CANADIAN ENVIRONMENTAL LAW REPORTS Third Series/Troisi`Eme S´Erie Recueil De Jurisprudence Canadienne En Droit De L’Environnement VOLUME 66 (Cited 66 C.E.L.R

CANADIAN ENVIRONMENTAL LAW REPORTS Third Series/Troisi`eme s´erie Recueil de jurisprudence canadienne en droit de l’environnement VOLUME 66 (Cited 66 C.E.L.R. (3d)) EDITORS/REDACTEURS´ Rick Lindgren, B.A., LL.B. COUNSEL, CANADIAN ENVIRONMENTAL LAW ASSOCIATION TORONTO, ONTARIO Paul Muldoon, B.A., LL.B., M.A., LL.M. VICE-CHAIR, ONTARIO ENVIRONMENTAL REVIEW TRIBUNAL TORONTO, ONTARIO Marcia A. Valiante, B.A., B.SC., LL.B., LL.M. FACULTY OF LAW, UNIVERSITY OF WINDSOR WINDSOR, ONTARIO Ramani Nadarajah, B.A., LL.B., LL.M. COUNSEL, CANADIAN ENVIRONMENTAL LAW ASSOCIATION TORONTO, ONTARIO

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CARSWELL EDITORIAL STAFF/REDACTION´ DE CARSWELL Cheryl L. McPherson, B.A., (HONS.) Director, Primary Content Operations O’Neil Smith, B.A., LL.B. Product Development Manager Jennifer Weinberger, B.A.(HONS.), Sharon Yale, LL.B., M.A. J.D. Supervisor, Legal Writing Supervisor, Legal Writing Peter Bondy, B.A.(HONS.), LL.B. Lisa Rao, B.SC., LL.B. Lead Legal Writer Senior Legal Writer Anne Simpson, B.A., M.L.S., LL.B. Bridget Mak, B.A.(HONS.), LL.B. Senior Legal Writer Legal Writer Eden Nameri, B.A., LL.B. Nicole Ross, B.A., LL.B. Legal Writer Legal Writer Martin-Fran¸cois Parent, LL.B., Donna Dickson LL.M., DEA (PARIS II) Content Editor Bilingual Legal Writer Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. 169

[Indexed as: Kwicksutaineuk/Ah-Kwa-Mish First Nation v. British Columbia (Minister of Agriculture & Lands)] Chief Robert Chamberlin, Chief of the Kwicksutaineuk/Ah- Kwa-Mish First Nation, on his own behalf and on behalf of all members of the Kwicksutaineuk/Ah-Kwa-Mish First Nation and Her Majesty The Queen In Right Of The Province Of British Columbia as represented by the Minister of Agriculture and Lands, Respondent (Plaintiff) and The Attorney General of Canada, Appellant (Defendant) Chief Robert Chamberlin, Chief of the Kwicksutaineuk/Ah- Kwa-Mish First Nation, on his own behalf and on behalf of all members of the Kwicksutaineuk/Ah-Kwa-Mish First Nation, Respondent (Plaintiff) and Her Majesty The Queen In Right Of The Province Of British Columbia as represented by the Minister of Agriculture and Lands and Attorney General of Canada, Appellants (Defendants) and British Columbia Salmon Farmers Association British Columbia Court of Appeal Docket: Vancouver CA038705, CA038707 2012 BCCA 193 D. Smith, Garson, Hinkson JJ.A. Heard: November 23-25, 2011 Judgment: May 3, 2012 Civil practice and procedure –––– Parties — Representative or class proceedings under class proceedings legislation — Certification — Plaintiff’s class proceeding — Identifiable class –––– Representative plaintiff was Chief of First Nations band having aboriginal traditional wild salmon fishing rights in area of concern — Stocks of wild salmon began to fall, allegedly due to presence of aquaculture fish farms in area of concern — Plaintiffs brought action against defendants Crown in Right of Canada and Crown in Right of province, alleging violations of fishing rights — Action was commenced as representative action, but plaintiffs proposed to convert to class proceeding and brought application for certification — Application was granted, and plaintiff class was described as “Aboriginal collectives” — Defendants appealed — Appeal allowed and certification order struck out — Establishing who actual plaintiffs were would require ethnographic evidence of aboriginal fishing rights in area of concern — “Aboriginal collectives” were incapable of definition by resort to that evidence — In any event “Aboriginal collectives” lacked legal capacity to com- 170 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

mence or prosecute civil proceedings — Plaintiff class accordingly failed to satisfy requirements for certification and appeal was properly allowed. Aboriginal law –––– Practice and procedure — Parties — Representative or class actions –––– Representative plaintiff was Chief of First Nations band having aboriginal traditional wild salmon fishing rights in area of concern — Stocks of wild salmon began to fall, allegedly due to presence of aquaculture fish farms in area of concern — Plaintiffs brought action against defendants Crown in Right of Canada and Crown in Right of province, alleging violations of fishing rights — Action was commenced as representative action, but plaintiffs proposed to convert to class proceeding and brought application for certification — Application was granted, and plaintiff class was described as “Aboriginal collectives” — Defendants appealed — Appeal allowed and certification order struck out — Establishing who actual plaintiffs were would require ethnographic evidence of aboriginal fishing rights in area of concern — “Aboriginal collectives” were incapable of definition by resort to that evidence — In any event “Aborigi- nal collectives” lacked legal capacity to commence or prosecute civil proceedings — Plaintiff class accordingly failed to satisfy requirements for certification and appeal was properly allowed. The proposed representative plaintiff, a First Nations Chief, resided with his First Nation in or near the Broughton Archipelago. That area of concern is a traditional First Nations wild salmon fishing ground. Stocks of wild salmon began to fall sharply in the area of concern, and the plaintiffs alleged that the decline was caused by nearby aquaculture salmon farming. The defendants, Crown in Right of Canada and Crown in Right of province, were respectfully responsible for preserving First Nations fishing rights and for regulating aquaculture salmon farming. The plaintiffs alleged that the defendants had, inter alia, violated the plaintiffs’ constitutionally-protected fishing rights, and brought an action for damages and for certain declaratory relief. The plaintiffs brought an application for an order certifying the action as a class proceeding. The application was granted, and the plaintiff class was certified as “all aboriginal collectives who have or assert constitutionally protected aboriginal and/or treaty rights to fish wild salmon” within the area of concern. The defendants appealed. Held: The appeal was allowed and the certification order was struck out. Per Garson J.A. (Hinkson J.A. concurring): The representative plaintiff is asserting a violation of protected First Nations fishing rights. Prior to certification as a class proceeding, the action was a representative action, and the representative plaintiff qua chief was an appropriate representative of all persons likely to be impacted upon by any unlawful acts or omissions by the defendants. Any determination of what persons were likely to be so impacted upon would require ethnographic evidence of relationships to the traditional wild salmon fishery. An “Aboriginal collective” as named in the certification order “fails to specify ob- Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. 171 jective criteria by which a collective could, without an ethnographic analysis and court determination, identify its membership in the class”. Accordingly the class as named did not meet the requirements of the Class Proceedings Act. Furthermore, the class as specified lacks legal capacity to bring any proceeding. It was unknown who could speak for an “Aboriginal collective” or how such a collective might participate in the proceedings. This lack of legal capacity was a further fatal defect, and the action should not have been certified as a class proceeding. Per D. Smith J.A. (concurring): The rights claimed in the present action belong to all members of the entity connected to the historical aboriginal rights holders: they are “collective rights that are for the use and benefit of all of the members of the Aboriginal entity asserting them”. That essential character is not altered by framing the action as seeking enforcement of collective rights by multiple “Aboriginal collectives”. They remain “manifestly collective claims”. The Class Proceedings Act is intended to govern procedures for the adjudication of multiple individual claims arising from a common wrong. It is “not designed to advance multiple collective rights claims for multiple collective entities”. The appropriate procedural forum for such collective rights claims is the representative action. Cases considered by Garson J.A.: Attis v. Canada (Minister of Health) (2007), 2007 CarswellOnt 2786, 46 C.P.C. (6th) 129, [2007] O.J. No. 1744 (Ont. S.C.J.) — considered Attis v. Canada (Minister of Health) (2008), 59 C.P.C. (6th) 195, 300 D.L.R. (4th) 415, 2008 CarswellOnt 5661, 2008 ONCA 660, 254 O.A.C. 91, 93 O.R. (3d) 35, [2008] O.J. No. 3766 (Ont. C.A.) — referred to Bisaillon c. Concordia University (2006), 51 C.C.P.B. 163, (sub nom. Bisaillon v. Concordia University) 149 L.A.C. (4th) 225, (sub nom. Bisaillon v. Concordia University) 348 N.R. 201, (sub nom. Concordia v. Bisaillon) 2006 C.L.L.C. 220-033, 2006 C.E.B. & P.G.R. 8200, 2006 SCC 19, 2006 CarswellQue 3689, 2006 CarswellQue 3690, (sub nom. Bisaillon v. Concordia University) 266 D.L.R. (4th) 542, [2006] 1 S.C.R. 666, [2006] S.C.J. No. 19 (S.C.C.) — followed Canada Morning News Co. v. Thompson (1930), [1930] S.C.R. 338, 1930 Car- swellBC 124, [1930] 3 D.L.R. 833 (S.C.C.) — considered Canadian Reform Conservative Alliance Party Portage-Lisgar Constituency Assn. v. Harms (2003), 2003 MBCA 112, 2003 CarswellMan 371, (sub nom. Canadian Reform Conservative Alliance Party Portage-Lisgar Constituency Association v. Harms) 177 Man. R. (2d) 251, (sub nom. Canadian Reform Conservative Alliance Party Portage-Lisgar Constituency Association v. Harms) 304 W.A.C. 251, 35 C.P.C. (5th) 261, 231 D.L.R. (4th) 214, [2004] 3 W.W.R. 1, [2003] M.J. No. 319 (Man. C.A.) — considered 172 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Cronk v. Canadian General Insurance Co. (1995), 95 C.L.L.C. 210-038, 128 D.L.R. (4th) 147, 85 O.A.C. 54, 23 B.L.R. (2d) 70, 25 O.R. (3d) 505, 1995 CarswellOnt 1200, [1995] L.V.I. 2708-1, 14 C.C.E.L. (2d) 1, [1995] O.J. No. 2751 (Ont. C.A.) — considered Hollick v. Metropolitan Toronto (Municipality) (2001), (sub nom. Hollick v. Toronto (City)) 56 O.R. (3d) 214 (headnote only), (sub nom. Hollick v. Toronto (City)) 205 D.L.R. (4th) 19, (sub nom. Hollick v. Toronto (City)) [2001] 3 S.C.R. 158, (sub nom. Hollick v. Toronto (City)) 2001 SCC 68, 2001 CarswellOnt 3577, 2001 CarswellOnt 3578, 24 M.P.L.R. (3d) 9, 13 C.P.C. (5th) 1, 277 N.R. 51, 42 C.E.L.R. (N.S.) 26, 153 O.A.C. 279, [2001] S.C.J. No. 67, REJB 2001-26157 (S.C.C.) — followed Hoy v. Medtronic Inc. (2003), [2003] 7 W.W.R. 681, 2003 CarswellBC 1290, 2003 BCCA 316, 183 B.C.A.C. 165, 301 W.A.C. 165, 14 B.C.L.R. (4th) 32, [2003] B.C.J. No. 1251 (B.C. C.A.) — followed MacKinnon v. National Money Mart Co. (2006), 2006 BCCA 148, 2006 Car- swellBC 697, [2006] 5 W.W.R. 601, 265 D.L.R. (4th) 214, 26 C.P.C. (6th) 1, 52 B.C.L.R. (4th) 219 (B.C. C.A.) — referred to MacKinnon v. National Money Mart Co. (2009), 2009 BCCA 103, 2009 Car- swellBC 635, 68 C.P.C. (6th) 241, 304 D.L.R. (4th) 331, 89 B.C.L.R. (4th) 1, 450 W.A.C. 276, 267 B.C.A.C. 276, [2009] 5 W.W.R. 418, [2009] B.C.J. No. 468 (B.C. C.A.) — considered Magill v. Expedia Canada Corp. (2010), 2010 ONSC 5247, 2010 CarswellOnt 7160, 1 C.P.C. (7th) 129, [2010] O.J. No. 4051 (Ont. S.C.J.) — considered Montana Band v. R. (1997), (sub nom. Montana Indian Band v. Canada) 140 F.T.R. 30, (sub nom. Montana Band v. Canada) [1998] 2 F.C. 3, 1997 Car- swellNat 2759, 1997 CarswellNat 2089, [1997] F.C.J. No. 1486, [1997] A.C.F. No. 1486 (Fed. T.D.) — considered Morgentaler v. New Brunswick (2009), 191 C.R.R. (2d) 7, 884 A.P.R. 39, 344 N.B.R. (2d) 39, 306 D.L.R. (4th) 679, 71 C.P.C. (6th) 233, 2009 NBCA 26, 2009 CarswellNB 200, 2009 CarswellNB 201, [2009] N.B.J. No. 139, [2009] A.N.B. No. 139 (N.B. C.A.) — followed National Hockey League v. Pepsi-Cola Canada Ltd. (1992), 70 B.C.L.R. (2d) 27, 92 D.L.R. (4th) 349, 42 C.P.R. (3d) 390, 5 B.L.R. (2d) 121, [1992] 6 W.W.R. 216, 1992 CarswellBC 215 (B.C. S.C.) — followed Pro-Sys Consultants Ltd. v. Infineon Technologies AG (2009), [2010] 4 W.W.R. 273, 81 C.P.C. (6th) 9, 469 W.A.C. 271, 277 B.C.A.C. 271, 312 D.L.R. (4th) 419, 98 B.C.L.R. (4th) 272, 2009 BCCA 503, 2009 CarswellBC 3035, [2009] B.C.J. No. 2239 (B.C. C.A.) — followed R. v. Marshall (2005), 15 C.E.L.R. (3d) 163, 235 N.S.R. (2d) 151, 747 A.P.R. 151, [2005] 2 S.C.R. 220, (sub nom. R. v. Bernard) 255 D.L.R. (4th) 1, [2005] 3 C.N.L.R. 214, (sub nom. R. v. Bernard) 198 C.C.C. (3d) 29, 287 N.B.R. (2d) 206, 750 A.P.R. 206, 2005 CarswellNS 317, 2005 CarswellNS Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. 173

318, 2005 SCC 43, 336 N.R. 22, EYB 2005-92895, [2005] S.C.J. No. 44 (S.C.C.) — followed R. v. Nixon (2002), 2002 CarswellOnt 1350, 21 C.P.C. (5th) 269, [2002] O.J. No. 1009 (Ont. S.C.J.) — considered R. v. Peter Paul (1998), (sub nom. R. v. Paul) 124 C.C.C. (3d) 1, (sub nom. R. v. Paul) 158 D.L.R. (4th) 231, 1998 CarswellNB 117, (sub nom. R. v. Paul) 196 N.B.R. (2d) 292, (sub nom. R. v. Paul) 501 A.P.R. 292, [1998] 3 C.N.L.R. 221, 18 C.R. (5th) 360, 6 Admin. L.R. (3d) 167, [1998] N.B.J. No. 126 (N.B. C.A.) — considered R. v. Peter Paul (1998), [1998] 4 C.N.L.R. iv (note), (sub nom. R. v. Paul) 235 N.R. 392 (note), (sub nom. R. v. Paul) 204 N.B.R. (2d) 400 (note), (sub nom. R. v. Paul) 520 A.P.R. 400 (note), [1998] S.C.C.A. No. 298 (S.C.C.) — referred to R. v. Powley (2003), 2003 CarswellOnt 3502, 2003 CarswellOnt 3503, 2003 SCC 43, 308 N.R. 201, 177 O.A.C. 201, 68 O.R. (3d) 255 (note), 230 D.L.R. (4th) 1, 177 C.C.C. (3d) 193, [2003] 2 S.C.R. 207, [2003] 4 C.N.L.R. 321, 5 C.E.L.R. (3d) 1, 110 C.R.R. (2d) 92, REJB 2003-47444, [2003] S.C.J. No. 43 (S.C.C.) — considered R. v. Sparrow (1990), 1990 CarswellBC 105, 1990 CarswellBC 756, 70 D.L.R. (4th) 385, 111 N.R. 241, [1990] 1 S.C.R. 1075, [1990] 3 C.N.L.R. 160, 46 B.C.L.R. (2d) 1, 56 C.C.C. (3d) 263, [1990] 4 W.W.R. 410, EYB 1990- 68598, [1990] S.C.J. No. 49 (S.C.C.) — followed R. v. Vanderpeet (1996), [1996] 9 W.W.R. 1, 23 B.C.L.R. (3d) 1, 50 C.R. (4th) 1, (sub nom. R. v. Van der Peet) 137 D.L.R. (4th) 289, (sub nom. R. v. Van der Peet) 109 C.C.C. (3d) 1, (sub nom. R. v. Van der Peet) 200 N.R. 1, (sub nom. R. v. Van der Peet) 80 B.C.A.C. 81, (sub nom. R. v. Van der Peet) [1996] 2 S.C.R. 507, (sub nom. R. v. Van der Peet) [1996] 4 C.N.L.R. 177, (sub nom. R. v. Van der Peet) 130 W.A.C. 81, 1996 CarswellBC 2309, 1996 CarswellBC 2310, EYB 1996-67132, [1996] S.C.J. No. 77 (S.C.C.) — followed Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2005), 20 C.P.C. (6th) 262, (sub nom. Ragoonanan v. Imperial Tobacco Canada Ltd.) 78 O.R. (3d) 98, 2005 CarswellOnt 5992, [2005] O.J. No. 4697 (Ont. S.C.J.) — referred to Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2008), (sub nom. Ragoonanan v. Imperial Tobacco Canada Ltd.) 236 O.A.C. 199, 2008 Cars- wellOnt 2399, 54 C.P.C. (6th) 167, [2008] O.J. No. 1644 (Ont. Div. Ct.) — referred to Ring v. Canada (Attorney General) (2010), 918 A.P.R. 86, 297 Nfld. & P.E.I.R. 86, 86 C.P.C. (6th) 8, 72 C.C.L.T. (3d) 161, 2010 NLCA 20, 2010 Car- swellNfld 86, [2010] N.J. No. 107 (N.L. C.A.) — referred to Rumley v. British Columbia (2001), 95 B.C.L.R. (3d) 1, 9 C.P.C. (5th) 1, [2001] 11 W.W.R. 207, 157 B.C.A.C. 1, 256 W.A.C. 1, 275 N.R. 342, 205 D.L.R. 174 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

(4th) 39, [2001] 3 S.C.R. 184, 2001 SCC 69, 2001 CarswellBC 2166, 2001 CarswellBC 2167, 10 C.C.L.T. (3d) 1, [2001] A.C.S. No. 39, [2001] S.C.J. No. 39, REJB 2001-26160 (S.C.C.) — followed Taff Vale Railway v. Amalgamated Society of Railway Servants (1901), [1901] A.C. 426, 70 L.J.K.B. 905 (U.K. H.L.) — considered Walls v. Bayer Inc. (2005), 2005 MBQB 3, 2005 CarswellMan 5, 6 C.P.C. (6th) 79, 189 Man. R. (2d) 262, [2006] 4 W.W.R. 720, [2005] M.J. No. 4 (Man. Q.B.) — considered Western Canadian Shopping Centres Inc. v. Dutton (2001), (sub nom. Western Canadian Shopping Centres Inc. v. Bennett Jones Verchere) 201 D.L.R. (4th) 385, [2002] 1 W.W.R. 1, 286 A.R. 201, 253 W.A.C. 201, 8 C.P.C. (5th) 1, 94 Alta. L.R. (3d) 1, 272 N.R. 135, 2001 SCC 46, 2001 Carswell- Alta 884, 2001 CarswellAlta 885, [2001] 2 S.C.R. 534, [2000] S.C.J. No. 63, REJB 2001-25017 (S.C.C.) — followed West Moberly First Nations v. British Columbia (2007), [2008] 5 W.W.R. 746, 2007 CarswellBC 1999, 2007 BCSC 1324, 78 B.C.L.R. (4th) 83 (B.C. S.C.) — followed Wuttunee v. Merck Frosst Canada Ltd. (2009), 2009 SKCA 43, 2009 Carswell- Sask 191, 69 C.P.C. (6th) 60, 324 Sask. R. 210, 451 W.A.C. 210, [2009] 5 W.W.R. 228, [2009] S.J. No. 179 (Sask. C.A.) — considered Wuttunee v. Merck Frosst Canada Ltd. (2009), 401 N.R. 399 (note), 494 W.A.C. 318 (note), 359 Sask. R. 318 (note), 2009 CarswellSask 681, 2009 Carswell- Sask 682, [2008] S.C.C.A. No. 512 (S.C.C.) — referred to Xeni Gwet’in First Nations v. British Columbia (2007), (sub nom. Tsilhqot’in Nation v. British Columbia) [2008] 1 C.N.L.R. 112, 65 R.P.R. (4th) 1, 2007 BCSC 1700, 2007 CarswellBC 2741, [2007] B.C.J. No. 2465 (B.C. S.C.) — considered Statutes considered by Garson J.A.: Class Proceedings Act, R.S.B.C. 1996, c. 50 Generally — referred to s. 4 — considered s. 4(1) — considered s. 4(1)(b) — considered s. 4(1)(c) — considered Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), c. 11, reprinted R.S.C. 1985, App. II, No. 44 Generally — referred to s. 35 — considered Fisheries Act, R.S.B.C. 1996, c. 149 s. 13(5) — considered s. 14(2) — considered Indian Act, R.S.C. 1985, c. I-5 Generally — referred to Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 175

Land Act, R.S.B.C. 1996, c. 245 s. 11(2) — considered

Statutes considered by D. Smith J.A.: Class Proceedings Act, R.S.B.C. 1996, c. 50 Generally — referred to s. 4(1)(b) — considered Rules considered by Garson J.A.: Supreme Court Civil Rules, B.C. Reg. 168/2009 R. 1-1(1) — considered

APPEAL by defendants from judgment reported at Kwicksutaineuk/Ah-Kwa- Mish First Nation v. British Columbia (Minister of Agriculture & Lands) (2010), (sub nom. Kwicksutaineuk/Ah-Kwa-Mish First Nation v. British Columbia (Agriculture & Lands)) [2011] 1 C.N.L.R. 92, 55 C.E.L.R. (3d) 165, 2010 Car- swellBC 3315, 2010 BCSC 1699, 15 B.C.L.R. (5th) 322, [2011] 4 W.W.R. 679 (B.C. S.C. [In Chambers]), granting plaintiffs’ application for certification of action for, inter alia, damages and declaratory relief for violation of certain First Nations fishing rights as class proceeding.

H.W.R. Gwillim, J. Sullivan, S. Knowles, for Appellant, British Columbia H.J. Wruck Q.C., A.J. Semple, S.C. Postman, for Appellant, Canada J.J. Camp Q.C., R. Mogerman, for Respondent K.G. O’Callaghan, A. Borrell, for Intervenor

Garson J.A.: Introduction 1 The waters of the Broughton Archipelago have for centuries been a source of salmon for the Aboriginal peoples who inhabit the area. There is no dispute that in recent decades, many stocks of wild salmon, once abundantly available for fishing, have declined significantly. The cause of that decline, it is alleged in this action, is the operation of fish farms in and about the Broughton Archipelago. The plaintiff, Chief Robert Chamberlin, is chief of the Kwicksutaineuk/Ah-Kwa-Mish First Nation. He commenced the within action and applied to have it certified as a class action. In certifying the action, the chambers judge defined the class as “all aboriginal collectives who have or assert constitutionally protected aboriginal and/or treaty rights to fish wild salmon for food, social, and ceremonial purposes within the Broughton Archipelago and the rivers that drain into the Broughton Archipelago on behalf of himself and 176 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

other Aboriginal collectives who have rights to fish in the Broughton Ar- chipelago.” His reasons for judgment may be found at 2010 BCSC 1699 (B.C. S.C. [In Chambers]). This appeal turns on whether the class was properly defined.

Statement of Claim 2 The Further, Further Amended Statement of Claim, filed July 6, 2010, describes the proposed class as follows: 1. This is a proposed class action on behalf of all aboriginal collectives who have or assert constitutionally protected aboriginal and/or treaty rights to fish wild salmon for sustenance, food, social, and ceremonial purposes (“Fishing Rights”) within the Broughton Archipelago (“Class”). The boundaries of the Broughton Archipelago are set out on the map attached as Sched- ule “A” to this Statement of Claim. 2. The Broughton Archipelago is a network of fjords and islands located along the mainland coast and adjacent to the North Eastern side of Vancouver Island. The Broughton Archipelago is a unique ecosystem that supports significant stocks of wild salmon that mi- grate in cycles from their spawning grounds in the Broughton Ar- chipelago to the Pacific Ocean and then return to spawn their original spawning grounds (“Wild Salmon”). 3 At para. 3 of the statement of claim, the plaintiff asserts that the Crown’s regulation of salmon aquaculture is responsible for the “serious and material decline in wild salmon stocks within the Broughton Archi- pelago ...”. 4 Also at para. 3, the plaintiff alleges that this Crown conduct infringes its fishing rights in breach of s. 35 of the Constitution Act, 1982. 5 Chief Chamberlin is the representative plaintiff, bringing the claim on his own behalf and on behalf of all members of the Kwicksutaineuk/Ah- Kwa-Mish First Nation. 6 At para. 15, the plaintiff alleges that the operation of salmon aquaculture has reduced or destroyed the plaintiff’s ability to harvest sufficient quantities of wild salmon to satisfy their sustenance, social and ceremonial needs. Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 177

7 At para. 19 of the statement of claim, the plaintiff claims the following damages: 19. As a direct result of the unconstitutional infringement of the Fish- ing Rights, the Class has suffered loss and damages including, but not limited to: (a) general damages for the loss of their ability to exercise a constitutionally protected right which provides for a source of food, sustenance and is of cultural, social and economic significance; (b) the costs of purchasing or otherwise procuring, and transport- ing food to replace the Wild Salmon that are not available; (c) costs arising out of the lost ability to exercise the Fishing Rights at their preferred times, using their preferred means, in their preferred places; and (d) the loss of the cultural, ecological, and spiritual integrity of the Wild Salmon habitat and fishing sites, including their ability to maintain cultural practices related to the Wild Salmon harvesting, including traditional management of the Wild Salmon. 8 The plaintiff claims the following relief at para. 20: 20. The Province and the Minister continue to authorize and regulate the Fish Farms in the manner set forth above and this continuing authorization and regulation causes unconstitutional, ongoing and irrep- arable harm to the Fishing Rights and gives rise to injunctive relief. Wherefore the plaintiff claims: (a) an order certifying this case as a class proceeding and appointing the Plaintiff as the representative plaintiff under the Class Proceedings Act, R.S.B.C. 1996, c. 50; (b) a declaration that the KAFN and the other Members of the Class have Fishing Rights within the Broughton Archipelago; (c) a declaration that the manner in which the Province has authorized and regulated the Salmon Farms has contributed to a significant decline in the Wild Salmon stocks; (d) a declaration that sections 11(2) of the Land Act and sections 13(5) and 14(2) of the Fisheries Act are of no force and effect because these provisions confer on the Minister the discretion to authorize salmon aquaculture and this discretion is not structured to accommodate the Fishing Rights of the Class; (e) a declaration that the manner in which the Province has authorized and regulated the Salmon Farms has infringed the 178 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

KAFN and other Class Members’ Fishing Rights in violation of s. 35 of the Constitution Act, 1982, and that the permits authorizing and regulating the Salmon Farms are void and of no force and effect and/or are constitutionally inapplicable; (f) an injunction prohibiting the Minister from issuing, renewing, or replacing any salmon aquaculture permits in the Broughton Archipelago; (g) a mandatory injunction requiring the Province to remediate the impact of Salmon Farms on Wild Salmon by restoring Wild Salmon stocks and habitat to the position that they would have been in but for the Province’s infringement of the Fishing Rights; (h) damages and/or compensation; (i) an order that the relief granted be implemented under the continuing supervision and jurisdiction of the Court; and (j) such further other equitable and related relief as to this Court may seem meet and just.

Certification Application and Order 9 In April 2010, the plaintiff applied for certification of the within proceeding as a class proceeding. The plaintiff proposed that the class be described as follows: ... all members of the First Nations who have or assert constitutionally protected aboriginal and/or treaty rights to fish wild salmon for sustenance, food, social, and ceremonial purposes within the Broughton Archipelago (the “Class Members”) or such other class definition as the court may ultimately decide on the motion for certification. The boundaries of the Broughton Archipelago are set out on the map attached as Schedule “A” to the Statement of Claim. 10 Following a lengthy hearing in April that continued into July and No- vember, with the benefit of written submissions, Mr. Justice Slade certified the within action on January 12, 2010. His order includes the following terms: IN THIS CLASS PROCEEDING the claim asserted by the plaintiffs is for declaratory relief, injunctive relief and damages against the Province for allegedly breaching s. 35 of the Constitution Act, 1982. THIS COURT ORDERS that: 1. this action is certified as a class proceeding; Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 179

2. the capitalized terms in this order are derived from the Fur- ther Further Amended Statement of Claim as amended pursuant to the Consent Order dated May 3, 2010; 3. the class is described as all aboriginal collectives who have or assert constitutionally protected aboriginal and/or treaty rights to fish wild salmon for food, social, and ceremonial purposes within the Broughton Archipelago and the rivers that drain into the Broughton Archipelago (the “Broughton Archipelago); 4. Chief Robert Chamberlin is appointed as representative plaintiff for the class members; 5. the trial of this proceeding will determine the following common issues: (a) To what extent are the Wild Salmon populations in the Broughton Archipelago in decline? (b) To what extent has the Province purported to authorize and regulate the Salmon Farms under the Land Act, R.S.B.C. 1996, c. 245 and the Fisheries Act, R.S.B.C. 1996, c. 149? (c) Has the manner in which the Province purported to authorize and regulate the Salmon Farms: (i) failed to prevent, or adequately manage the concentration of parasites, including sea lice, at the Salmon Farms and the transmission of these parasites from the Salmon Farms to the Wild Salmon; (ii) failed to prevent or adequately manage the concentration of infectious diseases at the Salmon Farms and the transmission of these infectious diseases from the Salmon Farms to the Wild Salmon; (iii) allowed the farming of non-indigenous Atlan- tic salmon species at the Salmon Farms and failed to prevent or adequately manage escapes of Atlantic salmon from the Salmon Farms that compete with the Wild Salmon for habitat and food; (iv) permitted the Salmon Farms to be located in areas that encounter significant runs of Wild Salmon, particularly as vulnerable juvenile Wild Salmon; 180 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

(v) permitted Salmon Farms to operate without requiring fallowing in a manner that effectively protects Wild Salmon during critical periods when Wild Salmon stocks, particularly juvenile Wild Salmon, are known to be passing in close proximity to Salmon Farms; (vi) permitted Salmon Farms that allow the transmission of parasites and disease to Wild Salmon by the use of permeable cages causing free flow of contaminated water and waste between the Salmon Farms and the marine environment; and (vii) made other decisions about, among other things, the location of the farms, size of the farms, concentration of the non-indigenous salmon permitted in the farms, the application of pest and disease treatments and the timing of harvesting operations, which have significant negative impacts on the populations of Wild Salmon? (d) To what extent have the actions or omissions of the Province caused or materially contributed to the decline of the Wild Salmon populations in the Broughton Archipelago? (e) Did the Province have knowledge, real or constructive, of the existence or potential existence of any Fishing Rights within the Broughton Archipelago? (f) Did the Province contemplate, or ought the Province have contemplated, that any Fishing Rights within the Broughton Archipelago could be affected by the manner in which the Province authorized and regulated the Salmon Farms? (g) Are the Class Members entitled to an award of aggre- gate damages and, if so, in what amount? 6. The trial of common issues, including a determination whether one or several of the common issues will be tried before the others, will be addressed in case management; 7. notice shall be given to Class Members in the form, time, manner, and at the cost of the party or parties to be directed by the Supreme Court after further submissions by the parties; and Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 181

8. the time and manner for opting out of the proceeding shall be as directed by the Supreme Court after further submissions by the parties, which application shall be brought promptly if the British Columbia Court of Appeal upholds certification in this case. [Emphasis added.]

