e d tach y e a r s h a l l b e t a k e n co i n c l u d e a l l of r b e CLber c u t end removed o r u a r t e d . o r damaged by che L i c e r s e e o r i t s a z c n t s a; p-ovided i n + h i s l i c e n c c . r5c 'Deparcmenc of r o r e s t s Act" and =be. cutting p c r n i c s . 1.2

Lands S u b j e c t

Occupatiaz

...

E a r v e s t i n g of che Cimbel- p l r c w n c t o ' e r m i r s i s s u e d under i u c t o r i c ; of this l i c e n c e shall be i n accordance u i c h cu-rencly a?provcd developncnc plans. e a c h of which coxsccucfvcly a s cppzoved 5y t h e Licensor f z r each s u c c e Âś s i v e period, i s hereby incorpozcced i n t o and mate a p a r t c f t h i s licence; R w i d c d t h e License- s h a l l ke e n t i t l e d t o c u t and rezmve c i a b e r o n l y fro= t>a.ore lrrrds eve: whiz: :he i i c c n r o z :ms iq=v:r! zo r t e Licensee a c u c r i r . ~p e r s i c a s r n x z ? ~ z t i c u l a : l s d e s c r i b e d ;r;:eifrer. F:oviizd ; 1 s G Ckac che l a n d s ca v h i c t :I licencz i s a?pl:cr>lc ana :cr u'nich occ2s3t i o n u i l l be gzanreb Co :te Licezsce a:c l i ~ i t c dco chose l;njr I c r s h i c h a c u c t i n g 7 e D i C La; S r r a is3s:;l t o t > e Li;e;see. T h l l l i c e r c e z f z l ? n=: C k c r c a z e be conrcrucd i n any e-'nr.er t h t r could izLic;r> ar h: i x z = p r c c e d aa s l v i n z conczol co che U c c n s c e ~i any of t 5 e i i n C n cr a=:' ; a r c clxereof z p c c f f i r * ir. clause 1.1 bur rhzr rhr o n l y Z i g . 2 .-.f car::/ caia suck 1sr.d: S k l l bc Ca :be .=<cent i s provided by chc s a i d F e z i i S .

.1.3

Page 2.

Tern

~ b i sl i c e n c e i s f o r a p e r i o d commencing from d a t e h e r e o f and c o n t i n u i n g f o r a t e r m o f t u e l v e ( 1 2 ) 7 c a r s n e x t e n s u i n g . I

.TIHG

2.1

PRIVILEGES

Developnent P l a n s

2.11 S u b m i s s i o n o f Development P l a n . S u b j e c t t o t h e provisions o f c l a u s e 2.13 t h e L i c e n s e e s h a l l s u b m i t a p l a n f o r t h e harvesting o f t h e t i m b e r ( h e r c i n a f t e r r e f e r r e d t o a s a development plan) f o r t h e approval o f t h e L i c e n s o r n o t l a t e r t h a n s i x ( 6 ) moncbs p r i o r t o t h e p r o p o s e d t i m e f o r coamencement o f o p e r a t i o n s u n l e s s a t h e r v i s e a u t h o r i z e d by t h e L i c e n s o r . I n t h e event t h a t subs e q u e n t d e v e l o p m e n t p l a n s a r e r e q u i r e d e a c h p l a n s h a l l be submitted f o r t h e approval of t h e Licensor not l a t e r than s i x ( 6 ) m o n t h s p r i o r t o t h e p r o p o s e d t i m e of commencement of operations.

A l l d e v e l o p m e n t p l a n s m u s t b e submitted u n d e r t h e hand and s e a l o f a f o r e s t e r r e g i s t e r e d under t h e " B r i t i s h Columbia P r o f e m n i o n a l F o r e s t e r 8 A c t n m d s h a l l h e f o r s u c h p e r i o d o f t i m e m d a h a l l c o n t a i n s u c h i n f o r m a t i o n as t h e Licensor r e q u i r e s cnd t h e L l e e a s o r r e s e r v e s t h e r l y h t . i f necessary. i n t h e interests o f o b t a i n i n g t h e maximum a n d Lhrd, Puhlic Sustained Yield proper development of t h e U n i t t o d e s i g n a t e t h e a r e a s o f o p e r a t i o n of t h e L i c e n s e e . P r o v i d e d t h a t p r i o r t o t h e a p p r o v a l of t h e i n i t i a l d e v e l opnent p l a n t h e Licensor a h a l l s e n d n o t i c e thereof t o t h e . other Licensees established i n t h e aaid unit. 2.12

Development P l a n a P a r t o f

t h e Licence

Each developmenc p l a n . o n a p p r o v a l by t h e L i c e n s o r . s h a l l b e and i s a t e r m a n d c o n d i t i o n a n d h e c o n e s and ii a p a r = of t h i s l i c e n c e a n d a n y b r e a c h o f t h e t e r n s and c o n d i t i o n s of any d e v e l o p n e n t p l a n o r c u t t i n g p e r m i t i s a breach o f t h e terms and c o n d i c i o n a o f t h i s l i c e n c e . 2.13

R e v i s i o n o f Development P l a n s ' N o c v i t h s c a n d i n g c l a u s e 2.11, t h e L i c e n s e e ~ a syu b m i t r e v i s i o n s t o t h e d e v e l o p m e n t p l a n a n d t h e L i c e n s o r may r e q u i r e t h e L i c e n s e e t o a u h n i t w i t h i n t h e t i m e f i x e d by t b s L i c e n s o r r e v i s e d development p l a n s m d d e s i g n a t e a r e a s f o r c u t t i n g 1. t h e e v e n t of a n y emergency c a u s i n g o r c h r e a c ening i n j u r y t o an7 timber s u b j e c t t o t h i s l i c e n c e and witho u r l i m i t i n g t h e g e n e r a l i t i e s of t h e f o r e g o i n g such emergency s h a l l i n c l u d e i n s e c t a t t a c k s . f i r e . b l o n d o m o r o t h e r c a u s e s and t h e L i c e n s e e s h a l l cake s u c h measures a s the Licensor d i r e c t s t o h a r v e s t t h e said timber.

2.2

Cutting P e r n i t s

2.21 A p p l i c a t i o n f o r and I s s u a n c e o f C u t t i n g P e r m i t s S u b s e q u e n t t o t h e a p p r o v a l of c h e developmenr p l a n and upon f u r t h e r v r i c r e n a p p l i c a t i o n from t h e Licensee, and s u b j e c t t o s o y d i r e c t i o n from t h e L i c e n s o r a a p r o v i d e d i n c l a u s e 2.22. t h e L i c e n s o r s h a l l i s a u e c u c c i n p p e r m i t s f r o m time c o t i r e a s r e q u i r e d co authorize t h e h a r v e s c l n g of t h e rimber f r o r r h e a r e a s f o r v h i c h a developmenc p l a n h a s been approved. U n c i l n a n u f n c r u r i n g facilities t o use deciduous a p c c i t s a s r e q u l r e d by c o n d i t i o n 8 . 8 h a v e been i n s t a l l e d o r provi d e d f o r by che l i c e n a e c and a r e i n u s e . a l l a p p l i c a t i o n s f o r c u r r l n g p e r r i r a v i l l b e c o n f i n e d t o rimber s r i o d s which a r e p r i a a r i l y c o n i f e r o u . nod t h e d e c i d u o u s volume r h e r e i n be r e c o r d e d I n a c c o r d a n c e w i t h c l a u s e 2.32.

2.21

Continued.

u*. &,henrise authorized by tk Licensor t h e a p p l i c a t i p l for t h e initial c u t t i n g p d t o r p d t s shall be =de atNn t r r l v e ( 1 2 ) \months f o l l m i q t h e d a t e of i s s u e of this l i c e n c e and at l e e t h e (3) months p r i o r t o t h e propoaed date of c ~ n c c u e n to r o p r a t i m . ; nubscquent a p p l i c a t i m s f o r c u t t i n g p d t s s h a l l made n o t less th&,, s i x (6) mcntha p r i o r t o t h e proposed camencctmznt of o p r a t i w s o, t h e a r e a a p p l h d for. Ths t e r m of a c u t t i n g p r m i t may be f o r a n y -ricd yeara u p t o a of t h r e e (3) y e a r . c-nmrste with the e S t h t c d volof timbcr in t h e u a a c m r e d by t h e pmit and t h e rate of c u t t i n g r e f e r r e d t o hereaSter in c l s r u e 2.32, p r w i d e d t h a t c u t t i n g permits issued t o authorize t h e hamsttrg of t i n b e r f r a o road r i g h t s of-uay vZt& t h e drea of an approved d c v e l p F n t plan-may be insued t o expire with t h e t a r n of t h e licence. The c u t t i n g p d t a a h a l l c o n s t i t u t e t h e Licensee's a u t h o r i t y to e n t e r on t h e lands t o v h i c h t h e c u t t i n g p d t a p p l i e s and t h e r i g h t t o -st tho timber t h e r c f r c n according t o t h e t e r n and c m d i t i m s of t h e p r m i t . Any c u t t i n g of tirpber not authorized by a p d t vlll be d e u r d t o be i n t r e a p a a s .

T k U c e r u o r m y d i r e c t t o t h e U c c m e e t o have s u m y e d snd defined on t h e grwnd, and a t t h e Licensee's e x p n s e , any o r all of t h e boundarir. of t h e c u t t i n g p d t s which he may deem necessary t o have so -yed and defined. I n t h e e v e n t of faikue of t h e Ucenaee t o ccrppkte m y such s u m y within t h e tliEits s e t by tk Licensor, t h e Licensor rey c a u x t h e s m y t o k made and t h e c o s t a s h a l l be charged t o and be payable f o r t h w i t h by t h e Licensee.

2.23

F o x of t h e Cutting P e r r i t

The c u t t i n g pnit s h a l l be i n t h e form of and a u b j e c t Co such t e n s and c m d i t l o n s a s t h e Licensor a p p r w c a consistcqt t i i t h t h e p r w i a i m s and i n t e n t of t h i s l i c e n c e , t h e ~~~~nt of F o r e s t s Act n and any amendments t k r e t o and n p l a t i c m s therrrcrder and t h e prmit a h a l l s e t f o r t h t h e r e i n t h e s p c i f i c a t i c n a of t h e tinkr t h a t n u s t be h a m s t e d . 2.3 2.31

Regulation of Cut Annual C c r s i t n e n t

The a u a n t i t v 0.' tinter t o te h a m a t e d under clause 1.1 of this l l c c n c e r e p r r s e n t a zr annual cccmitment n o t exceeding H) OQO jiii of t i n b e r k i n g a p a 6 of the annual a l l e a b k c u t ad t h e Public Sustained Yield U n i t . LLnd The Licensee a g r e e s k i t h t h e Licensor t h a t a l l l o s g i n g o r lmkring o p r a t i o n s c a r r i e d on by, o r on behalf o f , t h e Licensee on this u c c n c e vill te conducted according t o t h e f o l l o v i n g conditions: (a)

T k License6 s h a l l s u b i t a s part o r ' t h e devcii&nt' p l a n t o be s u t o i t t e d in accordarrcc with clau.e 2.11, a,. c u t t i n g b u d p t s e t t i ? g f o r t h t h e q u a n t i t i e s o r t b k r t o be harvested each Far and t h e c u t t i n g p m i t s t o which t h e c u t t i n g o p r a t i m s apply.

The q u m t i t y of t h h r harvested annually s h a l l be in accnzdance with t h e apprwed c u t t i n g budget and s h a l l be a y p l . ~ x i r u t e l yequal t o t h e approved a.Tnual harvest .rated in c l . 3 ~1.~1 above. .. , Provided t h a t t h e q-rtity of timber s a l e d a d b i l l e d Jr wasted (c) o r damaged in any given year s b l l not: ( i ) Exceed one Ilaldzed arid f i f t y (150) Fcr cent o r t h a t annual h a r v e s t , or (11) Ee l e s z t h a r r i r t y (50) p r cenr of t h a t a-mual h a r v e s t . (d) Provided t h a t t h e q u a r t i t y of timber scirhd and b i l l e d o r ba3ted o r danagcd . b l l :,Jt c n l t i : ~ t ~ m s leyx c e c j the irmual h a r v e s t s t a t e d in c l a u x 1.1 abovc. -

(b)

Page 4 2.32

Concinucd:

), ( c )

R w i d e d Chac chc Coca1 q u n c i c y of c h b e r h r v e s c c d d u r i n g 4 p e r i o d not u c e e d i n s f i v e (5) derigruced consecutive y e a r s a h a l l noc exceed one hundred and t e n (110) per c e n t n o r be l e a s c h n n i n e t y (90) p e r c e n t of f i v e (5) c i n e s t h e a n n u a l h r v c a c r e f e r r e d t o above, a n d s h a l l b e a l s o aubjecc co t h e following: (i) m e r e t h e q u n n t i r y of Cfnber b r v e s c e d whether s c a l e d and h i l l e d or uaaced o r damaged f o r s h e f i v e (5) desigruced cons e a r i v e y e a r s is i n u c c s s of one hundred (100) p e r c m c of c h c o c a l of a n n u a l h r v e a c . f o r c h a r p c r i o d . Cbm Che c o c a l of i dh i r u c c r s f o r cbe n u c p e r i o d of f i v e (5) consecucivc y e a r s aha11 b e reduced by a v o l w e corresponding co coca1 of s u c h e x c e s s quancicies.

( i f ) m e r e t h e q u a n c i t y of c l n b e r h r v e a c e d f o r t h e f i v e (5) d e s i g n a t e d c o n s e c u t i v e j a r s is over n i n e t y (90) per cenc buc l e n s t h a n one hundsed (100) per cenc of t h e coca1 of annual b l r u e a c a f o r r h a c p e r i o d . t h e n chc c o c a l of annual harvesca f o r che n u c p e r i o d of f i v e (5) coluecucive y e a r s shall be i n c r e a s e d b y a voltme corresponding t o t h e c o r a l of such deficient q~nciclea.

I n c h evcnc c h c C i u eaxfnrm quancicy of tfnber s p e c i f i e d i n c l r u r c s 2.32(c)(i) o r 2.32(e) a b w c i s exceeded a n a r s e a s ~ n cs u y bc ~ d under e c l a u e e 7.71 and t h e l i c e n c e s h a l l h e r u b j e c c co u n c e l l a c i o n a s provided i n c l a u a e 8.161. 2.322

Itinism Cut

Fzovided chac s h o u l d che quancicy of c i n b e r s c a l e d and h i l l e d or wasted o r damaged b e l e s s chan che amounC specified i n c l a u s e s 2.32(c)(iL) o r 2.32(e) above che l i c e a c c s h a l l be cubjecc :o c a n c e l l a c i o n 66 prov i d e d i n c l a u s e 8.141.

