B.C. Court Of Appeal Confirms That Allegations Of Failure To Consult Or Treaty Right Infringement Should Not Be Advanced As A Collateral Attack On Government Instruments

Overview

On July 6, 2011, the B.C. Court of Appeal released Reasons on an appeal from a judgment in an application to strike pleadings, brought by the plaintiff, Moulton Contracting Ltd. ("Moulton"). Moulton claims damages from the Fort Nelson First Nation ("FNFN"), from all members of the FNFN (in a representative claim) and from members of a family who are also members of the FNFN (the "Family Defendants") for preventing Moulton from harvesting two Timber Sale Licenses ("TSLs") in Northeast British Columbia. In the application, Moulton sought to strike paragraphs from the Family Defendants' Statement of Defence. These paragraphs included allegations that the Family Defendants were not liable for preventing the harvesting because the Crown failed to consult them prior to granting the TSLs, and because the TSLs infringed on their treaty rights and were therefore invalid. Moulton succeeded in its application and the Court found that the Family Defendants could not rely on a failure to consult or an infringement of a treaty right in defence to the tort claim. The Chambers Judge also struck a Third Party claim against the Province brought by the FNFN for indemnity relating to allegations of failure to consult with them on the grant of the TSLs.

The Court of Appeal dismissed the appeal from the Order striking the defences of the Family Defendants but allowed the appeal of the FNFN from the Order, striking the third party notice. The Court of Appeal held that the Family Defendants did not have standing to challenge the validity of the TSLs and, in the alternative, advancing a challenge to the validity of the TSLs by way of defence in the action was an impermissible collateral attack on the validity of the TSLs. The Court of Appeal allowed the appeal of the FNFN on the ground that it was not clear beyond doubt that the alleged failure of the Province to consult on the grant of the TSLs would not lead to liability to indemnify the FNFN if its liability was vicarious.

Facts

Moulton is a logging company that applied for and was granted two TSLs and a road permit, within land to which Treaty 8 applies, from the provincial Crown. The FNFN is a signatory to Treaty 8 and the Family Defendants are all members of the FNFN.

The underlying action includes a claim by Moulton for intentional interference with contractual relations and conspiracy to intentionally interfere with contractual relations. Moulton began the action after several members of the FNFN...