Issue on Appeal and Disposition of Appeal 11 In my view the main issue on this appeal is whether the certified description of the plaintiff class is statutorily permissible. I conclude that it is not. As will be discussed below, I consider determination of this issue to be dispositive of this appeal. I also find that there is no acceptable definition which this Court could substitute for the one used by the chambers judge. It is therefore unnecessary to consider the further grounds of appeal addressed by the parties. 12 In brief, my reasons for this conclusion follow. Because class proceeding legislation is procedural, and does not create substantive rights, a proposed class action must identify class members who individually have legal capacity to sue and assert a cause of action. The cause of action advanced in this case by Chief Chamberlin on behalf of his First Nation is a claim that the Crown infringed his First Nation’s fishing rights by the manner in which it regulated fish farms in the Broughton archipelago. Before certification, that action was a representative action brought by a person who does have legal capacity. However, the certification of Chief Chamberlin’s representative action on behalf of “Aboriginal collectives” fails to specify objective criteria by which a collective could, without an ethnographic analysis and court determination, identify its membership in the class. This analysis would be part of the infringement analysis which the certification order leaves to a later determination of the individual issues. Moreover, the term “Aboriginal collective,” does not, without more, identify a group that has legal capacity. Questions such as: who speaks for such a collective, how would it participate in the class action, how would it decide whether to opt-out, and whether determination of the common question would be binding on it, all illustrate the impermissible circularity of the definition of class members as certified in the order under appeal. Thus, for two central reasons, the lack of legal capacity, and the lack of known objective criteria, the class definition does not meet the criteria set out in the legislation. 182 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Arguments on Appeal 13 The appellants in this case are the Federal and Provincial Crowns. The British Columbia Salmon Farmers Association was granted intervenor status. The appellants objected to the certification order on numerous grounds, but as indicated already, these reasons focus on the parties’ submissions regarding the identifiable class requirement for certification. 14 Canada argues that there must be objective criteria for the identification of class members at the outset of the litigation. In the appealed order, Canada contends that no such objective criteria is provided. The class members are described as holders of Aboriginal fishing rights in the Broughton Archipelago but the determination of who holds such rights is not objective; the determination involves analysis of ethnographic and historical research and requires judicial findings of fact. Canada asserts it is not possible to identify who is or is not a member of the class prior to a trial determining the very issue needed to identify the class. 15 The Province says in addition that the order certifying the proceeding is flawed because the class members are not “persons” as is required by the Class Proceedings Act, R.S.B.C. 1996, c. 50, but are rather “aboriginal collectives” which are not recognized legal entities. It notes that, while the representative plaintiff is an individual, the claims are not personal claims as the class members are Aboriginal collectives, each with their own traditional territory within the Broughton Archipelago. Thus, essentially, British Columbia says the certified class is a class of multiple representative proceedings. It submits that the certification criteria have not been met and the appeal should be allowed. 16 The intervenor focuses on the common issues which relate to the impact of government regulation of fish farms on wild salmon. The intervenor argues that the court erred in accepting that a “system-wide” scientific inquiry could be carried out despite: different salmon runs (five species over 59 rivers); differing locations and histories of 29 salmon farms; different alleged immediate causes or mechanisms of harm to wild salmon (sea lice, disease, escapes and operational parameters of fish farms such as size, fallowing, location, permeable cages and harvesting); and Aboriginal rights of differing territorial scope for different Aborigi- nal collectives in the area. For reasons that will become evident, I have not addressed the intervenor’s argument. 17 The intervenor argues that no plausible methodology has been proposed for determining if fish farms are responsible for the decline in wild salmon stocks on a system-wide basis. In support of this submission, the Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 183

intervenor emphasizes that the Broughton Archipelago system is complex, being comprised of ocean waters as well as a complex series of rivers, streams and fjords. It submits that there is no evidence that a common cause exists throughout the Archipelago. 18 In support of the certification order, the respondent argues that the class is identifiable as a class comprised of collectives who are entitled to have or assert fishing rights in the Archipelago. He submits that self- identification through the assertion of a right to fish in the Broughton Archipelago is sufficient to meet the identifiable class requirement. The respondent submits that to hold that Aboriginal collectives cannot be “persons” within s. 4(1) of the CPA is contrary to the constitutional protection afforded to Aboriginal rights and that the jurisprudence is sufficiently advanced such that Aboriginal peoples can determine whether they are entitled to the constitutional protection provided by s. 35 of the Constitution Act, 1982. He submits that the CPA permits the court to enter upon a relatively elaborate factual investigation in order to determine class membership and that difficulty satisfying the conditions is not a reason for finding that the class is not identifiable.

Statutory provisions 19 The CPA test for certification provides as follows: 4 (1) The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met: (a) the pleadings disclose a cause of action; (b) there is an identifiable class of 2 or more persons; (c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members; (d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (e) there is a representative plaintiff who (i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and 184 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

(iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. (2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including the following: (a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members; (b) whether a significant number of the members of the class have a valid interest in individually controlling the prosecu- tion of separate actions; (c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings; (d) whether other means of resolving the claims are less practical or less efficient; (e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means. [Emphasis added.]

The Plaintiff’s Burden in a Certification Application 20 The plaintiff’s task on certification is to prove some basis in fact for the certification requirements, including the requirement that there be an identifiable class of two or more persons. As was stated in Pro-Sys Consultants Ltd. at para. 65: The certification hearing does not involve an assessment of the merits of the claim; rather, it focuses on the form of the action in order to determine whether the action can appropriately go forward as a class proceeding: Hollick at para. 16. The burden is on the plaintiff to show “some basis in fact” for each of the certification requirements, other than the requirement that the pleading disclose a cause of action: Hollick, at para. 25. However, in conformity with the liberal and purposive approach to certification, the evidentiary burden is not an onerous one — it requires only a “minimum evidentiary basis”: Hollick, at paras. 21, 24-25; Stewart v. General Motors of Canada Ltd., [2007] O.J. No. 2319 (S.C.J.) at para. 19. As stated in Cloud v. Canada (Attorney General) (2004), 247 D.L.R. (4th) 667 at para. 50, Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 185

73 O.R. (3d) 401 (C.A.), leave to appeal ref’d [2005] S.C.C.A. No. 50 [Cloud], [O]n a certification motion the court is ill equipped to resolve conflicts in the evidence or to engage in finely cali- brated assessments of evidentiary weight. What it must find is some basis in fact for the certification requirement in issue.

Standard of Review on Appeal 21 As stated by the Supreme Court of Canada in Hollick v. Metropolitan Toronto (Municipality), 2001 SCC 68, [2001] 3 S.C.R. 158 (S.C.C.) at paras. 14-16, class proceedings legislation should be construed gener- ously and not in an overly restrictive manner that would impede realiza- tion of the statute’s intended benefits; namely, judicial economy, access to justice and modification of the behavior of wrongdoers. Although the Court considered Ontario legislation in Hollick, this Court has adopted such reasoning (see for example: MacKinnon v. National Money Mart Co., 2006 BCCA 148 (B.C. C.A.) at para. 16, (2006), 265 D.L.R. (4th) 214 (B.C. C.A.)). 22 A chambers judge has broad discretion in determining whether a class proceeding has met the criteria for certification and an appellate court should not interfere unless the chambers judge has erred in law or is clearly wrong: Hoy v. Medtronic Inc., 2003 BCCA 316 (B.C. C.A.) at para. 38, (2003), 14 B.C.L.R. (4th) 32 (B.C. C.A.). 23 As stated by this Court in Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503, 312 D.L.R. (4th) 419 (B.C. C.A.), an appellate court should be restrained in its review of certification orders: [28] Section 4 of the CPA states that an action “must” be certified if all of the statutory criteria are satisfied. Accordingly, a judge on a certification application is not exercising a discretionary power in granting or refusing certification of an action as a class proceeding. However, the judge has a measure of discretion in the assessment of the statutory criteria and, absent an error of law, this Court will not interfere with an exercise of judicial discretion unless it is persuaded the chambers judge erred in principle or was clearly wrong: Camp- bell v. Flexwatt Corp. (1997), 44 B.C.L.R. (3d) 343, [1998] 6 W.W.R. 275 (C.A.) at para. 25, leave to appeal ref’d [1998] S.C.C.A. No. 13 [Campbell]. 186 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Analysis 1. The Relevant Legal Framework for Aboriginal Rights Claims 24 Before reviewing the reasons for judgment, I will briefly summarize the key principles essential to the proof of an Aboriginal rights claim. 25 In R. v. Sparrow, [1990] 1 S.C.R. 1075 (S.C.C.), at 1112, (1990), 56 C.C.C. (3d) 263 (S.C.C.), the Supreme Court of Canada developed a basic analytical framework for considering a claim alleging a breach of an Aboriginal right. The framework was subsequently summarized by the Court in R. v. Vanderpeet, [1996] 2 S.C.R. 507 (S.C.C.) at para. 2, as follows: In Sparrow, Dickson C.J. and La Forest J., writing for a unanimous Court, outlined the framework for analyzing s. 35(1) claims. First, a court must determine whether an applicant has demonstrated that he or she was acting pursuant to an aboriginal right. Second, a court must determine whether that right has been extinguished. Third, a court must determine whether that right has been infringed. Finally, a court must determine whether the infringement is justified. 26 Under the first branch, establishing an Aboriginal right, the claimant must establish that the activity is an “element of practice, custom or tradition integral to the distinctive culture of the Aboriginal group claiming the right” (Vanderpeet at para. 46). The court must determine whether the right claimed was a practice, custom or tradition practised by a pre- European contact Aboriginal group and whether, without the practice, custom or tradition, the culture of the group would have been fundamen- tally altered (Vanderpeet at paras. 59-60). As was held by the Court in R. v. Sparrow Aboriginal fishing rights are not traditional property rights. They are not individual rights, “they are rights held by a collective and are in keeping with the culture and existence of that group”. 27 Reasonable continuity between the pre-contact practice, custom or tradition and those of the modern day right claimant is also required: Vanderpeet at paras. 63-64. 28 Aboriginal rights must be grounded in the existence of a historic and present community, and they may only be exercised by virtue of an individual’s ancestrally based membership in the present community: R. v. Powley, 2003 SCC 43, [2003] 2 S.C.R. 207 (S.C.C.) at para. 24. In Powley, the court approached the issue of ancestral connection by first identifying the historic rights-bearing community and then identifying the contemporary rights-bearing community. Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 187

29 In R. v. Marshall, 2005 SCC 43, [2005] 2 S.C.R. 220 (S.C.C.) [here- inafter Bernard], McLachlin C.J.C. addressed the question of ancestral connection or continuity. At para. 67 she wrote: ... The requirement of continuity in its most basic sense simply means that claimants must establish they are right holders. Modern- day claimants must establish a connection with the pre-sovereignty group upon whose practices they rely to assert title or claim to a more restricted aboriginal right. The right is based on pre-sovereignty aboriginal practices. 30 Thus, in an Aboriginal rights claim, the identity of the proper rights holder is integral to the analysis. This is relevant for current purposes because the identity of the proper rights holder is also integral to the part of the class definition which requires class members to “have” or “assert” an Aboriginal right to fish. In other words, determination of the identity of the rights holder will be an important issue in the parts of the individual issues trials concerned with establishing the Aboriginal rights of each collective and will also be necessary to identify which collective is a member of the class because it has or asserts an Aboriginal right to fish in the Broughton Archipelago.

2. The Chambers Judge’s Reasons 31 The chambers judge concluded, based on his analysis of the ethnographic materials, that holders of Aboriginal fishing rights in the Broughton Archipelago could be identifiable as required by s. 4(1) of the CPA. 32 The reasons contain a lengthy analysis of some of the possible ancestral ties of some of the proposed class members and of the manner in which Aboriginal groups are defined in different contexts: the Constitu- tion Act, 1982; the Indian Act; and the British Columbia Treaty Commis- sion process. 33 The judge set out his task at paras. 19-21: Here, the entities are variously described in the pleadings and evidence as “Nations”, “First Nations”, “Tribes”, and “Bands”. The element that would establish each as a potential member of the class is the ability to claim an aboriginal right to harvest wild salmon in the environs of the Broughton Archipelago. This calls, at this stage, for a preliminary determination of the factors that would bear on the identification of holders of fishing rights in the Broughton Archipelago. Are the “persons” for the purposes of s. 4(1)(b) the nation, the tribes, or the bands? If the commonly used descriptor “First Nations” is to 188 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

have any meaning in the context of a discussion of aboriginal rights, it must, in my opinion, refer to an aboriginal collective that can fairly assert itself as having an ancestral connection to an identifiable collective which, historically, engaged in practices that found the basis for the asserted right. It does not assist this determination that the proposed class is comprised of Bands. The Indian Act was not on the radar before contact, and band membership may not necessarily establish an ancestral connection with the members of the same indigenous aboriginal collective for which fishing was an integral aspect of a distinctive culture at contact. A discussion of the evidence and the resulting factors that go to establish the proper identity of the potential members of the class follows. [Emphasis added.] 34 It is evident from the above that the judge ruled out the possibility that the class members could be described as Bands. 35 Beginning at para. 24, the judge considered information provided in Chief Chamberlin’s affidavit regarding how the Kwicksutaineuk/Ah- Kwa-Mish First Nation came to be known as a single collective. The affidavit also identified other “First Nations” who have or assert constitutionally protected treaty and/or Aboriginal rights to fish in the Broughton Archipelago. 36 At para. 29, he made reference to different descriptors of Aboriginal groups: It is evident that the term “First Nation” as used by Chief Chamberlin in his affidavit and as reflected in the Statement of Claim is used as a descriptor for “bands” that appear in the registry of DIAND. This is consistent with the general usage of the term “First Nation”, of which I take judicial notice. I am informed, in part, by a review of the foundation documents for three prominent aboriginal political organizations: the entity known as the Assembly of First Nations (AFN), the British Columbia-based First Nations Summit (FNS) and the Union of B.C. Indian Chiefs (UBCIC). The constitution of UBCIC establishes Indian Act bands as entities that qualify for membership. Foun- dation documents for the AFN and the FNS use the term “First Na- tions” to describe their members, and are organized to take direction from the chiefs of bands, in assembly. Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 189

37 He identified from the Chamberlin affidavit and the affidavit of Lori Walker sixteen such First Nations. After referring to Vanderpeet, he stated at para. 38 the following: In this test the aboriginal group is relevant as both the modern claimant of the right, and as the vessel of distinctive culture in which a qualifying historical activity must be located. The Court did not discuss how aboriginal societies are delineated, and adjudicated the claim on the basis that the Sto:lo were a qualifying aboriginal group. 38 He then discussed authorities commenting upon the ancestral continuity requirement noted above. 39 At para. 43, he quotes the language of Mr. Justice Vickers in Xeni Gwet’in First Nations v. British Columbia, 2007 BCSC 1700, [2008] 1 C.N.L.R. 112 (B.C. S.C.), concerning the manner in which a rights holder should be identified: Vickers J. concluded that the determination of the rights holder should focus on “the common threads of language, customs, traditions and a shared history that form the central “self” of a Tsilhqot’in person”, rather than shifting political structures (at para. 457): The political structures may change from time to time. Self identification may shift from band identification to cultural identification depending on the circumstances. What remains constant are the common threads of language, customs, traditions and a shared history that form the central “self” of a Tsilhqot’in person. The Tsilhqot’in Nation is the community with whom Tsilhqot’in people are connected by those four threads. 40 It should be noted that Vickers J. was not concerned there with identifying a legal entity capable of suit because that action was pursued as a representative action, rather, his focus was on the means by which the modern-day claimants could establish an ancestral link to a pre-sovereignty group. 41 Beginning at para. 55, the chambers judge began more closely considering evidence pertaining to the historical roots of the Kwicksutaineuk peoples in the Broughton Archipelago, one of several members of the Kwak’wala language group known as Kwakwaka’wakw or Kwakiutl. He noted Daisy May Sewid-Smith’s assertions that the Qwe’Qwa’Sot’Enox Nation, of which she is a member, are the Kwicksutaineuk peoples and that the Kwicksutaineuk/Ah-Kwa-Mish First Nation came into existence post-contact. 190 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

42 At para. 59, the chambers judge began examining different historical and ethnographic materials containing information on the indigenous peoples occupying the Broughton Archipelago, attempting to match modern-day entities to the groups listed therein. 43 He then, at para. 74, concluded that each of the eight First Nations referred to in the Chamberlin affidavit is an Indian Act Band with a name corresponding with that of a tribe identified in the ethnographic materials. 44 In paras. 77 and 78, he appears to exclude certain tribes for whom he could find no ethnographic link to ancestral groups that existed at the time of contact with Europeans: The aboriginal collectives listed in the two Walker affidavits include four bands (Gwa’Sala-Nakwaxda’xw, We Wai Kai, Wei Wai Kum, and Kwiakah) are also Indian Act bands, with names that correspond to tribes listed in the ethnographic material. They, together with all the First Nations listed in the Chamberlin affidavit, are from the Kwak’wala language group. As such, they would be Kwakwaka’wakw (herein referred to as Kwakiutl). The remaining four aboriginal collectives set out in the Walker affidavits, Homalco, K’omoks, Tsilhqot’in, and Ulkatcho, do not appear to have corresponding Kwak’wala tribal names. Homalco, K’omoks, and Ulkatcho are, according to Walker, registered as Indian Act bands. The K’omoks are said to have North Coast Salish origins, but are considered a Kwakiutl band due to Kwakiutl territorial expansion up to the late 1800s. In their filed Statement of Intent in the British Columbia Treaty Process, the K’omoks self-identified as both Kwakiutl and Salish. This appears to reflect the K’omoks history as suggested by Kennedy and Bouchard. 45 The chambers judge concluded that the following members could be class members as they had an ancestral tie to the Kwak’wala language group. He concludes that the eight First Nations listed in the Chamberlin affidavit are Kwakiutl, plus four identified in the Walker affidavit. These are the following First Nations listed in the Chamberlin affidavit: Kwicksutaineuk/Ah-Kwa-Mish Tsawataineuk Namgis Gwawaenuk Da’naxda”xw Kwakiutl Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 191

Mamalilikulla Tlowistsis 46 He also includes the following four Bands identified in the Walker affidavit: Gwa’Sala-Nakwaxda’xw We Wai Kai Wei Wai Kum Kwiakah 47 Each of these First Nations is an Indian Act Band. 48 The included Bands are identified by the judge on the basis of his examination of the ethnographic material. He found that each of them has common traditional territorial claims to fish in part of the Broughton Archipelago, and each belong to the Kwak’wala language group. 49 He clarified these findings later at paras. 153 and 154 in which he indicated that the class members could be part of a more fluid structure: The ethnographic literature reveals that the First Nations referred to in Chief Chamberlin’s affidavit as prospective members of the proposed class are all part of the Kwak’wala linguistic group. The same is true of several of the First Nations referred to in the Walker affidavits. The ethnographic literature reveals that the tribal structure of the Kwakiutl was somewhat fluid. Tribes, or more correctly numimas, would split, or recombine in new and distinctive collectives, in response to pressures both from within and without. The literature also indicates that, while each tribe had a territory, some resource sites were common property to the Kwakiutl. The evidence on this application is sufficient to establish the possibility that the fishing rights of the proposed members of the class, to the extent that they are of the Kwak’wala language group, and are therefore Kwakiutl, may extend throughout the Broughton Archipelago... 50 The chambers judge appears to have conducted a preliminary analysis of the ancestral link required to establish an existing Aboriginal right. As already noted, in order to establish Aboriginal rights, claimants must establish they are the rights holders, that is, they must establish an ancestral connection with the pre-sovereignty group upon whose practices they rely to assert a claim to an Aboriginal right. Such a lengthy analysis merely to identify class members, appears to conflict with the CPA goals of judicial economy and access to justice (see: Hollick at paras. 14-16). The purpose of this analysis is not entirely clear to me and further bol- sters my conclusion that the definition is not sufficiently objective to ful- 192 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

fill the purposes of the CPA. While access to justice for Aboriginal groups is of importance, one cannot divorce such aspirations from reality, i.e., the complex analysis required to establish Aboriginal rights claims. 51 The chambers judge seems to have recognized that the extent of his analysis made for the purpose of his preliminary determination could present problems in a subsequent hearing. At para. 101, he said: My conclusions on the identification of the Kwakiutl tribes, and related fishing rights, are made for the sole purpose of the application of the requirements of the Class Proceedings Act. As such, my conclusions are not determinative of their tribal identities or their fishing rights for any other purpose. 52 This Court’s decision in Pro-Sys Consultants Ltd. is authority for the standard of inquiry at the certification stage and it says that only a minimum evidentiary basis is required. I also note that Pro-Sys Consultants Ltd. is cited in the chambers judge’s reasons. 53 It is not clear to me whether the judge was searching for some basis in fact or making findings of fact as to which Aboriginal collectives could make an ancestral connection to a pre-contact Aboriginal group. For example, at paras. 89-91, the judge appeared to reach conclusions regarding class membership: [89] The ethnographic material referred to above establishes each of the collectives listed in the Chamberlin affidavit, and four of the aboriginal collectives listed in the Walker affidavits, namely Gwa’Sala- Nakwaxda’xw, We Wai Kai, Wei Wai Kum, and Kwiakah, as Kwakiutl. Each are present within a geographical area, largely co- extensive with the Broughton Archipelago, used and occupied at contact by the Kwakiutl. At contact, each had territorial interests within the larger geographical area, and enjoyed access to some resources, in common, within the larger territory with which the Kwakiutl, as a linguistic group (i.e. speakers of Kwak’wala), were associated. [90] Each of the collectives referred to in the above paragraph is a band with antecedents in the tribal divisions among the Kwakiutl. Each, as a band, occupies one or more Indian Act reserves. The reserves front on the waters of the Broughton Archipelago. It would be most unusual to suppose that, as fishing peoples, they do not use their reserves for staging their fishing activities. [91] The evidence on this application is sufficient to support a finding that there is an identifiable class that have an interest in the pro- Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 193

posed common questions. Each of the Kwakiutl bands has an ancestral connection with a distinct tribe of Kwak’wala speakers. 54 In any event, the evidence regarding the proper rights claimant will clearly be highly controversial in this case. This is illustrated by the evidence of Daisy May Sewid-Smith, discussed by the chambers judge at paras. 56-58: [56] Affidavits sworn by Daisy May Sewid-Smith, filed by Canada, challenge Chief Chamberlin’s assertion that the Kwicksutaineuk/Ah- Kwa-Mish First Nation has aboriginal fishing rights in the Broughton Archipelago. She deposes that she is a member of the Qwe’Qwa’Sot’Enox Nation. She says that Kwicksutaineuk is an al- ternate spelling of the name of her nation. She denies membership in the Kwicksutaineuk/Ah-Kwa-Mish First Nation, and says that the latter is a merged group which came into being post-contact, and as such has no traditional claim to the fishing rights of the Qwe’Qwa’Sot’Enox Nation. [57] In an affidavit previously filed in the Federal Court, Ms. Sewid- Smith deposes that she is a great-granddaughter of Olsiwite, who was one of the survivors of the massacre of the Qwe’Qwa’Sot’Enox people at Gilford Island in or about 1856. There were 24 survivors of the massacre of the Qwe’Qwa’Sot’Enox people by the Noxalk (Bella Coola) peoples in 1856. The few survivors fled their homeland territory, Gwayasdums (Gilford Island), but never relinquished their ownership of their traditional territory. Her ancestors went to a Mamalilikulla village to live, but retained their distinct identity as Qwe’Qwa’Sot’Enox, and retained their ownership and use of their traditional territories. [58] Ms. Sewid-Smith traces the history of the allocation of Indian Act reserves for the benefit of the indigenous peoples of the Broughton Archipelago. This led, she deposes, to the establishment of reserves within the traditional territory of the Qwe’Qwa’Sot’Enox for the benefit of related tribal groups with no ancestral connection to the land, including the group now comprising the Kwick- sutaineuk/Ah-Kwa-Mish First Nation. 55 The point is not whether Ms. Sewid-Smith is correct. The point is that this in- depth analysis of the merits of the claim shows the difficulty in determining class membership using the certified definition. The chambers judge’s reasons demonstrate that this analysis is considerably more involved than is appropriate. I also discuss below the question of whether the members of the class, as defined by the judge, are juridical persons for the purpose of this action. 194 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

56 As will be discussed in more detail below, class definitions must be clear and must state objective criteria. The chambers judge’s reasons show that the class definition in this case does not provide clear and objective criteria. 57 In addition, I must address the fact that the ethnographic research discussed by the chambers judge involved additional ethnographic writings which were not part of the record. The ethnographic research is not admissible through the doctrine of judicial notice as the facts therein were not common knowledge and I am also not satisfied that they met the requisite standard of undisputed accuracy. 58 There can be no doubt that the process he engaged in was procedur- ally unfair, and constituted an error of law. Indeed, the respondent does not defend the order appealed from on the basis of the correctness of the judge having embarked on such a course. Rather, he says that the judge’s own research was not relevant to the outcome. Authorities on this question of a court relying on facts that did not form part of the evidentiary record include: R. v. Peter Paul (1998), 158 D.L.R. (4th) 231, 124 C.C.C. (3d) 1 (N.B. C.A.), leave to appeal ref’d, [1998] S.C.C.A. No. 298 (S.C.C.); and Cronk v. Canadian General Insurance Co. (1995), 25 O.R. (3d) 505 (Ont. C.A.). 59 Beginning at para. 60, the chambers judge set out the additional literature he considered. At paras. 64-78, he reviews this literature and makes his “preliminary” findings as to which groups are Kwakiutl. 60 The chambers judge, in my respectful view, erred in making findings on the basis of evidence that did not form part of the record. 61 Thus in this case, there are two overlapping aspects to the enquiry as to the permissibility of the class definition. The first, is the question of the legal capacity of the class members; and the second, is the defini- tional question of whether the class definition naming Aboriginal collectives sufficiently identifies members of the class. As I have said, there is overlap between the issues that arise in establishing the identity of the class members who have an Aboriginal right to fish and in proving an Aboriginal rights claim; both involve identification of the proper claimant and some consideration of whether the continuity requirement is fulfilled. Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 195

3. Legal Capacity to Sue 62 Legal capacity (as distinct from standing) was recently described by the New Brunswick Court of Appeal in Morgentaler v. New Brunswick, 2009 NBCA 26, 306 D.L.R. (4th) 679 (N.B. C.A.): [47] In my respectful judgment, the following passage taken from [Thomas A. Cromwell, Locus Standi — A Commentary on the Law of Standing in Canada (Toronto: Carswell, 1986) at 3], captures the essential difference between legal capacity and standing: The distinction between capacity and standing is that capacity generally depends on the personal characteristics of the party divorced from the merits of the proceeding or the nature of the question in issue in it. It concerns the right to initiate or defend legal proceedings generally. Standing is concerned with the appropriateness of the court’s dealing with the particular issue presented at the instance of the particular plaintiff. It is more concerned with the nature of the issue and the context in which it is raised than with the personal characteristics such as age, mental capacity, etc., of the plaintiff. A party may have capacity to sue but lack standing...

a. The Need for Legal Capacity in a Class Proceeding 63 Rule 1-1(1) of the Supreme Court Civil Rules, B.C. Reg. 95/2011, defines a plaintiff as “a person who starts an action”. “Person” is not defined. 64 The common law rule is that, in order to sue or be sued, a party must be a natural person, corporation or a body given such capacity through legislation (see: National Hockey League v. Pepsi-Cola Canada Ltd. (1992), 92 D.L.R. (4th) 349, 70 B.C.L.R. (2d) 27 (B.C. S.C.) at para. 77). 65 It is a long-standing principle that an unincorporated association does not have capacity to sue or be sued absent legislation providing otherwise, either expressly or by implication (see: Taff Vale Railway v. Amalgamated Society of Railway Servants, [1901] A.C. 426 (U.K. H.L.) and Canadian Reform Conservative Alliance Party Portage-Lisgar Constituency Assn. v. Harms, 2003 MBCA 112, 231 D.L.R. (4th) 214 (Man. C.A.) at para. 22). In Canada Morning News Co. v. Thompson, [1930] S.C.R. 338 (S.C.C.), at 342, [1930] 3 D.L.R. 833 (S.C.C.), the Court held that: That an unincorporated society such as the [Chinese Nationalist League of Canada]...cannot become a lessee is established by several 196 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

judgments of which it is only necessary to refer to two, - Jarrott v. Ackerley, and Henderson v. Toronto General Trusts Corporation. These decisions rest upon the incapacity of an unincorporated and unregistered society to assert any position which is maintainable in law only by a legal entity.... [Footnotes omitted.] (See also: Arthur J. Meagher and Ronald A. Meagher’s Parties to an Action (Toronto and Vancouver: Butterworths, 1988) at 358-359.) 66 Actions launched by members of unincorporated associations can be brought in the names of members, personally or in a representative capacity (Meagher at 360-362). 67 Certification under the CPA does not endow non-juridical person class members with the substantive right to sue. 68 In Bisaillon c. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666 (S.C.C.) at para. 17, Mr. Justice LeBel, speaking for the majority, held that: The class action is nevertheless a procedural vehicle whose use neither modifies nor creates substantive rights (Malhab v. Mé- tromédia C.M.R. Montréal inc., [2003] R.J.Q. 1011 (C.A.), at paras. 57-58; Tremaine v. A.H. Robins Canada Inc., [1990] R.D.J. 500 (C.A.), at p. 507; Y. Lauzon, Le recours collectif (2001), at pp. 5 and 9). It cannot serve as a basis for legal proceedings if the various claims it covers, taken individually, would not do so: D. Ferland and B. Emery, eds., Précis de procédure civile du Québec (4th ed. 2003), vol. 2, at pp. 876-77. 69 As was held by a five-judge division of this Court in MacKinnon v. National Money Mart Co., 2009 BCCA 103 (B.C. C.A.) at para. 68, (2009), 89 B.C.L.R. (4th) 1 (B.C. C.A.): ... The various unique features of class proceedings (see MacKinnon v. Money Mart Co. (2006) 265 D.L.R. (4th) 214, at paras. 17-8) are essentially procedural. Class actions begin their lives as ordinary actions that are then certified if the statutory conditions are met. A class action may be decertified at a later point, in which event the proceeding may be permitted to continue as an ordinary one: s. 10(2). The Rules of Court apply to the proceeding unless otherwise provided in the Act. In provinces where no similar legislation exists, court rules have been used to “fill the procedural vacuum”: Western Canadian Shopping Centres, at paras. 34-5. 70 In summary, the CPA is a procedural vehicle; it does not create a substantive right to litigate. As a result, where an association or group Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 197

would lack capacity to act as a plaintiff independently, it cannot be made a capable plaintiff by simply being identified in a certification order for a class proceeding. It seems axiomatic from this discussion that a party to a class proceeding must be a legal entity with legal capacity to sue or be sued. 71 For additional jurisprudence supporting my conclusion that a class member must have legal capacity to sue, see: Magill v. Expedia Canada Corp., 2010 ONSC 5247 (Ont. S.C.J.) at paras. 42-44. 72 The next question then is: does an “aboriginal collective”, as described in the order under appeal, have legal capacity? 73 The Province argues in its factum that the class description in the certification order does not name entities that are necessarily juridical persons with the capacity to sue and, without such capacity, they cannot be plaintiffs in a class action: 93. Defining the class members as “aboriginal collectives” gives rise to a further error. The CPA requires that class members and their representatives be “persons”. While the authorities acknowledge that Indian “bands” constitute juridical persons in certain circumstances, there is no such recognition for “aboriginal collectives” nor tribal entities. The class members in this proceeding are “aboriginal collectives”, not Indian “bands”. Aboriginal collectives are not recognized in the law as legal entities. Because an aboriginal collective is not a “person”, it is necessary for those collectives to bring this proceeding in a representative capacity, thereby invoking s. 41(b) of the CPA. 74 The respondent argues that Aboriginal collectives are constitutional entities and are identifiable entities and that the class definition is intended to capture these entities that have s. 35 rights. The respondent argues that the members of the class can self-identify as Aboriginal collectives who have or assert Aboriginal or treaty rights.

b. Is an Aboriginal Collective a Juridical Person? 75 It appears to now be settled law that Bands registered under the In- dian Act have legal capacity to sue or be sued. Mr. Justice Johnston’s survey of the jurisprudence in West Moberly First Nations v. British Co- lumbia, 2007 BCSC 1324, 78 B.C.L.R. (4th) 83 (B.C. S.C.) at paras. 44- 57, is most helpful to the question at hand: 2) Can a Band of Indians sue or be sued in its own name? [44] ... My question was prompted by this concern stated by Mc- Eachern C.J.S.C. (as he then was) in Martin and Corbett v. British 198 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Columbia and MacMillan Bloedel Limited (1986), 3 B.C.L.R. (2d) 60 (B.C.S.C.), at p. 89: It is an open question whether Indian bands are juridical persons capable of suing and being sued even though bands are recognized by the Indian Act, R.S.C. 1970, c. I- 6. ... [46] In British Columbia, the Court of Appeal has dealt with the question in Oregon Jack Creek Indian Band v. Canadian National Railway Co. (1989), 34 B.C.L.R. (2d) 344 (B.C.C.A.). In that case, 36 Indian chiefs commenced action against the C.N.R., alleging tres- pass if the railway were allowed to expand its line, and that the tres- pass would adversely affect the aboriginal fishery on the Thompson and Fraser Rivers. When the plaintiffs applied to add a claim on behalf of three nations, the chambers judge refused, holding that the proper parties were the Indian Bands and the nations, not the chiefs as representatives. [47] After stating that the rights being asserted by the plaintiffs were communal in nature, Macfarlane J.A., for the court, says at p. 349: It is not necessary in this case to decide in what situations the band may be regarded as a legal entity for the purpose of commencing an action. It is sufficient to observe that a representative action may be brought by the members of the band council (Mathias v. Findlay, [1978] 4 W.W.R. 653 (S.C.)), or by a chief of a band for himself, and the majority of his band (Pap-Wee-In v. Beaudry, [1933] 1 W.W.R. 138 (Sask. K.B.)). The question in this case is not whether a band, through the members of its council, can bring an action in tres- pass, but whether the chief of a band (a group of Indians) can bring a representative action on behalf of himself and all other members of the band to enforce their communal rights. ... And later, at p. 350: It is a mistake, in my view, to conclude that aboriginal rights vest in an entity (which clearly does not exist today) and to ignore the historical fact that the rights are communal, and that they are possessed today by the descendants of the persons who originally held them. ... Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 199