LCC FAYICING AND SULLnfG

3. 3.1

Log Harking Before any t i m b e r is rvloved f r a che l a n d s d e s c r i b e d i n any cuccing permir i r a u e d usde: :his l i c e n c e , i C s h a l l be conspicuously rnazked u i r h t h e l i m b e r Ha=k a p p l i c a b l e Co che c f n b e r cue on chose land8 r e f e r r e d co i n che c u c c i n ~p e m i c .

3.2

Scaling ( i ) The Licensor may g i v e Cireccion a s CO che oechod of s c a l i n g . and -y d e s i g n a c e =he p i a c c of mcnling, measuring and couaring!f any c i s b e r CUE under c y a l i c e n c e .

( i l l Unless o c h e r u i s c d f r s c c e d by che Licensor. c k B r i c i a h C o l d i a Cubic S o 1 . e s h a l l be used and 8 p p l i e d i n che' 3salLng of a l l c i d e r cuc under :his l i c e n c e i n accordance u i c h , . f i x w o o d r c a l i n g s p e c i f i c scions approved by che Chief Forcscer.

1.1

Area of Occupation ( i ) Thc Liccnlce s h a l l be deemed co b e i n occupaciir, o i only chore lands d e s c r i b e d i n c u c c i n o p e z i r s i s s u e d co che Lizcnsec puraurnc C O t h i s l i c e n c e chac have noc bcea t e r n i n a c e d i n u z i r i n g by che Licensor aad chc p r o v i s i o n s 0 5 Pa:r X I of t h e 'nepa:cmezc of ?orcscs A C C " s h a l l apply che:cco for and during chc period char the Licenlee is deemed co be i n accupacion of any land. u l r h i x c h i s l i c e n c e . (11) The e n c i r e c u c c l n g p e m i c area a h a l l be d e u e d co be included i n che nrez.8 occupie: 5y =he Ucenmcc u n c i l :k Llcenror ha. n o r i f l e i

che Licensee i n u:iCing s a c i $ f a c c o r i l v an =he

char Che s l a s h has been disposed of "7--r r----, -

rnr$rr

4.21

Pr?-organirstion P l a n

h a L~..~ssa ~ N I Is u b a t r so t h a Llomnsor p r i o r t o Am11 11 of each ycsr during she c:m of Chi. l i c e a c e a f i r e p t o t c c c i o n prco r b a n i u t i o n p l a n t o g e t h e r w i t h a duty r o s t e r which s h a l l bc kept r r e n r d u r i n g t h e p c r i o d of m y 1 t o October 31 imclusivc o r f o r c c h ochcr period a s t h e H i n i a t e r m y s p e c i f y . a 1 1 t o t h e q s c i s f a c t L n of t h e Licensor. 4.22

Scandhy F o r c e The Licensee a g r c e s t o maintain a c a11 t i 5 C S d u r i n g E k period of Hay 1 t o October 3 1 i n c l u s i v e o r f o r s u c h o t h e r period a s t h e H L i s c c r may s p e c i f y a n i n i a u n standby f o r c e of t h r e c (3) ncn provided, h o w v e r , chi? f o r c c upon approval o f t h e U c e n s o r suy vary i n n r e b e r of m n dcpending upon t b e a c r c z g e d e u r r d t o 'be occupicd by t h e L i c c n r e e ond upon hazard c o n d i t i o n s . 'Ihe Licensor may r e q u i r e t h c U c e n s c c t o n a i n c a i n on tk a r c a of t h i s l i c e n c e an a d d i t i ~ ~ l forc: o f n o t more c k a onc (1) man f o r a c h t k c c hundred (300) a c r e s of t h e coca1 a r u i n a c r e s deencd occupied i n C h i s l i c e n c e .

4.23

Standby F o r c e E q u i p e a r Unless otherv&se authorized by the L i c e n s o r , d u r i n g t h e period of t h y 1 t o October 31 i n c l u z i w o r f o r s u c h ocher period a s t h e H i n i r t c r may s p e c i f y rh: stendby f o r c e provided 5 y t h e Licestsee as r c q u i r c d i n c l a u s e A.22 s h a l l be a d e q u a t e l y t r a i n e d and c q u i p w d f o r f o r c s r f i r e s u p p r e s s i o n aad s r h l be r w ' d y C o t a k e Lnmediate accion t o r u p p r c s s f i r e uhencvcz n o t i c e of a f i r e i s g i v c n o r received. Adequate nruru of t r a n s p o r t a t i o n and r a d i o COGmUniCStiob e q u i m a c of a t y p e and n d e r s a t i s f a c t o r y t o t h e LLcca.ÂśOr s h a l l be provided. Such f o r c c s h a l l b e n a i a by t h c U c e n s c c t o t h e s a i d standby f o r c e . ta1n:d i n a l o c a t i o n 02 o r near t h e c u t t i n g p c m i t a r c a o r a r c n s a s approved b y t h e Licensor.

Su5jccr t o t h c p r o v i s i o a s of 5:cCion 17 (8a) t h c Liccnsor r e q u i r e s t h c Licensee t o b u i l d F r i m r y a c c e s s roads s u b j e c t t o tk f o l l o u i n g coad1ciors:(a) Only such road, as may be designated from time t o t i n e by t h e Liccnsor s h a l l be p r i n a r y a c c e s s r o a d s . (b) Tnc s a i d roads s h a l : be conscrucccd c o t5t s p c c i f i c a c i o a s .upplied by r h c L2canror s a d t o Chc standards f i x c d by t h e Liccnsor. ( c j i h z r o r d r s h a l ? > c b u i l t only on l o c a t i o a s having t h c p r i o r , a p p r o v a l of t h e Liccnsor. (d) A 1 1 l a n d s u i r h i i r r c y =i;hts-of-uay stall k c v e s t e d i n t h e Crown p r i o r co ccascruc:fon of she roads. (c) A l l meters pcrc;iniag t o t h e c o s t s of c o a s t r u c c i o n and m e t h ~ d sof payment s h i l l bc r u j j e c r K O n e g o t i a t i o n and evidcnc-d by an addendt o t h i s Licence which addendm s h a l l f o r n a n i n t c g r a l plrrt of t h i s licence. ( 5 ) A l l s u c h roads s h a l l be t h e p r o p e r t y o f t h e Croun and t h e Liccnsce s h a l l Pave no c l a i n s a the s a i d r o a d s f o r compcnsocion o r o c h c r u i r c c x c c p t a s pr-idcd i n ( c ) above; and t h e Liccnsce s b l l not p l a c e any g a t e . o ~ s c r u c r i o no r inpcdimcnc of a n y kind i n , on o r over t h c s a i d r o a d s ; m d thc Liccnsce s h a l l noC p a s t any s i g n s on o r ncar chc road exccpc on Chc p r i o r a p p r o v a l a f t h e Licensor. (g) i l ~ eLicensee s b l i consrl-uct .ad m a i n t a i n clr? road i n s m n n c r t o cause t h e l c a s t damage t o t h e e n v i r o m e n r 011 t o chc s a s i s f a c r i o n of rt:e Llccnsor. 5 .Z

!ialn

and S z c c n h r y 2 ~ 3 6Coa:rru;cion

Un1c.s o r h c r u i z c Jurho:izcd i n v r i c i n g b y che Liccnsor. =he road; : > ~ l l'ce conscrucc=d .x rh= location roucc 2 s dcfin-5 o r ~ p p r o v o dby r h e Licensor. Th.? road; s h a l l bc conscrucccd =ad nainrnin>d by rhc Liccnscc a c c c r d i n g C J Chc s P e c i f i c n c l o n ~2nd szacdmd. d c f i n c d i n chc curcing permit, l s a u c d undc: c l a u s e 2.21.

, 5.4

During t h e t z m of o p e r a t i o n s under t h i s l i c c n c c , t h e L i c e n s e e . h a l l - i n r a i n a 1 1 maia a l l - w e a t h e r r o t d . c o n s t r u c t e d i n s c a n c c t l o n w i t h t h i s l i c e n c e i n s c o n d i t i o n c s t i s f a c c o r y t o t b c Licensor f o r u s e by normal v e h i c u l a r t r a f f i c d u r i n g auch r i p e a s t h e D i s t r i c t F o r e s t e r .ball specify. E r o s i o n R o t e c C i o n on S n l c Area Upon f i n a l c c s s a c i o n of o p e r a t i o n e o r on annunl c e m i n a r i o n of l o g s i n e o p e r a t i o n s o r a t a n y o t t z r rise a s i n z t r u c r c d by t h c F o r e s t O f f l c c r . t h c Licensee s h a l l c l e a n our d i t c h e s and c u l v e r t n and c o n s t r u c t t h e nvnber of water- bars or o w n c u l v c r c s t o t h e s ~ c c i f i c a c i o n sand ~ rr t a k e ocher locations t o the ~ a t i r f a c t i o n ' o f the D i s t r i c t ~ o r c s t o measures deemed n e c e s s a r y by t h e s a i d D i s t r i c t F o r e s t e r . I n t h e e v e n t t h e L i c c n s e c f a i l s t o carry o u t t h e above measures t h c D i s t r i c t F o r e s t e r may a s s e s s t h e L i c c n s e e t h e e a t i n a t c d c o s t s t o c a r r y o u t s u c h measures, and t h e L i c e n s e e s h a l l f o r t h u i t h pay t h e accouac.

5.5

A u t h o r i t y t o t a k e PosceraLcn of Rcrda b y t h e Crovn The Crouo r c s e r v e s t h e r i g h t t o c a k e w a s e a r i o n -of any o r a 1 1 road. c o n s t r u c t e d on c h i c l i c c n c c a r z a a t a n y ~ ~ D Zwithout C conpensacion t o t h e L i c c n s e e n o c u i c t u t a n d i n g t h e p r w i r i o n s of S e c t i o n 56 o f , t h c ' D e p r c n e n c of l o r e r c s Act" aubjecc, houcver, t o p c r n i t t i n g tthr L i c e w e e t h e we of t h e r o a d s f o r t h e d u r a c i o n of thfs l i c e n c e .

. 6.1 6.2

The L i c e n s e e r b i l n o t f o u l o r r e n d e r u a f i t i o r i r r i p t i o n , d r i n k i a g o r d o m e s t i c p ~ r p o a e sany l a k e . s t r e a m o r s p r i n g vhich l r w i d e s t h c vstc: s u p p l y f o r any i r r i ; o c i o n s y s r e 3 o r f ~ any r parson o r cocnunity. Thc L i c c n s e e s h a l l : ;.at a l l o w any Cree:. 1 ~ ~ slo",".^ . debrl:, c= 2x7 =cb:bs:rncz 1 : l ~ l y t o c a u r c p a l l u c i o ~K O be d e p o s i t e d a t zny tin: w i t h i n a n y l a k e o r screz~. n o t a l l o w any logs t o be s k i d d e d , c q u i p n e n t t o be o p e r a t e d , g r a v e l t o be d i r p l a c c d o: any damage t o b e done wlchin t h e highwater l e v c l of aay scream channel. p r o v i d e a l l s c s c m c r o s s i n ~ sw i t h a b r i d g c o r c r l v s r t . t h e d e s i g n of which u i l l zcc.==noCace =xi:cream flow and permit unobstrucccd f i s h yazsage and s c h e d v l e t h e c o a r c r u c c i o a of a11 scream crosainc: a s d i z c c t c d by t h z ? o r e r r O f f i c c r . n o t p l a c e any o t s c r u c r i o n o r f i l l w i t h i n t h c highcaccr l c v e l aÂŁ any c c r z a n chazzcl o: lake. rcmove any lo-;;r~$, m i l l i n g o r r o a d b u i l d i n g d c b r i s deposited i n a n y rcrcam c b n n c l or- l a k e a: d i r c c c c d by c l c F o r c s r Officer.' l o c a t e l a n d i n g s no c l o s e r t h a n two (2) c b a i n s f r o a a r . rcqcam c h a n n e l and only w i t h i n a r e a s d e n i g n a c c i f o r c u t t i n g . , d i r e c t t h e f a l l i n g azd y a r d i n g of r r f f a auay frrm .trctnbanks and l a k e z h o r c a excepz as o c h c r u i s e d e s i g n a t e d on che ground and approvcd t y t h e F o r e s t O f f i c c r . ... . n o t burn ' s l a s h c l o s e r t o t h e icrcambnnka o r l a k f s h o r e r t h a n chc d i s t a n c e z p e c i f i e d by t h e F o r e s t O f f i c e r . p r o t c c t f r m iogzing and b u r n i n g l s r v g e a 1 1 n c r e ~ n b a n kand l a k e s h o r e shrubs. '

tlr.25

7.1

The L i c c m e c s k ! i pay t o t h e Li;cn:cr s p c c i f i ~ d1::rcia.

F o r e r c Roccc;ion

s p r = v i d c d i n chc 'D~cparcmcct o f o sz=c b c c m ~ c sdue and payable.

Tax

F o r e s c Proccccion T:x a: Tn-*-.r

+ r che

Rental

An a n n u a l r e n r a l a r ch2 mtea Forcsc: A c r " znd Rcgol3cicns w k n 7.2

rhc f,ol,louing sum:

races am p:-ovi6cd ia chc 'Deparrmcnr of

Scaling .rely

Thc charges f o r s c n l i r . g , - ~ e i g h i n g .mearurin8 .ad upsn r e c e i p c of ~ c c o u n t .

councing i-di-

General Any o c h e r s m s , asses,-ca:: o+ coscs i n conncc:io= u i t h c u r l i c e n c e o z a r i r i n s from ciwe:' l u r v c i c i n g Operatio=: Conducted i n conj u n c c i o a u i t h t h i s l i c e n c e L w c d i a c e l y upon r e c e i p t of account. Depocits S u b j e c t co t h e provi:ion; of S e c t i o n s 2.03 and 2.05 of t h e l e g u l a c i o n 85/65. bcisr, a r e ~ u l a t i o ngovernin: t e a 4 Crown C G e r . t h e Licensee agzec: c h a t t h e sum of $.... a p p l i c a b i e as a d e p o s i t f o r t i n j e r covered by t h i s Liccnce, s h a l l b e k l d S y t h e Licensor ; u b j e c t t o c a p l i a n c c by C h Licensee u i c h a l l t h e tcl-p; a d condicion; o f t h i s l i c e n c e ; provided t b t t h e L i c e a s o r m y deduct fram t i m e t o time frca t h e r a i d d e p o s i t any sums n e c e s s a r y t o pay c b r g e c i a n r r r e d by t h e Licensor i n c a r r y i n g o u t t h e f u l l i a t e n c and p r o v i z i o n s of t h i a l i c e a c e and t h e Licensee s h a l l f o r c k ~ i c hp y t o t h e L i c e n s o r s u c h sulu. 6s a r e a e c c z s a r y tc pake chc d e w.z.it c a m -1 t o- the above o e n t i o n e d s-; provided further, if t h e Licensee ha: w e l l and t r u l y c m 2 l i e d uiCh t h e t c x and coidicionp of t h l c l i c e n c e t o t h e sa:<:faction of t h e U c e a z o z t h e a f o r e s a i d =ma = h a l l 5ecome r c f u n d a b l s :ubJccc Co t h e a f o r e s a i ; Rcgulacion; o c h e ~ ~ i st he e s a i d depari; I s su5jccC t o t h e deductions a; n f o r e mentioned o r ocherwise o i l 1 t c a p p l i c d f o r damages o r ocher charges.

