Courts in B.C. and Ontario Stop Exploration on Mining Projects for Failure to Consult

On December 2, 2011, the B.C. Supreme Court, in Taseko Mines Limited v. Phillips (Taseko Mines)1 granted the Tsilhqot’in First Nation’s (Tsilhqot'in) application for an injunction to restrain Taseko Mines Limited (Taseko) from continuing exploratory work under two permits while the Tsilhqot’in pursued judicial review of B.C.’s decision to grant the permits. On January 3, 2012, the Ontario Superior Court of Justice, in Wahgoshig First Nation v. Ontario and Solid Gold Resources Corp.2 (Wahgoshig First Nation) came to the same result and granted the Wahgoshig First Nation (Wahgoshig) an injunction to stop Solid Gold Corp.’s (Solid Gold) exploratory work while the Wahgoshig claimed that the Crown’s duty to consult had not been met. In both cases, the courts relieved the Aboriginal applicants from providing an undertaking for damages. Both courts took similar approaches to weighing potential harm when balancing commercial and Aboriginal interests and took similar positions on how the conduct of commercial enterprises can affect the requirement of First Nations to provide an undertaking in damages.

Background

Taseko Mines involved permits to undertake more exploratory work and to clear timber granted by the B.C. Ministry of Energy and Mines (MEM) while Canadian Environmental Assessment Agency (CEAA) undertook a 90-day study to determine if Taseko’s new project description should go to environmental assessment.3

In Wahgoshig First Nation, Solid Gold began exploratory drilling on Treaty 9 lands without prior consultation despite repeated warnings from the Crown that consultation was necessary and attempts by Wahgoshig to initiate consultation with Solid Gold.

Unlike in Taseko Mines Limited, it appears that Solid Gold was not required to obtain any additional permits from the Crown in order to carry out its exploration program, but rather relied on its rights to carry out exploration work as the holder of a mining claim under the Mining Act.4 In this case, the "Crown conduct" in question giving rise to the Crown’s duty to consult appears to be the enactment of the Mining Act itself, which establishes not only a "free entry" system whereby all Crown lands are open for prospecting and staking, but also grants a holder of a mineral claim the right to carry out exploration work without necessarily needing to obtain any additional permits.5

The Decisions

In applying the test for injunctive relief established by the decision in RJR-MacDonald Inc. v. Canada (AG),6 both courts considered if there was a serious issue to be tried, the nature of the potential harm and the balance of convenience.

In Taseko Mines, the Court found that whether the Crown had discharged its duty to consult in issuing exploration and cutting permits to Taseko was a serious question to be tried.7

In Wahgoshig First Nation, the Court found that the alleged failure of the Crown to satisfy its duty to consult was a serious question to be tried.The Court did not comment directly on the constitutionality of the Mining Act when dealing with the "serious issue" matter, but recognized that the duty to consult is not constrained by legislation and lies upstream of any legislative or statutory regime.8

With respect to the question of irreparable harm, both courts reached similar results but by slightly different routes. In Wahgoshig First Nation, the Court based its finding on irreparable harm on both development and lack of consultation. Although not making the link directly between irreparable harm to Aboriginal rights and development, the Court found that the Wahgoshig continue to exercise traditional rights over the lands and referred to jurisprudence that linked development on traditional lands to irreparable harm. The Court also emphasized that Canadian courts have recognized the loss of the opportunity to consult as an irreparable harm in itself.9

In Taseko Mines, Grauer J. found that loss of consultation is not necessarily an irreparable harm in itself, but a factor to consider when weighing the balance of convenience:

Taseko and the Crown rely on Sunshine Logging (2004) Ltd. v. Prior, 2011 BCSC 1044, for the proposition that "the loss of the constitutional right ... to be consulted does not itself amount to irreparable harm" (para.30). Mr. Justice Willcock went on, however, to reflect at paragraph 34 that "it ought not to be said that irreparable harm arises in every case where there is a failure to consult". What he makes clear in paragraph 32 is that while a failure to consult need not without more signify irreparable harm, it nevertheless remains to be weighed in determining the balance of convenience.10

Grauer J. concluded that without the injunction the Tsilhqot’in "will have lost their asserted right to be consulted at a deep level in relation to the exploration program, and their petition will become moot."11