This is the context in which the court endorsed the representative action as the proper form for bringing an action at p. 355: Thus, it appears that a representative action has been endorsed as the correct form in which to bring a claim involving aboriginal rights. The important thing is that all interests be represented at trial and that all persons who my have such a claim are bound by the result. ... [48] I note that on an application to re-open an appeal to the Supreme Court of Canada, the court stated that the above conclusions were obiter dicta, were not required for the decision of the issue before the Court of Appeal, and should not be decided at that stage (see Oregon Jack Creek Indian Band v. C.N.R. (No. 2), [1990] 1 S.C.R. 117). [49] The Court of Appeal expressly declined to decide in what circumstances an Indian band can sue as a legal entity. The application of the plaintiffs here, to add the six Indian bands of which they are chiefs and on behalf of which they are already suing in a representative capacity, squarely raises the issue. [50] An Indian Band has been considered to be legally capable as: • an employer for the purposes of the Canada Labour Code (see P.S.A.C. v. Francis, [1982] 2 S.C.R. 72); • a juridical person for the purpose of suing to determine the validity of surrender of reserve lands (see Montana Band v. R. [1998] 2 F.C. 3); • capable of contracting, and suing and being sued in contract (see Clow Darling Ltd. v. Big Trout Indian Band (1989), 70 O.R. (2d) 56 (Ont. Dist. Ct.)); • capable of executing a contract of guarantee (see Telecom Leasing Canada (TLC) Ltd. v. Enoch Indian Band of Stony Plain Indian Reserve No. 135, [1993] 1 W.W.R. 373 (Alta. Q.B.)); • competent to sue and defend actions between Indian bands, to determine which of two bands is entitled to possession and enjoyment of a reserve (see Wewayakum Indian Band v. Wewayakai Indian Band, [1991] 3 F.C. 420 (T.D.)); • competent to sue for a declaration that certain amendments to the Indian Act, R.S.C. 1985, c. I-5, were unconstitutional (see Sawridge Band v. Canada, [2003] 3 C.N.L.R. 358 (F.C.T.D.)); and • the proper parties to an action commenced by a corporation formed by 7 First Nations to claim aboriginal fishing rights, in place of the corporation, so that the First Nations were sub- 200 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

stituted for their corporate vehicle (see Anishinaabeg of Kabapikotawangag Resource Council Inc. v. Canada (Attor- ney General), [1998] 4 C.N.L.R. 1 (Ont. Ct. J.)). [51] In Blueberry River Indian Band v. Canada (Department of In- dian Affairs and Northern Development, [2001] 4 F.C. 451 (C.A.), the Federal Court of Appeal recognized that an Indian band is not legally the same as its members, nor do the members of an Indian band stand in the same place as the band itself. That was the result when individual descendants of the Beaver Band claimed entitlement to the proceeds of judgment awarded for breach of fiduciary duty relating to mineral rights on a reserve. The Beaver Band had subsequently divided into the Blueberry River Indian Band and the Doig River Indian Band. The Federal Court of Appeal agreed with the trial judge that the rights that had been breached were communal rights, and the damages should be paid to the respective bands as communal entities. In the process, the court said at paras. 15 and 16: The definition of “band” does not constitute an Indian band as a legal entity. Rather, I take it from the definition of “band”, and other provisions of the Indian Act, that in relation to rights to an Indian reserve, a band is a distinct population of Indians for whose use and benefit, in common, a reserve has been set aside by the Crown. ... However, it does not follow that because an Indian band is not a legal entity, rights accruing to the band are the rights of its members or their descendants in their individual capacities. [52] There may be some significance in this case that the plaintiffs have styled themselves, in their collective sense, as First Nations, not as Indian bands. That may have been to avoid the difficulties arising in some of the authorities from the fact that while Europeans were prepared to sign treaties with groups of Indians, when parliament created the notion of bands in the Indian Act, it did not see fit to grant these entities the capacities granted to corporations or to municipal organizations. As Slatter J. said in Papaschase Indian Band (De- scendants of) v. Canada (Attorney General), 2004 ABQB 655, at para. 166: If a band has a sufficient existence to sign a treaty, why can it not sue to enforce the treaty? If so, the potential for continuing confusion remains where the term used in the Indian Act - band - is avoided in favour of another Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 201

description - First Nation - which does not have the same statutory imprimateur. [53] In William v. Lake Babine Indian Band (1999), 30 C.P.C. (4th) 156 (B.C.S.C.), Taylor J. said at para. 30: In Martin v. B.C. (1986), 3 B.C.L.R. (2d) 60 (S.C.) at 65, McEachern C.J.S.C. (as he then was) left open the question of whether a Band was a juridical person. Subsequent decisions have determined, however, that a Band is such a juridical person that can sue or be sued in its own right. See Springhill Lumber Ltd. v. Lake St. Martin Indian Band, [1986] 2 C.N.L.R. 179 (Man. Q.B.). [54] I agree with those authorities that say that Indian bands ought not to continue under legal disabilities. In my view, neither bands nor their advisors ought to have to concern themselves with whether litigation in contemplation is one of the types where action might be permitted by the band, nor should bands have to continue to vex individuals to act in a representative capacity in order that a band’s collective legal interest can be protected. [55] I conclude, therefore, that Indian bands have the capacity to sue and to be sued in British Columbia. The plaintiffs’ application to add the bands for which they already act in a representative capacity will not be denied on the ground that the bands lack the capacity to sue. I point out that there is no application to substitute the bands for existing representational parties, and this finding has the advantage of maintaining the preferred practice of representative proceedings for the time being. ... [57] In summary: ... 4. An Indian band, as defined by the Indian Act, is a juridical person that can sue and be sued in its own name. 76 I agree with Johnston J., and for the reasons he gives, in concluding that an Indian Act Band is a juridical person. An Indian Act Band is a unique entity. It is an enduring, self-governed entity that has distinct rights and obligations: Montana Band v. R., [1997] F.C.J. No. 1486, 140 F.T.R. 30 (Fed. T.D.). However, Johnston J. did not, and was not, required to address the question of whether a Band could sue for an Ab- original right. 77 A review of the reasons for judgment in this case reveals that the chambers judge designated the class members as “Aboriginal collec- 202 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

tives” because of his recognition of the fact that Band membership does not necessarily establish the requisite ancestral connection to assert an Aboriginal right. I agree with the chambers judge in this regard. This is so because in some cases, an Aboriginal collective may self-identify along traditional lines independent of Indian Act designation as a Band. A Band is not necessarily the proper entity to assert an Aboriginal right. Having correctly recognized that it could not be assumed a band was the proper entity to assert Aboriginal rights, the chambers judge erred in then assuming that non- juridical persons, “Aboriginal collectives”, could be class members. 78 This issue is not merely technical but has important practical implica- tions. If the class members are not Indian Act Bands then the question arises as to who speaks for the collective. As noted in Willson, when an Aboriginal group commences a legal action, it chooses a representative (usually but not necessarily the group’s chief) to institute a representative proceeding. Here, because inclusion in the class is a non-voluntary process and because an Aboriginal collective is not necessarily a legal or organized entity, the question arises as to who speaks for the collective and how it should agree upon and exercise its participatory or opt-out rights in a class proceeding. 79 Because the term “aboriginal collective” is not defined in the order or in the reasons for judgment, the question is whether such a group is a juridical person. As addressed above, the respondent argues that because the Aboriginal collectives hold constitutional rights, they ought to be able to sue through this class action. I decline to decide in a general way if any Aboriginal collective, for example a First Nation that may be organized and governed along traditional lines, could or could not be a juridical person. That question can be left for another day. Here, there is no evidence that the “aboriginal collectives” who are class members are organized in a way that could confer legal status on them. Most impor- tantly, as I discuss in the following passages, the identity of the groups is not ascertainable without an in-depth examination of the merits of the individual liability issues in the proposed action.

4. Jurisprudence Regarding Identifiable Class: Objectivity, Merits- Based Criteria and Claims-Based Criteria 80 A further basis for my conclusion that the class description does not meet the requirements of the CPA is that the class members cannot be identified through objective criteria. As noted by Eizenga et al. in Class Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 203

Actions Law and Practice (Ontario: LexisNexisCanada, September 2011) at 3-16.1, the identifiable class requirement is particularly important in jurisdictions where class proceedings legislation provides for “opt-outs” (see s. 16 of the CPA). 81 The class definition at issue includes both merits-based and claims- based criteria. Merits-based criteria are dependent on the outcome of the litigation and claims-based criteria are dependent upon a class member asserting a claim. While merits-based criteria may require a potential class member to have suffered damage or loss, a claims-based requirement will merely require the person to claim to have suffered damage or loss. 82 Here, the class includes Aboriginal collectives who “have” or “assert” certain rights. The requirement to “have” a right is a merits-based criterion as the class action is concerned with the violation of these rights. The alternative requirement to “assert” a right is a claims-based criterion; a class member qualifies by asserting that they have a right. 83 The questions which must now be answered are whether the merits- based criterion used in this case is permissible and whether the claims- based criterion is sufficiently objective. 84 The identifiable class requirement was discussed by the Supreme Court of Canada in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 (S.C.C.) at para. 38: ... First, the class must be capable of clear definition. Class definition is critical because it identifies the individuals entitled to notice, entitled to relief (if relief is awarded), and bound by the judgment. It is essential, therefore, that the class be defined clearly at the outset of the litigation. The definition should state objective criteria by which members of the class can be identified. While the criteria should bear a rational relationship to the common issues asserted by all class members, the criteria should not depend on the outcome of the litigation. It is not necessary that every class member be named or known. It is necessary, however, that any particular person’s claim to membership in the class be determinable by stated, objective criteria ... [Emphasis added.] 85 The Dutton stipulation that “criteria should not depend on the outcome of the litigation” may also be referred to as a prohibition against merits-based criteria. The facts in R. v. Nixon (2002), 21 C.P.C. (5th) 269 (Ont. S.C.J.) are helpful to illustrate some of the difficulties which may arise when merits-based definitions are used. In Nixon, the action was 204 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

brought against the federal government for failing to prepare for and respond properly to a fire started by inmates of the Kingston Penitentiary in Ontario. The proposed class was comprised of inmates of the part of the penitentiary that had suffered the fire, excluding those liable for starting it or for impeding efforts to extinguish it. The court refused to certify the action on the grounds that the question would require consideration of central issues in the action and the inquiry required to determine class membership would raise a number of practical difficulties. 86 In this case, a suit involving Aboriginal rights claims, those who “have” an Aboriginal right to fish are class members. As addressed above, establishing an Aboriginal right to fish will also be a critical and possibly contentious issue in the litigation. 87 It is also noteworthy that the certified common issues are part of the infringement analysis outlined in the Sparrow and Vanderpeet analytical framework already discussed. Thus, the court will be required to consider questions related to infringement before the determination of the nature of the right and the identification of the rights holder. While in the purest sense, some of the common issues are theoretically possible to isolate from the question of infringement, their ultimate determination will be an integral part of the infringement analysis. The point is that it is difficult to draw a bright line between the individual and common issues. 88 There is some authority for the proposition that the prohibition against merits- based criteria should only apply when the criteria relate to the merits of the common issues. In Wuttunee v. Merck Frosst Canada Ltd., 69 C.P.C. (6th) 60, leave to appeal ref’d (2009), [2008] S.C.C.A. No. 512 (S.C.C.), Madam Justice Smith noted that there is considerable authority for the proposition that merits-based criteria are impermissible. However, her reasons also indicate that it may be beneficial to limit the prohibition to criteria speaking to the merits of the common issues, thereby allowing criterion that rely on the merits of issues that will be determined through individual issues trials. Her analysis drew exten- sively on Mr. Justice Cullity’s reasons in Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2005), 78 O.R. (3d) 98 (Ont. S.C.J.), aff’d 54 C.P.C. (6th) 167 (Ont. Div. Ct.). 89 For present purposes, it is unnecessary to resolve the issue of the limits of the merits-based criteria prohibition because in this case, it is my view that the merits-based criterion at issue is either impermissibly merits-based or not sufficiently objective. The question of whether a class member has an Aboriginal fishing right, although not a common issue, Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 205

will be central to the litigation. It is not sufficiently objective as having an Aboriginal right to fish is not a clear and sufficiently easily ascertainable identification criterion. As is demonstrated by the chambers judge’s lengthy and somewhat tortured analysis, the question is a complex one that requires preliminary determination of core issues that will be highly contentious between the class members. These considerations are more than sufficient to conclude that the requirements of s. 4(1) have not been met. 90 I now turn now to the question of whether the claims-based criterion requiring a class member to “assert” a claim is sufficiently objective and certain. The authorities conflict as to whether such definitions avoid the objectivity issues raised by merits-based criteria. 91 In Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184 (S.C.C.), the Supreme Court of Canada upheld a class definition crafted by this Court which included claims-based criteria. It required the members of the class to claim injury, loss or damage as a result of sexual misconduct occurring at a residential school. In Attis v. Canada (Minister of Health), 46 C.P.C. (6th) 129 (Ont. S.C.J.) aff’d 2008 ONCA 660, 300 D.L.R. (4th) 415 (Ont. C.A.), the court held at para. 55 that, because the Supreme Court of Canada in Rumley repeatedly referenced the class definition in discussing the common issues, it is safe to conclude that the definition was, at least, implicitly approved. However, as pointed out by Smith J.A. at para. 102 in Wuttunee, the appellant in Rumley did not challenge the definition on appeal to the Supreme Court of Canada and the question of individual abuse was not a common issue. 92 Courts have held that claims-based definitions do not meet the objectivity requirements because they allow claimants to self-identify at their convenience (see: Ragoonanan Estate at para. 44). On the other hand, in Walls v. Bayer Inc., 2005 MBQB 3, [2006] 4 W.W.R. 720 (Man. Q.B.), the court held at para. 27 that the fact of claiming to suffer injury is sufficiently objective. 93 In Wuttunee, Smith J.A. held that claims-based criteria may be acceptable but only where the definitions can be said to be sufficiently objective and certain. At para. 103, she held that: [103] In my view, what emerges from this review is a requirement for careful scrutiny of the facts and circumstances of a particular case prior to deciding: (1) whether a particular class definition is too broad to satisfy the requirement that it be rationally connected to the causes of action and common issues identified in the case; (2) that a 206 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

merits based definition will necessarily lead to circularity or otherwise be objectionable; and (3) whether a claims based class definition sufficiently meets the requirements of objectivity and certainty, in light of the established purposes of class definition. 94 This approach was cited with approval by the Newfoundland and Labrador Court of Appeal in Ring v. Canada (Attorney General), 2010 NLCA 20 (N.L. C.A.) at para. 71, 86 C.P.C. (6th) 8 (N.L. C.A.). 95 In this appeal, Canada submits that the Supreme Court of Canada in Hollick held that mere assertions of rights are insufficient to establish an identifiable class; some evidentiary basis is required. The cited paragraph provides: [25] I agree that the representative of the asserted class must show some basis in fact to support the certification order. As the court in Taub held, that is not to say that there must be affidavits from members of the class or that there should be any assessment of the merits of the claims of other class members. However, the Report of the Attorney General’s Advisory Committee on Class Action Reform clearly contemplates that the class representative will have to establish an evidentiary basis for certification: see Report, at p. 31 (“evidence on the motion for certification should be confined to the [certification] criteria”). The Act, too, obviously contemplates the same thing: see s. 5(4) (“[t]he court may adjourn the motion for certification to permit the parties to amend their materials or pleadings or to permit further evidence”). In my view, the class representative must show some basis in fact for each of the certification requirements set out in s. 5 of the Act, other than the requirement that the pleadings disclose a cause of action. That latter requirement is of course governed by the rule that a pleading should not be struck for failure to disclose a cause of action unless it is “plain and obvious” that no claim exists: see Branch, supra, at para. 4.60. [Emphasis added.] 96 I do not think that this passage goes quite as far as Canada claims. While it clearly requires an evidentiary basis for certification, it does not necessarily prohibit definitions that require the assertion of rights. In this case, it may be arguable that the affidavit evidence shows that there are Aboriginal collectives who assert an Aboriginal right to fish in the Broughton Archipelago and, further, who can provide a basis for their belief that they have an arguable claim. 97 However, in my view, even if claims-based criterion are in some cases acceptable, here the claims-based criterion is not sufficiently objec- Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. Garson J.A. 207

tive and certain because it requires a claim of a very complicated and contentious (even among members of the class) legal result. 98 I derive some support for this conclusion from consideration of Smith J.A.’s analysis of the facts in Wuttunee. In that case, the certified class definition included purchasers of a drug who were also members of at least one of four sub-classes. One such sub-class described plaintiffs who were induced to purchase the drug instead of a cheaper alternative, through unfair marketing practices. She held that the sub-group element of the definition was impermissibly merits-based as it relied on the merits of the common issues. She also held that the problem could not be remedied by simply amending the definition to provide that the class included people who claim to have been induced by unfair marketing practices, i.e., amending the definition to change it to a claims-based definition. Justice Smith concluded that such amendment in that case would not meet the requirements of objectivity and certainty. She distinguished such a definition from a claim anchored in part in objective verifiable fact, such as a claim to have suffered injury. At para. 106, Smith J.A. held that: In my respectful view, this definition cannot meet the requirements of objectivity and certainty. Unlike a definition in terms of those who claim loss or injury, which claim would itself be related to an objective, verifiable fact or event, any purchaser of Vioxx is free to claim that Merck engaged in some unspecified unfair marketing practice, or not, as and when he or she sees fit. There is no objective fact that, in itself, would either legitimate or defeat such a claim. The claim that Merck engaged in unfair marketing practices is the claim of a legal result. Although such a conclusion would be based on facts, the definition of this subclass does not indicate what those are or tie the definition to them. If the requirement that the class definition not be sub- jective means anything at all, this definition, in my view, cannot satisfy that criterion. 99 In my view, these considerations also apply to the matter at hand and the criterion requiring class members to assert an Aboriginal right is not sufficiently objective.

Conclusion 100 I conclude that the chambers judge erred and was clearly wrong in certifying the class as all Aboriginal collectives who have or assert Ab- original and/or treaty rights to fish within the Broughton Archipelago. 208 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

The class is comprised of parties that do not have capacity to sue and the class definition does not meet the objectivity requirements of s. 4. 101 No amendment to the certification order was suggested by the parties and, for the reasons I have already explained, I conclude that amendment is not a viable route for addressing the problems with the certified class definition.

Disposition 102 I would allow the appeal and strike out the order certifying this proceeding as a class action.

Hinkson J.A.:

I agree:

D. Smith J.A.:

103 I have had the privilege of reviewing the draft reasons of my col- league Madam Justice Garson. I am in agreement with Justice Garson’s analysis and disposition of the appeal on the basis that the respondent has not demonstrated an identifiable class under s. 4(1)(b) of the Class Pro- ceedings Act. I would add however my comments on the form of this action. 104 The claims being advanced are for declaratory and other relief for the infringement of communally held Aboriginal rights to wild salmon fishing in the Broughton Archipelago. The existence and scope of those rights will depend on the unique anthropological, ethnographical, and demographic history of the Aboriginal entity seeking to assert them. While Aboriginal fishing rights adhere to the Aboriginal entity asserting them, they are not personal rights of the individual members of the Ab- original entity; they do not exist independent of the entity. Rather they are collective rights that are for the use and benefit of all of the members of the Aboriginal entity asserting them. 105 The claims by Chief Chamberlin of the Kwicksutaineuk/Ah-Kwa- Mish First Nation are for the recognition and enforcement of collectively held Aboriginal fishing rights. Chief Chamberlin sues not only on his own behalf but on behalf of all of the Aboriginal collectives within the Broughton Archipelago. The action is framed as multiple claims of infringement of Aboriginal fishing rights, each independent of the other, on Kwicksutaineuk/Ah-Kwa-Mish First Nation v. B.C. D. Smith J.A. 209

behalf of multiple Aboriginal collectives within the Broughton Archipel- ago. Framing an action for the enforcement of collective rights by multiple Aboriginal collectives does not in my view change the essential character of the claims; they remain manifestly collective claims throughout. 106 Even if it could be assumed that the Aboriginal collectives who would form the proposed class are all legal entities, it does not follow that the rights asserted in this action are the rights of those collectives. The rights claimed in this action are communal rights held collectively by all members of the entity who are connected to the historical rights holders. A Band as a legal entity is not identical with its members and it is the members as a collective, rather than the Band as a distinct legal entity, who hold the rights asserted in this action. 107 The Class Proceedings Act provides a procedure for the advancement of multiple individual claims arising from a common wrong. It is not designed to advance multiple collective rights claims for multiple collective entities. Claims of this nature (for collective rights) are generally made through a representative action, where a member (or members) of the Aboriginal entity asserting the rights, sues in a representative capacity on behalf of himself or herself and all of the other members of the Aboriginal entity. 108 I too would allow the appeal and rescind the order certifying the action under the Class Proceedings Act. Appeal allowed. 210 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

[Indexed as: R. v. Larsen] Regina, Respondent (Appellant) and Mission Western Developments Ltd. and Blake Larsen, Applicants (Respondents) British Columbia Court of Appeal [In Chambers] Docket: Vancouver CA039465 2012 BCCA 167 Bennett J.A. Heard: January 25, 2012 Judgment: April 25, 2012 Environmental law –––– Statutory protection of environment — Environ- mental offences — Appeals — Miscellaneous –––– Leave to appeal — BL was director of MWD Ltd. (“applicants”) which owned property zoned for commercial development with fish-bearing watercourse at back — Restrictive covenant prohibited activity in creek area which would compromise fish habitat — DFO biologist and DFO fisheries officer gained access through open gate, did not observe “No Trespassing” sign, walked down creek, and found Bobcat operator at work, trees cut and stacked, and brush cleared — DFO workers asked worker to stop, and they remained for one hour, taking photos and making observations — Trial judge acquitted applicants of two counts of harmful alteration of fish habitat contrary to s. 35(1) of Fisheries Act — On voir dire, trial judge noted that where predominant purpose of inspection was to gather evidence for penal proceeding, warrant must be obtained before inspection could take place, and that applicants had reasonable expectation of privacy — Trial judge ruled DFO workers’ evidence was obtained in violation of s. 8 of Canadian Charter of Rights and Freedoms and should be excluded under s. 24(2) of Charter — Ap- peal judge ordered new trial — Appeal judge found that trial judge had neglected to take into account important factors, including that fence and signs existed primarily to protect applicants from liability, that gate was open and no signs were evident, and that property was intended for highly regulated form of use (commercial development), such that applicants had very diminished expectation of privacy — Appeal judge found that trial judge incorrectly applied “predominant purpose” test to DFO inspection, and that correct test was whether officer’s powers of inspection were exercised reasonably pursuant to “continuing regulatory purpose” — Applicants brought application for leave to appeal — Application dismissed — Applicants’ argument that appeal judge failed to conduct s. 686(1)(b)(iii) of Criminal Code analysis was misconceived as it had no application in appeal from acquittal — Appeal judge correctly observed that recognition of reasonable expectation of privacy should proceed on case by case R. v. Larsen 211 analysis of factors at hand that might be recognized generally as giving rise to expectation of privacy — Appeal judge did not err when he concluded that significant number of factors were overlooked in that analysis — Appeal judge correctly concluded that trial judge applied wrong legal test which constituted reversible error. Civil practice and procedure –––– Practice on appeal — Leave to appeal — General principles –––– BL was director of MWD Ltd. (“applicants”) which owned property zoned for commercial development with fish-bearing watercourse at back — Restrictive covenant prohibited activity in creek area which would compromise fish habitat — DFO biologist and DFO fisheries officer gained access through open gate, did not observe “No Trespassing” sign, walked down creek, and found Bobcat operator at work, trees cut and stacked, and brush cleared — DFO workers asked worker to stop, and they remained for one hour, taking photos and making observations — Trial judge acquitted applicants of two counts of harmful alteration of fish habitat contrary to s. 35(1) of Fisheries Act — On voir dire, trial judge noted that where predominant purpose of inspection was to gather evidence for penal proceeding, warrant must be obtained before inspection could take place, and that applicants had reasonable expectation of privacy — Trial judge ruled DFO workers’ evidence was obtained in violation of s. 8 of Canadian Charter of Rights and Freedoms and should be excluded under s. 24(2) of Charter — Appeal judge ordered new trial — Appeal judge found that trial judge had neglected to take into account important factors, including that fence and signs existed primarily to protect applicants from liability, that gate was open and no signs were evident, and that property was intended for highly regulated form of use (commercial development), such that applicants had very diminished expectation of privacy — Appeal judge found that trial judge incorrectly applied “predominant purpose” test to DFO inspection, and that correct test was whether officer’s powers of inspection were exercised reasonably pursuant to “continuing regulatory purpose” — Applicants brought application for leave to appeal — Application dismissed — Applicants’ argument that appeal judge failed to conduct s. 686(1)(b)(iii) of Criminal Code analysis was misconceived as it had no application in appeal from acquittal — Appeal judge correctly observed that recognition of reasonable expectation of privacy should proceed on case by case analysis of factors at hand that might be recognized generally as giving rise to expectation of privacy — Appeal judge did not err when he concluded that significant number of factors were overlooked in that analysis — Appeal judge correctly concluded that trial judge applied wrong legal test which constituted reversible error. Cases considered by Bennett J.A.: R. v. Alpha Manufacturing Inc. (2009), 277 B.C.A.C. 17, 469 W.A.C. 17, 2009 CarswellBC 2937, 2009 BCCA 443 (B.C. C.A.) — referred to 212 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

R. v. Edwards (1996), 45 C.R. (4th) 307, 192 N.R. 81, 26 O.R. (3d) 736, 104 C.C.C. (3d) 136, 132 D.L.R. (4th) 31, 33 C.R.R. (2d) 226, 88 O.A.C. 321, [1996] 1 S.C.R. 128, 1996 CarswellOnt 2126, 1996 CarswellOnt 1916, [1996] S.C.J. No. 11, EYB 1996-67692 (S.C.C.) — referred to R. v. Gaudaur (2010), 286 B.C.A.C. 41, 484 W.A.C. 41, 2010 CarswellBC 1216, 2010 BCCA 157 (B.C. C.A.) — referred to R. v. Jarvis (2002), 2002 SCC 73, 2002 CarswellAlta 1440, 2002 CarswellAlta 1441, 317 A.R. 1, 284 W.A.C. 1, 6 C.R. (6th) 23, 2002 D.T.C. 7547, [2003] 1 C.T.C. 135, 101 C.R.R. (2d) 35, [2002] 3 S.C.R. 757, [2003] 3 W.W.R. 197, 8 Alta. L.R. (4th) 1, 219 D.L.R. (4th) 233, 169 C.C.C. (3d) 1, 295 N.R. 201, [2002] S.C.J. No. 76, REJB 2002-35624 (S.C.C.) — considered R. v. King (2009), 189 C.R.R. (2d) 243, 2009 PECA 9, 2009 CarswellPEI 15, 284 Nfld. & P.E.I.R. 140, 875 A.P.R. 140, [2009] P.E.I.J. No. 15 (P.E.I. C.A.) — considered R. v. Lauda (1999), 121 O.A.C. 365, 1999 CarswellOnt 1833, 65 C.R.R. (2d) 133, 25 C.R. (5th) 320, 45 O.R. (3d) 51, 136 C.C.C. (3d) 358, [1999] O.J. No. 2180 (Ont. C.A.) — referred to R. v. Nolet (2010), 256 C.C.C. (3d) 1, 320 D.L.R. (4th) 1, 213 C.R.R. (2d) 52, [2010] 1 S.C.R. 851, 403 N.R. 1, 76 C.R. (6th) 1, 350 Sask. R. 51, 487 W.A.C. 51, 2010 CarswellSask 368, 2010 CarswellSask 369, 2010 SCC 24, [2010] 8 W.W.R. 1, 95 M.V.R. (5th) 1, [2010] S.C.J. No. 24, EYB 2010- 175730, [2010] A.C.S. No. 24 (S.C.C.) — followed R. v. Tessling (2004), 326 N.R. 228 (Eng.), 326 N.R. 228 (Fr.), 192 O.A.C. 168, [2004] 3 S.C.R. 432, 2004 SCC 67, 2004 CarswellOnt 4351, 2004 Carswell- Ont 4352, 189 C.C.C. (3d) 129, 244 D.L.R. (4th) 541, 75 O.R. (3d) 480 (note), 23 C.R. (6th) 207, 123 C.R.R. (2d) 257, [2004] S.C.J. No. 63, REJB 2004-72161 (S.C.C.) — considered R. v. Wilcox (2001), 152 C.C.C. (3d) 157, 2001 NSCA 45, 2001 CarswellNS 83, 192 N.S.R. (2d) 159, 599 A.P.R. 159, [2001] N.S.J. No. 85 (N.S. C.A.) — considered R. v. Winfield (2009), 2009 YKCA 9, 2009 CarswellYukon 86, 79 M.V.R. (5th) 19, 273 B.C.A.C. 152, 461 W.A.C. 152 (Y.T. C.A.) — followed Statutes considered: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 s. 8 — considered s. 24(2) — referred to Criminal Code, R.S.C. 1985, c. C-46 s. 686(1)(b)(iii) — considered s. 686(4) — considered s. 839 — referred to Fisheries Act, R.S.C. 1985, c. F-14 s. 35(1) — referred to R. v. Larsen Bennett J.A. 213

s. 49(1) — considered s. 49(2) — considered

APPLICATION for leave to appeal judgment reported at R. v. Larsen (2011), 2011 CarswellBC 2680, 2011 BCSC 1378, 64 C.E.L.R. (3d) 206 (B.C. S.C.) ordering new trial of applicants on charges under Fisheries Act.

P.D. Le Dressay, for Applicants T. Gerhart, R. Roberts, for Respondent

Bennett J.A.: I. Nature of the Application 1 The applicants, Mission Western Developments Ltd. and Blake Lar- sen, were acquitted by a Provincial Court judge of two counts of harmful alteration of fish habitat contrary to s. 35(1) of the Fisheries Act, R.S.C. 1985, c. F-14. On appeal by the Crown, Mr. Justice Grist of the B.C. Supreme Court allowed the appeal and ordered a new trial. The applicants now seek leave to appeal this order. 2 I would dismiss this application.

II. Background 3 The applicant Mission Western Developments Ltd. (“Mission West- ern”), a corporation of which the applicant Mr. Blake Larsen is a director, owns a property of about five acres of vacant land located at the intersection of two major highways in Mission, B.C. The land and surrounding area are zoned for commercial development. Windebank Creek, a fish-bearing watercourse, runs across the back of the property. 4 When the applicants purchased the land in 2007, the title included a restrictive covenant prohibiting activity in the area of the creek which would compromise the fish habitat, such as cutting trees or clearing groundcover. The previous owner, pursuant to an agreement with the De- partment of Fisheries and Oceans (“DFO”), had undertaken to maintain and enhance the habitat through various measures, such as planting fa- vourable plant species and guarding against invasive species. These com- mitments had been allowed to lapse, and by 2008 the applicant was in the course of negotiating with the DFO in the interests of continued development. 5 A fence surrounded much of the property, and the owner posted “No Trespassing” signs from time to time, which Mr. Larsen testified were 214 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

intended to guard against company liability and to discourage people from erecting shelters and consuming drugs on the site. 6 In February 2008, a DFO biologist, who regularly passed by the site, observed that the vegetation around the creek appeared to be less dense. She and a DFO fisheries officer decided to inspect the site later the same day. Neither observed any “No Trespassing” signs posted. They gained access through an open gate and walked down to the creek, where they found a Bobcat operator at work. They observed that trees had been cut and stacked and brush cleared. The operator told them that the property owner had hired him to clean up the area. 7 The DFO workers asked the Bobcat operator to stop work. They remained on the property for about an hour, during which time they took a number of photographs and made observations as to potential impacts on the fish habitat. 8 The applicants were charged with two counts of harmful alteration of fish habitat contrary to s. 35(1) of the Fisheries Act, R.S.C. 1985, c. F- 14.