B.C.

hl,Sdb.&f ........

Scumpge, inclusive 02 s o y a l c y a c t h e rate: a s a p p r a i s e d and a s s e s r z d by rhe Liccnsar fzom :imc co r k e accordia: tc Chc mechod of ap-ai:al chcn i n u s e 'iy chc iicenso: and or zc; t o r c h i n t h e cutciap, p e r m i t s r e f e r r e d co i z c l a u s e 2.21 above. T;le Liccnree r g r c c s t o pay r a i d z r m p a g e iecla:ive o f r o y a l t y cop,cchcr w i t h and IUA i n oddi;ion chcrcco chc 2o;lus t i d of S............ per hundred (100) c u b i c :cet o f wood i n n c d i ~ c c i yapon r e c c i p t of accoun:.

I n r h c evenc chat r h c quancicy of c i n b e r c u t c r r p c c i f i c d i n c?ausc 2.32 i s exccedcd chcx d0u';lo scmnpage incluzfv2 of r o y z l t y s h a l l hc a;scsscd a=d bc paya'2lc on any cxccss of cl: qu;lncicicr nho, r;accd. Provided, h ~ u e v z r . should chc qu;lnciry of c i n b e r cu; d u r i a r r p e r i o d nor c x c o a i i n g f i v e (5) d e r i g m c c d conrecucivc ye==: n o t cxcced t h e oaf huadzci and rcn (110) pfr. c c l t no a s s e s s n t n c ; t o r thc c x c c t s s h a l l :'c p j y s b l c and any ;mount; ?aid f o r =rses;menr: f o r t h e c x c e s r abovc may bc rcfundcd.

iio d2-z; z h z l l ic do.,= ;o young grouch o r co czccs deaign;ltcd : a young grovch d c s i ~ n a c c dCo be co 3c La£: ; ; ~ n d i n g . If c:ce; l e f c zt:aCing a:= damaecd c::cc::ivcly i n che judp;-t of chc Licca;o: jur-ing any voods opc:2rion. an azrezzmcn: uF11 kc made.

:..-c=z dc;ignzrcd to .>c ;ui i n c h c c v t r l n g p c m i i s issued pu1's a a n t :o c l a u s e 2.21 uhic:, 2:-c i c f r uncvc. ttmbc'r :.=;cad i n fops ;JC i t u n ? s , trees l c f t la3tc;l ia t h e process of f e l l i a s , and any o e r c b n c a ' ; l e cimbcr u h i c h i s cu: and not zcmovcd fro- any w r c i o n of a c u c r l z ~-mi[ = r e > r b l l 3: ::;rlcd, ncarured 0: counccJ a ¶ herei n b e l o r e p-ovidcd. A t any r i m = n : accoun: 0: occou:ltr "ill bc Lssucd l o r t h e crces or cio:~:. ~fo:cmcntloned a t onc >;iJ o n e - m l f (1-112) ::lc = C M P J ~ C T ~ L S : ~ 1 : - : - c n ~i ln~c f f c c ~~c~::hc: u t r h che cost: of r c a l l n g . mcazurix: zzd councing, ;rxd ru;h amount% are p,Y1 :==?Cij:Cly UPOX T C C C i P C C : l l - ~ o f .

8.1

l e l a c i n g t o Term of Licence

8.11

Expiry s u b j e c t t o any u t e u s i o n g r a n t e d a s her'eimafcer provided under t h e teand condlcions of t h i a l i c e n c e , t h i s l i c e n c e r b l l e x p i r e a n t h c canplecior, of t b r term a s provided i n c l a u s e 1.3.

The U f n i s t e r of F o r e s t s may extend t h e t e r n of this l i c e n c e f o r a period i n keeping u i t h t h e U c e n r e e ' t develoFmrnt plan s a d t h e o p r r s t i n g h i s t o r y c f t h i s l i c e n c e t o d a c e and on t h e g r a n t i n g of any e x t e n s i o n thereof t h e Licensor ~y v a r y t h c p r o v L i o o . and c o n d i t i o n s of chi. l i c e n c e o r of any c u t t i n g permits i s s u e d under auchorlcy of this licence. 8.13

Suspension n e f o r e s t O f f i c e r p s y s u a p u d any opera:ian conducted prrsuanc s o this l i c e n c e 3y n o t i c e i n w r i t i n g Chucof g i v e n t o t h e Licensee o r t o t h e person In charge o f t h e o p e r a t i o n f o r t b c b r u = h of any of t h e c-nts, p r o v i s o e s . terns o r c o n d i t i o n r of t t i r l i c e n c e and nay r e q u i r e t h e b r e a c h t o be remedied w i t h i n 6 stated t h e .

8.16

Cancellation

t h e K i n i s t e r of F o r e s t s may c a n c e l t h i s l i c e n c e on g i v i n g s i x c y (60) dayr n o t i c e i n u r i t i n g t o t h e Llcensee f o r t h e b r h c h of any covenants, provisoes, terms 0: c o n d i t i o n s of t h e l i c e n c e , o r f o r f a i l u r e t o pay any c h a r g e s , i n c l u d i n g s t m p a g e , r o y a l t y . r e n t a l o r tax. 8.1L2

Bankruptcy and I n a o l v e ~ c y The Licexsor r e s e r v e s t h e r i g h c c o suspend o r cancel this l i c e n c e i f chc License2 i s , o r beccnes, bankup: o r i n s o l v e n t .

8.2 8.21

improvements on Area a t Sxpizy F e l l e d Tlnber On t h e e x p i r y of t h i a l i c e n c e , any and 611 timber c u t under c h i s l i c e a c c snd remaining on che l i c e n c e a r e a s h a l l be and become t h e a b s o l u t e p r o p e r t y of r h c Liceasor.

8.22

n i l 1 and Canp Buildings It i s underrcood and agreed c b c t h e Licensee s h a l l r e w e a l l of h i s b u i l d i n g s . m i l l and l o g g i n g equipsenc aad fixcure. upon cornplecion of o p e r a t i o n s o r t e r n i n a t i o n of t h e l i c e n c e , whichever i s che sooner.

8.23

Fixed lmproveracncr ill inprovene.~c; >or capable o f removal o: a f f i x e d .ball r e v e r r chc Crown and che LLcensee o r anyone c l a i n i n : under him o r chem s h a l l have no c l a i c uhacsocver. co

8.3 8.31

l e l a c i n g co iranzfer of Liccnce and A c q u i s i c l o ~of Addicionrl C ~ z r i n g3 i g h t s ~ r r i g - c n c of Liccnce The Liccosee covcnancs v i r h chc Liccnsoz :hat h e w i l l noc a s s i g n o r CranJfer chis licence o: any i n c e r c h c chcrein vlchovZ che u r i c c c n canrcnc of the Licensor f i z s c had and obralned.

8-32

Page 9.

A c q u i s i t l m of c u t t i n g Rights

Thc Licensee a s n c s t h a t all timber s a l e u c ~ n c e swithin the publlc Sustained YieU U n i t that U Y bc subsequently acquired by the Licensee s h a l l forthwith be amended so a s t o ensure that the terms and c m d i t i m s a p p l i c a b k t o the harvesting of tbkr thereunder s h a l l a t a l l tlmes k t h e Sam? as t h e terms and c m d i t i m s applicable t o t h e harvesting of timbcr under this licence.

8.4

Deflnlticn of Agency

The Licensee agrees t h a t any p r a m o r F r s m s b*o cmduct. or 1. cmducting o p z r a t i m s t o the howledge of o r with the cmscnt of tk Licensee m t h e lands described i n any p r m i t issued p l r s m t t o +hi. Uccnce, i s and are t h e agents o r Servants of the Licensee. 8.5

Rights-of-May T b Licensor r e s e n V e st h e r i g h t t o grant righta-of-uay t o other p r a m s across, through o r over t h e lands v i t h i n the cutting p d t s issued under this Ucence hereinbefore described, provided h m v e r , t h e righta-of-vay s o granted shall not W d e or obstrucr t h e licensee*^ r i g h t s under this Uccnce o r prevent t h e Licensee Iran enjoylng t h e use iPprwemcnts.m the land3 within the c u t t i n g pfrmits of the Licerueels o r give any r i g h t s t o use t h e Licensee~s'improvementsuittiout the ccnsent of t h e s a i d Licensee while this licence i s in e f f e c t .

8.6

.Licence Subject t o Other Rights The Licensee covenants ' d t h the Licensor that in carrying out hi3 o p ~ a t i under ~ s thls licence he w i l l in no n y blcck, obstruct, o r danage any road, t r a i l , watercourse or other propzrty ard any objt=.lrztiol~ caused o r d-ge dme by him h i 1 1 h nmwed and rc)ui:Vd f.uLll!dth by t h e Licensee a t h i s o m e x p n s e .

8.7

Licence Subject t o the "Department of Forests Act" Provided f u l t h e r t h a t t h e i n t e r e s t , r i g h t s and p - i v i l g e s of t h e Licensee in thc s a i d hereditaments, tenements and prcmises s h a l l be ccnstrucd as subject always t o a l l t h e p r w i s i s n s of thc "Deprtmcnt Of Forests Act" and arrendments thereof and r e g u l a t i a ~ st l r n u ~ d d r .

8.8

Appurtenant Hanutacturing Plant

The Licensee covenant. and a p e s t o maintain i n oprraiion a n o d processing plant o r p l a n t s capable of u t i l i z i s g a l l t r e e s h w ~ e s t c dt o a seven and onc-tenth (7-1/10) inch diameter measured w t s i d e t h e bark a t a point t e l v e (12) inches frcm t h e ground &?d t o a f c u r (4) inch t o p d i a n r t e r , and b-ithout l i m i t i n g t l x generality of the foregoing such p h t o r p l a n t s s h a l l be c q u i p p d t o c a r r y out barlcing and chipping of timber and t o manufacture r a i l h a y t i e s as m e of the primary prcducts and t o handle and s t o r e a l l prcducts mufa:tured by the Licensee. '

a r and no cutting permit s h a l l be i s a Unles. othanrlse authorized in writing by the Licensor, thc Licell3ee agrees t o provide manufacturing f a c i l i t i e s and t o have such o&vrdtillg within thrce(3) ycars or t h e date or avard of t h i s 1iccn:e lillich, i n t h e opinion or t h e l i c e n s o r , are suitable f o r the uCi&izali-m of deciduous . p c i c s or t r e e s located cn t k area. approved f o r cutli!X i n accordance with clause 2.23 a n d . t l r volume o i deciduous trcca will h recorded in accordance nith clnuse2.32. Provided howver t h a t the Licel~%or nay i n h 1 . i t i n ~relea% tk Licensee absolutely o r c a l d i t i m a l l y i n %*ole o r in par(. i r m these covenants.

Page 10

In t b manutactwe of the q u a n t i t i e s of t f r b e r authorized f o r cutting plrnwt t o Clause 1.1, the Ucensor nay require t h e licensee t o offer t o a &p mill a s designated by the Ucensor. the uocd chips. oaudust and hogfuel manufactwed I r e all logs, slabs o r edgings and other chippable material a r i s i n g froD tiDber not otherwise u t i l i z e d by t h e Ucensee i n the m u f a c t u r e of lunber, t i e s , veneer and plgvocd. 9.

DECISION OF 11.2 HlNI-

F1Nb.L

The decioicn of t h e H i n i s t e r of Forests w i l l be f i n a l in t h e interpretation of m y of t h e t e r n , covenants and conditim:, of t h i s licence.

This licence shall be binding upon and ent o the benefit of the Licemee, and the said L i c a w e * s executors, r d d n i s t r a t O r a , successors

and assips.

I n Witness uhereo.' t h e Licensor has hereunto s e t hia hand and s e a l and t h e Ucensee has hereunto afflxed its corporate seal by t h e hands of i t s p r o p r o f f l c e n i n t h a t behalf.

SICEED, SEAIED AND EVEED) by t h e Licensor h t h e presence of:

1 1

;Sla&? Witness

T E CORPOILkTE. S L

O? TIE LICiNS.FZ) was h e n u n t o affixed ir. the 1

presence of:

DISIaICI

P?xKcE

W l i c Sustained Yield Unic

nm nmn*,

nvde t h e

..tt.h..

day of

CEOWZ

SIXANN'I

......&% 7. .--. ...., A.D.

lg.72.

Ber Majesty t h e Ween represented h e r e i n and a c t i a g by her District P o r e n t e r , of t h e a b w e named d i s t r i c t ( h e r e i n a f t e r c a l l e d t h e .Zicemor")

., and

Om-u

Znferprku L t d . . w ,

coecthr uith

OF 'ME OHE PART.

.f.t.dz

it.:

P o r t Helaon. S. C.

u e c u t o r a , adminiscrato:~.

V K

1BO

successors and a s s i g n a ,

( b c r e i ~ f c e ru l l e d t h e Y e e l u e e " ) OF

OIBER PART.

i n l i E S S E M t h a t . i n c o n s i d e r a t i o n o f t h e payments t o be made and t h c c o n d i t i o n s t o 'oe c a n p l i e d u i t h by and on t h e p a r t o f t h e Licensee. and of t h e U c e n s e e ' a o f f e r t o purchase t i m b e r under and s u b j e c t t o t h e p r o v i s i o n s o f R r c 111 of t h e 'Department o f F o r e s t s Act". t h e Licensor doer hereby g r a n t u n t o 'che Licensee a l i c e n c e t o c u t an3 renave q u a n t i t i e s o f timber f r c a Crown l a n d s witbin the Sikanai P u b l i c Sustained Yield U n i t according t o an apprwed p l a n and p e r n i t s a a h e r e i n a f t e r n+nrioned, s u b j e c t t o t h e provicioas of 'aid "kt" and f o r t h e term and s u b j e c t t o t h e r e s e r v a t i o n s and c o n d i t i o n s h e r e i n a f t e r me.? Ci~r..d

folio".:

SCOPZ OF 'ME LICENCE

Cutting Authority Tne L i c e n s e e i r aurho:ized and e n t i c l e d t o b a x e s c 10.000 cutLCs of t i n h e r p e r y e a r f r c a t h e s a i d S h n d v PubXc S u s t a i n e d Y i e l d Unic a c c o r d i n g t o a p p r w e d d e v e l o p e n t p l a a~ s here~ f t e rd e s c r i b e d and Co p c m i c s i s s u e d am h e r e a f c c r provided. The v o h of timber h s r v u t e d t a c h y u r a h a l l be t a k e n t o include a11 of t h e t i n t e r c u t and rssaovcd or u a s t e d , o r damsged by t h e Licensee o r it, a g e n t s a3 ~ o v i d c di n t h i s l i c e n c e , t h e "Deparcnmc of F o r e s t s Act" m d t h e cutting pemlta.