Both courts found that this potential harm to the respective Aboriginal rights and the public interest weighed in favour of granting the injunctions. While the Court in Taseko Mines acknowledged a public interest in Taseko gathering information for the sake of the environmental assessment,12 the public’s interest in the "reconciliation of the competing interests"13 weighed more heavily. In Wahgoshig First Nation, the Court was not swayed by the Crown’s argument that granting the injunction would increase tensions and that the Court should instead assist the Crown in facilitating a consultation process to promote reconciliation.14 Rather, it found that the greater public interest resided in ensuring that respect for the constitutionally protected right for Aboriginal peoples to be consulted was not eroded.15 The commercial interests of the mining companies did not stack up against both the potential irreparable harm to the respective Aboriginal rights themselves and the public interest in balancing and reconciling interests through consultation. In Taseko Mines the Court noted that, even though Taseko’s interests may be harmed, a delay of a few months and its associated costs weigh less heavily in the context of a billion-dollar project that has taken 20 years to bring to fruition.16 Even "serious financial jeopardy which could put [Solid Gold] out of business"17 did not tip the balance of convenience in favour of the mining company in Wahgoshig First Nation.

In relieving the Tsilhqot’in of the requirement to provide an undertaking in damages, the Court in Taseko Mines considered how heavily the balance of convenience favoured the Tsilhqot’in, the relative economic strength of the parties, the importance of matters proceeding on an appropriate basis in the future and noted that the Tsilhqot’in advised Taseko not to commence work under the permits until they had considered their options for response.18 In Wahgoshig First Nation, the Court simply noted precedent allowed for waiving the requirement when the applicant was "impecunious" or when the respondent’s behaviour was "egregious."19 This comment, however, must be read in light of the Court’s earlier conclusions that Solid Gold made a "concerted, willful effort not to consult, at least until after its flow-through share monies for 2011 had been exhausted"20 and it "failed to meet industry standards for responsible exploration."21

Commentary

Factually, Taseko Mines is a different decision from Wahgoshig First Nation. Unlike in Wahgoshig First Nation, the Tsihlqot’in were informed about Taseko’s proposed activities and provided with the opportunity to engage in consultation prior to the work being undertaken. Ultimately, it appears the Tsihlqot’in decided not to participate in consultation because they did not agree with the process established by the Crown. In Wahgoshig First Nation, both the Crown and the Wahgoshig agreed that the Crown’s consultation obligations had been not been satisfied, however, there was no mechanism for this consultation to occur absent Solid Gold voluntarily agreeing to delay following its legal rights.

With respect to the question of irreparable harm, the Court in Taseko Mines did not find that the failure to fulfill the duty to consult was an irreparable harm in and of itself. Nevertheless, this was a factor considered by the Court in determining that exploration on lands subject to Aboriginal rights without consultation could constitute not just damage to Aboriginal land and interests ancillary to it but potentially a permanent diminution of Aboriginal rights. The way in which the Court characterized the potential harm to Aboriginal interests would make it difficult for commercial interests to outweigh Aboriginal interests when courts determine the merits of granting injunctive relief. As Grauer J. comments:

Each new incursion serves only to narrow further the habitat left to them in which to exercise their traditional rights. Consequently, each new incursion becomes more significant than the last…The damage is irreparable…The geology will always be there. The ore bed is not going anywhere. The same cannot be said of the habitat that is presently left to the petitioners. Once disturbed, it is lost. Once lost, the exercise of Aboriginal rights is further diminished.22

Notably, the Court in Taseko Mines did not address in detail the actual physical impacts of the proposed exploration activities on the land other than in the most general of terms. This is surprising given the significance of irreparable harm to the analysis.

In Wahgoshig First Nation, the Court noted that the low level exploration activity carried out by Solid Gold involved clearing 25 m2 areas, clearing forest, bulldozing access routes to the drilling sites and transportation and storage of fuels and equipment.23 Clearly, the Court did not see the potential impacts of these activities on Aboriginal interests as the "speculative assertions of possible harms to vaguely defined interests,"24 as characterised by Solid Gold. Given the actions of Solid Gold in proceeding with its exploration program despite the protestations of both the Wahgoshig and the Crown and the fact that no consultation had actually occurred, it is not surprising that an injunction was granted in Wahgoshig First Nation. In our view, the outcome of this decision is less interesting than the underlying challenge to the Mining Act and the practical implications to the right of free entry in Ontario (as further discussed below).

With respect to providing undertakings as to damages, the attempts of Solid Gold in Wahgoshig First Nation to avoid consulting directly with the Wahgoshig clearly played a role in the Court’s decision not to require an undertaking in damages.25 In Taseko Mines, the Court was similarly willing to find that special circumstances existed in relieving the Tsilhqot’in from providing an undertaking as to damages, which included the fact that the Tsihlqot’in wrote to Taseko requesting them not to commence work under the permits until they had considered their response.26 The Tsihlqot’in delivered this letter not only after MEM’s deadline for submissions regarding the permits, but also after the permits were granted. That the Court considered this letter a factor indicates that, in certain instances at least, some courts may expect a third party proponent to do more than simply follow their legal rights.