III. Proceedings Below B.C. Provincial Court Proceedings 9 The Provincial Court proceedings commenced with a voir dire, heard on February 22 and 23, 2010, to determine the admissibility of evidence obtained by the two DFO workers in the course of their inspection. In an oral ruling on February 24, 2010, the trial judge noted that where the “predominate purpose” of an inspection is to gather evidence for a penal proceeding, a warrant must be obtained before the inspection can take place. He held that Mission Western had a reasonable expectation of privacy in the creek area. He accordingly ruled that the evidence gathered by the DFO workers was obtained in violation of s. 8 of the Canadian Charter of Rights and Freedoms and should be excluded under s. 24(2). 10 At trial, both sides tendered expert testimony as to the impact of the cutting and cleanup on the fish habitat. In oral reasons given August 27, 2010 (indexed as [R. v. Larsen] 2010 BCPC 274 (B.C. Prov. Ct.)), the trial judge held that a reasonable doubt existed as to the applicants’ guilt and acquitted them on both counts. R. v. Larsen Bennett J.A. 215

B.C. Supreme Court Proceedings 11 On appeal by the Crown to the Supreme Court, the appeal judge, Mr. Justice Grist, focused on the voir dire ruling. In a decision rendered Oc- tober 14, 2011 (indexed as 2011 BCSC 1378 (B.C. S.C.)), he found that the trial judge had neglected to take into account several relevant factors in his analysis of the applicants’ expectation of privacy: in particular, that the fencing and signs existed primarily to protect the applicants from liability, that the gate was open and no signs were evident on the day in question, and that the property was intended for commercial development, a highly regulated form of use. He found that the applicants “had, at best, a very diminished expectation of privacy in the property relating to the DFO inspection” (para. 34). 12 The appeal judge also found that the trial judge had incorrectly applied the “predominate purpose” test to the DFO inspection. He held that the correct test, as stated by the Supreme Court of Canada in R. v. Nolet, 2010 SCC 24, [2010] 1 S.C.R. 851 (S.C.C.), is whether the officers’ powers of inspection were exercised reasonably pursuant to a “continuing regulatory purpose”. He noted that the only evidence as to the DFO workers’ purpose in conducting the inspection was their own testimony, which indicated that their purpose was regulatory, and that no finding had been made to impugn their credibility. 13 Accordingly, he allowed the appeal and ordered a new trial.

IV. Grounds for Appeal 14 In seeking leave to appeal, the applicants contend that the appeal judge erred in law in three respects. The issues they raise may be stated as follows: 1. Whether the appeal judge erred in concluding that the trial judge had failed to consider relevant factors with regard to whether the applicants had established a reasonable expectation of privacy in the property; 2. Whether the appeal judge erred in finding that the trial judge had erred in concluding that the warrantless inspection of the applicants’ property amounted to a violation of section 8 of the Char- ter, such that the evidence obtained must be excluded pursuant to section 24(2); 3. Whether the appeal judge erred in failing to apply the curative provision in section 686(1)(b)(iii) of the Criminal Code. 216 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

V. Applicable Law 15 The appellants bring this application pursuant to s. 839 of the Crimi- nal Code, R.S.C. 1985, c. C-46, which permits an appeal to this Court of a summary conviction appeal “on any ground that involves a question of law alone”. 16 An appeal to this Court on a summary conviction “is not a second appeal from the trial court. Rather, it is an appeal from the decision of the summary conviction appeal court. Accordingly, the focus of a leave application, and the appeal if leave is granted, is on whether any error of law was committed by the summary conviction appeal judge”: R. v. Win- field, 2009 YKCA 9, 273 B.C.A.C. 152 (Y.T. C.A.) at para. 12; see also R. v. Alpha Manufacturing Inc., 2009 BCCA 443, 277 B.C.A.C. 17 (B.C. C.A.). 17 The test for leave to appeal from a summary conviction appeal is well-established. In Winfield, the Court summarized the test at para. 13: To obtain leave to appeal from the decision of a summary conviction appeal court, the applicant must establish that (a) the ground of appeal involves a question of law alone, (b) the issue is one of importance, and (c) there is sufficient merit in the proposed appeal that it has a reasonable possibility of success. The overriding consideration in the exercise of the discretion to grant or refuse leave is the interests of justice: R. v. Cai, 2008 BCCA 332, 258 B.C.A.C. 235 at para. 26 (Chambers); R. v. Gill, 2008 BCCA 259 at para. 3 (Chambers). 18 Leave is to be granted sparingly: R. v. Gaudaur, 2010 BCCA 157, 286 B.C.A.C. 41 (B.C. C.A.) at para. 3.

VI. Positions of the Parties a) The applicants 19 The applicants submit that their appeal has merit and raises important issues of law. In particular, they say that they raise a significant point of law with regard to the question of what factors ought properly to be considered in finding that a reasonable expectation of privacy exists in the environmental regulatory context; on this submission, they argue that a party’s decision to cooperate with a regulatory body in the pursuit of a common statutory objective should be seen as enhancing his or her expectation of privacy. 20 Further, they argue that this appeal raises an important question as to the nature of the correct legal test in considering a warrantless search in the environmental regulatory context. They contend that the trial judge R. v. Larsen Bennett J.A. 217

applied the proper test; they also argue that the appeal judge erred in suggesting that the Supreme Court of Canada in R. v. Nolet had overruled the “predominate purpose” test from R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757 (S.C.C.).

b) The respondent 21 The respondent Crown submits that leave to appeal should be refused. It concedes that all three stated grounds of appeal engage questions of law, but contends that none of them have merit. 22 On the first issue, the respondent submits that it is well-established in the case law that factors such as those considered by the appeal judge are relevant to an assessment of whether a reasonable expectation of privacy exists, and that the trial judge erred in overlooking this evidence. It submits that the appeal judge was correct in his conclusion that the applicants “had, at best, a very diminished expectation of privacy”. 23 With regard to the legal test for warrantless inspections under the Fisheries Act, the respondent argues that the applicants do not raise a question of importance and that there is no merit in this ground; they note that without a reasonable expectation of privacy, the applicants have no standing to make a section 8 claim. They argue that even if they had had such an expectation, the appeal judge made no error in applying the analysis set out by the Supreme Court of Canada in Nolet. They argue further that even under the “predominate purpose” test, what took place was clearly an inspection and not a criminal investigation.

VII. Analysis a) Section 686(1)(b)(iii) of the Criminal Code 24 I first address the applicants’ third ground of appeal, as it may be dealt with briefly. The argument that the appeal judge failed to conduct a section 686(1)(b)(iii) analysis is misconceived. As the respondent points out, per the wording of the Code, the curative provision applies “[o]n the hearing of an appeal against a conviction or against a verdict that the appellant is unfit to stand trial or not criminally responsible on account of mental disorder”. It has no application in an appeal from an acquittal. Section 686(4) deals with appeals from acquittals and contains no com- parable provision. 25 I would not grant leave to appeal on this issue. 218 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

b) Reasonable expectation of privacy 26 As the Supreme Court observed in R. v. Tessling, 2004 SCC 67, [2004] 3 S.C.R. 432 (S.C.C.), privacy is a “protean” concept — that is, one readily conforming to context — and there is no bright line which sets out when an individual’s expectation of privacy may be considered “reasonable”. What is clear from the jurisprudence is that courts must consider “the totality of the circumstances” in assessing whether a reasonable expectation of privacy may be said to exist: R. v. Edwards, [1996] 1 S.C.R. 128, 104 C.C.C. (3d) 136 (S.C.C.) at paras. 31, 45. 27 The appeal judge was correct to observe, at the outset of his analysis, that recognition of a reasonable expectation of privacy “should proceed on a case by case analysis of the factors at hand that might be recognized generally as giving rise to an expectation of privacy, both reasonable and worthy of protection” (para. 28, citing R. v. Lauda (1999), 136 C.C.C. (3d) 358 (Ont. C.A.)). 28 He agreed with the trial judge that factors such as the existence of the fence and the use of “No Trespassing” signs were relevant to the privacy analysis, but held essentially that the trial judge had misapprehended the evidence by overlooking a number of other factors: namely, the fact that the fence and signs were erected primarily to protect the applicants from liability; that the gate was open and the signs not in evidence on the day of the inspection; and that owners of property subject to a high degree of regulation — such as property zoned for commercial development — cannot expect to sustain an expectation of privacy which forecloses the statutory powers of inspection of relevant regulatory authorities. 29 On the latter point, the appeal judge noted at para. 33 the comments of the Supreme Court in Nolet, which was released subsequent to the trial decision in this case. In Nolet, which likewise centred on an allegation of unreasonable search and seizure, the contested space was the sleeping area of the cab of a transport truck. In his analysis, Binnie J. held that “the level of expectation [of privacy] is necessarily low because the cab of a tractor-trailer rig is not only a place of rest but a place of work, and the whole of the cab is therefore vulnerable to frequent random checks in relation to highway transport matters” (para. 31). He noted also that given the expectation that stops and searches may occur, occupants of commercial truck cabs should govern themselves accordingly. R. v. Larsen Bennett J.A. 219

30 The appeal judge also quoted at para. 31 from R. v. King, 2009 PECA 9, 284 Nfld. & P.E.I.R. 140 (P.E.I. C.A.), in which the court held at para. 40: There is a much reduced expectation of personal privacy when inspection powers are exercised upon an individual participating in a highly regulated endeavour like the fishery. In a regulated environment, the individual’s privacy interests must give way, more quickly than in criminal or quasi-criminal environment, to the need for broader powers of search and seizure. As the judge noted, although the applicants in this case were not “participating” in the fishing industry, the same statutory power of inspection is engaged, and should have been considered by the trial judge. 31 In my view, the appeal judge did not err when he concluded that a significant number of factors were overlooked in the analysis of the expectation of privacy. He concluded that “[o]n consideration of all of the relevant circumstances relating to the property itself and the ongoing relationship with DFO, the [applicants] had, at best, a very diminished reasonable expectation of privacy in the property relating to the DFO inspection” (para. 34). Of course, this conclusion does not bind the new trial judge, as the evidentiary context may be different. However, in light of the decision in Nolet, as discussed above, I agree that there was reversible error on this point. 32 The applicants argue that “in the environmental regulation of property development, open and constructive communication and joint efforts between the regulated and the regulator to accomplish the statutory purpose, should enhance the regulated party’s expectation that responsible and functional societal behaviour will enhance privacy as it will mutual respect”. This interesting argument does not further the applicants’ case. Obviously, cordial relations between regulatory bodies and those subject to regulation are in everyone’s best interests and should be preserved when possible. But the fact that a particular individual enjoys or has built up good relations with a regulatory agency does not mean that the former’s rights are, by this token, more deeply entrenched than those of a more adversarial party; nor do they “enhance” the former’s privacy interests. 33 In my view, there is insufficient merit to this ground of appeal, and the issue is not of legal importance. I would not grant leave to appeal on this issue. 220 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

c) Regulatory powers of inspection and section 8 34 Section 49(1) of the Fisheries Act, which empowers fisheries officers to conduct inspections, reads as follows: 49. (1) Subject to subsection (2), for the purpose of ensuring compliance with this Act and the regulations, a fishery officer or fishery guardian may enter and inspect any place, including any premises, vessel or vehicle, in which the officer or guardian believes on reasonable grounds there is any work or undertaking or any fish or other thing in respect of which this Act or the regulations apply and may (a) open any container that the officer or guardian believes on reasonable grounds contains any fish or other thing in respect of which this Act or the regulations apply; (b) examine any fish or other thing that the officer or guardian finds and take samples of it; (c) conduct any tests or analyses and take any measurements; and (d) require any person to produce for examination or copying any records, books of account or other documents that the officer or guardian believes on reasonable grounds contain information that is relevant to the administration of this Act or the regulations. 35 Subsection (2) provides that a fisheries officer may not enter a dwell- ing-house without either the resident’s consent or a warrant. 36 The question has arisen, in the context of fisheries and otherwise, as to when a regulatory search may be considered unreasonable for purposes of s. 8 of the Charter. In Nolet (which, as I noted earlier, was released after the trial decision in this case), the Supreme Court addressed this issue in some detail. The accused in that case argued that a search conducted pursuant to regulatory powers will be invalidated by a concurrent criminal law purpose. The parties apparently focused their arguments on whether one purpose needed to be “dominant”, or whether a legitimate purpose could “sanitize” an improper one. 37 Justice Binnie began his analysis by noting that “[t]he statutory authority for the search and the reasonableness of its exercise are two distinct issues” (para. 34). He went on to hold that in considering whether a search authorized by a regulatory provision has violated s. 8, “the question is not ‘determining which purpose is predominate or subordinate’. As long as there is a continuing regulatory purpose on which to ground the exercise of the regulatory power, the issue is whether the officer’s R. v. Larsen Bennett J.A. 221

search ... infringed the reasonable expectations of privacy of the [accused]” (para. 41). 38 The Nova Scotia Court of Appeal in R. v. Wilcox, 2001 NSCA 45, 152 C.C.C. (3d) 157 (N.S. C.A.) made statements to similar effect in the context of fisheries inspections. Cromwell J.A., as he then was, held at para. 106: In my respectful view, the search for a particular point in time or fact that is, of itself, the watershed between regulation and criminal pros- ecution is not the correct way to approach the issue. The question in each case is not whether a particular action or the exercise of a particular power should be labelled “regulatory” or “criminal”. The question is whether the Charter has been infringed. One must define the content of the Charter right in the particular setting. This cannot be done, in my view, by establishing “lines” or “points” which divide regulatory inspections from criminal investigations. I respectfully adopt the remarks of Lane J. in [R. v. Pheasant, [2001] G.S.T.C. 8, 48 W.C.B. (2d) 75] at [para.] 66 that what is required is “... a case- by-case approach which rejects simplistic distinctions based on char- acterizations of powers as criminal, quasi-criminal, administrative or regulatory”. Or, as La Forest J. put it in [R. v. Wholesale Travel, [1991] 3 S.C.R. 154], what is important are not labels but the values at stake in the particular context .... 39 The appeal judge in this case concluded that the trial judge’s decision was “based on a finding of predominate purpose, which on the above authorities was the wrong test to apply in the circumstances of a legitimate Fisheries concern”. I agree. Drawing on both Nolet and Wilcox, the appeal judge identified the salient question in the case as “whether in the context of the powers of inspection conferred on the Fisheries Officer by s. 49(1) of the Fisheries Act, the DFO actions can be construed as an unreasonable search” (para. 26). In my view, this was the legally correct way to frame the issue. 40 The applicants argue further that the appeal judge “incorrectly concluded that the decision of the Supreme Court of Canada in [Nolet] ... had jettisoned the predominate purpose distinction between regulatory and penal inspections set out by the Supreme Court of Canada in [Jarvis]”. In fact, the appeal judge nowhere refers to Jarvis. More impor- tantly, as the applicants elsewhere observe, the Supreme Court in Nolet specifically held that it was not overturning Jarvis and that the context was clearly distinguishable. Jarvis involved a civil tax audit, in which the taxpayer was obliged to disclose financial information; the audit evolved 222 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

into a criminal investigation for tax evasion. Viewed from the subject’s perspective, the nature of his liability altered from that of a taxpayer, whose relationship with the state is in the nature of a civil dispute, to that of a potential accused, whose relationship with the state is adversarial. In such circumstances, as Binnie J. affirmed in Nolet, it is appropriate to apply a “shifting focus” inquiry to determine at what point the relationship between state and individual becomes adversarial. Both Nolet and the present case take place in a wholly different context. Like the inspection in Nolet, the DFO employees’ actions always took place, broadly speaking, in a “penal” or “adversarial” context, in the sense that s. 49(1) of the Fisheries Act grants powers of entrance and inspection “for the purpose of ensuring compliance with this Act and the regulations”. Ulti- mately, the proper question for consideration, as Binnie J. held in Nolet, is whether the officers’ regulatory inspection powers were exercised reasonably in the totality of the circumstances. 41 In my view, the appeal court judge correctly concluded that the wrong legal test was applied by the trial judge so as to constitute reversible error. 42 The decision in Nolet, which was not available to the trial judge, an- swers the question raised with respect to the applicable legal test. The central issue having been decided by the Supreme Court of Canada, there is no important legal issue for this Court to consider, and there is insufficient merit in this ground of appeal to meet the test for leave. 43 I would not grant leave to appeal on this issue.

VI. Conclusion 44 Taking the above factors into consideration, I conclude that this appeal does not carry a reasonable possibility of success and does not raise issues of sufficient importance to the practice such that it would be in the interests of justice to grant leave to appeal. 45 The application for leave to appeal is dismissed. Application dismissed. Qu´ebec (Dir. des poursuites crim. & p´enales) c. Dorval 223

[Indexed as: Québec (Directeur des poursuites criminelles & pénales) c. Dorval] Directeur des poursuites criminelles et pénales (Appelant) c. Jean-Claude Dorval (Intimé) Cour supérieure du Québec Docket: C.S. Montmagny 300-36-000006-096 2011 QCCS 5780 Gagnon, J.C.S. Heard: 10 décembre 2010 Judgment: 27 octobre 2011* Procédure civile –––– Procédure en appel — Pouvoirs et obligations de la cour d’appel — Infirmer des conclusions de fait — Principes généraux –––– Eaux d’un lac etaient´ retenues par un barrage construit sur le terrain voisin d’un propriétaire riverain — En 2003, une brêche est apparue dans le barrage et le lac s’est graduellement vidé — Propriétaire riverain, qui etait´ en conflit avec son voisin, s’est renseigné pour savoir s’il pouvait faire quelque chose pour sauver le lac — Propriétaire riverain a et´´ e informé qu’aucune autorisation n’était néces- saire pour la construction d’un ponceau — En 2004, le propriétaire riverain a pris l’initiative de construire un ponceau sur le lac — Peu de temps après, un agent de la protection de la faune s’est présenté au lac et a remarqué la présence du ponceau — Propriétaire riverain a et´´ e inculpé d’avoir exploité un ouvrage entraˆınant la détérioration, la destruction ou la perturbation de l’habitat du poisson — Juge du procès a conclu que le propriétaire riverain avait prouvé, selon la prépondérance des probabilités, qu’il croyait raisonnablement et en toute hon- nêteté que la construction du ponceau améliorerait l’habitat du poisson, et il l’a acquitté — Ministère public a interjeté appel — Appel rejeté — En l’absence d’une erreur manifeste et dominante, une cour d’appel devrait eviter´ d’intervenir dans les conclusions du juge du procès — Erreur est manifeste et dominante si elle est clairement evidente´ et a mené a` un résultat déraisonnable ou inap- proprié — En l’espèce, la Cour a conclu que la décision du juge du procès d’acquitter le propriétaire riverain etait´ fondée sur une evaluation´ raisonnable des faits — Par conséquent, la Cour ne devrait pas intervenir dans les conclusions du juge du procès.

*Demande d’autorisation d’appel rejetée a` Québec (Directeur des poursuites criminelles & pénales) c. Dorval (2011), 2011 CarswellQue 13213, 2011 QCCA 2221, 66 C.E.L.R. (3d) 240, EYB 2011-199158 (Que. C.A.). 224 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Droit de l’environnement –––– Responsabilité pour dommages causés a` l’environnement — Nuisance — Défenses — Divers –––– Eaux d’un lac etaient´ retenues par un barrage construit sur le terrain voisin d’un propriétaire riverain — En 2003, une brêche est apparue dans le barrage et le lac s’est graduellement vidé — Propriétaire riverain, qui etait´ en conflit avec son voisin, s’est renseigné pour savoir s’il pouvait faire quelque chose pour sauver le lac — Propriétaire riverain a et´´ e informé qu’aucune autorisation n’était nécessaire pour la construction d’un ponceau — En 2004, le propriétaire riverain a pris l’initiative de construire un ponceau sur le lac — Peu de temps après, un agent de la protection de la faune s’est présenté au lac et a remarqué la présence du ponceau — Propriétaire riverain a et´´ e inculpé d’avoir exploité un ouvrage en- traˆınant la détérioration, la destruction ou la perturbation de l’habitat du poisson — Juge du procès a conclu que le propriétaire riverain avait prouvé, selon la prépondérance des probabilités, qu’il croyait raisonnablement et en toute hon- nêteté que la construction du ponceau améliorerait l’habitat du poisson, et il l’a acquitté — Ministère public a interjeté appel — Appel rejeté — En déterminant si un accusé a pris toutes les précautions qu’une personne raisonnable aurait prises dans les circonstances, le juge du procès pouvait prendre en considération la prévisibilité raisonnable d’un danger dans l’habitat du poisson — Preuve démontrait que la construction du ponceau a, dans les faits, produit des effets néfastes sur l’habitat du poisson — Toutefois, la Cour a conclu que, si le propriétaire riverain croyait fermement que la construction du ponceau amé- liorerait l’habitat du poisson, il devrait etreˆ acquitté — Cour a conclu que la dé- cision du juge du procès d’acquitter le propriétaire riverain etait´ fondée sur une evaluation´ raisonnable des faits — Par conséquent, la Cour ne devrait pas intervenir dans les conclusions du juge du procès. Civil practice and procedure –––– Practice on appeal — Powers and duties of appellate court — Reversing findings of fact — General principles –––– Waters of lake were confined by dam built on riparian owner’s neighbouring land — In 2003, crack appeared in dam and lake water gradually drained away — Riparian owner, who was at odds with his neighbour, asked around to see if he could do something to save lake — Riparian owner was told that no authorization was required to build culvert — In 2004, riparian owner took initiative of building culvert on lake — Shortly after, wildlife officer showed up at lake and noted presence of culvert — Riparian owner was charged with having carried on work that resulted in harmful alteration, disruption or destruction of fish habitat — Trial judge found that riparian owner proved, on balance of probabilities, that he reasonably and honestly believed that building culvert would improve fish habitat, and he acquitted him — Crown appealed — Appeal dismissed — Absent palpable and overriding error, appellate courts should re- frain from interfering with trial judge’s findings — Palpable and overriding error is one that is plainly seen and which led to unreasonable or inappropriate outcome — Here, Court found that trial judge’s decision to acquit riparian Québec (Dir. des poursuites crim. & pénales) c. Dorval 225

owner was based on reasonable assessment of facts — Therefore, Court should not interfere with trial judge’s findings. Environmental law –––– Liability for environmental harm — Nuisance — Defences — Miscellaneous –––– Waters of lake were confined by dam built on riparian owner’s neighbouring land — In 2003, crack appeared in dam and lake water gradually drained away — Riparian owner, who was at odds with his neighbour, asked around to see if he could do something to save lake — Ripa- rian owner was told that no authorization was required to build culvert — In 2004, riparian owner took initiative of building culvert on lake — Shortly after, wildlife officer showed up at lake and noted presence of culvert — Riparian owner was charged with having carried on work that resulted in harmful alteration, disruption or destruction of fish habitat — Trial judge found that riparian owner proved, on balance of probabilities, that he reasonably and honestly believed that building culvert would improve fish habitat, and he acquitted him — Crown appealed — Appeal dismissed — In deciding whether accused took all care which reasonable person would have taken in circumstances, trial judge could take into consideration reasonable foreseeability of danger in fish habitat — Evidence showed that building culvert actually adversely affected fish habitat — However, Court found that, if riparian owner firmly believed that building culvert would improve fish habitat, he should be acquitted — Court found that trial judge’s decision to acquit riparian owner was based on reasonable assessment of facts — Therefore, Court should not interfere with trial judge’s findings. Cases considered by Gagnon, J.C.S.: Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask 179, 2002 SCC 33, 30 M.P.L.R. (3d) 1, 219 Sask. R. 1, 272 W.A.C. 1, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, REJB 2002-29758 (S.C.C.) — considered Lévis (Ville) c. Tétreault (2006), 36 C.R. (6th) 215, 2006 CarswellQue 2911, 2006 CarswellQue 2912, 2006 SCC 12, 31 M.V.R. (5th) 1, (sub nom. Lévis (City) v. Tétreault) 346 N.R. 331, 207 C.C.C. (3d) 1, [2006] 1 S.C.R. 420, (sub nom. Lévis (City) v. Tétreault) 266 D.L.R. (4th) 165, [2006] S.C.J. No. 12 (S.C.C.) — considered R. v. Chapin (1979), [1979] 2 S.C.R. 121, 1979 CarswellOnt 39, 1979 Carswell- Ont 1316, 10 C.R. (3d) 371 (Fr.), 95 D.L.R. (3d) 13, 26 N.R. 289, 8 C.E.L.R. 151, 7 C.R. (3d) 225 (Eng.), 45 C.C.C. (2d) 333 (S.C.C.) — referred to R. v. MacDonald (1983), 1983 CarswellAlta 16, 24 Alta. L.R. (2d) 187, 3 C.C.C. (3d) 419, 42 A.R. 228 (Alta. C.A.) — referred to 226 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

R. v. Rio Algom Ltd. (1988), 29 O.A.C. 349, 66 O.R. (2d) 674, 46 C.C.C. (3d) 242, 23 C.C.E.L. 85, 1 C.O.H.S.C. 1, 3 C.E.L.R. (N.S.) 171, 1988 Carswell- Ont 188, [1988] O.J. No. 1810 (Ont. C.A.) — considered R. v. Sault Ste. Marie (City) (1978), 1978 CarswellOnt 24, [1978] 2 S.C.R. 1299, 85 D.L.R. (3d) 161, 21 N.R. 295, 7 C.E.L.R. 53, 3 C.R. (3d) 30, 40 C.C.C. (2d) 353, 1978 CarswellOnt 594, [1978] S.C.J. No. 59 (S.C.C.) — referred to R. c. Tangestanifar (2006), [2007] R.J.Q. 1, 2006 CarswellQue 10317, 2006 QCCA 1583, EYB 2006-111534 (Que. C.A.) — considered Statutes considered: Code de proc´edure civile, L.R.Q., c. C-25 art. 60 — referred to Criminal Code, R.S.C. 1985, c. C-46 s. 19 — referred to Fisheries Act, R.S.C. 1985, c. F-14 s. 34(1) — considered s. 35(1) — considered s. 78.6 [en. 1991, c. 1, s. 24] — pursuant to

APPEL interjeté par le ministère public a` l’encontre de l’acquittement d’un propriétaire riverain ayant construit un ponceau sur un lac.

Me Donald Barnabé, pour l’appelant Me Suzanne Gagné, pour l’intimé

Gagnon, J.C.S.:

1 Le ministère public appelle de l’acquittement de l’intimé, prononcé le 4 décembre 2009, a` l’accusation d’avoir : A` Sainte-Apolline-de-Patton (lac Fortin), district de Montmagny, le ou vers le 19 août 2004, date où le ministre a eu connaissance des el´´ ements constitutifs de l’infraction selon l’article 82 de la loi ci- après citée, a exploité des ouvrages, entraˆınant la détérioration de l’habitat du poisson; contrairement a` l’article 35, paragraphe 1, de la Loi sur les pêches (L.R., 1985, chapitre F-14 et amendements), com- mettant ainsi l’infraction prévue a` l’article 40, paragraphe 1, alinéa a) de cette loi, se rendant passible d’une amende d’au plus 300 000 $. 2 L’appelant définit ainsi les questions litigieuses que soulève son pourvoi : 1) Le juge de première instance a-t-il erronément evalu´´ e les critères juridiques applicables, donnant ouverture aux défenses d’erreur Québec (Dir. des poursuites crim. & pénales) c. Dorval Gagnon, J.C.S. 227

raisonnable sur les faits et de diligence raisonnable prévues a` l’article 78.6 de la Loi sur les pêches? 2) Le juge de première instance a-t-il rendu une décision déraison- nable eu egard´ a` la preuve en donnant ouverture aux défenses d’erreur raisonnable sur les faits et de diligence raisonnable prévues a` l’article 78.6 de la Loi sur les pêches?

I- LE CONTEXTE 3 En 1953, le niveau du ruisseau Fortin a et´´ e artificiellement rehaussé par l’érection d’un barrage, pour augmenter ainsi la surface noyée et former le lac Fortin. 4 L’intimé est propriétaire de plusieurs terrains qui entourent ce plan d’eau dans la localité de Sainte-Apolline-de-Patton. 5 Le lac Fortin re¸coit ses eaux d’un tributaire principal venant de l’est et se déverse a` l’ouest par un emissaire,´ le ruisseau Fortin. 6 Le Centre d’expertise hydrique du Québec classe le barrage dans la catégorie « a` forte contenance » mais qualifie son etat´ de « pauvre ». L’organisme considère le ruisseau comme etant´ non navigable et non flottable. Le lit du ruisseau est, quant a` lui, du domaine hydrique public, alors que la terre ferme est plutôt du domaine privé. 7 Lorsqu’en mai 2003, le barrage situé sur la propriété de son voisin cesse, en raison d’une brèche majeure, de retenir les eaux, l’intimé voit le lac se vider graduellement. 8 Devant l’inertie de son voisin, face a` cette catastrophe et la rapidité de l’exondation des berges, l’intimé fait des démarches pour obtenir le réaménagement du barrage, mais en vain. L’ouvrage se trouve sur la propriété d’un voisin avec lequel il est en conflit. Ses multiples appels au ministère de l’Environnement et au Centre d’expertise hydrique du Qué- bec pour obtenir de l’aide n’amènent rien de concret. Pendant ce temps, l’affaissement du lac se continue. 9 En mai 2004, une employée du Centre lui indique cependant que la construction d’un ponceau ne requiert pas d’autorisation particulière. Il s’adresse ensuite a` la municipalité et a` la MRC qui lui confirment qu’il n’a pas a` demander de permission pour ce faire. 10 Dans l’intervalle, la décrue du lac Fortin se poursuit de fa¸con drama- tique, faisant passer le niveau de l’eau d’un mètre de profondeur a` environ 30 cm. Par endroits, le lac s’assèche même complètement, laissant des cadavres de poissons morts gisant sur son lit. 228 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

11 Donnant suite aux avis re¸cus lors de ses consultations, l’intimé se rend dans une bibliothèque publique, où il se procure le manuel « L’aménagement des ponts et ponceaux en milieu forestier » (pièce D- 5), dont il s’inspire abondamment pour concevoir le remède au mal qui affecte le lac Fortin. 12 En juillet 2004, l’intimé entreprend lui-même la construction d’un ouvrage qui repose a` la fois sur sa propriété et sur le lit asséché du ruisseau. 13 La digue, comme l’a qualifiée l’expert Trencia, est longue de 75mè- tres et large d’environ 5 mètres. Elle est, le 19 août 2004, traversée par deux tuyaux de dix centimètres, qui laissent s’écouler l’eau du lac dans l’émissaire. 14 Le 29 septembre 2004, lorsqu’un agent de la protection de la faune se présente a` nouveau sur les lieux, afin d’effectuer l’inventaire des poissons du ruisseau, celui-ci remarque que les tuyaux ont et´´ e remplacés par d’autres, mesurant 60 centimètres de diamètre. 15 Comme le souligne le mémoire du ministère public, ce n’est toutefois qu’après le dépôt de la dénonciation que l’intimé a consulté les experts Delagrave et Massicotte pour obtenir un avis relatif aux incidences et impacts environnementaux de la construction de l’ouvrage.

II- LE JUGEMENT ENTREPRIS 16 Après avoir analysé et résumé la preuve qui lui est soumise de part et d’autre, de même que le droit applicable, le juge conclut que la poursuite s’est déchargée du fardeau de démontrer hors de tout doute raisonnable que : 1- l’intimé « a erig´´ e et donc exploité un ouvrage au sens de l’article 35(1) de la Loi sur les pêches (L.R.C., 1985, ch. F-14) »1; 2- dans un lieu qui constitue un habitat du poisson au sens de l’article 34(1) de la Loi sur les pêches2; 3- entraˆınant ainsi la détérioration de cet habitat. [57] Comme j’ai décidé que la notion de gain net de l’habitat ne constitue pas un moyen de défense possible a` l’étape de l’évaluation de la détérioration de l’habitat du poisson, je conclus donc, que la perte

1Paragraphe [15] de la décision du juge Pierre L. Rousseau du 4 décembre 2009. 2Paragraphe [31] de la décision du juge Pierre L. Rousseau du 4 décembre 2009. Québec (Dir. des poursuites crim. & pénales) c. Dorval Gagnon, J.C.S. 229

d’habitat, qui n’est pas négligeable, constitue en soit (sic), hors de tout doute raisonnable, une détérioration de l’habitat du poisson, du simple fait de l’érection de l’ouvrage au sein de l’habitat concerné3. 17 Le magistrat examine ensuite la question de savoir si l’intimé a ren- contré, par prépondérance de preuve, les exigences des moyens d’exonération prévus par l’article 78.6 de la Loi sur les pêches, tel que balisés par la jurisprudence des tribunaux supérieurs canadiens. 18 Son etude´ l’amène a` conclure a` la non-culpabilité de l’intimé pour les motifs suivants : [83] Ces observations de l’expert Delagrave, jointes aux conclusions de l’expert monsieur Bernard Massicotte, (rapport D- 12), sont a` l’effet que le rehaussement du lac, par l’aménagement de l’ouvrage lui apparaˆıt comme favorable en ce qui attrait (sic) a` la qualité du milieu aquatique. Toujours selon cet expert, le rehaussement a fait en sorte d’accroˆıtre la superficie nette du milieu aquatique en récupérant une partie des habitats exondés par le démantèlement partiel du barrage a` l’exutoire du lac. [84] Quand vient le temps d’appliquer le test objectif de l’homme raisonnable, la notion de “gain net d’habitat” trouve ici application et en conséquence, vu les conclusions des experts, le tribunal conclut que le défendeur s’est déchargé de son fardeau de me démontrer, par prépondérance de preuve, ses moyens de défense raisonnable sur les faits et celle de diligence raisonnable. [85] L’omission du défendeur d’obtenir au préalable du Ministère fédéral des pêches apparaˆıt aux yeux du tribunal, raisonnable suivant les critères jurisprudentiels reconnus, mais aussi en fonction de toutes les circonstances mises en preuve.