1-2

b u d s S u b j e c t t o Occupation B a r v e s t i n g o f t h e timbel- pursuant t o permits issued under a u t h o r i w o f t h i s l i c e n c e s h a l l h e i n accordance u l t h c u ~ r e n t l yapproved dcvclopmcqt p l a n s . e a c h of whicb c o n s e c u t i v e l y a s approved by t h e Licensor f o r e a c h s u c c e s s i v e period. La hereby i n c o r p o r a t e d i n t o and made a p a r t of t h i s licence.,

R o v i d c d t h e Liccnaec s h a l l be e n t i t l e d t o cut and remove timber o n l y fro^ t h o s e landa over uhich t h e Liccorror han inaucd r o t h e LiC.llJec c u r r i n g permit as more p s r c i c u l a r l y d e s c r i b e d hcrecfce:, 81.0 Cbdc t h e lands t o v h i c h chi. l i c e n c e La a p p l l c a > l c and f o r vhich occupat i o n u i l l be g r a n t e d t o thc Llcensee r r c l h i c e d t o rhoae land, f o r vhich a c u t t i n g p c m i c ha3 Seen i a s u e j t o the Licensee. Thi. l i c e n c e s h a l l n o t t b e r c f o r c be consrrucd i n any manner chzc could i n d i c s r o o; bc i3:erprcced as g l v i n l c o n r r a l t o the Licensee of any of rhc lnnCs or a z y P a r t t h e r e o f s p e c i f i e d i n c1au.r 1.1 but t h r c the o n l y r i g h t of c n c r y o n t o such lsnd. s h a l l be co rbc ryccnr s a provided by t h e . . i d - m i r a .

1.3 r\

P a g e 2.

Tern

T h i s l i c e n c e i s f o r a p e r i o d c o n a e n c i n x from d a t e h e r e o f and c o n t i n u i n g f o r s term o f t w e l v c ( l 2 ) Years n e x t e n s u i n g .

CUTTING PRIVILEGES 2.1 2.11

D e v e l o p n e n t Plan. Submisaior of Development P l a n s S u b j e c t t o t h e p r o v i s i o n s o f c l a u s e 2.13 t h e L i c e n s e e s h a l l submir a p l a n f o r t h e h a r v e a t i n g of t h e t i m b e r ( h e r e i n a f t e r r e f e r r e d t o a6 a d e v e l o p m e n t p l a n ) f o r t h e a p p r o v a l o f t h e L i c e n s o r n o t l a t e r t h a n s i r ( 6 ) montha p r i o r t o r h e p r o p o s e d t i n e f o r commencemenf o f operations u n l e s s o t h e r u i a e s u c h o r i r e d by t h e L i c e n s o r . I n t h e e v e n t t h a t subsequent d e v e l o p n e n t p l a n s a r e r e q u i r e d e a c h p l a n a h a l l b e s u b n i t t e d f o r the spproval of t h e Licensor n o t l a t e r than a i x ( 6 ) m o n t h s p r i o r t o t h e p r o p o s e d r i m e o f comaencement o f .operations. A11 d e v e l o p m e n t p l a n s m u s t b e submitted u n d e r t h e h a n d and s e a l of a f o r e s t e r r e g i s t e r e d under t h e " B r i t i s h C o l u a b i a P r o f e s s i o n a l F o r e s t e r 8 Act" a n d s h a l l b e f o r s u c h p e r i o d o f t i m e a n d s h a l l c o n t a l n s u c h i n f o r m a t i o n as t h e L i c e n s o r r e q u i r e s a n d t h e L i c e a s o r reserves t h e r i g h t . i f n e c e a s a r y . i n s h e i n t e r e s t s o f o b t a i n i n g t h e maxinun a n d p r o p e r d e v e l o p m e n t o f t h e Sfksonf Public Sustained Yield U n i t t o d e a i g n a c e t h e a r e a s of o p e r a t i o n o f t h e L i c e n a e e .

Provided t h a t p r i o r t o t h e approval of the i n i t i a l development p l a n t h e L i c e n s o r s h a l l s e n d n o t i c e t h e r e o f t o t h e o t h e r Licensees e s r a b l i a h e d i n che s a i d u n i t . 2.12

Dcvelopnent P l a n a P a r t o f t h e L i c e n c e Each development p l a n . on a p p r o v a l by s h e L i c e n s o r , s h a l l b e and i s a t e r n a n d c o n d i t i o n a n d b e c o n e s and i s a p a r t of t h i s l i c e n c e and a n y b r e a c h of t h e r e r m s and c o n d i t i o n s of a n y d e v e l o p n e n t p l a n o r c u t t i n g p e r m i t I s a b r e a c h of t h e terms and c o n d i t i o n s o f t h i s l i c e n c e .

2.13

R e v i a i o n of Development P l a n s ' H o t v i t h s r a n d i n g c l a u s e 2.11, r h e L i c e n s e e may s u b r i c r e v i s i o n s t o t h e d e v e l o p n e n t p l a n a n d t h e L i c e n a o r nay r e q u i r e c h e L i c e n s e e t o s u b m i t w i t h i n t h e t i n o f i x e d by r n e Licensor r e v i s e d d e v e l o p n e n t p l a n s and d e s i g n a t e a r e a s f o r c u t t i n g i n t h e e v e n t of any emergency c s u c i n g o r t h r e a t ' e n i n g i n j u r y t o any t i m b e r s u b j e c t t o t h i s l i c e n c e and wicho u t l i m i t i n g t h e g e n e r a l i c i e m of t h e foreRoing such emergency s h a l l i n c l u d e i n s e c t a t c * c k s . f i r e , blovdovn o r o r h c r c a u s e s and t h e L i c e n s e e s h a l l t a k e s u c h measures a8 C h e L i c e n ~ o rd i r e c r s r o h a r v e s s t h e s a i d t i m b e r .

2.2 2.21

Cutting Permits A p p l i c a r i o n f o r and I s s u a n c e of

Cutting Permits

Subaequenr r o t h e a p p r o v a l o f t h e development p l a n and upon f u r t h e r v r i r t e n a p p l i c a t i o n f r o - t h e L i c e n s e e . a n d ~ u b j e c tt o a n y d i r e c t i o n f r o a r h e L i c e n s o r a s p r o v i d e d i n clause 2 . 2 2 , r h e L i c e n s o r s h a l l i s s u e c u r c i n g p e r m i t s f r o = r i m e t o t i z e as r e q u i r e d t o a u t h o r i z e r h e h a r v e s r i n g o f t h e timber f r o n rhe a r e a s f o r v h i c h a developnent p l a n has beec approved. U n t i l p a o u f n c r u r i n g f a c l l i c i e s r o u s e deciduous s p e c i e 1 a s r e q u i r e d b y c o n d i e i o n 8.8 have been i n s t a l l e d o r provi d e d f o r by r h e l l c c n a e e a n d a r e i n u s e , a l l a p p l f c a r i o n s f a r c u r r i n g pcrnic. w i l l be confined ro t i n b e r sranda v h i c h a r e p r i m a r i l y coniferous and r h c d e c i d u o u s volume c h e r e l n s h a l l b e r e c o r d e d i n a c c o r d a n c e v l r h c l a u s e 2.32;:

u ~ o t h e) r w l s~~a u ~ h~o r i z a~dby the Ucansor t k i p p l i c a t i m f o r t h e i n i t i a l c u t t i n g ~ m i or t pzamits s h a l l be =da within tvalve (u) month. f o l l c d n g t h e dats or i s s u e of this licence urd a t ka~t thme (3) months p r i o r t o t h e proposed date of CcrrnnCeMnt of o p m t i m a ; n t a p p l i c a t i o n s f o r c u t t i n g p r n i t a sha3l k made n o t lass t b z r m m t h s y r i o r t o t h e proposed c - n c e ~ n t of o p r a t i m s the a r a a a p p b d for. The term of a c u t t i n g p d t M Y be f o r any p r i a of of t h m e (3) ytars cmmensrate v i t h the e s t k t o d p a n up t o a v o h of t b h r in t h e m a cOVerOd by t h e p r n i t and the rate or c u t t i n g m f e r r s d t o h c m a R e r in clruse 2.32, provided t h a t c u t t i n g p d t s issued t o authorize the h a m s t i n g of timber f r m road right s of-nay within t h e a r e a o r an approved d e v e l o p n t plan may & issued t o expim v i t h t h c t e r m of t h e Ucenca.

he c u t t i n g p d t s s h a l l c o n s t i t u t e the L l c e n a e e * ~a u t h o r i t y to e n t a r on t h e lands t o vfiich t h e c u t t i n g p d t applies Md t h a r i g h t t o h a m s t tho timber t h s r c f r m according t o t h e terms end c m d i t i c n s of the pnnlt. Any c u t t i n g of t i n b e r n o t authorized by a p&t all be deenrd t o be I n t r e s p a s s .

2.22

2.23

Survey of Boundaries The Licensor may d i r e c t t o t h e l i c e n s e e t o have s u n e y e d and defined cn t h e ground, urd a t t h e Licensee's e x p w e , any o r a l l of th bcundaries of t h e c u t t i n g p d t s which he msy deem necessary t o have 'so surveyed o t tk Licensee t o ccmpkta any and detlned. In t h e event of f a i l such s u m y v l t h i n t h e tim W t s tet by the Licensor, the Licensor may c a u x tb aurvcy t o be made and t h e c o s t s shaU be charged t o and tc psyabln f o r t h v l t h by t h e Licensee. Forn o t t h e Cutting P e d t T k c u t t i n g p z d t s h a l l be L? t h e form o r fad subject t o mch t e r n s and c m d i t i m s a s the Llcensor approves consl=tent v l t h tlle p r w i s i m s end i n t e n t o t t h i s llcence, the "DcpartJent of F o r e s t s A c t " and any M n h n t s t h e r r t o and r e g u l a t i ~ thereunder s and t h e p d t s h a l l s a t f o r t h t h e r r b the s p c l f i c a t i m a o t t h e t i n k r that must be harvested.

2.3 2.31

Reaulaticm of Cut Annual C m n i t n r n t The q u a n t i t y o t t b b e r t o be harvested under clau5e 1.1 of t h i s Ilconce m p r e s c n t s a? mual c d t m c n t not a c c e d i n g ~o,(x)(I PPLl d! u o t t b b e r being a part o t the a m u a l allcnable cut i n t h e I Fubllc Su5talned r i e l d U d t .

2.32

Cutting W g e t s The Llcensae agrees d t h t h e Llcensor t h a t a l l loggbrg o r lumbering o ~ r a t l o n ac a r r i e d on by, o r on behalt of, t h e Licensee on thi. llccnce will & carducted according t o the f o l l w l n g cmditions: (a)

The Licensee s h a l l s u b i t a. part of t h e developnent plan t o be subnitted l n accordance n i t h clau5c 2 . n . a c u t t i n g budgat settin.3 f o r t h t h e q u a n t i t i e z o t timber t o be harvested each y e a r and t h e c u t t i n g p d t s t o which t h e c u t t i n g o ~ r a t i m .apply.

(b)

T k q u a n t i t y of timbsr harvested a v l u a l l y s h a l l k I n accnrdancc with the approved c u t t i n g budget and s h a l l k apFroximatcly equal t o t h e apprwed mu1 harvest s t a t e d in c l a u ~1.1 above.

(c)

Prwided t h a t the quantity of timber s a l e d and b i l l e d o r us3ted o r damaged i n any given year s h a l l not: (1) Exceed one hundred a-d f i r t y (150) p r cent or t h a t annual harvc,t, or (11) Ee 1e.s than f i f t y (50) per c e n t or t h a t a m u a l harvest.

(d)

Prwidcd t h a t the quantity ai. t l n b e r scaled pnd b i l l e d o r ~ s k d o r damaged ,hall not ccntinuou.ly cxcscd the axnus1 hameat s t a t e d in clause 1.1 above.

2.32

Continued: (e)

R o v i d c d t h a t t b c t o t a l q u n n c i t y o f timber harveated d u r i n g a period nor exceeding f i v e (5) d e n i g m c e d c o n s e c u t i v e year. s h a l l n o t u c e e d one hundred and t e n (110) p e r c e n t n o r be lea. t h a n n i n e t y (90) per c e n t of f i v e (5) t i m e s t h e annual h a r v e s c r e f e r r e d t o above, and s h a l l be a l s o s u b j e c t t o t h c f o l l o u i n g : (1) Ubere t h e q u a n t i t y of t i m b e r h a r v e s t e d whether a c a l e d and b i l l e d o r wasted o r damaged f o r t h e f i v e (5) d e s i g n a t e d cons e c u t i v e years i s i n u c e a a o f one hundred (100) p e r c e n t of t h e t o t a l of a n n u l h a r v e s t s f o r t h a t p e r i o d , t h e n t h e t o t a l of a m u a l h a r v e s t s f o r t h e n u t p e r i o d of f i v e (5) c o n s e s u t i v c y e a r s s h a l l be reduced by a voltxue corresponding t o t h e t o t a l of s u c h excesa q u a n t i t i e s . ( i i ) Uhcre.the q u a n t i t y of timber h a r v e s t e d f o r t h e f i v e (5) d e s i g n a t e d c o n s e c u t i v e y e a r s i s o v e r n i n e t y (90) per c e n t b u t l e a s than one hundred (100) p e r c e n t of t h e t o t a l of annual h a r v e s t # f o r t h a t period, then t h e t o t a l of annual harvests f o r t h e next period of f i v e (5) consecutive y e a r s s h a l l be i n c r e a r c d by v o l m e c o r r e s p o n d i n g t o t h c t o t a l of such d e f i c i e n t quantities.

I n t h e event t h e c t h e m a x h q u a n t i t y of timber s p e c i f i e d i n cl.uses 2.32(c)(i) o r 2.32(c) above i s exceeded a n aaseaamenc may bc made under c l a u s e 7.71 and t h e l i c e n c e shall b e s u b j e c t t o c a n c e l l a t i o n a s provided i n c l s u s e 8.141. 2.322

Hinimtn Cut

R w i d e d t h a t should t h e q u a n t i t y of timber s c a l e d and b i l l e d o r wasted o r d s ~ s g e dbe l e s s t h a n t h e s=ounc a p e c l f i e d i n clau.ea 2.32(c)(ii) o r 2.32(e) above t h e l i c c x c c s h a l l be s u b j e c t t o c a n c e l l a t i o n a s prov i d e d i n c l a u s e 8.141.

3.1

Log Harking Before any t i n b e r i s renoved f r o 3 t h e l a n d s described i n any c u t t i n g p e r n i t i s s u e d unde: t h i r l i c e n c e , i t s h a l l be conspicuously r a r k e d w i t h t h e Timber Hark a p p l i c a b l e t o t h e t i n b c r c u t on t h o s e l a n d s referred t o i n the cutting pernit.