The Crown in Wahgoshig First Nation is in the awkward position in which it confirmed to the Court that the duty to consult existed and had not been met but, practically speaking, did not have the statutory power to prevent Solid Gold from following its rights under the Mining Act. In this respect, Wahgoshig First Nation raises many of the same issues from the recent decision of the Yukon Supreme Court in River Dena Council v. Government of Yukon (Ross River) (see our Aboriginal Law Update dated November 30, 2011). The Crown took no position on the injunction motion; however, it requested that the Court impose a consultation process rather than grant the injunction since an injunction would further polarize the parties.

The constitutional challenge to the Mining Act which underlies the decision in Wahgoshig First Nation will be an issue to watch. Although Ontario’s Mining Act is different from the mining legislation in the Yukon in that it does expressly grant a specific basket of exploration rights, it appears that the ability to carry out exploration work without applying for additional authorizations has now attracted a similar challenge by an Aboriginal group in Ontario. As noted in our Aboriginal Law Update on Ross River, most Canadian jurisdictions provide that rights to carry out invasive exploration activities are not automatically granted upon the registration of a mineral claim. Rather, additional authorizations from the Crown are usually required in order to carry out any significant exploration work, thereby providing an opportunity for consultation to occur. The position taken by the Crown in Wahgoshig First Nation regarding remedy by the courts (i.e., obligation to consult rather than injunction) is surprising. In the absence of a legislated requirement to consult under the free entry system (which the Crown submits triggers the duty to consult), an injunction provides the Crown with a tool to force mining companies to consult prior to exploration activities under the Mining Act, whereas the Crown’s proposed remedy could result in further delays before the courts.

In our view, these types of challenges to mining legislation are not surprising where there is the potential for adverse impacts on Aboriginal interests without a corresponding ability on the part of the Crown to carry out its consultation obligations. Whether such challenges will ultimately be successful remains to be seen (we note that the Supreme Court of Canada in Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council left open the question of whether government conduct includes legislative action).27 Nevertheless, in our view governments should be cautious to protect the right of free entry, which is so critical to the exploration and mining sectors in Canada and elsewhere in the world, by ensuring that the right to carry out invasive exploration work is not automatically tied to recording a mineral tenure (or, where tied, there is a proper legislative mechanism for the Crown to carry out its consultation obligations).28 If not, governments risk not only having their mining legislation challenged, but potentially may also face legal action by third party proponents that are prevented from following their legal rights. Indeed, Solid Gold announced on January 24, 2012 that it is pursuing legal action against the government of Ontario in which it is seeking damages of $100 million.


1 2011 BCSC 1675.

2 2011 ONSC 7708.

3 Supra, note 1 at paras. 10 and 13.

4 RSO 1990, c. M. 14 (Mining Act).

5 We note that in most cases, exploration work would generally trigger the need for a proponent to obtain permits under other environmental legislation but this does not appear to have been the case in Wahgoshig First Nation.

6 [1994] 1 S.C.R. 31.

7 Supra, note 1 at para. 48.

8 Supra, note 2, at para. 41.

9 Ibid. at para. 53.

10 Supra, note 1 at para. 56.

11 Ibid. at para. 57.

12 Ibid. para. 59.

13 Ibid. at para. 60.

14 Supra, note 2 at paras. 3 and 69.

15 Ibid. para. 72.

16 Supra, note 1 at para. 55.

17 Supra, note 2 at para. 67.

18 Supra, note 1 para. 70.

19 Supra, note 2 at para. 77.

20 Ibid. at para. 58.

21 Ibid. at para 59.

22 Supra, note 1 at paras. 65 and 66.

23 Supra, note 2, at para. 12.

24 Ibid. at para. 67.

25 Ibid. at paras. 58, 59 and 77

26 Ibid. at para. 70.

27 [2010] 2 S.C.R. 650 at para. 44.

28 Until recently, British Columbia was a good example of this separation. The B.C. Mineral Tenure Act provided the basis on which a party may record a mineral claim based on a free entry system. Once a claim was recorded, any invasive exploration activities would require a permit under section 10 of the B.C. Mines Act. In this way, free entry was preserved while the Crown maintained the statutory power to meet its obligations to consult Aboriginal peoples prior to a private third party carrying out invasive exploration activities on the claim. However, British Columbia has recently introduced amendments to the B.C. Mines Act that will exempt a greater number of exploration activities from this permitting requirement. While the changes are welcome to many in the mining industry, in our view, there is a risk that these changes may lead to challenges to the B.C. mining legislation similar to those in the Yukon and Ontario unless proper mechanisms are created for Aboriginal consultation to occur.