III- LE DROIT APPLICABLE a) Le pouvoir d’intervention en appel 19 Notre droit etablit´ clairement qu’en l’absence d’une erreur manifeste et dominante, une cour d’appel doit s’abstenir de modifier les conclusions de fait du juge d’instance. 20 Dans Housen v. Nikolaisen, [2002] 2 S.C.R. 235 (S.C.C.), la Cour suprˆeme du Canada rappelle qu’on peut aussi reformuler cette mˆeme pro-

3Jugement du juge Pierre L. Rousseau du 4 d´ecembre 2009, paragraphe 57. 230 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

position en disant qu’une cour d’appel ne peut réviser la décision du juge de première instance dans les où il existe des el´´ ements de preuve qui puissent etayer´ sa décision. 21 Le rôle d’un tribunal d’appel n’est donc pas de rédiger de meilleurs jugements, mais plus simplement de contrôler les motifs a` la lumière de la preuve pertinente et des arguments des parties, puis de confirmer la décision d’instance, a` moins que le premier juge n’ait commis une erreur manifeste, ayant conduit a` un résultat inapproprié ou déraisonnable. 22 On dira d’une erreur qu’elle est manifeste si elle est clairement evidente.´ 23 Dans R. c. Tangestanifar, 2006 QCCA 1583 (Que. C.A.), monsieur le juge Chamberland nous rappelle, au moment de rétablir l’acquittement prononcé en première instance, mais ecart´´ e subséquemment par la Cour supérieure, que : [10] Malgré tous les efforts de la poursuite pour voir dans le débat en première instance des questions de droit, il s’agissait essentiellement d’une question de fait, et la Cour supérieure, siégeant en appel, ne pouvait intervenir qu’en présence d’une erreur manifeste et dominante dans l’appréciation des faits par le juge de la Cour municipale. Il faut se rappeler que « (. . .) la notion d’« acquittement déraison- nable » est incompatible, en droit, avec la présomption d’innocence et l’obligation qu’a la poursuite de présenter une preuve hors de tout doute raisonnable » (R. c. Biniaris, [2000] 1 R.C.S. 381, paragr. 33); ce ne sera donc que dans des cas très exceptionnels qu’un juge d’appel pourra conclure au caractère déraisonnable d’un verdict d’acquittement reposant, comme en l’espèce, sur une pure question d’appréciation des faits. 24 Saisi d’un appel d’une condamnation prononcée contre un défendeur accusé d’avoir eu a` bord de son navire de pêche des pétoncles de gros- seur non réglementaire, l’honorable juge Glennie de la Cour du Banc de la Reine du Nouveau-Brunswick ecrit,´ au sujet du moyen de défense prévu a` l’article 78.6 de la Loi sur les pêches, que : 52 La conclusion d’un juge du procès concernant la question de savoir si un défendeur a etabli´ un moyen de défense fondé sur la diligence raisonnable conformément a` l’article 78.6 de la Loi constitue une conclusion de fait. Une cour d’appel n’a pas la compétence lui permettant de modifier la conclusion du juge du procès relative a` la diligence raisonnable, sauf si une telle conclusion est manifestement déraisonnable et n’est pas etay´´ ee par la preuve : R c. Starvish (1987), 79 N.S.R. (2d) Québec (Dir. des poursuites crim. & pénales) c. Dorval Gagnon, J.C.S. 231

136 (C.A. N.-E.), au paragraphe 8, R. c. Harris ((1997), 121 C.C.C. (3d) 64 (C.A. N.-E.),´ R. c. Petten (1995), 129 Nfld. & P.E.I.R. 37, au paragraphe 60, et R. c. D’Entremont (1994), 130 N.S.R. (2d) 28, au paragraphe 14. 53 Dans l’arrêt R. c. Higgins (1981), 60 C.C.C. (2d) 246 (à la page 251), la Cour d’appel de la Nouvelle-Ecosse´ a déclaré que [TRADUCTION] “le succès ou l’échec du moyen de dé- fense fondé sur la diligence raisonnable relève du domaine exclusif du juge du procès”. La Cour d’appel a souligné de nouveau que la diligence raisonnable comportait une conclusion de fait qu’une cour d’appel ne peut infirmer que si elle est déraisonnable ou non etay´´ ee par la preuve. Voir egalement´ R. c. Belliveau (1986), 76 N.S.R. (2d) 234 (C.A. N.-E.)´ et R. c. Gerhart (1989), 91 N.S.R. (2d) 276. 54 C’est en ces termes que le juge d’appel MacDonald s’est ex- primé a` propos de la portée admissible de la révision en appel dans l’arrêt R. c. Stavish, précité, au paragraphe 8 : [TRADUCTION] Autrement dit, le juge Reardon a conclu que le capitaine Starvish avait démontré qu’il n’avait pas et´´ e négligent en traversant la ligne de démarcation tracée par La Haye. C’était là une conclusion de fait. Elle etait´ raisonnable et elle etait´ etay´´ ee par la preuve. Par conséquent, il est permis d’affirmer que le juge Haliburton a out- repassé sa compétence en infirmant cette conclusion. [nos soulignés]

b) Le moyen d’exonération fondé sur l’article 78.6 de la Loi sur les pêches 25 L’article 78.6 de la Loi sur les pêches porte essentiellement sur les moyens de défense que sont l’erreur raisonnable sur les faits et la diligence raisonnable en ce qu’il prévoit : 78.6 Nul ne peut etreˆ déclaré coupable d’une infraction a` la présente loi s’il etablit´ : a) soit qu’il a pris les mesures nécessaires pour l’empêcher; b) soit qu’il croyait raisonnablement et en toute honnêteté a` l’existence de faits qui, avérés, l’innocenteraient. 232 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

26 La disposition codifie, en fait, des défenses reconnues en droit com- mun sous les appellations « erreur raisonnable sur les faits » et « diligence raisonnable ». 27 Dans le cas, comme en l’espèce, d’une infraction de responsabilité stricte, le ministère public est dispensé de prouver l’état d’esprit d’un accusé. Il n’a qu’à faire la preuve hors de tout doute raisonnable de l’élément matériel de l’infraction, d’où découle une présomption d’infraction4. 28 Ainsi, dès que la poursuite a prouvé l’actus reus de l’infraction, le fardeau de preuve se transporte alors sur les epaules´ de l’accusé qui peut, par une preuve prépondérante, soulever une défense d’erreur de fait raisonnable ou de diligence raisonnable. 29 Le premier moyen repose sur deux fondements, soit l’erreur de fait et le caractère raisonnable de l’erreur. Cette défense comporte donc un el´´ e- ment subjectif, la méprise de l’accusé a` l’égard d’un el´´ ement matériel de l’infraction, ainsi qu’un el´´ ement objectif où la personne raisonnable sert de modèle. Cette défense s’attarde essentiellement a` l’état d’esprit du défendeur au moment de poser l’acte illégal. 30 Il ne suffit donc pas que l’erreur soit honnête, il faut aussi, pour qu’elle puisse constituer un moyen de défense efficace, qu’elle soit raisonnable. 31 De plus, pour etreˆ susceptible d’exonérer l’auteur, l’erreur doit etreˆ relative a` un etat´ de fait qui, s’il avait existé, aurait rendu l’accusé innocent. 32 Quant au moyen dit de « diligence raisonnable », celui-ci réfère a` l’élément matériel du comportement de l’accusé. Il ne comprend qu’un el´´ ement subjectif : le défendeur a-t-il pris toutes les précautions qu’une personne raisonnable aurait prises dans les mêmes circonstances, pour eviter´ la violation de la loi? 33 Ainsi, lorsqu’il s’agit de l’exercice d’une activité particulière, faisant l’objet d’une réglementation précise, la diligence requise sera celle dont ferait preuve une personne raisonnable s’adonnant a` la même activité. 34 Il importe aussi de rappeler que l’erreur raisonnable de fait, de même que la diligence raisonnable ne peuvent equivaloir´ a` une erreur de droit.

4R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299 (S.C.C.), p. 1326. Qu´ebec (Dir. des poursuites crim. & p´enales) c. Dorval Gagnon, J.C.S. 233

Cette dernière n’étant pas une défense en droit pénal, a` moins d’avoir et´´ e provoquée par une personne en autorité5. 35 Celui qui commet une infraction n’est, en effet, pas excusé, même s’il démontre qu’il a fait des démarches raisonnables pour connaˆıtre la loi et qu’il s’est mépris de bonne foi a` la suite de ses recherches6. 36 Notons finalement que l’erreur raisonnable sur les faits implique aussi que le défendeur a fait les efforts raisonnables pour bien connaˆıtre la situation qui le confronte ou qu’il n’a pas et´´ e négligent7. 37 On constate de plus qu’il est parfois nécessaire de fondre ces deux moyens de défense pour evaluer´ adéquatement la responsabilité d’un accusé. 38 L’auteur Paule Halley ecrit,´ a` ce sujet, dans un article intitulé « La loi fédérale sur les pêches et son régime pénal de protection environnementale »8. La défense d’erreur de fait raisonnable est une autre manière pour l’accusé d’établir qu’il a, dans les circonstances, fait preuve de diligence. Cette défense est particulière aux infractions de responsabilité stricte, car l’erreur doit etreˆ raisonnable et non simplement de bonne foi comme en matière d’infractions criminelles. L’erreur raisonnable est celle qu’aurait commise un homme raisonnable placé dans les mêmes circonstances. Le juge Dickson, dans R. c. Chapin, a précisé que la réussite de ce moyen de défense n’exigeait pas la preuve qu’un tiers ait forcé l’accusé a` croire vrai quelque chose de faux. Le caractère « raisonnable » de l’erreur est, comme en matière de défense de diligence, un standard flexible. C’est-à-dire que le caractère raisonnable de l’erreur sur la présence des el´´ ements constitutifs de l’infraction variera en intensité selon les obligations imposées par le type d’activité poursuivie. Ainsi, dans R. c. Chapin, la Cour suprême a appliqué a` l’accusé une norme de diligence peu elev´´ ee pour evaluer´ le caractère raisonnable de l’erreur de fait. Dans R. c. Pierce Fisheries Ltd, cette même cour a utilisé une norme plus elev´´ ee. Cette flexibilité vient du fait que les tribunaux considèrent que celui qui entreprend une activité qui exige des con-

5L´evis c. Th´etreault [2006] 1 C.R. 420. 6R. v. MacDonald (1983), 3 C.C.C. (3d) 419 (Alta. C.A.). 7R. v. Chapin, [1979] 2 S.C.R. 121 (S.C.C.). 8Les Cahiers de Droit, vol. 33, n° 3, septembre 1992, p. 759-856, p. 840 et 842. 234 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

naissances particulières a l’obligation d’acquérir au préalable ces connaissances. De plus, il est clair que l’erreur doit s’être produite alors que l’accusé croyait raisonnablement satisfaire aux obligations imposées par la loi, et il n’est pas suffisant qu’il ait simplement et´´ e diligent pour con- stater l’existence de ces obligations. [...] L’erreur de fait pourrait egalement´ porter sur l’éventualité d’une dé- térioration, d’une destruction ou d’une perturbation d’un habitat ou sur la nocivité de la substance. Le choix d’une méthode qui s’avère inadéquate pour protéger l’habitat du poisson ou l’erreur sur la nociv- ité d’une substance apparaissent possibles dans les cas des plus manifestes. L’erreur pourrait etreˆ fondée sur des informations er- ronées ou sur le fait que la substance utilisée n’est pas celle que l’accusé croyait utiliser malgré sa diligence. L’erreur sera d’autant moins raisonnable que l’accusé exerce des activités pour lesquelles un haut degré de compétence est exigé. Abstraction faite de circonstances exceptionnelles, les questions en- tourant la nocivité même de la substance, la présence d’ouvrages ou d’entreprises et l’existence d’un dépôt de substances nocives parais- sent peu susceptibles de donner ouverture a` une défense d’erreur de fait. Pareilles erreurs relèvent plus de l’interprétation donnée a` ces el´´ ements par les tribunaux et intéressent davantage la très controver- sée défense d’erreur de droit. [citations omises]

c) L’erreur de droit provoquée par une personne en autorité 39 Le moyen de défense dit « de l’erreur de droit provoquée par une personne en autorité » a et´´ e reconnu par la Cour suprême du Canada en 2006 dans l’affaire Lévis (Ville) c. Tétreault, [2006] 1 S.C.R. 420 (S.C.C.). 40 Développé pour atténuer la rigueur et les injustices causées par l’absolutisme de la règle voulant que l’ignorance de la loi ne soit jamais une excuse9, ce moyen de défense se veut un contrepoids assurant le maintien de l’équité fondamentale du processus pénal lorsque l’Etat´ donne d’une main un avis erroné a` un justiciable et qu’il tente, de l’autre main, de faire sanctionner le comportement de celui qui a agi en s’autorisant de cet avis.

9Articles 60 C.p.p. et 19 C.cr. Qu´ebec (Dir. des poursuites crim. & p´enales) c. Dorval Gagnon, J.C.S. 235

41 La réception de ce moyen, qui ne conduit pas a` l’acquittement, mais a` un arrêt des procédures, nécessite la concomitance de six (6) com- posantes essentielles : 1) la présence d’une erreur de droit ou d’une erreur mixte de droit et de fait; 2) la considération, par son auteur, des conséquences juridiques des actes accomplis; 3) le fait que l’avis obtenu provenait d’une personne compétente en la matière; 4) le caractère raisonnable de l’avis; 5) le caractère erroné de l’avis re¸cu; 6) l’accomplissement de l’acte sur la base de cet avis.

IV ANALYSE 42 La preuve et les arguments soumis par la défense, participe en l’espèce des trois modes d’exonération dont nous venons de discuter, en ce que l’intimé prétend qu’il a cru que son ouvrage ne détériorait pas l’habitat du poisson, mais avait plutôt pour effet de le rétablir et de sauver son environnement. Il soutient egalement´ qu’il a pris toutes les précautions raisonnables qu’une personne raisonnable aurait prises face a` cette même situation. Finalement, il plaide qu’il a cru, sur les bases des renseignements colligés auprès des autorités compétentes qu’il a con- sultées, que l’action qu’il a entreprise en construisant la digue etait´ a` la fois légale et bénéfique pour la flore et la faune du ruisseau Fortin. 43 Le premier juge n’a pas retenu ce dernier moyen de l’erreur de droit provoquée par une personne en autorité, puisque même si la décision ne traite pas spécifiquement de cette excuse, le juge l’a, a` l’évidence, exclue en choisissant d’acquitter l’intimé plutôt que de prononcer un arrêt des procédures. 44 Notons de plus que les avis re¸cus des fonctionnaires du ministère de l’Environnement, du Centre hydrique, de la municipalité et de la MRC portaient sur la légalité des travaux de construction d’un ponceau et sur la nécessité pour ce faire d’obtenir une autorisation. Or, l’intimé n’est pas accusé d’avoir construit l’ouvrage sans détenir de permis, mais bien d’avoir exploité celui-ci de fa¸con a` détériorer l’habitat du poisson. La preuve démontre qu’il n’a consulté a` cet egard´ qu’après le dépôt de l’accusation. 236 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

45 L’intimé ne s’et donc pas conformé aux exigences posées par la Cour suprême du Canada dans Levis c. Thétreault10. 46 En ce qui concerne la croyance erronée de l’intimé que son comportement ne détériorait point l’habitat du poisson, mais contribuait plutôt a` le rétablir et a` sauvegarder la faune et la flore du ruisseau Fortin, il est utile de rappeler a` nouveau ce qu’écrit monsieur le juge Pierre Rousseau a` ce sujet : [74] Toujours a` la recherche d’une ultime solution, sans pour autant changé (sic) la vocation récréative du lac Fortin et de l’habitat naturel des poissons, il consulte le guide produite (sic) sous la cote D-5, et voit a` eriger´ l’ouvrage au rétrécisse- ment du lac. [75] En tant que propriétaire riverain ayant la plus grande superficie de terrain, sa crainte en n’agissant pas, etait´ de se le faire par les autres propriétaires ainsi que par les autorités concernées, et en conséquence d’être poursuivi devant les tribunaux. [76] Son objectif ultime, en cherchant a` employer tous les moyens raisonnables a` sa disposition, est de limiter les dégâts occa- sionnés au lac suite a` la brèche constatée dans le vieux barrage, et au surplus d’en améliorer son etat´ général. [77] Se basant donc sur les recommandations contenues au guide (D-5) et fort du fait qu’il est confirmé propriétaire du fond de terrain, exception faite du ruisseau Fortin, (D-7, lettre de M. Huron), il entreprend donc les travaux avec le plus de précau- tion (sic) possible qu’il peut dans les circonstances. [78] Il prend même le soin de contacter sa municipalité et sa municipalité régionale de comté pour vérifier si un permis ou une autorisation quelconque est exigé. Dans la négative, il procède donc aux travaux d’érection de l’ouvrage. [79] Les soulignements en jaune qui apparaissent a` la pièce D-5, “L’aménagement des ponts et des ponceaux dans le milieu forestier”, sont ceux du défendeur, ce qui confirme qu’il a consulté le document, mais aussi, qu’il a cherché a` prendre toutes mesures possibles et raisonnables mises a` sa disposition pour ne pas détériorer l’habitat naturel du poisson, dont, et non limitativement, la qualité du matériau utilisé (C.F. l’analyse granulométrique D-8), l’utilisation de tuyaux blancs

10Précité, note 4. Québec (Dir. des poursuites crim. & pénales) c. Dorval Gagnon, J.C.S. 237

pouvant permettre l’écoulement des eaux durant les travaux, l’emploi de toiles géotextiles, la pose des tuyaux d’écoulement suivant l’angle recommandé par le guide (D-5), la pose d’un déversoir, . . ., etc. [80] Dans les circonstances, la qualité de l’ouvrage erig´´ ee ne fait aucun doute dans l’esprit du tribunal. D’ailleurs les experts Doucet et Delagrave affirment a` la page 2 de leur rapport produit sous la cote D-10, et je cite : La mise en place d’un faible ouvrage contribuant a` relever légèrement le niveau du lac Fortin sont de nature a` favoriser l’amélioration du milieu aquatique. [81] Puis a` la page 3 du même rapport, et je cite : La mise en place de l’ouvrage etant´ faite en péri- ode de faible débit et la très grande partie a` sec n’a pas risqué d’entraˆıner d’impacts importants, etant´ donné la présence de bief aval d’environ 800 pieds de long qui est susceptible de retenir les particules fines. [82] D’ailleurs, l’expert monsieur Marc Delagrave, qualifié par le tribunal d’expert en génie hydraulique particulièrement en etude´ d’impact environnemental en milieu hydrique, fait l’observation suivante dans son témoignage, a` savoir, que l’ouvrage est quant a` lui, assez unique et intéressant avec une alimentation a` faible niveau d’eau. [83] Ces observations de l’expert Delagrave, jointes aux conclusions de l’expert monsieur Bernard Massicotte, (rapport D- 12), sont a` l’effet que le rehaussement du lac, par l’aménagement de l’ouvrage lui apparaˆıt comme favorable en ce qui attrait (sic) a` la qualité du milieu aquatique. Toujours selon cet expert, le rehaussement a fait en sorte d’accroˆıtre la superficie nette du milieu aquatique en récupérant une partie des habitats exondés par le démantèlement partiel du barrage a` l’exutoire du lac. [84] Quand vient le temps d’appliquer le test objectif de l’homme raisonnable, la notion de “gain net d’habitat” trouve ici application et en conséquence, vu les conclusions des experts, le tribunal conclut que le défendeur s’est déchargé de son fardeau de me démontrer, par prépondérance de preuve, ses moyens de défense raisonnable sur les faits et celle de diligence raisonnable. 238 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

47 L’appelant reproche notamment au juge d’avoir pris en compte, au moment d’apprécier les moyens de défense d’erreur de fait raisonnable et de diligence raisonnable, le « gain net sur l’habitat » alors qu’il avait spécifiquement exclu ce concept au moment de décider si la poursuite avait etabli´ les el´´ ements essentiels de l’infraction. 48 Dans R. v. Rio Algom Ltd.11, la Cour d’appel de l’Ontario, rappelle que l’appréciation d’un moyen de défense qui, comme en l’espèce, renvoie a` un test objectif, permet au juge d’examiner la prévisibilité du danger résultant de l’activité en tant que facteur pertinent, pour décider si le défendeur a pris toutes les précautions qu’on doit attendre d’une personne raisonnable dans les mêmes circonstances. 49 La notion de « gain net de l’habitat » réfère directement a` la prévisibilité de bienfait ou de danger pour l’environnement, et le juge etait´ fondé de considérer ce facteur a` cette etape´ de son analyse. 50 L’évaluation de ces moyens de défense doit s’effectuer en fonction de l’ensemble de la preuve et du contexte. En l’espèce, « l’habitat du poisson » a et´´ e perturbé de fa¸con importante par le bris du barrage et la décrue du lac qui a suivi. Pendant un an, l’intimé multiplie les démarches pour corriger la situation. Ses efforts aboutissent sur la construction de l’ouvrage litigieux. Les travaux sont entrepris par lui pour redonner, croit-il alors, a` la faune et a` la flore environnant le ruisseau et le lac, un habitat convenable, ressemblant a` celui des cinquante dernières années. 51 Son erreur a et´´ e de ne pas considérer que la digue ainsi erig´´ ee em- piétait sur environ 400 mètres carrés l’habitat jadis occupé par le poisson, mais qui avait dû, par la suite, en déserter la majeure partie en raison de l’assèchement de cette partie du lac. 52 Si, comme il le croyait erronément, les travaux de construction de la jetée ou du ponceau profitaient pleinement a` l’habitat du poisson, son comportement ne pouvait alors entraˆıner sa responsabilité pénale. 53 Le juge a conclu, a` la lumière du contexte factuel et des démarches de l’intimé, que l’erreur de ce dernier etait´ raisonnable dans les circonstances et qu’il n’avait pas et´´ e négligent. 54 C’est là une détermination qui doit s’appuyer sur une analyse de la preuve, qui ne doit pas souffrir d’une erreur manifeste et dominante. Or, la conclusion du juge Rousseau a` cet egard´ satisfait ces critères, est

11(1988), 46 C.C.C. (3d) 242 (Ont. C.A.). Qu´ebec (Dir. des poursuites crim. & p´enales) c. Dorval Gagnon, J.C.S. 239

soutenue par la preuve et est conforme aux principes de droit applicable a` une infraction de responsabilité stricte. 55 Le Tribunal n’est pas ici en présence d’un de ces cas très exceptionnels où il peut conclure au caractère déraisonnable d’un verdict d’acquittement qui repose essentiellement sur une question d’appréciation des faits. 56 Il n’y a pas lieu, pour la Cour supérieure, d’intervenir.

POUR CES MOTIFS, LE TRIBUNAL : 57 REJETTE l’appel du ministère public; 58 CONFIRME le verdict de non-culpabilité. Appel rejeté. 240 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

[Indexed as: Québec (Directeur des poursuites criminelles & pénales) c. Dorval] Directeur des poursuites criminelles et pénales (Requérant) c. Jean-Claude Dorval (Intimé) Cour d’appel du Québec Docket: C.A. Québec 200-10-002740-111 2011 QCCA 2221 Morin, J.C.A. Judgment: 25 novembre 2011 Droit de l’environnement –––– Responsabilité pour dommages causés a` l’environnement — Nuisance — Défenses — Divers –––– Eaux d’un lac etaient´ retenues par un barrage construit sur le terrain voisin d’un propriétaire riverain — En 2003, une brêche est apparue dans le barrage et le lac s’est graduellement vidé — Propriétaire riverain, qui etait´ en conflit avec son voisin, s’est renseigné pour savoir s’il pouvait faire quelque chose pour sauver le lac — Propriétaire riverain a et´´ e informé qu’aucune autorisation n’était nécessaire pour la construction d’un ponceau — En 2004, le propriétaire riverain a pris l’initiative de construire un ponceau sur le lac — Peu de temps après, un agent de la protection de la faune s’est présenté au lac et a remarqué la présence du ponceau — Propriétaire riverain a et´´ e inculpé d’avoir exploité un ouvrage en- traˆınant la détérioration, la destruction ou la perturbation de l’habitat du poisson — Juge du procès a conclu que le propriétaire riverain avait prouvé, selon la prépondérance des probabilités, qu’il croyait raisonnablement et en toute hon- nêteté que la construction du ponceau améliorerait l’habitat du poisson, et il l’a acquitté — Ministère public a interjeté appel a` la Cour supérieure — En déter- minant si un accusé a pris toutes les précautions qu’une personne raisonnable aurait prises dans les circonstances, le juge du procès pouvait prendre en consideration´ la prévisibilité raisonnable d’un danger dans l’habitat du poisson — Preuve démontrait que la construction du ponceau a, dans les faits, produit des effets néfastes sur l’habitat du poisson — Toutefois, la Cour a conclu que, si le propriétaire riverain croyait fermement que la construction du ponceau amé- liorerait l’habitat du poisson, il devrait etreˆ acquitté — Cour a conclu que la dé- cision du juge du procès d’acquitter le propriétaire riverain etait´ fondée sur une evaluation´ raisonnable des faits et a rejeté l’appel du ministère public — Minis- tère public a déposé une requête en permission d’appeler devant la Cour d’appel — Requête rejetée — Ministère n’a pas démontré que la Cour supér- ieure a commis une erreur de droit — Cour supérieure a eu raison de considérer que le juge du procès pouvait evaluer´ le facteur du « gain net » — Par consé- quent, la requête en permission d’appeler devrait etreˆ rejetée. Québec (Dir. des poursuites crim. & pénales) c. Dorval 241

Environmental law –––– Liability for environmental harm — Nuisance — Defences — Miscellaneous –––– Waters of lake were confined by dam built on riparian owner’s neighbouring land — In 2003, crack appeared in dam and lake water gradually drained away — Riparian owner, who was at odds with his neighbour, asked around to see if he could do something to save lake — Ripa- rian owner was told that no authorization was required to build culvert — In 2004, riparian owner took initiative of building culvert on lake — Shortly after, wildlife officer showed up at lake and noted presence of culvert — Riparian owner was charged with having carried on work that resulted in harmful alteration, disruption or destruction of fish habitat — Trial judge found that riparian owner proved, on balance of probabilities, that he reasonably and honestly believed that building culvert would improve fish habitat, and he acquitted him — Crown appealed to Superior Court — In deciding whether accused took all care which reasonable man would have taken in circumstances, trial judge could take into consideration reasonable foreseeability of danger in fish habitat — Evi- dence showed that building culvert actually adversely affected fish habitat — However, Court found that, if riparian owner firmly believed that building culvert would improve fish habitat, he should be acquitted — Court found that trial judge’s decision to acquit riparian owner was based on reasonable assessment of facts and dismissed Crown’s appeal — Crown brought motion for leave to appeal before Court of Appeal — Motion dismissed — Crown did not show that Superior Court erred in law — Superior Court was correct in considering that trial judge could assess “net gain” factor — Therefore, motion for leave to appeal should be dismissed. Statutes considered: Criminal Code, R.S.C. 1985, c. C-46 s. 839 — referred to Fisheries Act, R.S.C. 1985, c. F-14 s. 35(1) — considered s. 78.6 [en. 1991, c. 1, s. 24] — considered

REQUETEˆ en permission d’appeler a` l’encontre d’une décision publiée a` Québec (Directeur des poursuites criminelles & pénales) c. Dorval (2011), 2011 CarswellQue 12059, EYB 2011-197831, 66 C.E.L.R. (3d) 223, 2011 QCCS 5780 (Que. S.C.), ayant confirmé l’acquittement d’un propriétaire riverain ayant construit un ponceau sur un lac.