3.2

Scaling ( i ) The Licensor may g i v e d i r e c t i o n a n t o t h e method of s c a l i n g , and may d e s i g n a t e t h e p l a c e of s c a l i n g . ~ e a s u r i n gand c o u n t i n g of any timber cur under c h i 8 l i c e n c e . (iL) k l c a s 0cherui.c d i r e c t e d b y . t h e L i c e n s o r , t h e B r i t i s h Columbia Cubic S c a l e a h a l l be u ~ e dand s p p l i e d i n che.mcaling of a l l timber c u t under c h i s l i c e n c e i n accordance w i t h finnuobd s c a l i n g s p e c i f i c a t i o n s a p p r w e d by t h e Chief F o r e s t e r . ., ..

4.1

Area of Occupation ( i ) The Licensee s h a l l be deemed t o be i n occupation of o n l y chose i n n d ~ deecribcd i n c u t t i n g p e r p i t . issued t o che Licensee pursuant t o t h i n l i c e n c e t h a t have n o r been r c m i n a c e d i n w r i t i n g by t h e Licenaor and t h e p r o v i s i o n s of P a r t X I of t h e '.Deprtmenc of P o r e s r s Act" s h a l l apply t h c r c t o f o r and d u r i n g t h e p e r i o d c h a t t h e Liccnace i a deemed t o be i n occupstion of any landa w i t h i n c h i s l i c e n c e . ( i i ) The e n t i r e c u t r i n g permit area . h a l l be d c e e d r o be includcd i n t h e areas occupied by t h e L i c e n s e e u n t i l che Licensor has n o t i f i e d t h e Licenscm i n u:iring r h s c t h e s l a s h has been dispose$ o f s a r i m f a c c o r i l y on t h e e n t i r e a r e s of a loegcd c u t t i n g p e r n i c .

4.21

Re- organization Plan

2%. Libansbs sh.ll submit t o Cha LLosnsor p r i o r t o AprLl 15 of csch y e a r d u r i n g t h e ttrr. of t h i s l i c e n c e a f i r c p r o t e c t i o n pre, o r g a n i z s t i o n p l s n together u i t h s d u t y r o s t e r which s h a l l be kept c u r r e n t during che period of b y 1 t o October 31 i n c l u s i v e o r f o r juch o t h e r p e r i o d a s t h c H l n i s t c r may s p e c i f y . a11 t o t h e s a t i s f a c t i o n of t b c Licensor. 4.22

Standby Force The Licensee a g r c c s t o a i n t a i n a t a l l t i n e s d u r i n g t h c period of Hay 1 t o October 31 i n c l u s i v e o r f o r such o t h e r period a s t h e X f n i s t c r may s p e c i f y a a i n h r t s n d b y f o r c e of t h r c c (3) men prov i d e d , however. t h i s f o r c c upon approval of t h e Licensor may vary i n n k e r of uen depending upon t h e a c r e a g e d e e d t o be occupicd by t h e L i c e w e e and upon h a u r d c o n d i t i o n s . The Liccnsor may r e q u i r e t h e Licenree t o ~ i n t a i non tk a r e a of t h i s l i c e n c e a n s d d i t i o n a l f o r c c of n o t more t h a n one (1) man f o r each t h r e c hundred (300) a c r e s of t h e t o u l a r u . i n a c r e s dcmcd occupied i n t h i s l i c e n c e .

4.23

Standby F o r c e E q u i p e n t Unless o t h e r w i s e authorized by t h e Licensor, during t h e period of Hay 1 t o October 31 i n c l u s i v e or f o r such o t h e r period as t h e X i n i s t e r nuy a p e c i f y t h e standby f o r c e provided Sy t h e Licensee as r e q u i r e d i n c l a u s e 1.22 s h a l l be adequately t r s l n c d and equipped f o r f o z e s t f i r e s u p p r e s s i o n and s h a l l be r e a d y t o t a k c i m e d i a z e a c t i o n t o suppress f i r e whenevcr n o t i c e of a f i r c i. given or received. Adequate means of t r a n s p o r t a t i o n and r a d i o c-ication equipeat of a t y p c and n d c r s s t i s f a c t o r y t o t h e Licensor s h a l l be provided by t h e Licensee t o t h e s a i d standby f o r c c . Such f o r c e s h a l l be -intain+d i n a l o c a t i o n on oe near r h e c u t t i n g p e r n i t a r e a o r a r c a s a s sppzoved by t h e Liccnsor.

5.1

R i m a r y Accesa Roads S o b j c c t t o tk provisions of S e c t i o n 17 (6s) t h e Licensor require. r h c Licensee t o b u i l d p r i c a r y access roads a u b j c c t t o t h e following conditions:(a) (Xlly s u c h roads as may be designated from t h e t o t h e by t h e Licenzor s h a l l be p r i n a r y accesa roads. (b) h c s a i d r o a d s a h a l l be constructed co t h e s p e c i f i c a t i o n s supplicd by t h e Licensor and t o t h e s t a n d a r d s f i x e d by t h e Licensor. ( c ) The roads s h a l l be b u i l t only on l o c a t i o n s having t h e p r i o r approval of t h e Liccnsor. (d) A11 lands w i t h i n any riehrs-of-uay s h a l l b e verccd i n t h e Cram p r i o r t o conacrucrion of t h e roads. ( c ) A l l ~ d t c e r sp e r t a i n i n g t o t h e c o s t s of c o n s t r u c t i o n and methods of p a p e n t .ball be aubject t o n e g o t i r c i o n and evidenced by a n addendm t o t h i e l i c e n c e vhich addendum shall form a n i n t e g r a l p a r t of t h i s licence. (f) A l l such roads .hall be t h e p r o p e r t y of t b c Crom and chc Licennec s h a l l have no c l a i n on tk s a i d roads f o r compcnsacion o r otherwise cxcepc s a provided i n (c) above; and t h e Licensee s h a l l not place any g s t e . o b s t r u c t i o n o r h p e d h e n c of any kind i n , on o r over t h e s a i d roads; and t h e Liccnrec s h a l l not p o s t any s i g n s on o r near t h e road except on t h e p r i o r approval of t h e Licensor. h e Licensee shall c o n s t r u c t and a i n t a i n t h e road i n a u n n c r t o (g) cause t h e l c a s c d a ~ g ct o che environment a l l Co t h e s s c i r f s c c l o n of t h e Liccnnor.

5.2

Hain and Secondary Eoad Conmcrucrion Unless o t h e r u i 3 c aurhorized i n w r i t i n g by t h e Licensor, che roads s h a l l be conscrucrcd o n t h e l o c a t i o n r o u r c sl defined or approved by t h e Licensor. The roads s h a l l be conscructcd and maintained by t h e Llccnaee according t o :he c p e c l f i c s c i o n l and atandrsd. dcfincd i n chc c u r r i n g permica issued undcr clause 2.21.

n u r i n g t h e t e r n of o p e r a t i o n . under c h i s l i c e n c e . r l u Licensee .hall -inrain a11 n v i n a l l - w e s t h e r road. c o n s t r u c t e d i n connection with c h i s l i c e n c e i n a c o n d i t i o n s s r i a f a c c o r y Co t h c Licenaor f o r us, by v e h i c u l a r t r a f f i c d u r i n g such t i n e *S t b c Di.tricc l o r e a t e r .ball apscify. Erosion R o t e c t i o n c-a S a l e Area upon f i n a l c e s s a t i o n o f o p e r a t i o n s o r on annun1 t e r n i n 6 c i o n of logging oper.tions o r a t a n y o t h e r tLne a s i n s t r u c t e d by t h e F o r e s t O f f i c e r , t b e U c c n a e e a h a 1 1 c l e a n o u t d i t c h e s and c u l v e r t s and co,trucr t h e n d e r of u a t c r - b a r s o r open c u l v c r t s t o t h e S p c i f i c a t i o n s and l o c a t i o n s t o t h c a a c i s f a c t i o n of t h e D i s t r i c t P o r e r c e r o r t a k e o ~ h r -asurea deened n e c c s s a y b y t h e s a i d D i s t r i c t P o r e s t e r . I n rhc e v e n t t h e L i c e n s e e f a i l s t o c a r r y o u t t h e above sea.ures t h c D i s t r i c t F o r e s t e r may a s s e s s t h e L i c e n l e e t h e entimated c o s t s to c a r r y out such E s a s u r e s . a n d t h e Licensee s h a l l f o r t h w i t h pay t h e account. A u t h o r i t y co Talrr P o s s c s a i o n of Roads b y tk C r o w

Ihe &own r e s e r v e . t h e r i g h t t o Cake possession o f any o r a11 road. c o n s t r u c t e d on t h i s l i c e n c e a r e a a t any t h u i t h o u t compensation t o t h e Licensee n o t u i t h a t a n d i n g t h e p r o v i s i o n r of S e c t i o n 56 of t h e "Depar-nc of F o r e s t s Act" s u b j e c t , h o u f v r r , t o p e r m i t t i n g t h c Licensee t h e u s e of t h e roads f o r t h e d u r a t i o n of c h i s l i c e n c e .

Ihe Licensee . b a l l n o t f o u l o r r e n d e r u n f i t f o r i r r i g a t i o n , d r i n k i n g o r d-.tic purposes a n y lalrc. stream o r s p r i n g which provides t h e water .upply f o r s n y i r r i g a t i o n r y s c e n o r f o r any p e r a o a o r cerenrnity. The Licensee a h a l l :

( 1 not a l l o v any t r e e s . l o g s . l o g e i n g d e b r i s , o r any aubstanke l i k e l y

(2)

(3)

(4)

(5)

(6) (7) (8) (9)

t o cauac p o l l u t i o n t o be deposited a t any t i n - w i t h i n m y l a k e o r stream. n o t a l l o w any l o g s t o b e skidded. e q u i p e n t t o b c operated, g r a v e l t o b c d i r p l a c c d oz any d a m g e t o b e done w i t h i n t h e highwater l e v e l of a n y s t r e a m channel. provide a11 s t r e a m c r o s c i n g a w i t h a b r i d g e o r c u l v e r t . t h e design of which w i l l a c c o a m d s t e naxhum atrcam flow and p e m i c unobstructed f i s h p a s s a g e and s c h e d u l e t h e c o n s t r u c t i o n of a11 scream c r o s s i n g s a s d i r c c c e d by t h c F o r e s t O f f i c c r . not p l a c e any obstruction o r f i l l w i t h i n t h e highuscer l e v e l of any stream c h a n n c l oz lakc. remove 4ny l o g g i n g , m i l l i n g o r road b u i l d i n g d e b r i a deposited i n any s t r e a m c h a n n e l o r l a k e a s d i r e c t e d by t h e F o r c r t O f f i c e r . l o c a t e l a n d i n g s n o c l o s e r t h a n two (2) c h a i n s from any stream channel and o n l y w i t h i n a r e a s d c s i g n a t c d f o r c u t t i n g . d i r e c t t h e f a l l i n g and y a r d i n g of t r e e s away f r a streambanks and l a k c s h o r e s e x c e p t a s otherwise d e s i g n a t e d on t h e ground and approved by t h e F o r e s t O f f i c e r . n o t burn s l o s h c l o s e r t o t h e streambank6 o r lakeshore. t h a n t h c distance s p e c i f i e d by t h e Forest Officer. p r o t e c t f r m l a g g i n g and burning damage a l l a t r e a r b a n k and lakeahore shruba.

FINANCIAL The L i c e n ~ e es h a l l pay c o t h e Liccn3or t h e f o l l o u i n g m u m . t h e , mpcificd hcrcin.

a t the

An annual r e n t a l a c t h c r a c c s a a provided i n the '?)cprEmenC o f . F o r c a r s AcC" end Regulations when che s a m e becanee duc and pnyable.

Porcac R o r e c c i o n Tax Poreat Procc;cion Tax a t r a c c s a s provided i n chc ' n e p a r m c n c of Porescs Acc" and Rcgulncions when the ' a = be=-cs due and psyablc.

Scaling he charges f o r mcaling. u e i c h i n g . =-=asurLng snd counting a c e l y upon r e c e i p t of accourrc.

7.4

General Any ocher .ms. ao.ccamcn:a o r COCCC i n Cormection u i c h chi, l i c e n c e o r a r i n i a g f r u n timbel- h a r v c r t i n g o ~ c r n t i o a cconducted i n conj u n c t i o n w i t h t h l s l i c e n c e h z b z d i s t e l y upon r e c e i p t of account.

7.5

DeposiCc S u b j e c t t o t h e p r o v i c i o n z of S c c c i o a s 2.03 and 2.05 of t h e B.C. Z e g u l a t i o n 85/65, being n regulation goverainC, CM 1 ~ - f Croua t h h c r , cpe L i c e n r c c agree: t b c t h e a= of $.>~.~zP.PP a p p l i c a b l e a8 a deponit f o r cirrjcr covered by c h l c Llccnce, s h a l l be held b y t h e Licensor a u b j e c c t o c a p l i a n c c by tire U c e n s e e w i t h a11 t h e term and c o n d i t i o a a of t h i s l i c e n c e ; provided C h c t h e L i c e a s o r may deduct frm time t o t h e f r u n t h e .aid d e p o s i t any sn e c e s s a r y t o pay charges i n c u n c d by th Licensor i n c a r r y i n g n u t t h e f u l l i n t e n t and p r o v i n i o a r of this l i c e n c e and t b c Sicencee a h 1 1 f o r t h u i t h pay t o t h e L i e m a o r ouch sua8 as a r e a e c e a s a ~ yt o make t h e d c p a s i t e q u a l t o t h e above orcntioned sum; provided f u r c h e r , i t t h e Licenacc h s w e l l and t t u l y c u n p l i e d w i t h t h e tern^ and condiciona of t h i n l i c e n c e Co t b c s n t i c f a c t i o n of t h e Licensor t h e aforesaid o m o b n l l bccase ccfundablc o u b j c c t t o t h e a f o r e s a i d B e g u l a ~ i o n ; o t h e r u i a e t h e s a i d d e p o s i t i o s u b j e c t co the,deductiono a n nforcmcncioncd o r otherwise w i l l bc a p p l i c d f o r b g n e o r ocher chsrgea.

...,.

Stunpage, i n c l u s i v e of r o y n l c y a t che r a c e r na a p p r a i s e d ,rind asnerocd by chc Zlcenaor fzosl zime t o t h e according co Chc method of appuaiool t h e n i n u s e by chc L i c e n s o r and a s 8 C C f o r t h i n t h e c u t c i n e p e r m i t s referred t o i a c l n u r c 2.21 above. Z'xe Wccnsee l e y c o e c t b c r u i c h and agrcea cn pay c o l d s c m p a g e i n c l u n i v e of r i n n d d i c i n n t h e r e t o thc -ho;rus b i d of $. per hundred (100) c u b i c f e e t of wood i a n c d i a t c l y upon r e c c i p c of account.

