Province Punished In Costs In Flawed Consultation Case: 'Moulton Contracting Ltd. v. British Columbia'*

Article by Joan M. Young and Lindsay Dykstra, Student at Law

Case Background

The Province of British Columbia has been punished with a substantial costs award made against it arising out of a flawed consultation process with the Fort Nelson First Nation. This is the follow up decision to the trial outcome in Moulton Contracting Ltd. v British Columbia,1 whereby the British Columbia Supreme Court held the Province of British Columbia liable to Moulton Contracting Ltd. ("Moulton") for failing to disclose information relating to Moulton's Fort Nelson Timber Sales Licences ("TSL").

The original action stemmed from events in October 2006 when the Behn family, who are members of the Fort Nelson First Nation ("FNFN"), established a blockade to halt Moulton's logging operation. The company had purchased two Timber Sales Licences from the Province of British Columbia to log in the area, but as a result of the blockade were unable to do so and suffered substantial economic damages. Moulton subsequently brought an action against FNFN and their Chief, the Behn family, and the Province.

The Court dismissed the claims made against the Behn family, Chief Logan and FNFN, but in a novel interpretation of the law found the Province liable for breaching an implied contractual term in the TSL that it had (1) adequately consulted and discharged its duty to First Nations, and that it (2) was unaware of any dissatisfaction expressed by First Nations with the consultation process. The Province had failed to disclose to Moulton both that FNFN had expressed dissatisfaction with the consultation process and that the Behn's intended to block Moulton's access to the logging area. Damages of $1.75 million were awarded to Moulton for the Province's breach of these implied contractual terms.

Ruling on Costs

On June 5, 2014 the judgement on costs was issued. It largely penalized the Province for failing to accept an earlier settlement offer, sanctioned the Behn's for setting up the blockade, and sanctioned FNFN and Chief Logan for failure to disclose certain documents in a timely and reasonable manner.

Specifically, Moulton was awarded double costs against the Province, a punitive measure due to their earlier rejection of Moulton's $1.5 million settlement offer. The Court determined that the offer to settle ought to have reasonably been accepted, and that the relationship between terms of the settlement and the final judgement justified the award.2

The Province argued that...