Me Donald Barnabé, pour le requérant Me Suzanne Gagné, pour l’intimé 242 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Morin, J.C.A. (oralement):

1 Le requérant demande la permission d’appeler d’un jugement rendu le 27 octobre 2011 par la Cour supérieure, district de Montmagny (l’honorable Claude C. Gagnon), qui a rejeté l’appel du jugement pro- noncé le 4 décembre 2009 par la Cour du Québec, district de Montmagny (l’honorable Pierre-L. Rousseau), qui a acquitté l’intimé a` l’égard d’une accusation d’avoir enfreint le paragraphe 35(1) de la Loi sur les pêches (L.R.C. 1985, c. F-14). 2 Voici comment est rédigé ce paragraphe : 35(1) Il est interdit d’exploiter des ouvrages ou entreprises entraˆınant la détérioration, la destruction ou la perturbation de l’habitat du poisson. 3 Le juge Rousseau a prononcé l’acquittement en se fondant sur l’article 78.6 de la Loi sur les pêches : 78.6 Nul ne peut etreˆ déclaré coupable d’une infraction a` la présente loi s’il etablit´ : a) soit qu’il a pris les mesures nécessaires pour l’empêcher; b) soit qu’il croyait raisonnablement et en toute honnêteté a` l’existence de faits qui, avérés, l’innocenteraient. 4 Quant au juge Gagnon, il a rejeté l’appel de ce jugement, en déclarant notamment ce qui suit : [53] Le juge a conclu, a` la lumière du contexte factuel et des dé- marches de l’intimé, que l’erreur de ce dernier etait´ raisonnable dans les circonstances et qu’il n’avait pas et´´ e négligent. [54] C’est là une détermination qui doit s’appuyer sur une analyse de la preuve, qui ne doit pas souffrir d’une erreur manifeste et dominante. Or, la conclusion du juge Rousseau a` cet egard´ satisfait ces critères, est soutenue par la preuve et est conforme aux principes de droit applicable a` une infraction de responsabilité stricte. [55] Le Tribunal n’est pas ici en présence d’un de ces cas très exceptionnels où il peut conclure au caractère déraisonnable d’un verdict d’acquittement qui repose essentiellement sur une question d’appréciation des faits. 5 La requête pour permission d’appeler de ce dernier jugement se fonde sur l’article 839 du Code criminel selon lequel les motifs a` l’appui d’une telle requête doivent comporter une question de droit seulement. Québec (Dir. des poursuites crim. & pénales) c. Dorval Morin, J.C.A. 243

6 Voici ce qu’on lit aux paragraphes 11 a` 13 de la requête : 11. L’appelant désire obtenir la permission d’en appeler de ce jugement car le juge Gagnon a commis une erreur de droit. 12. Plus précisément, le juge de la Cour supérieure a commis une erreur de droit : • en considérant la notion de « gain net d’habitat » comme facteur pertinent lors de l’application du test objectif de l’homme raisonnable donnant ouverture a` une défense de diligence raisonnable et d’erreur raisonnable sur les faits. 13. L’intérêt supérieur de la justice commande a` faire décider de la question de droit plus haut mentionnée, eu egard´ au fait que : a) la décision pour laquelle l’appelant demande la permission d’appeler entraˆınera une modification sub- stantielle de l’application de l’article 78.6 de la Loi sur les pêches en ce que, dorénavant, il faudra tenir compte de la notion de « gain net d’habitat » lors de l’évaluation du test objectif de l’homme raisonnable pour déterminer s’il y a eu erreur raisonnable sur les fait ou diligence raisonnable; b) en permettant que l’on puisse tenir compte des impacts positifs ou potentiellement positifs résultant de la commission d’une infraction, le juge de la Cour supérieure a erronément interprété l’arrêt R. v. Rio Al- gom Ltd de la Cour d’appel de l’Ontario, qu’il cite au soutien de sa décision, et a elargi´ par le fait même la portée de la défense de diligence raisonnable et d’erreur raisonnable sur les faits et ce, pour l’ensemble des infractions dites « de responsabilité stricte » (R-4). 7 Le requérant n’a pas démontré que le juge Gagnon aurait commis une erreur de droit dans son analyse du pourvoi dont il etait´ saisi. 8 Le juge Gagnon a bien expliqué pourquoi il considérait que le juge Rousseau etait´ fondé de considérer le facteur de « gain net d’habitat » a` l’étape de l’analyse des moyens soulevés en vertu de l’article 78.6 de la Loi sur les pêches, même s’il avait exclu ce concept en décidant que la poursuite avait etabli´ les el´´ ements essentiels de l’infraction. 244 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

9 Voici notamment ce qu’il a déclaré au paragraphe 49 de son jugement : [49] La notion de « gain net de l’habitat » réfère directement a` la prévisibilité de bienfait ou de danger pour l’environnement, et le juge etait´ fondé de considérer ce facteur a` cette etape´ de son analyse. 10 Par ailleurs, le juge Gagnon n’a pas fait une interprétation erronée de l’arrêt de la Cour d’appel de l’Ontario en s’exprimant de la fa¸con suivante, au paragraphe 48 de son jugement : [48] Dans R. c. Rio Algom Ltd, la Cour d’appel de l’Ontario, rappelle que l’appréciation d’un moyen de défense qui, comme en l’espèce, renvoie a` un test objectif, permet au juge d’examiner la prévisibilité du danger résultant de l’activité en tant que facteur pertinent, pour décider si le défendeur a pris toutes les précautions qu’on doit attendre d’une personne raisonnable dans les mêmes circonstances. 11 Voici, de fait, ce qu’a ecrit´ le juge Goodman au paragraphe 24 de cet arrêt : 24. . . .In applying the principle espoused by Dickson J. in Chapin quoted above, it is my view that the reasonable foreseeability of danger resulting from an act or omission which constitutes prima facie proof of the offence alleged is one of the factors to be considered in deciding whether an accused took all the care which a reasonable man might have been expected to take in the circumstances. . . . POUR CES MOTIFS, LE SOUSSIGNE´ : 12 REJETTE la requête pour permission d’appeler. Requête rejetée. Specter v. Nova Scotia 245

[Indexed as: Specter v. Nova Scotia (Minister of Fisheries & Aquaculture)] Marian and Herschel Specter, Appellants v. Minister of Fisheries and Aquaculture, and Kelly Cove Salmon Ltd., Respondents Nova Scotia Supreme Court Docket: Hfx 350371 2012 NSSC 40 Michael J. Wood J. Heard: December 15, 2011 Judgment: January 30, 2012 Environmental law –––– Statutory protection of environment — Approvals, licences and orders — Amendment, revocation or suspension –––– K Ltd. held licences and leases issued pursuant to Fisheries and Coastal Resources Act for finfish aquaculture operations at three sites — Operations consisted of floating cage systems containing salmon and rainbow trout, which were being raised for commercial production — K Ltd. applied for amendment of licences/leases, involving relocation of sites within harbour and increase in size of lease areas — Minister issued requested amendments, after undertaking consultations and receiving related materials — Appeal was brought concerning decision to approve amendment applications — Appeal dismissed — Appellants argued, unsuccessfully, that since there was no specific procedure for amendment set out in Act, regulations or specific licences and leases, then no such amendments could be permitted — It was not necessary that amendment procedure be detailed in legislation — Section 59(2) of Act required Minister to follow new licence application process where he concluded that amendment was substantial and may have detrimental impact on other uses of marine resources — This clearly contemplated that some amendments would go through process for new applications and some would not — It could not have been intent of legislature, in drafting s. 59(1), that all amendments must follow new application process — Minister’s decision did not violate s. 3 of Aquaculture License and Lease Regulations — Depth requirement in s. 3(1)(b) of Regulations was intended to be minimum depth and not definition of precise distance that must exist for every aquaculture lease site in province — It was not unreasonable for Minister to forego public hearing — This was not situation where Minister made decision in absence of information and where public hearing may have been essential — Minister obtained significant amount of information, including submissions both pro and 246 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

con from public — It was not unreasonable for Minister to obtain and review relevant information which was available concerning new sites. Environmental law –––– Statutory protection of environment — Approvals, licences and orders — Appeals — To court — General principles –––– K Ltd. held licences and leases issued pursuant to Fisheries and Coastal Resources Act for finfish aquaculture operations at three sites — Operations consisted of floating cage systems containing salmon and rainbow trout, which were being raised for commercial production — K Ltd. applied for amendment of licences/leases, involving relocation of sites within harbour and increase in size of lease areas — Minister issued requested amendments, after undertaking consultations and receiving related materials — Appeal was brought concerning decision to approve amendment applications — Appeal dismissed on other grounds — Entirety of Minister’s decision-making process was subject to review based upon reasonableness standard — Although Minister was required to interpret and apply statutory provisions, process involved factual determinations as well as legislative analysis — In addition, Act was integral to Minister’s role of regulating and promoting aquaculture and fisheries — These were areas in which Minister had particular familiarity and expertise, and his interpretation of legislation was to be given deference. Natural resources –––– Fish and wildlife — Licences — Miscellaneous –––– Amendment — K Ltd. held licences and leases issued pursuant to Fisheries and Coastal Resources Act for finfish aquaculture operations at three sites — Opera- tions consisted of floating cage systems containing salmon and rainbow trout, which were being raised for commercial production — K Ltd. applied for amendment of licences/leases, involving relocation of sites within harbour and increase in size of lease areas — Minister issued requested amendments, after undertaking consultations and receiving related materials — Appeal was brought concerning decision to approve amendment applications — Appeal dismissed — Appellants argued, unsuccessfully, that since there was no specific procedure for amendment set out in Act, regulations or specific licences and leases, then no such amendments could be permitted — It was not necessary that amendment procedure be detailed in legislation — Section 59(2) of Act required Minister to follow new licence application process where he concluded that amendment was substantial and may have detrimental impact on other uses of marine resources — This clearly contemplated that some amendments would go through process for new applications and some would not — It could not have been intent of legislature, in drafting s. 59(1), that all amendments must follow new application process — Minister’s decision did not violate s. 3 of Aquacul- ture License and Lease Regulations — Depth requirement in s. 3(1)(b) of Regu- lations was intended to be minimum depth and not definition of precise distance that must exist for every aquaculture lease site in province — It was not unreasonable for Minister to forego public hearing — This was not situation where Specter v. Nova Scotia 247

Minister made decision in absence of information and where public hearing may have been essential — Minister obtained significant amount of information, including submissions both pro and con from public — It was not unreasonable for Minister to obtain and review relevant information which was available concerning new sites. Cases considered by Michael J. Wood J.: Alliance Pipeline Ltd. v. Smith (2011), 328 D.L.R. (4th) 1, 56 C.E.L.R. (3d) 161, 16 Admin. L.R. (5th) 157, [2011] 1 S.C.R. 160, 2011 SCC 7, 2011 Car- swellNat 202, 2011 CarswellNat 203, 102 L.C.R. 1, 412 N.R. 66, [2011] S.C.J. No. 7, [2011] A.C.S. No. 7 (S.C.C.) — considered Brighton v. Nova Scotia (Minister of Agriculture & Fisheries) (2002), 2002 NSSC 160, 2002 CarswellNS 271, 206 N.S.R. (2d) 95, 645 A.P.R. 95, [2002] N.S.J. No. 298 (N.S. S.C.) — considered Elmsdale Landscaping Ltd. v. Nova Scotia (Minister of Environment) (2009), 2009 NSSC 358, 2009 CarswellNS 657, 91 C.L.R. (3d) 308, 901 A.P.R. 191, 284 N.S.R. (2d) 191, 47 C.E.L.R. (3d) 314 (N.S. S.C.) — followed Environmental Resource Centre v. Canada (Minister of Environment) (2001), 2001 FCT 1423, 2001 CarswellNat 2928, 2001 CarswellNat 3268, 2001 CFPI 1423, 214 F.T.R. 94, 45 C.E.L.R. (N.S.) 114, 40 Admin. L.R. (3d) 217, [2001] F.C.J. No. 1937 (Fed. T.D.) — considered Specter v. Nova Scotia (Minister of Fisheries & Aquaculture) (2011), 2011 NSSC 266, 2011 CarswellNS 452 (N.S. S.C.) — referred to Specter v. Nova Scotia (Minister of Fisheries & Aquaculture) (2011), 2011 NSSC 333, 2011 CarswellNS 598, 975 A.P.R. 142, 307 N.S.R. (2d) 142 (N.S. S.C.) — referred to Statutes considered: Canadian Environmental Assessment Act, S.C. 1992, c. 37 Generally — referred to Environment Act, S.N.S. 1994-95, c. 1 Generally — referred to Fisheries and Coastal Resources Act, S.N.S. 1996, c. 25 Generally — referred to Pt. III — referred to s. 2 — considered s. 6 — considered ss. 45-48 — referred to s. 47 — considered s. 47(a) — considered s. 48 — considered s. 48(c) — considered s. 51 — considered s. 51(2) — considered 248 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

s. 51(3)(b) — considered s. 52 — considered s. 58 — considered s. 59 — considered s. 59(1) — considered s. 59(2) — considered s. 119 — considered s. 120 — considered Navigable Waters Protection Act, R.S.C. 1985, c. N-22 Generally — referred to Regulations considered: Fisheries and Coastal Resources Act, S.N.S. 1996, c. 25 Aquaculture License and Lease Regulations, N.S. Reg. 15/2000 s. 3 — considered s. 3(1)(b) — considered Words and phrases considered: academy of science [This appeal concerned a Ministerial decision to approve applications for amendments to licences and leases related to finfish aquaculture operations.] It is not the function of this Court, sitting in appeal of the Minister’s decision, to review the scientific and technical evidence, and resolve any inconsistencies or ambiguities which might exist. To do so would turn this Court into an “academy of science” as that term has been used in other cases. Such an approach is inappropriate. It is the function of the Minister and his staff to review the scientific information and determine whether it supports the particular application. It is the role of this Court to assess that decision based on the standard of reasonableness and not to second guess the Minister’s interpretation of the evidence.

APPEAL from decision of Minister to approve applications for amendments to licences and leases related to finfish aquaculture operations.

Marc Dunning, for Appellants Darlene Willcott, for Respondent, Minister of Fisheries and Aquaculture William Moreira, Q.C., Ian Breneman, for Kelly Cove Salmon Ltd.

Michael J. Wood J.: Overview 1 Shelburne Harbour has been the location of finfish aquaculture operations for many years. Such operations are regulated by the Province of Nova Scotia through the regime created by the Fisheries and Coastal Specter v. Nova Scotia Michael J. Wood J. 249

Resources Act, S.N.S. 1996, c. 25 (the “Act”). The Minister responsible for the administration of the Act is the Minister of Fisheries and Aquacul- ture (the “Minister”). 2 In 2008, the respondent, Kelly Cove Salmon Ltd. (“Kelly Cove”) held licences and leases issued pursuant to the Act for the operation of three sites in Shelburne Harbour. These are identified as site numbers 0602, 0983 and 1192. The operations consisted of floating cage systems containing salmon and rainbow trout, which were being raised for commercial production. 3 In September, 2008, Kelly Cove applied to the Minister for an amendment of the licence/lease applicable to site 0602. The proposed amendment involved relocation of the site within Shelburne Harbour, as well as an increase in the size of the lease area. Applications for similar amendments were made by Kelly Cove in March, 2009 with respect to sites 0983 and 1192. In each case, the sites were to be relocated within Shelburne Harbour and the lease area increased. 4 Between the spring of 2009 and the spring of 2011, the Minister un- dertook consultations and received materials with respect to the amendment applications. In February, 2011, the federal Minister of Transport, Infrastructure and Communities issued an approval under the Navigable Waters Protection Act, R.S.C. 1985, c. N-22, for the installation of Kelly Cove’s aquacultural equipment at the new locations. 5 On March 9, 2011, the Minister issued the requested amendments to Kelly Cove authorizing the relocation of the three sites within Shelburne Harbour. 6 On June 13, 2011, Marian and Herschel Specter commenced this appeal pursuant to s. 119 of the Act in relation to the Minister’s decision to approve Kelly Cove’s amendment applications. 7 Kelly Cove was not initially named as a respondent to the appeal and they made a motion to this Court to be added as a party respondent. This was granted by decision of Rosinksi, J. (2011 NSSC 266 (N.S. S.C.)). 8 There were preliminary motions by the Minister and Kelly Cove to dismiss the appeal on the basis that it was filed out of time, and also that the appellants lacked the necessary standing. These motions were dismissed by decision of LeBlanc, J. (2011 NSSC 333 (N.S. S.C.)). 9 This decision deals with the merits of the Specters’ appeal. 250 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Legislative Framework 10 In considering this appeal from the Minister’s decision to grant the amendments, it is necessary to understand the legislative regime within which the decision was made. 11 The purpose of the Act is set out in s. 2, which provides as follows: Purpose of Act 2 The purpose of this Act is to (a) consolidate and revise the law respecting the fishery; (b) encourage, promote and implement programs that will sustain and improve the fishery, including aquaculture; (c) service, develop and optimize the harvesting and processing segments of the fishing and aquaculture industries for the bet- terment of coastal communities and the Province as a whole; (d) assist the aquaculture industry to increase production; (e) expand recreational and sport-fishing opportunities and ecotourism; (f) foster community involvement in the management of coastal resources; (g) provide training to enhance the skills and knowledge of par- ticipants in the fishery, including aquaculture; (h) increase the productivity and competitiveness of the processing sector by encouraging value-added processing and diversification. 12 The powers of the Minister are found in s. 6, which provides: Powers of Minister 6 The Minister, for the purpose of the administration and enforcement of this Act, may (a) establish and administer policies, programs and guidelines pertaining to the administrative development and protection of the fishery and coastal zone aquatic resources; (b) consult with and co-ordinate the work and efforts of other departments and agencies of the Province respecting any matter relating to the maintenance and development of fishery resources; (c) enter into agreements with the Government of Canada or the government of any other province on matters relating to the management or development of fishery resources; Specter v. Nova Scotia Michael J. Wood J. 251

(d) develop scientific databases, especially with respect to determining the impact of various geartypes on the fisheries environment and engage in consultations with the Government of Canada to ensure equitable access to fishery resources; (e) gather, compile, publish and disseminate information, including statistical data, relating to the maintenance and development of fishery resources; (f) establish and assist demonstration programs that are consistent with the intent of this Act; (g) conduct economic analyses to determine the costs and benefits of proposed alterations to traditional harvesting and processing of fisheries resources and aquaculture; (h) convene conferences and conduct seminars and educational programs relating to the development, management and protection of fisheries resources; (i) give financial assistance to any person, group, society or association for purposes related to the promotion and enhance- ment of the fishery; (j) establish fees for the provision, registration or filing of any information, documents, returns and reports, any application for, processing and issuance of an approval, certificate, licence or lease, any inspection or investigation and any services or material provided in the course of the administration of this Act; (k) prescribe forms for the purpose of this Act. 13 Part III of the Act is entitled, Training, Technology and Development, and sets out broad authority on the part of the Minister to undertake projects and establish programs for the development of fishery resources and the aquaculture industry. 14 The procedure for the issuance of aquaculture licences and leases is set out in ss. 45 to 48 of the Act: Application for licence 45 (1) A person may apply to the Minister, in the manner prescribed by the Minister, for an aquaculture licence. (2) Where the site at which aquacultural activities are proposed to be carried on is on Crown land, the applicant shall, in addition to applying for a licence pursuant to subsection (1), apply to the Minister, in the manner prescribed by the Minister, for an aquaculture lease. 252 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

(3) Where the site at which aquacultural activities are proposed to be carried on is on private land, the Minister shall only issue an aquaculture licence to the owner or lessee of that land. Contents of application 46 (1) An application for an aquaculture licence or aquaculture lease shall be accompanied by the information stipulated by the Minister. (2) The Minister may require an applicant for an aquaculture licence or aquaculture lease to submit any additional information the Minister considers necessary. (3) Where the Minister considers an application to be incomplete, the application shall not be processed until the information required is submitted. Prerequisites to making a decision 47 Before making a decision with respect to the application, the Minister (a) shall consult with (i) the Department of Agriculture and Marketing, the De- partment of the Environment, the Department of Housing and Municipal Affairs and the Department of Natural Resources, and (ii) any boards, agencies and commissions as may be prescribed, and (b) may refer the application to a private sector, regional aquaculture development advisory committee for comment and recommendation. Issue of licences 48 After completing the consultation referred to in clause 47(a) and after receiving a recommendation, if any, from a regional aquaculture development advisory committee pursuant to clause 47(b), the Min- ister may (a) issue the aquaculture licence or aquaculture lease; (b) issue the aquaculture licence or aquaculture lease, subject to any conditions the Minister deems appropriate; (c) refer the application to a public hearing; or (d) reject the application for the aquaculture licence or aquaculture lease. Specter v. Nova Scotia Michael J. Wood J. 253

15 Sections 51 and 52 of the Act set out the requirements for aquaculture licences and leases. In both cases, they are granted for a specific geo- graphic area and species. They are also to incorporate any necessary permit, approval, licence or permission which might be required under the laws of Nova Scotia or Canada. 16 The amendment of licences and leases is referred to in the following provisions: 51 (2) An aquaculture licence may be varied or amended by the Min- ister at any time as may be reasonably necessary to carry out the purposes of this Part...... Amendment of licence or lease 59 (1) An aquaculture licence or aquaculture lease may be amended by the Minister or upon the application of the holder in accordance with this Part, the regulations, the licence or the lease. (2) Where, in the opinion of the Minister, the proposed amendment is substantial and may have a detrimental impact on other uses of marine resources, the Minister shall follow the procedure set forth for a new licence application. 17 The appeal provisions of the Act are found in ss. 119 and 120: Appeal to Supreme Court 119 (1) A person aggrieved by a decision of the Minister may, within thirty days of the decision, appeal on a question of law or on a question of fact, or on a question of law and fact, to a judge of the Supreme Court of Nova Scotia and the decision of that court is final and binding on the Minister and the appellant, and the Minister and the appellant shall take such action as may be necessary to implement the decision. (2) The decision of the court pursuant to subsection (1) is final and there is no further appeal to the Nova Scotia Court of Appeal. Duty to dismiss appeal 120 An appeal in connection with any matter under this Act shall be dismissed by the Supreme Court of Nova Scotia if the sole ground for relief established on the appeal is a defect in form or a technical irregularity. 254 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Facts 18 The Record filed by the Minister is extensive, consisting of more than 2,000 pages of materials relating to these sites and the amendment application process. I will review and summarize the relevant facts which I have gleaned from those materials. 19 The three sites in question have been operating as aquaculture facilities in Shelburne Harbour for many years - site 0602 since at least 1991, site 0983 since at least 1996 and site 1192 since at least 2006. Kelly Cove is the current operator and holds the licences and leases with respect to these locations. 20 In 2008 and 2009, Kelly Cove applied to the Minister for an amendment of the existing licences and leases. The amendments consisted of relocation of the sites within Shelburne Harbour, as well as an increase in size of the leased/licenced areas. The purpose of the application was described in the Environmental Impact Assessment Report prepared on behalf of Kelly Cove by Sweeney International Management Corp. in March, 2009. That report states (at p. 842 of the Record) as follows: KCS proposes to relocate these existing sites in order to improve the environmental and economic sustainability of their production of At- lantic salmon (Salmo salar) in Shelburne Harbour, as well as to increase the overall production of their Nova Scotia operations. It is also the intention of KCS to increase production of their Nova Scotia operations. The two remaining sites in the area, Site #003 and Site #1193, located to the north of Boston Rock and Hartz Point, will have leases handed back over to the Nova Scotia government. 21 As this passage indicates, Kelly Cove was surrendering two other site locations as part of the amendment process. 22 The Minister had a number of reports that were prepared and submitted on behalf of Kelly Cove, including the following: (i) Environmental Management Plan prepared by Sweeney Interna- tional Management Corp. and dated February 20, 2008. (ii) Environmental Impact Assessment prepared by Sweeney Interna- tional Management Corp. and dated March, 2009. (iii) Addendum to Environmental Impact Assessment prepared by Sweeney International Management Corp. and dated August 25, 2009. Specter v. Nova Scotia Michael J. Wood J. 255

(iv) 2009 Level II EMP Report and Mitigation Plan prepared by Swee- ney International Management Corp. and dated September 30, 2009. (v) Stocking Plan Justification submitted by Sweeney International Management Corp. and dated January 26, 2010. (vi) 2010 EMP Report for Site 0602 prepared by Sweeney Interna- tional Management Corp. and SIMCorp Marine Environmental Inc. and dated July 26, 2010. (vii) 2010 EMP Report for Site 0983 prepared by Sweeney Interna- tional Management Corp. and SIMCorp Marine Environmental Inc. and dated July 28, 2010. (viii) External Audit for Site 0602 prepared by Sweeney International Management Corp. and SIMCorp Marine Environmental Inc. and dated December 29, 2010. (ix) Addendum to Mitigation Plans for Sandy Point and Boston Rock (site 0602 and 0983) prepared by Sweeney International Manage- ment Corp. and SIMCorp Marine Environmental Inc. and dated January 26, 2011. 23 The Environmental Monitoring Program (EMP) reports arise out of the Nova Scotia Aquaculture Environmental Monitoring Program established by the Province of Nova Scotia. The purpose of the Monitoring Program is to assess the interaction between the aquaculture operation and the surrounding environment. There are three levels of potential monitoring which might be required. Level II Monitoring is described in the Environmental Monitoring Program Framework document (p. 1351 of the Record) as follows: Level II - For sites that are considered Hypoxic B or Anoxic, additional sampling is required to better delineate the affected area and more effectively defining the zone of influence. 24 The 2010 EMP Report for the existing site 0983 concluded that some of the data fell within the Hypoxic B classification. The Environmental Monitoring Program Framework document describes Hypoxic B as follows (p. 1354 of the Record): Hypoxic B These sites are likely causing adverse environmental effects to the marine sediments under and adjacent to some cages. The site operator will conduct Level II monitoring and, in addition to following operational BMP’s, the site operator will implement addi- 256 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

tional/enhanced BMP’s. A mitigation plan must be submitted to NSDFA for approval and the site operator must provide a strong ra- tionale for maintaining or increasing production levels. 25 The 2010 EMP Report for the existing site 0602 stated that the data from the test results would cause the site to fall within the Hypoxic A classification. This is described in the Framework document (p. 1354 of the Record) as follows: Hypoxic A These sites are likely causing adverse environmental effects to the marine sediments under and adjacent to some cage structure. The site operator must adjust appropriate BMP’s to improve environmental performance and follow Level I monitoring next sampling season. 26 The External Audit for site 0602 indicates that it was prepared at the request of the Nova Scotia Department of Fisheries and Aquaculture as a result of the site being classified as Hypoxic A. The objectives of the audit were described as follows (p. 1279 of the Record): 1.1 Audit Objectives The objective of this audit was to complete an external audit of the operation of Aquaculture site #0602 for conformity with the requirements of the NSDFA Environmental Monitoring Program and the Associated Best Management Practices contained within. 27 The outcome of the audit was as follows (p. 1292 of the Record): 3.0 Audit Conclusions and Observations The activities of KCS, with respect to their operation of site #0602 and their general operations, are compliant with the audit criteria. A site visit was conducted and confirmed the site’s adherence to sound management practices and conformity with the audit criteria. The audit findings, limited to the noted opportunities for improvement, are based on interviews, the site visit and documentation review. Within the scope of the criteria used for this external audit, evidence provided indicated that management practices are not likely the cause of the poor environmental rating. It is the auditors understanding the company has applied for a boundary amendment to aid in the mitigation of the environmental issue at this site. 28 There was also an External Audit conducted for site 0983 in Decem- ber of 2010. The conclusion of that audit (p. 1342 of the Record) was essentially identical to that for site 0602, including the reference to an application for a boundary amendment to aid in mitigation of environmental issues at the site. Specter v. Nova Scotia Michael J. Wood J. 257

29 The Addendum to Mitigation Plans for sites 0602 and 0983 was prepared at the request of the Nova Scotia Department of Fisheries and Aquaculture. The addendum includes the following comments with respect to the potential impact of the proposed boundary amendment on the environmental issues at the two sites (pp. 1296 and 1300 of the Record): 2.1 Site Configuration [For Site 0602] There are proposed changes to the site configuration of site #602. These changes are dependant on a boundary amendment, which is in the final stages of the federal review process. Assuming acceptance of the boundary amendment, the boundaries of #0602 will be shifted to the north. This will place the cages over an entirely new section of seafloor and leave the currently occupied space fallow (Fig. 1). By leaving the previously occupied area fallow, it should be afforded an opportunity to recover from the impacts of previous years’ farming activities. It is generally accepted that the major effects of aquaculture sites on benthic conditions are limited to within 25 - 50 m of the cage array. The nearest cages in the new cage configuration will be approximately 130 m away from the historically high sulphide areas that were noted during EMP surveys and thus should not have a great influence on the fallowed areas. The new cages that will be installed at #0602 will be described by 3 sections of steel cages, each of a 2×4 arrangement. Each section of cages will be separated by approximately 155 m, effectively isolating each section from the others. Additionally, the groups of cages will be oriented with the longest sides of the cage arrays running perpen- dicular to the general flow of current (Fig. 1). This should help to spread the settling waste products from the farm over the widest area possible and minimize benthic impacts...... 3.1 Site Configuration [For Site 0983] There are proposed changed (sic) to the site configuration of site #0983. These changes are dependent on a boundary amendment, which is in the final stages of the federal review process. Assuming acceptance of the boundary amendment, the boundaries of #0983 will be shifted to the east. This will place the cages over an entirely new section of seafloor and leave the currently occupied space fallow (Fig. 2). By leaving the previously occupied area fallow, it should be afforded an opportunity to recover from the impacts of previous years’ farming activities. While the shift in position of the cage array will only place the new cages approximately 35 m away from the previously high sulphide locations, it should allow the impacted 258 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

seafloor to lie fallow with little influence from the new cages since the major effects of aquaculture sites on benthic conditions are limited to within 25 - 50 m of the cage array (Mayor et al. 2010). The new cages that will be installed at #0983 will be described by 1 section of steel cages of a 2×8 arrangement. The stocking density and biomass for Boston Rock will be less than in previous production cycles. With a smaller biomass and a new location for the cages, KCS feels that the environmental conditions of the benthos will be better managed. 30 The relocation of the sites within Shelburne Harbour required an approval under the Navigable Waters Protection Act. In February, 2011, the Minister of Transport, Infrastructure and Communities issued such an approval for each of those sites, copies of which were forwarded to the Minister. Attached to each approval were specific details of the proposed relocation and particulars of the equipment to be installed. Also attached was an Environmental Assessment Screening Report prepared pursuant to the Canadian Environmental Assessment Act and dated December, 2010. The report identified a number of potential environmental effects and, where applicable, recommended mitigation measures. The report concluded as follows (p. 157 of the Record): After reviewing the input received from various sources, Transport Canada has concluded that all environmental concerns relevant to the scope of the project have been satisfactorily addressed in the EA. 31 As part of its process, Transport Canada requested a further review of the application by Fisheries and Oceans Canada (“DFO”) which resulted in a letter dated November 18, 2010 from DFO. DFO concluded that moving the sites, in conjunction with mitigation measures set out in the Kelly Cove plan, and additional mitigation measures identified by DFO, would be an improvement with respect to the environmental impact of the operations (p. 180 of the Record). 32 The Minister sought input from a variety of sources with respect to the amendment applications. A number of memoranda were sent to the Aquaculture Review Network, although it is not completely clear who was included in that group. At the least, it appears to include various Federal and Provincial Government agencies. A number of such agencies responded with comments concerning the proposed amendments. 33 The Record also includes comments and submissions from the public, some of which are in favour of the proposed amendments and some which are not. In some cases, there were extended communications between the public and staff of the Department of Fisheries and Aquacul- Specter v. Nova Scotia Michael J. Wood J. 259

ture. Typically, this was in the form of email exchanges. The appellants were particularly active in this process and the Record discloses that this included the following: (i) On July 19, 2010, they made submissions to Transport Canada on behalf of the “Friends of Shelburne Harbour”. (p. 1728 of the Record) (ii) They prepared a series of letters on the topic of sustainable aquaculture in Shelburne Harbour, which were sent to the members of the Shelburne community and posted on the website which they maintained for the Friends of Shelburne Harbour. Copies were also sent to Department staff and the Minister. (For example see p. 1831 of the Record) (iii) They prepared and circulated various discussion papers on the monitoring of aquaculture sites in Nova Scotia and, in particular, Shelburne Harbour (pp. 1833 and 1851 of the Record). (iv) In December, 2009, they provided a detailed document commenting on Kelly Cove’s Environmental Impact Assessment for Shel- burne Harbour and made recommendations for further amendments to that document (p. 1745 of the Record). (v) In July, 2010, they sent a letter to members of the Shelburne community providing an analysis of the three proposed sites using a DFO site screening tool and concluded that approval could not be justified. They recommended that members of the public should make submissions directly to Transport Canada (p. 1716 of the Record). 34 In February, 2011, the Ecology Action Centre in Halifax sent the Minister detailed comments concerning the November, 2010 DFO letter prepared as part of the federal environmental review process. The EAC letter came to the following conclusions with respect to the DFO advice (p. 1923 of the Record): 1.3 Conclusion: Reject DFO Advice After a careful review, detailed in the following appendices, it was concluded that there are numerous and serious shortcomings in the DFO analyses of these three new proposed sites in the inner portion of Shelburne Harbour, Nova Scotia. The DFO advice defies common sense, is not supported by scientific analysis, and is inconsistent with DFO’s own aquaculture siting guidance. If this DFO advice is accepted, the proponent would be rewarded by being given another op- 260 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

portunity to create three new and larger dead zones, one of which would be right in front of a residential area. 35 After the initial submission of the applications, there were a number of changes to the boundary locations, some of which were made by Kelly Cove in response to concerns raised by shore front property owners (see pp. 672 and 682 of the Record). 36 In March, 2011, on the recommendation of staff, the Minister approved the amendments to the size and boundaries of the three sites.

Issues 37 The notice of appeal filed on June 13, 2011 alleged that the Minister’s decision to grant the leases and licences was unreasonable for six reasons. At the conclusions of submissions, Mr. Dunning, on behalf of the appellants, indicated that only the following reasons were in issue: (a) The Minister erroneously treated the areas for the Licences and Leases in question as amendments to existing Licences and Leases rather than new Licences and Leases. (b) The Minister failed to follow the proper procedure for a new Licence and/or Lease pursuant to the Fisheries and Coastal Resources Act. (c) The Minister’s decision violated section 3 of the Aquaculture License and Lease Regulations made pursuant to the Fisher- ies and Coastal Resources Act...... (f) The Minister failed to engage in a sufficient public consultation process. 38 In their submissions, the appellants addressed grounds of appeal (a) and (b) together as they are obviously inter-related. As a result, the issues on this appeal can be addressed under the following headings: 1. Did the Minister fail to follow the proper procedure in considering the Kelly Cove applications? 2. Did the Minister’s decision violate s. 3 of the Aquaculture Licence and Lease Regulations? 3. Did the Minister fail to engage in a sufficient public consultation process? In addition to these specific issues I will consider whether the Minister’s decision was generally reasonable in all of the circumstances. Specter v. Nova Scotia Michael J. Wood J. 261

Analysis Standard of Review 39 The parties are in agreement that the Minister’s decision to issue or amend licences and leases under the Act is reviewable based upon a standard of reasonableness. That was the conclusion of MacDonald, A.C.J. (as he then was) in Brighton v. Nova Scotia (Minister of Agriculture & Fisheries), 2002 NSSC 160 (N.S. S.C.), which involved an appeal pursuant to s. 119 of the Act. 40 The appellant does argue that some aspects of the Minister’s decision involve the interpretation of the Act, (such as whether it was necessary to follow the procedure for new licences and leases) and those aspects of the decision should be reviewed on a standard of correctness as they involve questions of law. 41 Questions of statutory interpretation do not automatically attract a standard of correctness. It is important to consider the nature of the legislation and the extent to which the decision involves both factual and policy determinations. A useful overview of the categorization of issues and the related standard of review is found in the following passage from Alliance Pipeline Ltd. v. Smith, 2011 SCC 7 (S.C.C.): [26] Under Dunsmuir, the identified categories are subject to review for either correctness or reasonableness. The standard of correctness governs: (1) a constitutional issue; (2) a question of “general law ‘that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise’” (Dunsmuir, at para. 60 citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 62); (3) the drawing of jurisdictional lines between two or more competing specialized tribunals; and (4) a “true question of jurisdiction or vires” (paras. 58-61). On the other hand, reasonableness is normally the governing standard where the question: (1) relates to the interpretation of the tribunal’s enabling (or “home”) statute or “statutes closely connected to its function, with which it will have particular familiarity” (para. 54); (2) raises issues of fact, discretion or policy; or (3) involves inextricably intertwined legal and factual issues (paras. 51 and 53-54). 42 A review of the Act indicates that the Minister has broad powers to promote and regulate the aquaculture industry. The purposes of the Act are set out in s. 2, which demonstrates the legislative intent to have the Minister promote the aquaculture industry, while at the same time bal- ancing other interests, such as the expansion of recreational, sport fishing and ecotourism opportunities. 262 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

43 In Elmsdale Landscaping Ltd. v. Nova Scotia (Minister of Environ- ment), 2009 NSSC 358 (N.S. S.C.), Duncan, J. applied a reasonableness standard of review to a statutory appeal of a Minister’s decision to approve the construction and operation of a quarry, pursuant to the Envi- ronment Act and supporting regulations. The Court concluded that the Minister’s decision involved questions of mixed fact and law, as well as the exercise of discretion and application of policy. I find this characterization applies equally to the Minister’s decision which is under review in this proceeding. 44 I am satisfied that the entirety of the Minister’s decision-making process is subject to review based upon a reasonableness standard. Although the Minister was required to interpret and apply statutory provisions, that process involved factual determinations as well as legislative analysis. In addition, the Act is integral to the Minister’s role of regulating and promoting aquaculture and fisheries. These are areas in which the Minister has particular familiarity and expertise, and so his interpretation of that legislation ought to be given deference.