.... .....

I n Chc e v e n t t h n t t h c q u a n t i t y of c f n b e r cuc o r s p c c i f i c d i n c1nu.c 2.52 i s exceedcd thcn doublc stempage inc1u;ivc of r o y a l t y s h a l l 'uc as,csscd and bc p a y n j l e on a n y cxcesa of t h c quancitie. above acnced. Provided, houevcr, should t h e q u a n t i t y of tlmber Ern d u r i n e a p e r i o d n o t olccedirrp f i v e (5) do.i&rmced eomseeucivc yearn sot exceed t h e one h ~ ~ d r cand d t e n (110) per ccnC no Ol8e.Ements f o r t h e exccsc s h a l l b e payable nnd any naounc; p n i d . f o r ; .. nosm=zrcncc f o r che e x c e s s abovc m y be rcfundcd. .. .. 7.72

Dnmnec

..,....

No domag.i .'hnll be done t o young giouch o r t o tzcc. d e s i g ~ c c d co be l c f c s t a n d i n g . I f Ezeel o r young grouch dcaifinaccd co bc l e f t z t o n d i n ~a r c dnmoecd cxcc;civcly i n t h e jvdgmcnt of chc Licensor d u r i n g any uoods opczacion, o n n c a c ~ r m c n cw i l l bc madc.

Trcc; dcaignoced co bc cur i n chc cuccing pcx$c? ireued paraunnc t o c l a u s e 2.21 which a=e l c f c uncur, cimbcr rmacc.3 i n topa and i t u n l s , t r c e . l c f t lodgcd i n che procc.. of f e l l i n g . and nny merchnnmblc timber which 1. cut and not r c w v c d f r m any p c c i a n of n c u t t i n g p e r n i t orca s h a l l bc s c a l e d . mcn.ured o r councc.l am hcrri n b c f o r c provided. Ac any c i n e an account o r ascouacr w i l l bc insucd f o r t h e c r c e s o r c i d c z aforoncntioned a c onc nabd one-holf (1-112) chc st-page r a c c c currently i n e f f e c c tag=che: v i c h Che c o s ~ sof o c a l i n g , mennuring and counciry, nnd much oeounc. a r c p y a b l e imncdiaccly u p n r c s e i p c cilercof.

8.1

Xelacing t o T e r n of Wqcnce

8.11

Expiry S u b j e c t t o any c x t e n r i o n g r a n t e d a s h a r e i ~ f t e rprov:.dsd under t h e term and c o o d i c i o u of t h i s l i c e n c s , t h i s l i c e n c e a h a l l mxpire on t h e c o n p l e c i o n of t h c term a8 provided i n c l a u s e 1.3.

8.12

Extension The U n l a t c r o f F o r e s t s may extend t h e tcrm of c h i s l i s a n c e f o r a p e r i o d i n b e p i n g u i t h the l i c e n s e e ' s development p l a n s n d t h e o p e r a t i n g h i r c o r y of t h i s l i c e n c e - m dace and on che g r a n t i n s of any e x c t n r i o n t h e r e o f t h e Licensor w y v a r y t h e p r o v i r i o n r and conditionm of c h i s l i c e n c e o r o f any c u t t i n e p e n a i r s imsued under a u t h o r i t y of t h i s l i c e n c e .

The F o r e s t O f f i c e r may nuspcnd any a p e r a t i o n conducted prra u n t t o C h i 8 l i c e n c e by n o t i c e i n v r i t i n g thereof g i v e n t o t h e L i c c n a e e or t o t h e person i n c h r g e of t h e o p e r a t i o n f o r tk b r e a c h of any of t h e covenants, p r o v i r a 8 . terns o r c o n d l t i o n c of t l r i r l i c e n c c and nay r e q u i r e t h e b r e a c h t o be remedied u i t h i a a s t a t e d tlme.

8.141

Breach of C o n d i t i o n s The H i n i s c e r of Foreaca msy cancel c h i s l i c e n c e on givPng s i x t y (60) dayn n o t i c e i n u r i c i n g t o t h e Licensee f o r t h e breach of any c o v e n a n t s , p r o v i s o e s , t e r m o: c o n d i t i o n s of t h e l i c e n c e , o r f o r f a i l u r e t o pay any c h a r g e r , i n c l u d i n g ncwpage. r o y a l t y . r e n t a l o r cax.

8.1L2

Bankrupccy and insolvency The L i c e n s o r r c r e r v e c t h e r l g h r t o nuspend o r c a n c e l Chi. l i c e n c e i f t h e Llcencee i s , o r become., bankrupt o r i n s o l v e n t .

8.2 8.21

Improvemcnta on Area a t Expiry F e l l e d Timber On t h e e x p i r y of t h i s l i c e n c e . a n y and a11 timber c u t under t h i s l i c a c e and r e m i n i n g on t h e l i c e n c e a r e a s h a l l be and b e c o w t h e abrolutc property of the Li,cc~ror. . .

8.22

H i l l and Camp B u i l d i n g s It i s understood and agreed c h . t c h e Licensee s h a l l remove a l l of h i = b u i l d i n g s , m i l l and logging cquipncnc and f i x t u r e s upon cosp l e t i o n of oper.tions o r t e r m i n a t i o n of t h e 'licence, u h i c h c v e r ~ i # t h e sooner.

6.23

Fixed Inprovenenta A l l imprwementc nor capable of removal o r a f f i x e d s h a l l r e v e r r r o t h e Crown and che Licanllee or anyone claiming.under .,., him o r them s h a l l have no c l a i m uharsoever.

8.3

3 e l a t i n g t o h n n s f c r of Licence and Acgui.ttion Csrting Rights

of Addicion.1

~ h Licensee c covcnnnra w i t h t h e Liccnsor thac he w i l l not . s a I g " o r t r a n s f e r c h i a l i c e n c e o r any i n c c r e s c t h e r e i n uichouc t h e v r i r c e n rnnmrnr of ?he Licensor f i r a c h a d . and obrained. -

Page 9. 8.3'

Acquisitim of Cutting Rights

Thc Licensee a s r e e s t h a t a l l timber s a l e Uccnces u i t h l n the m b l l c Sustained YieU U n i t t h a t nay be subsequently acquired by t h e Licenses shall f o r t h v i t h be amended s o 6s t o ensure t h a t the terms and c m d i t i m s applicable t o thc harvesting of +imkr t k r e u n d e r shall a t a l l times be t h e same as the terms and c a r d i t i m s a p p l l c a b h t o the harvesting of timber under this licence.

The Ucenaee agrees t h a t any p r s m o r p r a m s h%o cmducts o r is cmducting o p e r a t i m a t o t h e knowledge d o r with the cmscnt of t h c Licenaee on t h e Lrnds described in any Prmit issued p r s u m t t o t h i s licence, I s and are t h e agents o r servants of the Licensee.

The =censor rtsen.es t h e r i g M t o grant rights-or-hay t o other p r s c n a across, through or over t h e lands v i t N n the cutting p r n i t s lasued under this l i c e n c e hcreinbeforr described, provided h w v c r . t h e rights-of-way s o granted shall not i n p d e o r obstruct t h e Llcenseefs r i g h t s under this l i c e n c e o r prevent t h e Llcensee f r m enjoying t h e use Of t h c Licenseeta cmn inprwemurts m t h e lands within t h e c u t t i n g p c d t a o r givc any r i g h t s t o use t h e Ucenseets-improvements vlthcut t h e c m s e n t Of the said Ucenaee w h i l e this licence i s in effect. 8.6

.Licence Subject t o Other Rights The Licensee c w e n a n t s &th t h e Licensor t h a t in carrying out hla o p r a t i o n s under t h h l i c e n c e he will i n n o hay block, obstruct, o r damage any road, t r a i l , uaterccurse o r o t h e r p r o p r t y ard any o h a t . x ~ r ; t i a caused o r d a g e dme by him w i l l be removed and rcpi:wd f.rrLl8l;lt.h by t h e Licensee at h i s o m e x p n s e .

8.7

licence Subject t o t h e "Depaensnt of f o r e s t s Act" Prcnided f u r t h e r t h a t t h e i n t e r e s t , r i g h t s and p r i v i l g e s Of the Licensee in thc s a i d h e r e d i t a m n t s , tenements and prcmises s h a l l be cmstrued as subject always t o dl t h e p r o v i s i m s of thc "De&urtlrcnt Of Forests Act" and anrndments thereof and r e y l a t i m s tlxreurrder.

8.8

Appurtenant Uanutacturing Plant The Licensee covenant, and a p a s t o maintain in o p r a t i o n a n o d processing plant o r p l a n t s capable of u t i l i z i z s a l l t r e e s h.~rvestcd t o a seven and me-tenth (7-1/10) inch d i a m t e r i r r a s ~ r e da t s i d e the bark a t a point twelve (12) inches I r a n t h e g r w i d azzd t o a $cur (4) inch t o p dinmzter. and h i t h o u t l h i t l n g tlx gencraYty of tb foregoing Such plant o r p l a n t s s h a l l be equlppcd t o c a r r y cut barKlng and chipping of timber and t o manufacturr r a i l h a y t i e s a s me of the primary p r d u c t s and t o handle and storre all prcducts manufa:tumd by the Licensee.

Unless otherwise authorized in writing by the Licensor, thc Wcellee agrees t o provide manufacturing f a c i l i t i e s and t o have such o&rratfllb w i t h i n thrce(3) ycars of t h e date of aliard of t h i s licc~lzedrich, i n the opinion of the l i c e n s o r , are suitable f o r the u t i l i z x t i m Of deciduous 5 p c i e s of t r e e s located m the area3 approved f o r c u t t i n g i n accordance with clause 2.23 and.tlu volume of deciduous trccs ~111 bc =corded in accordmce with clause2.32. Provlded howsver t h a t t h e U c c r ~ ? o rnay in x~-itF-t<l r l c ~ ct f i C Liccn3cs absolutely 07 c a ~ d i t l m s l l yI n ~ f i o l eor i n p a x fran thc5e covcnantg.

Page 10

the mmutactura or t h e quantities of t I m k r authorized sor c u t t l n g p u s u a n t t o Clduse 1.1, thc licensor U S I'CquiR the licensee t o o f f e r t o a p l p w i l l as designated by t h e Licensor, the wood eMps, s a u d u d m d h o g f u e l m u f a c t u r e d f r m a l l logs, slabs o r edgings other chippable m a t e d a r i s i n g frrm timber not ptheruise u t i x z e d try t h e Licensee In t h e m u f a c t u r e of lumber, t i e s , veneer and plyno&. 9.

DECISION OF TIE HINISEFi FINAL The decisicn of the KMster of Forests w i l l be f i n a l i n the i n t a r p m t a t i m of any of t h e tarma, Cwenants and c m d i t i m . or this Ucence.

10.

EKfFIT OF LICENCE

This licence shall be binding u p and enure t o the benefit of t h e Licensee, m d t h e said Licensee's executors, administrators, successors and rssips. I n Witness uhereof t h e Licensor has hereunto s e t . h i s hand and s e a l and the ILcensee has hereunto afflxed i t s corporate r a l by the hands of i t s p r o p r o r f i c e r s in t h a t tchalf.

SIGED, SEALED AM) D E I J E E D ) by t h e Licensor in the 1 presence of: 1 1

'A -d Witness

m cmmn

SEAL o? E I LIENSD) uas hereunto a f f x t d In the 1 prssance of: )

Licensor

I86

1011

- 4 t h Avenue

Prince George, B.C. v2L 3 9

File: T.S.H.L. T.S.H.L.

A08692 A08693

Ckn=nica fhterprises L t d . R.R.Cl

Fort Nelsw, B.C.

D O

Mr. J. Peterson

Attentimx

Dear Sir:

Subject:

Outstanding Annual Fees

I n revieving again your outstanding a-t w i t h t h e Ministry, I note t h a t the annual fees for 1980 - 1983 relative t o T.S.H.L.'s A08692 and A08693 are still outstanding. You are thereby in violatian of Sectim 89 of .the Forest Act and condition 7-1 of the W e -ti& licences. Your total in&bt&wss in this regard is $113,280.00 exc l u s i v e of interest.

Tnis canrwt cmtinue any longer. I n u t therefore regretfully &vise that I have instructed M. .Joyce, District W g e r , FOR Nels.cn, that . In no f u r t k r cutting permits are to be issued to your -y. additim all existing cutting permits pursu+nt to T.S.H.L.'s A08692 and A08693 zre suspn&d effecrive O=taber 14, 1983, subject to S e c t i c x ~ 5 9 of the Forest hrt. P l e w note also that T.S.H.L.'s A08692 and A08693 m y be subj to cancellation purswt t o Secrim 6 1 of the Forest Prt and w n d i t i o n 8.141 of the licence dxunwts. y o u r s truly

C.C.

Mr. A.C. M a c P h e r s o n - A s s i s t a n t D e p u t y M i n i s t e r , T i m b e r Range & Recreation Mr.

Joyce

D i s t r i c t Manager

- F o r t N e l s o n , B:C.

M .J.

ilki inn

IL.giana1 .Xana5or Prince Gaorga Forest Ragion Ministry o f Poresta

Rrr

Omineca Entrrpri.ses Ltd.

Reference is made to your memorandum dated June 27, 1'986 roceived bera on July 2, 1986.

I have now had an o_oportt;nityto reviev the deciaion at thr Hoaourabla Mr. Justice Ruttan and I would confirm that essentially what the Suprame Court Judgement e~tabli~hed we8 rrinstatement of the cancelled License. on the condition that they rtmain suapeaded until full reinatatemsnt b y . payment of $141,600.CO on : o bcfcre October 1, 1985. This was easantially tha first part of the relief granted Sy +ha ..Appeal Board and it was confitmad by tho court alihough +he other conditions attachad to :he reinstatanent war* set a a i d e by Mr. Juatica Ruttan. This being the cars. you now have two options firscly. you can treat the licansas a s undsr suspeasion w h i c h they art and serve a cancellation notice for non-payment of rentala which is what the surpeneion war made for inizially or aacondly, if you do not wish to proceed on non-payment of rental8 a1or.o you may start the whole procedure ouar again cndar Section 5 9 an6 specify the grounds for your action in autpendin~ao being both the non-papenr of rentala and the oucsranding stumpage chargea. The whole p a i n t of t h e court decision was that.tha cancellation had t o be for =ha s u a reaaoa aa +ha suspension a d since -,k,e suapeneion vaa far non-payment af rentals only tba cancellation had to be sbilarly rastricted.. Bccansa it was not it was invalid and t h e licanaea fhrn rsvarted b a e. X . to their suspended state once the cancellation was invalidatad. BLnce it is doubtful that we could iaaua a now suopansion for o license already undar ouspanaion, I would suggaat the most appropriara course of action to follow vould be to proceed wi%k a cance1:ation notice under Section 6 1 z e s t r i c t i n g the zeaaona to =on-paymerrt. of rentals. If you are contemplating reinitiating the entire proc.edinqs from euspenaion onward. I vould auggast that the

.. . / 2

-' ..c-~ g i n a lsuspanaiazr f o r mn-payment

of tanka18 hr r..rtak.d and tha rights b e r e i n s t a t e d before t h e r e is a 8or;panrk far bath naa-pay~ntat r a n t o l s and st-ge fees. Wan thi* has s:2 d e g t r s becausm rdnstatoxeat mfgRt h e construed as some Mad o f a w a i v e and by fU th. deane.+ way t o proceed would bbr t o f o f l o v up oa t h e Appdal M u d Ordrr ncv -eating tho l i c e n s e s a s Pndar 8usp.nrion f o r n a - p a p e n t at ran- and aubjeet t o c a n e a l l a t i o n for th. saaxa raason an t h r e e months notic.. It aaems to me that any letter r a n t d a r Sackions 5 9 o r 6 1

Should not m i x c o a ~ a a c t u a lt a w vith s t a t u t o r y ranrsdiaa. Wbers righto are to be suspended o r cancelled under t h e o f a s t a t u t e any taferenca t o t h e e a n c a l l a t i o n provisions found i n Section 8.141 $ h o l d be d8letsd. i s an entirely srparare c a n t r a c t u a l rcmedy and should .stat ba confused v i t h s t a t u t o r y provisfons

I t r u s t these comments will be af some assiatance.

