Northern Superior Appeals Dismissal of Aboriginal Consultation Claim Against Ontario

Northern Superior Resources Inc., a Sudbury-based junior mining company, is not giving up on its $110-million lawsuit against the provincial government. It has recently asked Ontario’s highest court to reverse the dismissal of its claim, which seeks damages from the Crown for allegedly failing to properly discharge its duty to consult.

What is noteworthy about the case is that the plaintiff is the project proponent, not an Aboriginal group. The litigation thus raises the question of whether a corporation can bring a successful claim against the Crown arising out of the latter’s constitutional obligations to Aboriginal peoples.

The case centres on the breakdown of Northern Superior’s relationship with the Sachigo Lake First Nation. After years of working together, the company and the First Nation reached an impasse over the continuation of the company’s mineral exploration activities. The Crown had not undertaken any direct consultation with the First Nation, and it is far from clear from the trial judge’s findings of fact that the Crown’s duty to consult had, in the circumstances, actually been triggered for the further exploration activities. Northern Superior argues that it had been, that it was breached, and that, as a consequence, the Crown is liable to the company.

Though Northern Superior did not succeed at first instance, the trial judge’s reasons leave open the possibility that another corporate plaintiff could succeed on a similar claim against the Crown, on different facts, in the future. Regardless of how it decides Northern Superior’s appeal, the Ontario Court of Appeal will likely do the same.

The facts

Northern Superior holds various claims in the Red Lake Mining Division, some 740 kilometres northwest of Thunder Bay.

Beginning in the mid-2000s, the company involved Elders and leaders of the Sachigo Lake First Nation in its work. It entered into a series of agreements that provided, among other things, that the company would employ members of the First Nation and would conclude its work in time to avoid interfering with traditional hunting seasons.

In late 2011 and early 2012, the company’s relationship with the First Nation began to fall apart. There were disputes over the First Nation’s invoicing practices, the timing of the company’s payments to the First Nation, and certain exploration and staking activities. In May 2012, the First Nation presented the company with a new draft agreement, effectively demanding that the company pay the First Nation various fees – including for “[a]dministration” and for use of the First Nation’s aircraft – that had not been part of previous agreements between them. The company refused.

That was that. In June 2012, the First Nation wrote to the company, informing it that further exploration activities were no longer in the community’s best interests.

 The trial decision

Northern Superior took the matter to court. It commenced an action for damages – not against the First Nation, but against Ontario. The theory of the company’s case was that, among other things, the province had failed to fulfil its constitutional duty to consult Aboriginal groups and, in so doing, had breached a legal duty to the company. This, the company argued, entitled it to compensation.

The trial judge disagreed. Justice Lederer of the Ontario Superior Court of Justice dismissed Northern Superior’s action: Northern Superior Resources Inc. v. Ontario, 2016 ONSC 3161. He held that, because the Crown owes its duty to consult to First Nations, not to third parties, that duty conferred no legally enforceable benefit on the company: at para. 63. He then concluded that the Crown owed the company no separate legal duty because, as he stated at para. 89:

The first arm of the test in Anns v. Merton London Council is not satisfied. The requisite proximity is not present either through the terms of the applicable legislation or through the interaction between Northern Superior and Ontario.

He went further:

There is no reason for me to consider the second arm of the [Anns] test; however, I offer the following. This part of the test asks whether there is some policy or broader reason which should cause any duty of care to be limited or extinguished…. In the context of modern-day Canada, with the constitutional recognition of the rights of First Nations and our, generally, understood desire for reconciliation, there could be no more powerful policy recognition calling for the setting aside of any duty of care owed by the Crown to third parties than our expressed desire to come to terms with our history and our relations with those who were here first.

What Justice Lederer decided, then, is that: (1) the duty to consult, in itself, does not confer legally enforceable rights or benefits on a project proponent; and (2) in this case, the relationship between the company and the province was not such that the province owed the company a duty of care.

Northern Superior’s claim faltered, in part, on the lack of any direct contact between the province and the company about the latter’s deteriorating relationship with the First Nation until after that relationship had broken down. This finding by the trial judge proved fatal to the company’s argument that, in the circumstances, the province owed it a duty of care.  Notwithstanding Justice Lederer’s obiter comments about the second prong of the Anns test, he did not decide whether the province could have been liable to the company on different facts – i.e., in a case in which the Crown had a more direct relationship with the proponent and had been directly involved in consultations. In our view, it will require another case – not Northern Superior’s appeal – to answer that question.

The appeal

Northern Superior filed its Notice of Appeal in the Ontario Court of Appeal on June 23, 2016. It asserts, among other things, that the trial judge erred in failing to conclude that: (1) the Crown’s duty to consult entailed a duty to the company; and (2) the Crown owed the company a duty of care, both in connection with the company’s rights under the Mining Act and in relation to “the issues the [company] encountered with First Nations in connection with its mineral exploration work in Ontario and the Crown’s involvement therein”.

The Court of Appeal is more likely to make law on the first point than the second. It may hold that the duty to consult cannot, in itself, supply the basis of a claim for damages by a project proponent against the Crown. While the Court of Appeal will have to decide whether there was a duty of care in this specific case, it is likely to leave for another day the question of whether another company might bring – and prevail – on such a claim. Its reasoning could, however, give some indication of what might form the basis of a successful claim by a proponent in the future.

The bottom line

Justice Lederer’s trial judgment in Northern Superior leaves open the possibility that, in the right circumstances, a resource project proponent could successfully bring a claim for damages against the Crown where the Crown fails to consult with Aboriginal groups and accommodate their interests. Such a claim would not be for breach of the duty to consult, per se, but rather for breach of a separate duty of care occasioned by a failure of consultation on the part of the Crown.

McCarthy Tétrault LLP will continue to monitor this case and report on any further significant developments. For more information, please contact Bryn Gray or Adam Goldenberg.

duty of care duty to consult

Authors

Subscribe

Stay Connected

Get the latest posts from this blog

Please enter a valid email address