1. Did the Minister fail to follow the proper procedure in considering the Kelly Cove applications? 45 The essential position of the appellants is that the applications by Kelly Cove ought to have been treated as new applications and not amendments, which would have triggered the provisions of ss. 47 and 48 of the Act. They make this submission on two alternative grounds. First, that there is no authority in the Act for Kelly Cove to apply for an amendment of the licences and leases. Alternatively, s. 59(2) requires the Minister to follow the procedure for a new licence application. 46 The Act refers to amendments in several places. Section 51(2) states: 51 (2) An aquaculture licence may be varied or amended by the Min- ister at any time as may be reasonably necessary to carry out the purposes of this Part. 47 In addition, s. 59(1) provides: Amendment of licence or lease 59 (1) An aquaculture licence or aquaculture lease may be amended by the Minister or upon the application of the holder in accordance with this Part, the regulations, the licence or the lease. 48 The appellants argue that since there is no specific procedure for amendment set out in the Act, regulations or the specific licences and leases, then no such amendments can be permitted. Essentially, they say Specter v. Nova Scotia Michael J. Wood J. 263

that s. 59(1) contemplates further legislative or regulatory enactments or the incorporation of amending authority in the licence and lease documents. In my view, that is not a proper interpretation of the Act. I do not believe that it is necessary that the amendment procedure be detailed in the legislation. Amendments can range from minor adjustments to substantial alterations, and the Minister should be given discretion to decide what procedure he needs to follow in order to carry out his statutory mandate. 49 Section 59(2) requires the Minister to follow the new licence application process where he concludes that the amendment is “substantial and may have a detrimental impact on other uses of marine resources”. This clearly contemplates that some amendments will go through the process for new applications and some will not. The appellants’ argument is that all amendments must follow the new application process, which would suggest that s. 59(2) is meaningless. That cannot have been the intent of the legislature in drafting s. 59(1). 50 The licence/lease documents themselves are structured as agreements between Her Majesty the Queen and Kelly Cove. They are described as “indentures” and contain recitals, as well as mutual promises. They are signed by the Minister on behalf of Her Majesty the Queen and the presi- dent of Kelly Cove. Agreements of this nature can always be amended with the mutual concurrence of both parties, whether or not a specific clause to that effect is included in the document. There is no reason why that principle should not apply to the agreements in this case unless there is a provision in the Act which would direct otherwise. As noted above, s. 59(2) provides some restrictions on the Minister’s discretion to negotiate amendments, but only in the circumstances described in that subsection. 51 The appellants also argue that the Kelly Cove applications fall within the scope of s. 59(2), and therefore ought to have been dealt with in accordance with the new application procedures set out in ss. 47 and 48. This is triggered where the Minister forms the opinion that the proposed amendment is both substantial and may have a detrimental impact on other uses of marine resources. With respect to the question as to whether the amendments are substantial, the appellants say that they involve moving the aquaculture facilities to brand new locations. The specific changes are set out in the various plans on file in the Record. 52 It is obvious that the new locations are in relatively close proximity to the existing leases and licences. Counsel for the appellants, in argument, estimated that the boundaries between the new and old locations were 264 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

generally less than a hundred metres apart at their closest points. The size of the area covered by the licences and leases also increased. With sites 0983 and 1192, the area was essentially doubled. For 0602, the new area was slightly more than three times the size of the existing site. 53 With respect to the second requirement under s. 59(2), the appellants point out that the existing sites had significant environmental impacts as demonstrated by the results of the 2010 EMP’s. In addition, they note that the Environmental Impact Assessment filed on behalf of Kelly Cove in support of the applications shows significant environmental impact from the operations if no mitigation measures are adopted. Similar conclusions were reached as part of the Transport Canada environmental review. 54 In response, the Minister points out that s. 59(2) gives the Minister a very broad discretion by use of the phrase “in the opinion of”. That, combined with the reasonableness standard of review, should give rise to a high degree of deference to any determination by the Minister that the new licence application procedures need not be followed. 55 It is not completely clear from the Record what determination, if any, the Minister made under s. 59(2). It would appear that the Minister and his staff consulted relatively broadly with respect to the applications, which is the primary requirement under s. 47(a). The one exception appears to be the failure to consult with the Department of Housing and Municipal Affairs which no longer exists under that name. The appellants rely on correspondence from the Minister to a member of the public dated March 14, 2011 (p. 2022 of the Record), the substance of which was as follows: Thank you for your correspondence of March 9th, 2011 regarding the amendments to finfish sites in Shelburne Harbour. I certainly do re- member our talk about Sherm Embree and O Vacations which it is a nice play on words. Members of my department’s Aquaculture Division have worked with the proponent, Fisheries and Oceans Canada, Transport Canada and several other agencies in the review of these files. The process to amend the lease Nos. 0602, 0983 and 1192 has now concluded and the amendments have been approved. Public engagement by our department was not deemed necessary as these were amendments to pre-existing aquaculture sites. However, I am confident that the extensive process followed has taken the necessary steps to reach a proper conclusion. Specter v. Nova Scotia Michael J. Wood J. 265

56 The appellants submit that the last paragraph indicates that the Min- ister had determined that this was an amendment application which would exclude the new application procedures under ss. 47 and 48, including the option of a public hearing. While that is one possible interpretation of that correspondence, I would note that on March 25, 2009, the Manager of Aquaculture Policy and Licencing wrote to Kelly Cove advising them of the procedure to be followed with respect to their applications (p. 1617 of the Record). That correspondence indicated that among other things the following steps would take place: • Complete an initial review and determine if the application should proceed. • If proceeding, seek input from relevant network agencies, including other Provincial and Federal regulatory bodies. • Determine whether there is to be public engagement, and if so, in what format. 57 This letter outlines a procedure that very much tracks the new application process set out in ss. 47 and 48 of the Act. 58 In addition, the Minister wrote to the appellants on January 19, 2011 (p. 1693 of the Record) as follows: Thank you for your recent e-mail concerning my response to Ms. Tudor. You are correct that the amendments to the inner Shelburne Harbour sites are in the latter stages of review by our department and by federal agencies. I understand the Canadian Environmental Assessment Act review has been completed for the inner Harbour amendments and that the Navi- gable Waters Protection Program of Transport Canada will soon make a decision regarding their authorization. Once all federal input has been received, I will consult with my staff to determine the appropriate next steps pertaining to these amendments. Public engagement may take place for site amendments but such decisions are made on a case by case basis. 59 On February 1, 2011, the Minister again wrote to the appellants and stated the following (p. 1695 of the Record): Thank you for bringing your concerns over the Shelburne Harbour aquaculture sites to my attention. As you know, aquaculture site applications go through a network of agencies responsible for aquaculture development in marine waters. My department coordinates the information from the other government agencies and my office leases 266 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

and licenses the aquaculture operations. I have not heard from all agencies, with their recommendations for the proposed site amendments. Therefore, I have not made a final decision on the aquaculture sites. All site approvals are posted on the department website, www.gov.ns.ca/fish/aquaculture for everyone to see. You are en- couraged to check the website regularly to become informed of any decisions that may be of interest to you. At this time, no decision has been made with reference to a public hearing for the amendments. 60 My interpretation of the documents is that the Minister was following a process which was very similar, if not identical, to that adopted for new applications. Section 48(c) of the Act makes a public hearing discretionary even for new applications. 61 If the appellants are correct and the Minister was required to follow the new application procedures in ss. 47 and 48, the only deficiencies identified by the appellants are the failure to consult with the Department of Housing and Municipal Affairs and the failure to hold a public hearing. The latter issue will be discussed further when addressing the question of the sufficiency of the public consultation. 62 When the Minister receives an application for an amendment of a licence or a lease, he must consider what information will be needed in order to assess the application. Part of that analysis will be to determine the nature and the extent of the consultation to be undertaken. The Min- ister should consider the questions raised by s. 59(2) and whether the nature of the application is such that the more fulsome procedures for new applications should be followed. 63 In this case, we do not know the Minister’s thought process as he did not give reasons for the procedure which he chose to follow, nor was he required to do so. As noted above, there are suggestions in the materials that he may have concluded that the application was not sufficiently substantial to merit the full ss. 48 and 47 review. On the other hand, there are comments in the documents which indicate that this review was, in fact, followed, except for the consultation with the Department of Hous- ing and Municipal Affairs. 64 If it was clear that the Minister had formed the opinion that the requested amendments were not substantial within the meaning of s. 59(2), I would defer to that decision on the basis that it fell within the reasonable range of options available in the circumstances. These amendments were to long standing leases and licences involving relocation to new Specter v. Nova Scotia Michael J. Wood J. 267

sites in the immediate vicinity. Although there was an increase in area, whether this is significant would involve a consideration of the Shel- burne Harbour area and any impacted uses, such as recreational, other fisheries and ecotourism. Those are matters clearly within the expertise of the Minister and his Department. 65 In conclusion, if the appellants are correct and the Minister made a determination that he was not required to follow the new application procedures in light of s. 59(2), I am not prepared to conclude that such a decision was unreasonable in all of the circumstances.

1. Did the Minister’s decision violate s. 3 of the Aquaculture Licence and Lease Regulations? 66 This issue was addressed in the appellants’ written submissions, but not expanded upon in oral argument. It relies on s. 3 of the Aquaculture Licence and Lease Regulations which provides: Location and marking 3 (1) Marine aquaculture lease sites shall (a) be located 25 m from the mean low water level; and (b) have a water depth of 2 m on the shoreward boundary at low tide. (2) Despite subsection (1), the Minister may issue an aquaculture lease for a marine area up to the highwater mark if in the Minister’s opinion the area is required for the aquaculture undertaking. (3) Despite subsection (1), the Minister may issue an aquaculture lease for the bottom culture of mollusks in respect of any area heretofore leased for such purpose by the Government of Canada according to the metes and bounds description used in the licence or lease issued by the Government of Canada. 67 The appellants argue that the use of the word “shall” means that the lease must have a water depth of two metres on the shoreward side of the boundary at low tide, and that the site plans attached to the application documents indicate a minimum water depth of five metres at that point, and that this represents a violation of the Regulation. 68 It is clear that the depth requirement in s. 3(1)(b) of the Regulations is intended to be a minimum depth and not the definition of a precise distance that must exist for every aquaculture lease site in the Province. I find no merit to this ground of appeal. 268 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

2. Did the Minister fail to engage in a sufficient public consultation process? 69 Assuming that the process for new licence and lease applications is applicable, s. 48(c) of the Act gives the Minister discretion as to whether to refer the application to a public hearing. The appellants agree that such a decision is only reviewable if it is unreasonable in the circumstances. 70 The Record indicates that the Minister, on the recommendation of staff, made the decision that a public hearing was not required. This determination was made some time after February 1, 2011, which was essentially at the end of the application review process. By the time the decision was made, the Minister had the benefit of the following: • The results of the Aquaculture Network consultation. • The results of the federal review under the Navigable Waters Pro- tection Act, including copies of written submissions from the appellants and other members of the public. • Significant correspondence and position papers from the appellants and other members of the public. • The critique of the DFO opinion from the Ecology Action Centre. • Correspondence from the Mayor of Shelburne in support of the amendment applications. • The various technical reports and assessments filed on behalf of Kelly Cove. 71 In his letter of March 14, 2011 (p. 2022 of the Record), which was written after the decision was made to grant the amendments, the Min- ister made the following comments: Public engagement by our department was not deemed necessary as these were amendments to pre-existing aquaculture sites. However, I am confident that the extensive process followed has taken the necessary steps to reach a proper conclusion. [Emphasis added] 72 The highlighted sentence indicates that the Minister was satisfied that the nature and extent of the application review process, which covered a period of two years, was sufficient in order for him to make a decision. This is not a situation where a Minister made a decision in the absence of information and where a public hearing may have been essential. The Record discloses that the Minister obtained a significant amount of information, including submissions both pro and con from the public. In these Specter v. Nova Scotia Michael J. Wood J. 269

circumstances, I cannot conclude that it was unreasonable for the Min- ister to forego a public hearing.

General Review of the Minister’s Decision 73 A decision such as that made by the Minister in this case has a number of components. There are questions of procedure, sufficiency of information, degree of consultation and, ultimately, whether to grant the application. In this case, the decision making process spanned a period of two years from the time of the initial applications. The appellants have invited the Court to review some specific complaints about the Minister’s decision to grant the amendments, and these have been addressed above. 74 The appellants also argue that the Minister’s decision was unreasonable because he failed to consider relevant evidence and say that there was no evidentiary foundation which would allow the Minister to rely on the federal review process and the mitigation measures contained therein. Unlike the specific grounds of appeal already addressed, these arguments go to whether the Minister’s overall decision was reasonable. 75 The relevant evidence which the appellants say the Minister failed to consider is essentially the Ecology Action Centre letter of February 17, 2011 providing a critique of the DFO letter of November 18, 2010. There is nothing in the Record to say that the Minister did not review and consider the Ecology Action Centre letter. It was specifically sent to the Minister’s attention by the Ecology Action Centre and it is a fair pre- sumption that he reviewed and considered it. The argument of the appellants is that if he had considered this information, the Minister would have refused the amendment applications. I do not believe that that is necessarily a logical conclusion. It is equally probable that the Minister considered all of the other technical information before him and concluded that this material was sufficient to justify the granting of the applications. 76 In matters such as this, it is not reasonable to expect that the Minister issue a written decision outlining what information he considered and why. The proper approach is summarized in the following passage from Elmsdale Landscaping Limited, supra: [56] It is not fatal to the decision that the Minister failed to specifically reference the additional information of amenities that was put before him. In my view, the question falls to a determination of whether, based on the information available to the Minister, his decision was reasonable. 270 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

77 It is not the function of this Court, sitting in appeal of the Minister’s decision, to review the scientific and technical evidence, and resolve any inconsistencies or ambiguities which might exist. To do so would turn this Court into an “academy of science” as that term has been used in other cases. Such an approach is inappropriate. It is the function of the Minister and his staff to review the scientific information and determine whether it supports the particular application. It is the role of this Court to assess that decision based on the standard of reasonableness and not to second guess the Minister’s interpretation of the evidence. 78 The appellants argue that there was no evidentiary foundation for the Minister’s decision to rely on the materials generated by the federal review. They say that it was not reasonable for the Minister to rely on documents that were prepared for a different purpose, and that the Minister was obliged to carry out his own independent review of the information and did not do so. They also say that it was unreasonable for the Minister to rely on mitigation measures identified and imposed through the federal approval process. 79 There is nothing inherently unreasonable about the Minister collect- ing information from a variety of sources, assessing it and making a decision. In fact, s. 47 of the Act contemplates consultation with various government departments, boards, agencies and commissions, as well as the private sector. Surely, it was contemplated by the Legislature that the Minister could accept and consider information obtained through this process without independent verification. In the present case, the fact that an environmental assessment was carried out as part of the Navigable Waters Protection Act approval does not make the information inherently unreliable. It cannot be said that it was unreasonable for the Minister to obtain and review relevant information which was available concerning the new sites. 80 The appellants claim that it was unreasonable for the Minister to rely on the mitigation measures set out in the federal environmental review and DFO’s letter of November 18, 2010. In support of this, they cite the Federal Court decision in Environmental Resource Centre v. Canada (Minister of Environment), 2001 FCT 1423 (Fed. T.D.). In that case, there was a statutory obligation under the Canadian Environmental As- sessment Act to consider measures that would mitigate any significant adverse environmental effects of the project under consideration. The measures in question were found in a Regional Sustainable Development Specter v. Nova Scotia Michael J. Wood J. 271

Strategy. The Court’s comments relied upon by the appellants are found in paras. 154-156: [154] In my opinion, this opinion highlights the problem with reliance by the MOE upon RSDS, as a mitigation measure, when making her decision. She has no legislative control over that process in the event of its abandonment. In my view, reliance by the MOE upon provincial regulatory powers and initiatives, including the RSDS and industry based initiatives, including the CEEMI, which are beyond enforcement or control by the federal authorities, amounts to a misin- terpretation of her duty to consider mitigation factors when she reviewed the CSR. She erred in her interpretation of the Act. [155] However, if I am in error in this conclusion, I will also consider her decision as an exercise of ministerial discretion. Viewed from that perspective, the question is whether the decision is reasonable. [156] I am not satisfied that reliance upon processes over which she has no control constitutes a reasonable exercise of authority or discretion. 81 There are a number of distinguishing circumstances in the present case. First, the Minister had no statutory obligation to consider mitigation measures, and we do not know the extent to which the Minister, in fact, did so. The Record indicates that there were existing environmental concerns with the sites, and the purpose of the amendment was to mitigate those impacts. Whether this would be the result, is simply one of the factors that the Minister must weigh in considering the amendment applications. 82 One of the concerns of the Court in Environmental Resource Centre was that the Minister had no control over the provincial requirements which were presented as mitigation measures. In the present case, the licences between the Minister and Kelly Cove include the following provisions: 4. Any undertakings required by Schedule “B” to this licence, and any permits, protocols, approvals, licences or permissions which may be required under the laws of the Province or Canada form part of this Agreement, and the Licensee hereby agrees to comply with any conditions or limitations contained in these requirements unless compliance for licensing purposes is expressly waived by the Minister...... 8. The Licensee agrees to comply with any environmental monitoring program determined by the Minister. This data shall be submitted to 272 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

the Minister or his designate for purposes of site evaluation. Failure to comply will be grounds for immediate revocation of the licence. 9. The Licensee shall submit to the Minister, if requested, a report stating such information as the Minister requires concerning the Li- censee’s use and the productivity of the licence area...... 17. If the Licensee is in breach of the terms of this licence and such breach is not corrected within the time period set out in the notice from the Minister, the Minister may cancel this licence without further notice or compensation. 83 In addition, s. 51(3)(b) of the Act provides as follows: 51 (3) An aquaculture licence may be terminated by the Minister at any time if ..... (b) the holder of the licence does not show due diligence in fulfilling the terms and conditions of the licence; 84 Similarly, s. 58 of the Act states: 58 An aquaculture licence or aquaculture lease issued by the Minister pursuant to this Part may be terminated or revoked if the holder is in breach of this Part or the regulations or any term or condition set forth in the licence or lease. 85 I am satisfied that the combined effect of the licence, conditions and statutory provisions is that the Minister has the ability to terminate any licence or lease for failure to comply with mitigation measures that might be imposed as part of an approval issued by Transport Canada pursuant to the Navigable Waters Protection Act. 86 If the Minister determined that the mitigation measures identified in the federal review should be imposed on Kelly Cove at the amended site locations, I believe it was reasonable for him to conclude that he had the tools to monitor and enforce this through the provisions of the agreements and Act referred to above. 87 When the Minister’s approval decision is examined from a global perspective, it appears eminently reasonable. There were existing aquaculture sites which had operated in Shelburne Harbour for many years. Kelly Cove proposed to move these operations to adjacent sites within the Harbour in order to alleviate some environmental problems that had developed. There were to be some operational changes which would assist in minimizing any negative environmental impacts. These Specter v. Nova Scotia Michael J. Wood J. 273

applications were subject to review by Transport Canada, including an environmental assessment, and received the necessary approval under the Navigable Waters Protection Act. Kelly Cove provided extensive technical reports to assist the Minister in assessing the applications. In some instances, the location of the sites was adjusted to respond to concerns of adjacent landowners. 88 Members of the public were aware of the proposed amendments and made submissions to the Minister and the Department. Some were in favour of the relocation and some were not. The Minister consulted with a number of government departments and agencies, none of whom expressed any concerns with respect to the applications. 89 When considering all of the circumstances, I am not satisfied that the appellants have met the burden of showing that the Minister’s decision to approve the amendment applications was unreasonable. They are clearly unhappy with it, and perhaps feel that the Minister has not properly weighed the information which he had available to him. That does not mean that the decision is unreasonable. Approval was certainly one of the options available to the Minister in light of the extensive information which he had.

Conclusion 90 For the reasons outlined above, I have concluded that the appeal should be dismissed because I have found that the Minister’s decision, including the particular components identified by the appellants, was reasonable in the circumstances. 91 I want to make a further comment on one point raised by the appellants, and that was the failure to consult with the Department of Housing and Municipal Affairs. They argue that failure to do so is fatal to the Minister’s decision if it is determined that the Minister was required to follow the procedures set out in s. 47(a). 92 For the reasons set out above, I have concluded that the Minister was not required to follow those procedures; however, if I am wrong, then I believe this is a matter which would fall within the scope of s. 120 of the Act, which provides as follows: 120 An appeal in connection with any matter under this Act shall be dismissed by the Supreme Court of Nova Scotia if the sole ground for relief established on the appeal is a defect in form or a technical irregularity. 274 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

93 In my opinion the failure to consult with the successor to the Depart- ment of Housing and Municipal Affairs is a technical irregularity, given the relatively extensive government consultation which did take place and the submissions received from the Town of Shelburne. 94 If the parties are unable to reach an agreement on costs, I am prepared to receive written submissions by the end of February, 2012. Appeal dismissed. R. v. Zellstoff Celgar Ltd. Partnership 275

[Indexed as: R. v. Zellstoff Celgar Ltd. Partnership] Regina v. Zellstoff Celgar Limited Partnership British Columbia Provincial Court Docket: Nelson 20460 2012 BCPC 38 L.J. Mrozinski Prov. J. Heard: June 20-23, 27-30, 2011 Judgment: February 16, 2012 Environmental law –––– Statutory protection of environment — Environ- mental offences — Offences — Breach of approvals, licences or orders — General principles –––– Defendant operated pulp mill alongside river — Mill generated significant amount of waste water — Defendant had provincial effluent permit allowing discharge of treated effluent into river — Terms of permit included limits for total suspended solids (TSS) and biochemical oxygen demand (BOD) — Terms of permit also required acceptable result on single concentration rainbow trout toxicity test — Defendant’s effluent treatment system (ETS) was adversely affected by weak black liquor that spilled into mill’s general sewer system — Mill’s effluent exceeded TSS limit on five days, exceeded BOD limit on two days, and failed toxicity test on two days — Defendant was tried on five counts of failing to comply with requirements of permit — Defen- dant convicted of three counts — Convictions related to excessive TSS, excessive BOD, and failing toxicity test — Defendant failed to establish it exercised all reasonable care to prevent commission of these offences — Spill material included weak black liquor soap that should not have been allowed to drain into mill’s main sewer line — Adverse impact of soap on ETS was entirely foreseeable — Had defendant followed established procedures, spill material would have been prevented from entering main sewer system — Acquittals related to lack of sufficient capacity in spill ponds — Defendant established due diligence with respect to problem with spill ponds — Defendant’s ETS could not handle material in spill ponds so defendant was prudent in leaving it there until another solution came to light — Defendant had acted reasonably in attempting to understand and resolve this issue. Cases considered by L.J. Mrozinski Prov. J.: Fletcher v. Kingston (City) (2004), 2004 CarswellOnt 1860, (sub nom. R. v. Kingston (City)) 240 D.L.R. (4th) 734, (sub nom. R. v. Kingston (City)) 185 C.C.C. (3d) 446, (sub nom. R. v. Kingston (City)) 70 O.R. (3d) 577, 7 C.E.L.R. (3d) 198, (sub nom. R. v. Kingston (City)) 187 O.A.C. 143, [2004] O.J. No. 1940 (Ont. C.A.) — considered 276 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

R. v. Boutcher (2001), 202 Nfld. & P.E.I.R. 243, 608 A.P.R. 243, 2001 Car- swellNfld 182, 2001 NFCA 33, [2001] N.J. No. 186 (Nfld. C.A.) — considered R. v. Chung (1999), 1999 CarswellBC 492 (B.C. S.C.) — considered R. v. Commander Business Furniture Inc. (1992), 9 C.E.L.R. (N.S.) 185, 1992 CarswellOnt 222, [1992] O.J. No. 2904 (Ont. Prov. Div.) — followed R. v. Deslisle (2003), 181 B.C.A.C. 55, 298 W.A.C. 55, 2003 BCCA 196, 2003 CarswellBC 661, [2003] B.C.J. No. 662 (B.C. C.A.) — followed R. v. Kienapple (1974), 1974 CarswellOnt 238F, [1975] 1 S.C.R. 729, 26 C.R.N.S. 1, 1974 CarswellOnt 8, 15 C.C.C. (2d) 524, 44 D.L.R. (3d) 351, 1 N.R. 322, [1974] S.C.J. No. 76 (S.C.C.) — followed R. v. MacMillan Bloedel (Alberni) Ltd. (1979), [1979] 4 W.W.R. 654, 1979 Car- swellBC 693, 12 B.C.L.R. 29, 47 C.C.C. (2d) 118, [1979] B.C.J. No. 1498 (B.C. C.A.) — referred to R. v. Petro-Canada (2003), 171 C.C.C. (3d) 354, 49 C.E.L.R. (N.S.) 60, 2003 CarswellOnt 199, 222 D.L.R. (4th) 601, 168 O.A.C. 247, 63 O.R. (3d) 219, [2003] O.J. No. 216 (Ont. C.A.) — considered R. v. Placer Developments Ltd. (1983), 13 C.E.L.R. 42, 1983 CarswellYukon 14 (Y.T. Terr. Ct.) — followed R. v. Sault Ste. Marie (City) (1978), 1978 CarswellOnt 24, [1978] 2 S.C.R. 1299, 85 D.L.R. (3d) 161, 21 N.R. 295, 7 C.E.L.R. 53, 3 C.R. (3d) 30, 40 C.C.C. (2d) 353, 1978 CarswellOnt 594, [1978] S.C.J. No. 59 (S.C.C.) — considered R. v. Seraphim (January 18, 1993), Doc. Rossland 4745 (B.C. Prov. Ct.) — considered Rizzo & Rizzo Shoes Ltd., Re (1998), 1998 CarswellOnt 1, 1998 CarswellOnt 2, 50 C.B.R. (3d) 163, [1998] 1 S.C.R. 27, 33 C.C.E.L. (2d) 173, 154 D.L.R. (4th) 193, 36 O.R. (3d) 418 (headnote only), (sub nom. Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re) 221 N.R. 241, (sub nom. Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re) 106 O.A.C. 1, (sub nom. Adrien v. Ontario Ministry of La- bour) 98 C.L.L.C. 210-006, [1998] S.C.J. No. 2 (S.C.C.) — considered Statutes considered: Environmental Management Act, S.B.C. 2003, c. 53 Generally — referred to s. 120(6) — considered s. 120(7) — considered Fisheries Act, R.S.C. 1985, c. F-14 Generally — referred to s. 34(1) “deleterious substance” — considered s. 34(1) “deleterious substance” (a) — considered ss. 35-43 — referred to s. 36(1) — considered s. 36(3) — considered R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 277

s. 36(4)(b) — considered s. 36(5) — considered Regulations considered: Fisheries Act, R.S.C. 1985, c. F-14 Pulp and Paper Effluent Regulations, SOR/92-269 Generally — referred to s. 3 — considered s. 6 — considered s. 6(1) — considered s. 6(5) — considered s. 14 — referred to Sched. II, s. 3 — considered Sched. II, s. 5(2) — considered

TRIAL of defendant on five counts of failing to comply with requirements of provincial effluent permit.

T. Gerhart, for Crown J. Walton, S. Armstrong, for Defendant

L.J. Mrozinski Prov. J.: Introduction 1 The defendant, Zellstoff Celgar Limited Partnership (“Celgar”), pleads not guilty to six counts of various breaches of the Fisheries Act, R.S.C. 1986, c. F-14 and the Environmental Management Act (“EMA”), SBC 2003, c. 53. 2 Count 1 of the Information alleges that between the 19th and 25th days of November, 2008 Celgar unlawfully deposited a deleterious substance in water frequented by fish contrary to s. 36(3) of the Fisheries Act. Count 2 alleges that between the 22nd and 25th days of November, 2008, Celgar unlawfully failed to comply with a requirement of its provincial effluent Permit by depositing effluent into the Columbia River that was acutely lethal to trout and did thereby commit an offence contrary to s. 120(7) of the EMA. Count 3 alleges that between the 19th and 26th days of November, 2008, Celgar failed to comply with its Permit by depositing effluent into the Columbia River that exceeded its daily loading limit for total suspended solids contrary to s. 120(7) of the EMA. Count 4 alleges that between the 19th and 22nd days of November, 2008, Celgar failed to comply with its Permit by depositing effluent that exceeded its maximum daily loading limit for biochemical oxygen demand contrary 278 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

to s. 120(7) of the EMA. Counts 5 and 6 allege that between the 7th and 25th days of September, 2008, Celgar failed to comply with a requirement of its Permit to maintain its spill ponds in good working order contrary to ss. 120(6) and 120(7) of the EMA. 3 Celgar operates a pulp mill alongside the Columbia River in Castle- gar, British Columbia. As with all such operations, the Celgar mill gener- ates a significant amount of waste water. Celgar is permitted to and does discharge its treated effluent into the Columbia River pursuant to Permit # 1272 (the “Permit”) subject to certain terms and conditions. Among those, Celgar’s treated effluent must meet limits for total suspended solids (“TSS”), biochemical oxygen demand (“BOD”), and must be able to pass a 96 hour rainbow trout Single Concentration Rainbow Toxicity Test (the “Rainbow Trout Test”). 4 On November 18, 2008, material identified by Celgar as dilute weak black liquor in excess of 1000 m3 overflowed a tank and spilled into the mill’s general sewer. From there, it made its way directly into Celgar’s effluent treatment system (“ETS”). A much smaller amount, approximately 33 m3 spilled over a roadway at the mill. Some of that spill material entered the Columbia River. Celgar reported the spill on November 18, and took the steps necessary to contain the spilled material in the River. 5 The parties agree that the spilled material had a negative impact on Celgar’s ETS thereby decreasing the effectiveness of the system. As Cel- gar admitted, its ETS began to negatively respond to the spilled material within days of its release into the mill’s general sewer. 6 Celgar admits that on November 20, 21, 23, 24 and 25, its treated effluent exceeded its prescribed TSS permit level of 6000 kg/day. It admits that on November 20 and 21, its treated effluent exceeded its prescribed BOD permit level of 6000 kg/day. On November 23 and 24, Cel- gar’s treated effluent failed the Rainbow Trout Test. Because of these failures on these two days, Celgar concedes that it deposited a deleterious substance into the Columbia River, a body of water frequented by fish and subject to a First Nations and sports fishery, on November 23 and 24. It denies having deposited a deleterious substance as charged on No- vember 20, 21, and 22, 2008. 7 While substantially admitting the actus reas of the charges under counts 1 to 4, Celgar submits that it must be acquitted of these charges on the grounds that it exercised due diligence with respect to the operation of its ETS and took all reasonable steps to avoid exceeding its per- R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 279

mitted limits, or depositing a deleterious substance on the days it concedes these acts occurred. 8 With respect to counts 5 and 6, Celgar submits that the Crown has not proven beyond a reasonable doubt that it failed to maintain its authorized works, viz., its two spill ponds, in good working order contrary to ss. 120(6) and (7) of the EMA. Alternatively, Celgar submits that it acted with all due diligence in maintaining its spill ponds such that though the ponds were full between September 7 and November 25, 2008, Celgar could not, despite its best efforts, alter that fact.