~arristirand Solicitor

185

-.....--, -. Forests

& h h Columbia

LULL

P r i n c e George. B.C. VZL 3H9 A

File:

h08692

A08693 Omenica Enterprises Ltd.

R.R.

# 1

Fort Nelson, B.C. VOC 1RO Attention: Ylr. John I. P e t e r s o n

Dear S i r : I n v i w of t h e d e c i s i o n o f t h e C o u r t o f Appeal i n r e f u s i n g l e a v e to -peal, I must r e g r e t f u l l y a d v i s e t h a t p u r s u a n t t o S e c t i o n 61 o f the Forest Act, T i a b e r S a l e H a r v e s t i n g L i c e n c e s R08692 and A08693 are cancelled e f f e c t i v e October 31. 1986 f o r norr-payment o f r e n t a l s u n d e r Section 89 of t h e F o r e s t a c t . k c t i o n 61 (3) of t h e F o r e s t a c t g i v e s you t h e o p p o r t u n i t y to be heard o n this matter, providing you r e q u e s t s u c h a h e a r i n g w i t h i n 30 days f r o m t h e date t h i s n o t i c e i s served. Yours t r u l y ,

F o r and on behalf o f

n.J. Wilkins Regiondl nanager RT/v j !cc: fWt Joyce, District f l a ~ g e r . F o r t N e l s o n Icc: 3. Juhasz, Timber h n a g e m e n t Branch 1 Please proceed w i t h a d v e r t i s i n g n o t i c e o f c a n c e l l a t i o n i n G a z e t t e ! (as per Sect. 6 1 (5) o f F o r e s t h c t )

@ -

I91

Province c British Columbia

MIL,\nORANDUw

M8n1slry ol

. L

File H e m

Re:

. . From:

~r.&ce Georic

File:

A 08692 A 08693

mineca Enterprises Ltd.

I met today with John Peterson and Hurray Horrison(Barrister S solicitor) I n response to cancellation letter dated July 15. 1986. They viewed this meeting as a preliminary discussion leading to subsequent submissions to address the requirements of the Ministry for re-instatement of the T.S.H.L.'s. I'advlsed that my requirements were that in order to prevent .' cancellation of the licences on October 31. 1986. the canpany vould have

to:

- Provide full payment of outstanding rental charges of $198.240.00

and -Hake provlslon'for payment of rhe total outstanding account which stood at $995.512.87 (including the June 1986 invoice for rental) effective June. to the satisfaction of the Ministry.

I'further advised that : 1. I was not prepared to accept any extension to the October 31, 1986 cancellation deadline. 2. 1 would be prepared to liEt the suspension of the licences upon full payment of the outstanding account. 3. I w u l d review any reasonable and substantial and early retirement of the total outstanding account and aake appropriate recommendations to Victoria given that they were prepared to pay in full the outstanding rental charges. 4. I had no objection to financial backing by the Port Nelson I. B. but that changes in corporate structure or cunership uould require Hinisterial approval. Meethg closed with the q a n y agreeing to present me with a financial package at a meeting on October 6. 1986 at 10:OO hours or earlier if possible.

-/vj

!cc: !cc:

L. Herkel G. Gurnsey

'!cc:

D. Doyle F - D. t9. Attn. Art Joyce !cc: 05488 !cc:

Province of British Columbia

D..

h(inistry 01

MEMORANDUM

Doyle

~ m m : P r i n c e George

Due:

Ausurt 2S. 1916

~de':

A 08692 A 08693

Omineca E n r e r o r i a e a ~ t d . m n k s f o r your memo of August 18. 1996. F u r t h e r t o o u r telephone c o n v e r s a t i a n o f August 20. l e t me r e s t a t e t h e t h r u s t of my comaeritr t o t h e H e a s r s . P e t e r s o n and f i o r r i s o n a t my meeting with them on August 5 . The p o i n t I made t o them Llaa t h a t p r o v i s i o n o f Wyment of t h e outstanding r e n t a l c h a r g e s uould i n i t s e l f n o t r e s u l t i n r o i n t t a t e m e n t of t h o l i c e n c e s (i-e. t h e c a n c e l l a t i o n would be revoked but t h e l i c e r ~ c e swould remain i n suspension w i n g t o t h e c o n t i n u i n g problem of zhe outstanding account).

I was i n e f f e c t , i n a l l f a i r n e s s t o the l i c e n s e e , pointing o u t t h a t simply paying t h e o u t s t a n d i n q r e n t a l uould n o t aoluo t h e i r probkems and a l l o w them t o begin o p e r a t i n g t h e i r l i c e n c e s . I n t h i s r e g a r d u e haue t h e advice contained i n your memo dated J u l y 4, 1986. We w i l l so proceed i n t h e u n l i k e l y e v e n t t h a t th4 l i c e n r e e remits t h e o u t s t a n d i n g r e n t d l charges, b u t does n o t s a t i s f y o u r requirements r e l a t i v e t o t h e balance OF t h e o u t s t a n d i n g account. P l e a s e l e t me know i f you have any problem w i t h tho foragoing. I f n o t , d o you concur t h a t i t might be a d v i s a b l e t o c l a r i f y t h e (Dltter with t h e licansee in w r i t i n g . ~ t t a c h e da r e c o p i e s o f our c a n c a l l a t i o n l e t t a r dated J u l y 15, 1986 f o r . your i n f o r m a t i o n .

nJUJv j j

Enc 1. c : n3W !cc: F i l e f c c : Typing F i l e

Province of British Columbia

Minlsrry ol Forests

W n k t r y oe Forests and Lands . 1011 - 4th Avenue i

DOUBLE

Prince George. B.C.

vz~'3n9

REGISTERED October 14. 1986 File:

A08692 aoe69i

Omenica Enterprises ~ t d R.R. %1 Fort Nelson. B.C. VOC 1RO Accencion:

Ur. John I. Peterson

Dear Sir: Seference is made to my letter dated July 15. 1986 which adivsed chat T.S.H.L.'s A08692 and A08693 uould be cancelled effective October 31. 1986 Eor non-paymenc of rentals under Section 89 of the Forest Acc.

I have received information to che effect that the Xiniscry of Foresrrs and Lands are reviewing the circumstances surrounding the-operation of Cmenica Enrrerprises Ltd. Since this review is not likely to be concluded until afcer Ocrrober 31. 1986. nocice of cancellacion is herewith excended to November 30. 1986.

R A . Truant AND O N BEKALF

H.J. uilkins Regional nanager

Province a/

MlnlSlfy 01 .

British Columbia

Forests and Lands

. - -. Forest Service

1011

- 4rh'Avenur

Prince George. B;C.

vZL 3W

File:

A08692 A08693

Cmenica Enterprises Led. R.R. Cl Fore Nelson. B.C. VOC 1RO Accencion:

nr. John I. Pecerson

Dear Sir: This is co confirm chac pursuant to Seccion 61 of che Foresc Act. Tlmber Sale Harvesting Licence A08692'and A08693 are cancelled effective November 30, 1986 for nonpayment of rencals under Seccion 89 of the Focesc ACE.

Yours cruly

F.A. aaxcer Regional tlanager

...

Province ol British Columbia

hl~nlslry01

Foresrs ana Lanas

Pile:

A08692 A08693

Cmineca Encerprises Lcd. R.R. gl Forc Nelson. B . C . VOC LRO Accention:

Mr. John I. Peterson

Dear Sir: This lecter cancels and supcrcedes any leccer of Augusc 18. 1987. Upon review of our tiles ic is apparent char Licences A08692 and A08693 were cancelled pursuant to Mr. Uilkins cancellation leccer of Ocrober 14. 1986. Although no appeal was czken Erw char cancellacion notice ue are aware chat certain informal negotiations were raking place with the Ministry with respect to both che tax Eorfeicure of che mill site and cancellation of the licences. try letcer of Augusc 18. 1987. was sLmply co confFrm the cancellation t m k effecrive November 30, 1986. according to Mr. Uilkins cancellation letter. By way of this lecter we are advising the Chief Forester of these mzccers since we consider all appeal rights under the Forest ?.cc have lapsed. . Please be advised chat any acclvicies on che former licence area will be considered in trespass and dealt with accordhgly. .

Yours truly

OMIN1A ;RR L.

ENTERPRISES

iNEUON. . S.C VK

1-i

;,-

IRO- P_HONE(604 7 7 ~ 7 2 4 %

J u l y 11, 1 9 8 8 Reqistered N a i l

. .

nr. F. B a x t e r . Regional tianaqet. 2 i i 2 i s t r y of F o r e s t s l B l l P o u r z h Avenue P r i n c e G c o r g e , B.C. V2L 3H9 Dear S i r s :

P u r s u a n t t o C h a p t e r 1 4 8 , s e c t i o n 1 5 ( 2 1 ( a 1 of t h e F o r e s t A c t , O m i n e c a i n t e r p r i s = s L t d . h e r e b y r g q u e s t s you t o o f t e c on'e o r t w o (preferably o n e ) E o r e s t L i c e n c e ( s 1 t o r e p l a c e TSXL Aaa692 a n d TSHL A08693. W e o f c o u r s e a r e a w a r e t h a t t h e s ~TSHLs h a v e b e e n c a n c e l l e d . b u t w e f e e l i t i s p r u d e n t t o make t h i s r e q u e s t g i v e n t i a t t h e c a n c e l l a t i o n i s u n d e r a p p e a l a n d 5.r t h a t u e a r s now i n t h e f i r s t 6- month p e r i o d o f t h e f i n a l y e a r of t h e TSXLs. H e do n o t e x p e c t t h e TSHLs t o r e m a i n c a n c e l l e d a n d i t w o u l d c e r t a i n l y be a f i o l l o u v i c t o r y i f t h e y had ex7ired dcrinq the process.

-y

truly,

I I

,($,

Roy P e t e r s o n

.-.., -. British Columbia

Forests and Lanas

<,,Lea

.--

*=.

:f .

FOUNl .\renuc ..ceGeqc

EnVZL 3H9

Caineca Enterprises Ltd. R . 3 . El Fort NeLson. B.C. W C 1RO Attention:

Hr. Roy Peterson President

Dear Sir: Thank you for your letrer of July 11. 1988. as you static .limbey Sale Harvesting Licences A08692 and a08693 have been cmc&l.e~- Even. though you scare you do nor expec: these lic=nccs to ceziain cancelled. the realicy of the situation is these licences no longer exist. as Section 157 3f the Forest Acc clearl'f states that your a p ~ e c l'of the cancellation does --r ogerace as a stay. --

I'm sure you ;rill appreciare that as these licenses no long exist. there is no entitlemenr to request a replacement Forest Licence under Sec:ion 15(2) of the Forest ac:. Yours truly.

FOREST ACT [Amendment to s . 156 proclaimedeffec!ive September 7. 19821

CHAPTER 140 [Consolidated July 12. 1982 .] [Act administered by rhe Minisny

Interpretation

of Forests]

PART 1

1.. In this Act "allowable annual cut" means a rate of timber harvest in^ specified for an area of land; "burning permit" means a burning permit issued undersection 113; .. . "chief forester" 'means the chief forester appointed under the Ministry of Forests Act; "control of a corporation" means beneficial ownership of more than 50% of its issued - .. capital. having full voting rights in all circumstances, by __...:. . . .. . , ...,. .._.,:: .. i ....(a) onelperson; or . .... *: : not dealing witfi. .each .. $lierat arm's-length; .. . .. . . ..... ..:- . .--. .... ... . . : ,*-,,82 (b) a group of persons -.. . . . . . .. . :,; I .,

_:_

, -

(2) In respect of all timber sale harvesting licences and timber sale licences surrendered under subsection (I), the regional manager shall with their holder enter into one or more forest licences (a) for a term of 15 years; (b) that authorize Crown timber to be harvested from a public sustained yield unit or one or more timber supply areas; and . . (c) that, in total, specify an allowable annual cut equal to the total of the allowable annual cuts (i) specified in the surrendered timber sale harvesting licences, plus increases and minus decreases, if any, in the allowable annual cuts made by the Crown since they were entered into; and (ii) specified in the surrendered timber sale licences, plus increases and minus decreases, if any, in the allowable annual cuts made by the Crown since they were entered into, or such portion of them as the regional manager determines. (2.1) The forest licence may, for any of the fitst 5 years of its term, provide for an allowable annual cut that differs from the allowable annual cut determined under subsection (2) (c). (3) A notice of a surrender shall be published in the prescribed manner. 1978-23-14: 198049-6. effccrivc

May

17. 1980; 1982-12-1.

Expiry

15. (1) Notwithstanding its tern but subject to subsection (5). a timber sale harvesting licence expires on the expiry of its term that is in effect on January 1, 1979, and it shall not be renewed. (2) For a timber sale harvesting licence that is not surrendered the regional manager shall. if reouested to do so bv its holder durine the f m t 6 months of the final vear of its term. in a nbtice served on itsholder within 3 months after the request, offer one or more forest licences that would (a) be tor a term of 15 years commencing- on the expiry - of the timber sale harvesting licence; (b) authorize Crown timber to be harvested from a public sustained yield unit or one or more timber supply areas; and (c) in total, specify an allowable annual cut equal to the allowable annual cut specified in the timber sale harvesting licence, plus increases and minus decreases, if any, in the allowable annual cut made by the Crown since the date it was entered into. (3) Where the holder of the timber sale harvesting licence surrenders under section 14 (1) one or more timber sale licences with a request under subsection (2). the total allowable annual cut offered under subsection (2) shall be equal to the total of the (a) allowable annual cut specified under subsection (2) (c); and (b) allowable annual cuts specified under section 14 (2) (c) (ii). .... .. m y , for any of the first 5 years of its term, provide for an (3.1) The forest licence allowable a n a u t that differs from the allowable annual 'cut determined under subsections (2) (c) and (3). (4) An offer made under subsection (2) may be (a) amended; and (b) accepted by written notice of acceptance served on the regional manager within 3 months after the offer is served.

IU7182

(ii) the regional manager may, in a notice served on its holder. (A) delete the portion from an old temporary tenure or existing timber licence over the area; and (B) exclude the portion from a future timber licence to be entered into for the area. 1978-2347.

Compatible use - . -, 58. No agreeme_n.t.t~deunder this or the former Act shjdl prevent or impede the C_~ r o & f r o & using, or granting the use oC Crown land for any pu.pose.that-the&$onal manager considers iscompatible with timberhamesting. 1978-23-58.

DIVISION (4)-SUSPENSION AND CANCELLATION Suspension of rights

59. (1) Subject to section 60 and in addition to any penalty under this Act or the regulations, the regional manager or district manager may suspend, in whole or in part, riehts in an ameement where its holder (a) made a material misrepresentation, omission or misstatement of fact in his application for the agreement or in information furnished with it; (b) f a s to perform an obligation to be performed by him under the agreement; or (c) fails to comply with this Act or the regulations. (2) Before the rights are suspended, the regional manager or district manager shall serve a notice on the holder (a) specifying the alleged failure of performance or compliance; and (b) allowing the holder at least 14 days after the date of service to remedy the failure of performance or compliance. (3) Subject to section 60 a suspension of rights takes effect on the expiry of the time allowed in the notice and continues until the rights are reinstated by the regional manager or district manager or cancelled under this Act(4) On request of the holder. the regional manager or district manager shall allow him an opportunity to be heard and shall rescind the notice where he considers that the holder is not subject to subsection (1). (5) On the application of the holder of the agreement the regional manager or district manager shall reinstate rights suspended under this section or section 60 where the holder is performing his obligations and is complying with this Act and the regulations.

1978-23-59: 1980-14-2.

Suspension by officer

60. The regional manager, a district manager or a forest officer authorized by either of them may. by written order and without notice, suspend in whole or part the rights under an agreement where he believes on reasonable and probable grounds that its holder has failed to perform an obligation to be performed by him under the agreement or has failed to comply with this Act or the regulations. and that the failure of performance or compliance is causing or may imminently cause serious damage to the natural environment. 1978-23-60. 1980-14-7. ,mi82

Cancellation

61. (1) Where rights are under suspension (a) the chief forester may cancel atree farm licence, pulpwood harvesting area agreement or pulpwood agreement; (b) the regional manager may cancel an agreement other than an agreement referred to in paragraph (a); and (c) the district manager may cancel an agreement other than a forest licence or an agreement referred to in paragraph (a). (2) At least 3 months before cancelling an agreement the chief forester, regional manager or a district manager, as the case may be, shall serve on its holder a written notice of .cancellation specifying the grounds of cancellation and the day on which cancellation takes effect. (3) Where, within 30 days after a notice of cancellation has been served the holder so requests, the chief forester, regional manager ora dismct manager, as the case may be. shall give him an opportunity to be heard. (4) A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed. (5) Notice of a cancellation shall be published in the Gazette. 1978-23-61: 1980-14-3.

Continuing liability

62. Notwithstanding the expiry, surrender, suspension or cancellation of his agreement the holder is liable (a) to pay the rent, fees, costs and penalties owing to the Crown in respect of the agreement, and (b) to perfom all other obligations under the agreement incurred beforeits expiry. surrender. suspension or cancellation. 1980-50-39. cffcctive May 17. 1980.

No compensation

63. No compensation is payable by the Crown and no proceedings shall be commenced or maintained to claim compensation from the Crown or to obtain a declaration that compensation is payable by the Crown in respect of an expiry, failure to extend, reduction, deletion or deeming under section 15 (1). 19 (b) and (c), 20 (3). 33 (1) and (5). 37 (11, 39 (1). 44 (3). 53 (except as provided in it). 54 to 57. or 95. 1978-23-63.

PART 5 Timber marking: interpretation 64. In this Fart "registrar" means the registrar designated by the minister to administer timber marks and marine log brands. 1978-23-64 1980-14-26.

1mt82

FOREST ACT

. -

CHAPTER 140 [See starus sheer following this Act.] [Consolidared November 10. 19921 Rn

&uim

I. Inlapmation 2. Classification and M-emcnl of F o w l s d F o w l Land and Rcylstion of Culling Rats3. Disposition of limber by the Cmm Division ( I b F o r m s of R i g k lo Cmwn Timber Division (2)-Fomt tiDivision (3)-Tinlkr Sjk Diviriam (4)-Timbcr Limwcr Division (5)-~m: F~kams nu Division (6)-Pulpuoal ADivision ( 7 b W d l a Licarcr Division ( 8 )- M i4. Gcnual Tenure Rovisiom Division ( l b l n t u p c w i o n Division ( 2 b T r Y r r l a d Exchange Dclaionr and Rcductionr Division (3blDivision (4)-Suspension dCurcllation Division (5)-Eligibilily or A p p l i i u 5. limber Marking 6. Timber Scaling 7. Paymenu lo Ihe Cmm 8. R& and Rights of Way 9. F o m t R e ~ c l t i o n 10, F o m l Raectian Division (Iblnlcrprrution d Applidon Division ( 2 b F i r c -don Division (3)Slrrh d Snag Disposal Division ( 4 b F i r c S u p p s i o n Division ( 5 b l n s w d Dirctrc Conlml Division (6)--Gc& Fcms R a m i o n 10.1 Silvicullurc I I. Muins Log Salvage 12. Manufvlurc in the Rovim 13. Trrrprrr. R e a w r y of Money. Mircllvmus Division (I)--Tmp" Division (2bRecowry of M-y Division ( 3 ) - M i l u m r r 14. A p k . RegulaiRnaltia Division ( I b A p p a k Division (2)-Rcguhtionr Division (3)-Olfcnm and Pcmllia IS. SMY ASchcdula [Rcpcalcd]

---

- 488 10 - 15.2

2 99ll IhI'J -

n - 33.1 3441 4 549

40 43 48 63 49 5 0 - 51 5 2- 58 59 63 63.1 6 4- 71 72- W ) 81 90.1 91 - I03 104 107 108- I29 108- 109 110- r16 + 117- I19 120 124 125 127 128 129 129.1- 129.91 1%- 134 135 137 138 - I53 138 140 141 144 147 - 153 154- 164 154 - I57 158 158.92 I59 164 165- ~n

PART I

INTERPRETATION Interpretation

1. (1) In this Act "allowable annual cut" means a rate of timber harvesting specified for an area of land; "basic silviculture" means such harvesting methods and silviculture operations including seed collecting, site preparation. artificial and natural regeneration, brushing,

Compatible use 58. No agreement made under this or the former Act shall prevent or impede the Crown from using, or granting the use of, Crown land for any purpose that the regional manager considers is compatible with timber harvesting. 1978-23-58.

DIVISION (4)-SUSPENSIONAND CANCELLATION Suspension of rights

59. (1) Subject to section 60 and in addition to any penalty under this Act or the regulations, the regional manager or district manager may suspend, in whole or in part, rights in an agrccmcnt whcrc it.. holdcr (a) made a material misrepresentation, omission or misstatement of fact in his application for the agreement or in information furnished with it; (b) fails to perform an obligation to be performed by him under the agreement; or (c) fails to comply with this Act or the regulations. (2) Before the rights are suspended, the regional manager or district manager shall serve a notice on the holder (a) specifying the alleged failure of performance or compliance; and (b) allowing the holder at least 5 days after the date of service to remedy the failure of performance or compliance. (3) Subject to section 60 a suspension of rights takes effect on the expiry of the time allowed in the notice and continues until the rights are reinstated by the regional manager or district manager or cancelled under this Act. (4) On request of the holder, the regional manager or district manager shall allow him an opportunity to be heard and shall rescind the notice where he considers that the holder is not subject to subsection (I). (5) On the application of the holder of the agreement the regional manager or district manager shall reinstate rights suspended under this section or section 60 where the holder is performing his obligations and is complying with this Act and the regulations. 1978-2349: 1980-14-2: 1992-4025

Suspension by oflicer

60. The regional manager. a district manager or a forest officer authorized by either of them may, by written order and without notice. suspend in whole or part the rights under an agreement where he believes on reasonable and probable grounds that its holder has failed to perform an obligation to be performed by him under the agreement.or has failed to comply with this Act or the regulations, and that the failure of performance or compliance is causing or may imminently cause serious damage to the natural -.. environment. ...

1978-l3-60: 1980-14-7.

Cancellation

61. (1) Where rights are under suspension (a) the chief forester may cancel a tree farm licence, pulpwood harvesting area agreement or pulpwood agreement; ..

(b) the regional manager may cancel an agreement other than an agreement referred to in paragraph (a); and (c) the district manager may cancel an agreement other than a forest licence or an agreement referred to in paragraph (a). (2) At least 3 months before cancelling an agreement the chief forester, regional manager or a district manager, as the case may be, shall serve on its holder a written notice of cancellation specifying the grounds of cancellation and the day on which cancellation takes effect. (3) Where, within 30 days after a notice of cancellation has beenserved the holder so requests, the chief forester, regional manageror a district manager, as the case may be, shall give him an opportunity to be heard. (4) A notice of cancellation may be rescinded or the day on which a cancellation takes effect may be postponed. (5) Notice of a cancellation shall be published in the Gazette. 1978-23.61: 19x0-14-25,

Disqualification

61.1 Where a person who is a small business forest enterprise within the meaning of the regulations (a) makes a material misrepresentation, omission or misstatement of fact in his application for registration under the regulations or in information furnished with the application, (b) fails to perform an obligation to be performed by him under a timber sale licence, or (c) fails to comply with this Act or the regulations, the regional manager or district manager, in addition to any action that may be takkn under this Act. may by notice served on that person do all or any of the following: (d) disqualify him from being registered is a small business forest enterprise; (e) disqualify him from making a n application under Part 3, either by himself or through an agent, for a period not exceeding 2 years after the date of the notice served on him by the regional manager or district manager; (f) cancel any timber sale licences held by him; (g) suspend, in whole or in part, rights in any timber sale licences held by that person. 1988-37-20, cflcciivc July 11. 1988 (B.C. Reg. 262@8): 1992-4026.

Continuing liability

62. (1) Notwithstanding the expiry, surrender, suspension or cancellation of his' agreement the holder is liable (a) to pay the rent, fees, costs and penalties owing to the Crown .. . . in respect of the agreement. . .. (b) to perform all other obligations under the agreement, (c) to perform all other obligations imposed by or under this Act with respect to the agreement. and (d) to pay to the Crown all other money required by or under this Act to be paid to the Crown in respect of the agreement incurred before its expiry, surrender, suspension or cancellation. ...:, NO". 10. IWZ 38.5

Ca)

(2) In this section references to an agreement shall be read as including references to a cutting permit or road permit issued to the holder of the agreement. 1980-50.39. effective May 17. 1980: 1987-54-9.

No compensation

63. No cpmpensation is payable by the Crown and no proceedings shall be commenced or maintained to claim compensation from the Crown or to obtain a declaration that compensation is payable by the Crown in respect of an expiry, failure to extend, reduction, deletion or deeming, or a reduction in an allowable annual cut as a result of a determination or a deeming. under section 7 (I) to (1.2). 15 (I), 19 (b) and (c), 20 (3). 33 (I) and (5). 37 (I), 39 (I), 4 4 (3) before its repeal, 53 (cxcept as provided in it), 54 to 57, or 95. 1978-23.63: 1992-40-27.

Settlement of indebtedness 63.1 An application under this Act for an agreement listed in section 10 or for a permit under this Act not listed in that section may be refused if the applicant has not (a) paid to thc Crown by thc due datc undcr scclion 141 any lnoncy that is required to be paid by the applicant to the Crown, or (b) made arrangements satisfactory to the official who has the discretion to approve the application or to enter into the agreement or issue the permit pursuant to the application. 1992-40-28.

PART 5 T IMBER M ARKING Timber marking: interpmlation 64. In this Pan "registrar" means the registrar designated by the minister to administer timber marks and marine log brands. 1978-23-64 1980-14-26.

Timber mark duration 64.1 (1) A timber mark held under an agreement listed in section 10, whether issued before or after the coming into force of this section, expires, is suspended or is cancelled if, under this Act, the agreement expires, is suspended or is cancelled. as the case may be. . . (2) A timber mark held under a certificate issued under section 66 before'the coming into force of this section expires (a) in 1997 on the.anniversary of the issue date of the certificate if the holder is the owner of the land to which the timber mark pertains, or (b) on June 30, 1993 if the holder is not the owner of the land to which the timber mark pertains. (3) A timber mark held under a certificate issued under section 66 after the coming into force of this section expires on the fifth anniversary of the issue date of the certificate or, by consent of the applicant, on an earlier date specified in the certificate. ...,

OMINECA ENTERPRISES LTD. CHRONOLOGY DATE

EVENT

July 8,1977

License A08692 for the Liard issued (TSHL) License A08693 for the Sikanni issued (TSHL)

May 5,1983

Omineca requests replacement Forest License

Ju!y 14, 1983

M i s t e r rehses replacement Forest License

Letter from Regional Manager suspending the two licenses April 25, 1984

Letter from Regional Manager relating to the cancellation of the two licenses

May 24,1984

Letter from Regional Manager setting out minutes of the meeting with Omineca

October 17, 1984

Letter fiom Regional Manager canceling the two licenses

October 1984

Omineca Appeals the cancellations

December 18,1984

Decision of Chief Forester Robbins Campbell Appeal Board decision

March 4,1985 I

Supreme Court decision of Ruttan from Campbell

August 6, 1985

I June 20, 1986

Court of Appeal decision of Macfarlane from Ruttan

July 15, 1986.'

Letter from Ministry of Forests regarding cancellation of two licenses

August 5, 1986

Omineca meeting with Regional Manager & his memo to file of minutes of meeting

I October 14, 1986

Letter from Ministry of Forests extending time relating to cancellation

November 17, 1986

Meeting with Minister

November 30. 1986

Purported date of cancellations of licenses

June 26,1987

July 11, 1988

I August 19, 1988

Statements for rental for the year 1987 sent to Omineca I

II Omineca requests rollover of TSHLs into Forest Licenses (section 15 Forest Act) I Regional Manager refusal to rollover license.

November 18, 1988

DATE

EVENT

November 27,2000

BC Court of Appeal grants Omineca leave to appeal

June 14,2002

BC Court of Appeal dismisses Omieca's appeal.

September 2002

Omineca files application for leave to appeal to the Supreme Court of Canada