Celgar’s Effluent Treatment System 9 The substance of Celgar’s due diligence defence is that since April of 2005, it has taken steps to improve the performance of its ETS. Celgar’s ETS is known as a low rate air activated sludge treatment system. It is a fairly complex system in which the mill effluent is treated in stages with each successive stage designed to separate out from the effluent which will ultimately be disgorged into the Columbia River the fibres, toxins and various other compounds that travel with the effluent as a consequence of the pulping process. 10 In the first stage, effluent from various areas at the mill travels into the main sewer line where it is then pumped through several kilometres of pipe to the primary clarifier. The primary clarifier acts as a settling pond where large solids such as wood fibre will settle out of the effluent. From the primary clarifier the effluent is gravity fed to the cooling pond to ensure consistency of temperature before it flows into the aeration basin. The aeration basin is the beating heart of Celgar’s ETS. It is home to a variety of bacteria. When working properly, the bacteria in the aeration basin will metabolize the contaminants or pollutants in the effluent and convert that into bacterial growth. That growth is then separated from the effluent following a settling process in the secondary clarifiers. From there, the effluent travels to the foam tank where it is mixed with clean cooling water and then discharged into the Columbia River along a dif- fuser. When the ETS works properly, the discharged effluent will meet the Permit requirements. 11 To protect the aeration basin, Celgar has in place two spill ponds with a combined capacity of just over 60,000 m3. The ponds are designed so that materials that may be harmful to the aeration basin can be stored until the ETS can process them in a way that will not harm the bacteria in the basin. The spill ponds are an integral part of Celgar’s ETS. As the 280 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

ponds fill, Celgar has in place a reclamation strategy whereby effluent that has been diverted to the spill ponds may be reclaimed to the primary clarifier and from there gravity fed to the cooling pond and subsequently the aeration basin. 12 Since April, 2005, and particularly throughout 2007 and 2008, Celgar submits that it had been struggling with ETS problems and took numerous steps to try to understand why its ETS was not performing optimally. By August of 2008, Celgar submits that its ETS problems were such that even though its two spill ponds were full, there was no way to reclaim the effluent in the ponds to the treatment system without risk of damag- ing the bacteria in the aeration basin. As such, in November 2008, Celgar submits that despite its best efforts, it had no spill pond capacity and continued upset conditions in its ETS. Thus was the state of affairs when on November 18, 2008, 1000 m3 of a substance Celgar maintains was dilute weak black liquor spilled into the mill’s general sewer.

The Spill on November 18, 2008 13 On November 18, 2008, Shawn Browne, utilities shift supervisor at Celgar, arrived at the mill just shortly before 6:00 p.m. to begin his shift. After donning his work clothes, Mr. Browne headed along his usual path to what is known as the recovery room, essentially the starting point for his shift. En route, Mr. Browne was diverted by a flow of what appeared to him to be weak black liquor across his path. He took a different route to the recovery room and there met with the outgoing shift supervisor, Mr. Jack Smith, a long time pulp mill worker though not with as many years at Celgar as Mr. Browne. The two discussed what Mr. Browne had just seen and Mr. Smith told Mr. Browne that things were coming under control and that he was quite concerned with an upset at the lime kiln at that time. Mr. Smith told Mr. Browne that the material was condensate from the evaporators. 14 At this point, the material observed by Mr. Browne was, in his esti- mation, about one foot high. Photograph number 29 in Exhibit 14 demonstrates clearly that the material was much higher, possibly 3 feet or more, at some point earlier that day. 15 With the shift change complete, Mr. Browne and his fellow employees set about dealing with the spill. As everyone knew at this point, the spill material was coming from a large tank labelled the “Weak Black Liquor” tank which I accept was not storing weak black liquor at the time but rather was being used as a spill tank to store contaminated con- R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 281

densate diverted from nearby tanks known as flash tanks 3 and 4. It was apparent in the evidence and I have no difficulty finding that material was being diverted from the flash tanks to the spill tank from approximately 8:00 a.m. that morning and continued to divert for most of the day. I find also that at approximately 2:00 p.m. the spill tank itself started to overflow and continued to overflow with some breaks up to approximately 7:00 p.m. 16 Celgar itself estimates the spill to have amounted to in excess of 1000 m3. Mr. Browne testified that it was the largest spill he had seen at Cel- gar even assuming he intended to mean the largest spill he had seen ema- nating from the spill tank. There can be no question that this had to have been a significant event for the mill and for those persons on day shift trying to address both the ongoing diversion to the spill tank and the overflow of the spill tank. None of the day shift personnel present on November 18 testified in this case. 17 As the utilities shift supervisor for Celgar, Mr. Browne had to decide how to deal with the spilled material. Because he knew of the upset conditions in the ETS and the lack of capacity in the spill ponds, he reasoned that it would be better to allow the spilled material to travel directly into the treatment system via the primary clarifier rather than divert it to either of the spill ponds. In that way, he could avoid any potential contamination of the ETS by the materials already in the spill ponds. He reasoned that as the ETS was routinely fed dilute weak black liquor that was the safest alternative. The response of the ETS in the days that followed would indicate that Mr. Browne’s calculation was incorrect. On the other hand, given the absence of any capacity in the spill ponds and the state of the ETS at the time, it is probable given the known effect of the spilled material on the health of the ETS that no matter what Mr. Browne did, the ETS would have been adversely affected. It may well have been only a matter of degree.

The Cause of the Spill 18 Mr. Browne prepared a report on the cause of the spill and, consequently, in his view, the nature of the spill material, which was entered in this trial as Exhibit 5. With respect to the cause, Mr. Browne concluded that the condensate from the evaporator process carried with it more par- ticles of weak black liquor than normal giving rise to a spike in the conductivity meters at the flash tanks and in turn causing the material to be diverted to the spill tank for a prolonged period of time. This prolonged 282 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

diversion of the contaminated condensate in turn caused the spill tank to fill and then to overflow into the sewers and onto the road and into the Columbia River. 19 Mr. Browne was convinced this was a dilute weak black liquor spill because of the conductivity spike recorded by the on-line meter at the flash tanks. He was asked on cross examination whether the material could not have been weak black liquor soap like that which decimated Celgar’s ETS in 2003, and responded that it could not have been as the November incident bore no resemblance to what had occurred in 2003. In particular, Mr. Browne noted that in the November incident, unlike the case in 2003, the pumps that move the liquor around the evaporator cir- cuit did not jam with the overly viscous soap. 20 In the normal course of the pulp operation, wood chips are fed into a digester along with a substance known as white liquor. As Mr. Browne described it, white liquor is a caustic substance used to dissolve the wood. In the digester the white liquor works to separate the tannins and lignins from the wood. The fibre is removed from the digester and sent for washing and ultimately bleaching. The remaining material composed of the tannins, lignins, fatty acids, and inorganic salts is called weak black liquor. Some of that is used for washing the pulp while the remainder is sent to the weak black liquor storage tanks. From there, the weak black liquor is concentrated in the evaporator plant and what emerge are combined condensate, condensate and heavy black liquor. The combined condensate is used in the pulp washing process and re-circulated back to the evaporator, the bulk of the condensate is diverted to the main sewer and from there makes its way into the ETS, and the heavy black liquor is used as fuel in the recovery boiler. 21 This digesting process also creates another substance known as weak black liquor soap. As Mr. Browne described it, this soap is a by-product of a chemical reaction when certain softwoods are mixed with white liquor. The soap, which is composed of, among other things, resin, fatty acids and alkaline chemicals from the liquor, comes out of the bottom of the digester along with the weak black liquor and travels with it to the weak black liquor storage tanks. There, the soap, which is normally lighter than the weak black liquor, will separate and rise to the top of the weak black liquor tank. As a consequence of both its weight relative to the weak black liquor and location at the top of the tank, the soap will be cooler in temperature than the weak black liquor below. R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 283

The 2003 Soap Event 22 From time to time, the mill will experience what mill workers call an “upset”. In 2003, such an upset occurred when the digester shut down yet low-strength liquor was still generated and made its way into the weak black liquor tank. While in the normal course, weak black liquor has a specific gravity (“s.g.”) or density range of 1.06 to 1.07, the dilution of the weak black liquor in the weak black liquor storage tank in 2003 caused the density to drop below 1.04 s.g., the density range for soap. This caused what was described in this trial as a soap inversion wherein the soap sank to the bottom of the weak black liquor tank and from there travelled into the evaporator. When boiled, the soap became highly viscous, almost like toothpaste. It clogged up the evaporator system such that Celgar workers had to manually drain the soap from the evaporator into the sewer which then drained into the ETS. Unfortunately it was only then that Celgar learned how toxic weak black liquor soap was for the bacteria in its aeration basin. The introduction of the soap into the ETS was catastrophic for the system and in turn led to the discharge of unlawful substances into the Columbia River. 23 As a consequence of this soap event Celgar took a number of steps to prevent a future soap inversion. By letter dated December 23, 2003, Fiona Mckay, then and now the Environmental Superintendant for Cel- gar, advised the Ministry of Water, Lands and Air Protection that Celgar would be incorporating ISO procedures for handling soap. Ms. Mckay further advised that Celgar would be conducting “Soap School” for its employees. 24 The document attached to Ms. Mckay’s letter of December 23, 2003, and entered as Exhibit 25 in this trial, contains three ISO procedures. One regards minimizing the risk of a soap inversion. A second is concerned with procedures for recognizing when soap inversions are immi- nent. The last outlines procedures when soap carryovers occur. It is this third ISO procedural document that is of most relevance in this case. 25 One of the critical steps necessary to avoid a soap inversion was for Celgar to cease stockpiling soap in the weak black liquor tank. The evidence in this case indicates that Celgar put into place a process whereby soap was skimmed or decanted off the top of the weak black liquor tank routinely and stored in a small soap storage tank nearby. From there, the soap is pumped to the tank containing heavy black liquor and both are incinerated in the recovery boiler. 284 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

26 The evidence also indicates that the soap pump, which was intended to pump soap from the small storage tank to the recovery boiler, was down with mechanical problems for a few weeks prior to the November 18 incident. I accept however that on November 14, 2008, the pump was working and according to Celgar’s records was on for 12 hours. From this evidence I find that I cannot determine with any confidence whether or how much soap had not been decanted from the weak black liquor tank. I do not and cannot know how much storage capacity remained in the soap storage tank, nor is it possible to determine on the evidence if the 12 hours in which the pump was working on November 14 had the effect of emptying the soap storage tank entirely or whether it merely created some capacity. Assuming the pump was down for weeks due to mechanical failure as Mr. Browne testified, I cannot know how much soap may have been stored in the weak black liquor tank which, as Mr. Browne also testified, was the only place it could have been if there was no room in the soap storage tank. 27 Another important step to detect the presence of soap as set out in the ISO procedure is to monitor the on-line meters for signs of a soap carryover into the evaporators. The signs to watch for include conductivity spikes in the combined and contaminated condensate streams. In respect of soap carryovers, the ISO procedure indicates that these conductivities will not indicate sustained levels of over 2000 umho (expressed in the trial in English as microsiemens - a measurement of conductivity) unless there is soap contamination. 28 In his report on the cause of the spill, Mr. Browne reported a sighting of a heavy flow of liquor/foam coming from what appeared at the time was the heavy black liquor storage tank. As I have noted, the evidence is clear that the spilled material came out of the tank labelled heavy black liquor, but that tank was at the time actually the spill tank to which contaminated condensate was to be diverted away from the flash tanks. 29 Having reviewed the on-line meters, Mr. Browne reported that from 5:00 a.m. to 7:48 a.m., the density measure of the weak black liquor entering the weak black liquor storage tanks was dropping, and that by 8:12 a.m. had dropped to 1.05 s.g. At 9:12 a.m. the conductivity measurements of flash tanks 3 and 4 spiked to 2000 microsiemens and continued at that level until 6:36 p.m. in the case of flash tank 4 and 7:24 p.m. in the case of flash tank 3. Mr. Browne also reported that steam to the evaporators was minimized at 10:12 a.m. and that the spill tank overflow be- R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 285

gan at 2:12 p.m., stopped at 2:27 p.m. and then resumed again at 3:24 p.m. and continued until 7:00 p.m. 30 What occurred then, at least as far as the on-line meters were able to measure, was that in the early morning hours of November 18, low- strength weak black liquor had been entering the weak black liquor storage tank for several hours. Its density range by 8:12 a.m. was 1.05 s.g., just slightly above the density range for soap. By 9:12 a.m., the on-line meters were reporting a very sudden spike in conductivity of the condensate stream which spike continued for what was obviously a prolonged period of time. 31 As Mr. Browne agreed in cross examination, his conclusion that the spill was basically contaminated condensate was based on the sudden spike in conductivity at 9:12 a.m. There is no question that the spike would indicate a larger than normal amount of weak black liquor in the condensate; in other words, it met the generally accepted criteria for contaminated condensate. However, as Mr. Browne also agreed, the on-line meter at the flash tanks only measured up to 2000 microsiemens so he would have no way of knowing, based on that measurement alone, whether the spill was contaminated condensate - a mixture of condensate and abnormal amounts of weak black liquor - or whether the spill mixture contained a percentage of weak black liquor soap. 32 However, as has been previously noted, Mr. Browne was sure the spill could not have been weak black liquor soap because in 2003 the introduction of soap into the evaporators, as a consequence of the soap inversion, had caused such blockage that the evaporators had to be manually drained. 33 The density range of the weak black liquor in the weak black liquor tank, which measured at 1.05 s.g. at 8:12 a.m., would not support a soap inversion. Similarly, Mr. Browne’s observation that the evaporators continued to pump would not support a soap inversion. But as Mr. Browne agreed on cross examination, there is another way in which soap can enter the evaporators from the weak black liquor tank and that is by melt- ing back into the weak black liquor once it drops to a certain level of density. Mr. Browne agreed that this was possible and were it to occur it could account for the presence of weak black liquor soap in the evaporators. This would not be in the same quantity as the 2003 soap event so that comparisons with that event are not determinative of the possible presence of soap in the evaporator on November 18, 2008. I find that the 286 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

2003 soap event in which the evaporators were so clogged it was necessary to drain them manually did not re-occur in 2008. 34 The Crown submits that apart from the prolonged period of time during which the conductivity levels of the condensate flows were “off the chart” as Mr. Browne agreed was the case on cross examination, there were other indicators that what was occurring that day in November was a type of soap event, namely, soap carryover into the evaporator. 35 First, while recognizing that Mr. Smith told Mr. Browne as he started his shift at 6:00 p.m. on November 18, that the spilled material was condensate from the evaporators, the operator’s log notes from November 18, made by Justin Simon indicate otherwise. Mr. Simon’s notes state firstly that the number 3 and 4 flash tanks were measuring at 2000 microsiemens all day and were diverting to the spill tank all day. De- pending on when Mr. Simon’s day started, this is not inconsistent with the evidence in the case. Mr. Simon then makes reference to “probable soap to spill tanks and evaps” and further writes “purging soap/foam through evaps.” He adds “spill tank is contaminated and beyond use” and finally “soap pump still down...”. 36 On their face, the notes from the operator that day clearly point to there having been weak black liquor soap in the evaporator and in the spill tank. 37 The reference in the ISO procedures for soap carryover that conductivity measurements of the condensate streams will not indicate sustained levels of over 2000 microsiemens unless there is soap contamination also suggests the presence of weak black liquor soap in the evaporator. 38 While the density range of the weak black liquor in the weak black liquor tank suggests against a soap inversion, it does not prove that weak black liquor could not otherwise have entered the evaporator - an outcome Mr. Browne agreed was possible. 39 A drop in the temperature of the weak black liquor at the point where it enters the evaporator will suggest the presence of weak black liquor soap as that soap is cooler than the liquor resting below it. The ISO procedures indicating when soap carryover occurs state that the first indica- tions of soap carryover occur when the temperature of the weak black liquor leaving the weak black liquor tank measures in the 65º - 75ºC range. The trends produced by Mr. Browne in his report entered as Ex- hibit 5 show the temperature at weak black liquor storage tank number 1 to have been at or below 70ºC until approximately 4:00 p.m. on Novem- ber 18. Again this is not determinative but it is not explained either. R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 287

40 While soap in the evaporators can be difficult to detect, it is clear on the evidence that one of the ways in which mill workers can detect soap in the evaporators is by monitoring the alarms at the mill’s distribution control system. Mr. Browne agreed on cross examination that on Novem- ber 18, 2008, a number of alarms signalled a possible soap carryover. 41 In the event of a soap carryover, the ISO procedure recommends as follows: ...Since the quantity of soap/foam carried out of the Evaps with the process condensate streams is a function of the vapour flow passing down through the Effects, stopping the evaporation process will greatly reduce or eliminate the carryover of soap/foam from the Evaporator bodies. 42 In addition, the ISO procedure mandates that the soap-contaminated liquor must be pumped out of the Effects back into the weak black liquor tanks. In other words, what must be done as soon as a soap carryover is discovered is that the evaporator must be shut down, and its contents returned to the weak black liquor tanks, not diverted into the main sewer line with the attendant risk the material could end up in the ETS. 43 In this case there is considerable evidence suggesting that the nature of the material spilt on November 18, 2008, at Celgar was a mixture of weak black liquor soap and condensate from the evaporation process. I do not find, as submitted by Celgar, that the report of Mr. Paul Klopping, an expert in biological waste treatment, regarding the character of samples of effluent taken from the secondary clarifiers on November 26, 2008, is determinative of the fact that the spill on November 18, 2008, could not have been comprised of a mixture of condensate and weak black liquor soap. 44 As I find some evidence on which it could be concluded that weak black liquor soap formed part of the spill material on November 18, 2008, I have no hesitation in finding that Celgar should have made every effort to divert that material from the evaporator Effects back to the weak black liquor tank. It should not have been allowed to drain into the mill’s main sewer line. 45 Celgar submits that much of the evidence regarding a possible soap carryover is taken out of context or, in the case of Mr. Simon’s day-timer notes, cannot be considered by this court as the Crown did not call Mr. Simon to explain the meaning of his notes. Ultimately, Celgar submits that the Crown bears the onus of proof of its soap theory which onus 288 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Celgar submits has not been met. This raises the question of the onus of proof generally in regard to the defence of due diligence.

The Defence of Due Diligence 46 As the parties agree, the charged offences herein under ss. 120(6) and (7) of the Fisheries Act, and s. 36(3) of the EMA are strict liability offences for which Celgar has admitted (subject to its exceptions on Count 1) to the actus reas. Because these are strict liability offences, it is open to Celgar to prove that it took all reasonable care to avoid committing the offences as charged: R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299 (S.C.C.). 47 I have already noted that Celgar’s defence is that the cause of the unlawful discharge was the adverse impact of the spilled material on the ETS. Celgar further submits that it used all reasonable care to avoid introducing the spilled material into the ETS but could not avoid doing so on November 18, 2008, as it had no capacity to divert the material to its spill ponds. That in turn was caused, despite Celgar’s best efforts, by an inability to create capacity in the months leading up to the spill because the health of the ETS simply would not allow for any reclamation of the contents of either spill pond. 48 In the result, Celgar focused all of its evidence in this trial on the health of its ETS in the years and months leading up to the spill, and on its efforts to address those health issues in order to demonstrate that it could not have reasonably done more to avoid being in the situation it found itself in on November 18, 2008. It did little to address the evidence which suggests the spilled material was made up of condensate combined with weak black liquor soap, except to emphasize the distinction between the 2008 and 2003 events. I have already found that whatever occurred on November 18, 2008, it was not a soap inversion as occurred in 2003. 49 In R. v. Sault Ste. Marie (City), the Court held that the defence of due diligence was available either because the accused has shown it did not know nor could it have known of the hazard, or the accused knew of the hazard but took all reasonable steps to avoid the event. 50 In advancing the defence of due diligence in this case, Celgar has conceded it knew the ETS was compromised and it had no practical spill capacity. It knew in these circumstances that it had to take great care to avoid spills of liquor, or chemicals or oils into the ETS. That much is set out in Celgar’s own publication entitled “Pulp Digest” dated October 9, 2008, and entered in this trial as Exhibit 33. The ISO procedures and the R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 289

2003 event form very clear evidence that Celgar knew it had to take great care to avoid the introduction of weak black liquor soap in the ETS. I have no difficulty concluding that the lack of capacity in the spill ponds at the time placed Celgar in a position where it had to be all the more vigilant to avoid the introduction of toxic substances into the ETS. It was entirely foreseeable that the introduction of a toxic substance into the ETS would adversely affect it thereby making it very likely Celgar would violate the terms and conditions of the Permit by introducing an unlawful discharge of effluent into the Columbia River. 51 While not denying forseeability, Celgar’s defence is that it had no real choice on November 18, 2008, to do anything other than allow the spilled material to flow into the ETS. It was on the horns of a dilemma of its own making, albeit only after exercising all reasonable care. Even assuming Celgar could not have acting reasonably created more capacity in its spill ponds before November 18, 2008, the question remains whether it exercised all due care in preventing the spilled material from entering the main sewer in the first instance. That in turn raises the question of the cause of the spill and the nature of the spilled material. 52 As the Ontario Court of Appeal held in R. v. Petro-Canada [2003 CarswellOnt 199 (Ont. C.A.)] at paras. 16 to 20, the law of due diligence does not require a defendant to prove how an offence occurred, or the cause of the offence, only that it took reasonable steps to avoid any foreseeable cause of the offence. However, as the passages below evidence, where a defendant chooses to prove a cause, that will have the advantage of narrowing the range of preventative steps taken: 16 In my view, it is clear from Dickson J.’s reasoning that in a case like this one, “the particular event” which the accused must show it has taken all reasonable steps to avoid is the discharge of the pollut- ing substance into the particular water system. There is no suggestion in the language of Dickson J. that the accused must first prove the precise cause of the discharge before it can engage the defence of due diligence. 17 Moreover, such a requirement would be inconsistent with the fair- ness described by Dickson J. While the accused will know what it has done to avoid the discharge and can fairly be asked to say so, the accused may well not know precisely how the discharge came about. In my view, to require the accused to prove something that may well be beyond its knowledge to trigger this defence moves this category of offence closer to absolute liability than Dickson J. intended. 290 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

18 The same approach is implicit in the language used by Catzman J.A. for this court when he said this about the due diligence defence in Ontario v. London Excavators & Trucking Ltd. (1998), 40 O.R. (3d) 32 (C.A.) at 36: It is common ground between the parties that the offence with which the appellant was charged is one of strict liability. Once the actus reus of a strict liability offence is proved, a conviction must follow unless the accused establishes that it exercised due diligence to avoid the commission of the offence. 19 Returning to this case, the offence charged is that the accused discharged or caused to be discharged a contaminant, namely gasoline, into the natural environment that caused, or was likely to cause, an adverse effect. Once the Crown proves this, the accused can successfully defend itself by showing on a balance of probabilities that it took all reasonable steps to avoid or prevent the discharge. The “particular event” is discharging or causing the discharge of gasoline as described in the charge. 20 For these reasons I do not think that the law requires the accused to prove precisely how the discharge came about - in this case precisely why the pipe failed - in order to avail itself of the due diligence defence. On the other hand, in a case where the accused can do this, it may be able to narrow the range of preventative steps that it must show to establish that it took all reasonable care. However where, as here, the accused cannot prove the precise cause of the pipe failure the due diligence defence is not rendered unavailable as a result. That being said, it must be emphasized that to invoke the defence successfully in such circumstances, the accused must show that it took all reasonable care to avoid any foreseeable cause. [emphasis added] 53 Though Celgar was not required to prove the cause of the unlawful discharges, it advanced evidence to prove the cause was the unavoidable introduction of the spilled material into the ETS. It advanced evidence, which I accept, that Mr. Browne decided against diverting the spill material that day into the spill ponds as that would create a strong likelihood of adverse impact. I do not doubt that Mr. Browne made the best decision he could in the circumstances of November 18, 2008, given what he thought he knew about the spill. However, the evidence in this case raises a real question as to whether Mr. Browne’s understanding of the R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 291

nature of the spilled material was correct and if not, whether Celgar has made out the defence of due diligence. 54 I find that there is compelling evidence in the record to support the Crown’s theory that the spill material was condensate mixed with weak black liquor soap and that had Celgar followed the ISO procedures, it should have prevented the spill material from entering the main sewer system. 55 It was obviously foreseeable and I find that Celgar knew that if weak black liquor soap entered the ETS, it would have severe adverse consequences for the bacteria in the aeration basin and that a permit violation was likely. 56 I cannot find on the evidence that the only probable cause of these offences lay with the state of health of the ETS. I find there is compelling evidence to suggest the cause of the offences lay with Celgar’s failure to follow its own procedures regarding a soap carryover. As I cannot be satisfied that Celgar has proven the cause of the offences at issue, it follows that Celgar must show it acted with due diligence to prevent any foreseeable cause. As it was obviously foreseeable that the introduction of weak black liquor soap into the ETS would cause a failure of the treatment system, I cannot be satisfied that Celgar has met its onus and shown that it exercised all reasonable care to prevent the commission of these offences. 57 As such, it follows that a conviction must be entered on Counts 1 to 4 in regard to those dates on which Celgar has admitted the actus reas of the offences.

The Fisheries Act Charge 58 It remains to be determined whether the Crown has proven beyond a reasonable doubt that Celgar deposited a deleterious substance into the Columbia River on the days of November 20, 21 and 22, 2008. 59 It bears noting that count 1 of the Information specifically charges that: Zellstoff Celgar Limited Partnership and Zellstoff Celgar Limited, between the 19th day of November 2008 and the 25th day of Novem- ber 2008, at or near the Zellstoff Celgar pulp mill...did unlawfully deposit or permit the deposit of a deleterious substance, to wit: pulp mill effluent, in water frequented by fish, to wit: the Columbia River, in violation of section 36(3) of the Fisheries Act, and did thereby commit an offence contrary to section 40(2) of the Fisheries Act. 292 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

60 The disputed elements of count 1 raise two issues. The first is whether the Crown has proven that the pulp mill effluent deposited by Celgar on November 20, 21, and 22, met the definition of a deleterious substance in s. 34(1)(a) of the Fisheries Act. The second, alternative question, is whether Celgar is exempt in any event from s. 36(3) pursuant to s. 36(4)(b) of the Fisheries Act providing it has not failed to comply with effluence deposit limits authorized pursuant to the Pulp and Paper Effluent Regulations (“PPER”).

The Legislative Scheme under the Fisheries Act and PPER 61 Section 34(1) of the Fisheries Act sets out a definition of deleterious substance for the purpose of ss. 35 to 43 of the Act. Section 34(1)(a), which is the definition relevant to this case, provides that a deleterious substance is: any substance that, if added to any water, would degrade or alter or form part of a process of degradation or alteration of the quality of that water so that it is rendered or is likely to be rendered deleterious to fish or fish habitat or to the use by man of fish that frequent that water... 62 Section 36(1) of the Fisheries Act makes it an offence to deposit a deleterious substance in water. Section 36(3) provides as follows: (3) Subject to subsection (4), no person shall deposit or permit the deposit of a deleterious substance of any type in water frequented by fish or in any place under any conditions where the deleterious substance or any other deleterious substance that results from the deposit of the deleterious substance may enter any such water. 63 Section 36(4)(b) of the Fisheries Act provides for the deposit of certain waste or pollutants by regulation: (4) No person contravenes subsection (3) by depositing or permitting the deposit in any water or place of (a) waste or pollutant of a type, in a quantity and under conditions authorized by regulations applicable to that water or place made by the Governor in Council under any Act other than this Act; or (b) a deleterious substance of a class, in a quantity or concentration and under conditions authorized by or pursuant to regulations applicable to that water or place or to any work or undertaking or class thereof, made by the Governor in Council under subsection (5). R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 293

64 Subsection (5) of s. 36 of the Fisheries Act authorizes the GIC to make regulations prescribing: (a) the deleterious substances or classes thereof authorized to be deposited notwithstanding subsection (3); and (b) the persons who may authorize the deposit of any deleterious substances or classes thereof in the absence of any other authority, and the conditions or circumstances under which and requirements subject to which those persons may grant the authorization. 65 Pursuant to s. 36(5) of the Fisheries Act, the GIC brought into force the PPER, SOR/92-269. Section 3 of the PPER provides as follows: For the purpose of the definition “deleterious substance” in subsection 34(1) of the Act, the following classes of substances from a mill or an off-site treatment facility are prescribed as deleterious substances: (a) acutely lethal effluent; (b) BOD matter; and (c) suspended solids 66 Section 6 of the PPER authorizes the deposit of BOD and suspended solids up to a limit prescribed by formula under s. 14 of the PPER but it does not confer any authority to deposit acutely lethal effluent.

Did Celgar deposit a deleterious substance on the disputed days 67 Celgar submits that it is critical to any charge under s. 36 of the Fish- eries Act that the Crown prove the defendant deposited a deleterious substance: viz, a substance that, if added to any water, would degrade or alter or form part of a process of degradation or alteration of the quality of that water so that it is rendered or is likely to be rendered deleterious to fish or fish habitat. Celgar submits that there is no evidence on which this court could conclude that the substances deposited in the Columbia River on November 20, 21 and 22, 2008, were deleterious within the meaning of s. 34(1) of the Fisheries Act. 68 The evidence in this case is that samples of final effluent taken from the ETS on November 20 to 24 were subject to a Daphnia magna 48 hour LC50 toxicity test by Cantest Ltd. in Vancouver. There is no issue in this case with respect to the validity of the tests or the lab itself. The Crown called Craig Buday, who was qualified in this trial as an expert in aquatic toxicology and the conduct of toxicity and bioassay testing, to give evidence with respect to the tests. Mr. Buday testified that a sample of efflu- 294 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

ent will fail the 48 hour LC50 test if 60% or more of the test subjects die in 100% concentration of effluent within 48 hours. Schedule I of the PPER provides that effluent fails the Daphnia magna test when at 100% concentration it kills more than 50% of the Daphnia magna subject to it during a 48-hour period. I accept that Mr. Buday may have misspoken and that he meant his evidence to coincide with the requirements of the PPER. 69 In this case, the test subjects, the Daphnia magna (a freshwater inver- tebrate species) all experienced 100% mortality rates at 48 hours in the 100% concentration samples of the final effluent. In some instances, such as the November 20 sample, mortality occurred much sooner at the 24 hour mark. As Mr. Buday testified, the final effluent taken from Celgar on the days noted failed the Daphnia magna tests. While not denying this, Celgar submits that this alone does not render the effluent deleterious as Mr. Buday did not give an opinion regarding the impact the effluent would have when added to water. Celgar relies on the ruling of Mad- ame Justice Gillese in Fletcher v. Kingston (City) (2004), 70 O.R. (3d) 577 (Ont. C.A.) at para. 63 where it was held with respect to the meaning of s. 34(1) of the Fisheries Act that: ...a substance is deleterious if, when added to any water, it would alter the quality of the water such that it is likely to render the water deleterious to fish, fish habitat or to the use by man of fish that frequent the water. There is no stipulation in paragraph (a) that the substance must be proven to be deleterious to the receiving water. There is no reference to the receiving water in paragraph (a). On the contrary, the language makes it clear that the substance is deleterious if, when added to any water, it degrades or alters the quality of the water to which it has been added. The “any water” referred to in paragraph (a) is not the receiving water. Rather, it is any water to which the impugned substance is added, after which it can be determined whether the quality of that water is rendered deleterious to fish, fish habitat or the use by man of fish that frequent that water. 70 However, as the Crown notes, some of the leachate found by the trial judge in Fletcher to have been a deleterious substance had been tested using a variety of concentrations. At para. 43 of the decision, Gillese J.A. held that: The Ministry’s acute lethality tests were performed on the Ministry samples at a variety of concentrations. The diluted concentrations were made by adding the leachate to a proportionate amount of water. Given the trial judge’s acceptance of the protocols employed R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 295

and the test results on the diluted Ministry samples, I see no error in his conclusion that the leachate contained in those samples was a deleterious substance within the meaning of paragraph (a) of the definition of that term in s. 34(1). 71 The samples taken from Celgar’s ETS on November 21 and 22 were also tested using a variety of concentrations. The sample taken on No- vember 21 was tested at 100%, 56%, 32% and 18% concentrations. At the 56% and 32% concentration levels, the Daphnia magna experienced 100% mortality at 48 hours. The sample taken on November 22 was also tested at the same varied concentration levels. At 56% concentration, the Daphnia magna experienced 70% mortality at 48 hours while at the 32% concentration level, 30% of the fish died at the 48 hour mark. I have no difficulty concluding from this that the effluent deposited by Celgar on November 21 and 22 was likely to be rendered deleterious to fish or fish habitat. 72 The tests on the sample of effluent taken from Celgar’s ETS on No- vember 20, and tested in 100% concentration showed 100% mortality at 48 hours. The test results also note that at the 24 hour mark, the Daphnia magna were immobilized. As Mr. Buday testified, they were still alive but not swimming freely. Mr. Buday concluded from that that the effluent was either causing harm to the test organisms or acting like a narcotic and possibly eventually leading to the death of the organisms. 73 There is strong evidence to suggest that the effluent deposited by Cel- gar on November, 20 was also deleterious to fish or fish habitat. Never- theless, as the effluent was not tested in water, I cannot conclude beyond a reasonable doubt that had the sample been added to water, it would alter the quality of the water such that it would have been rendered deleterious to fish or fish habitat.

Is Celgar protected by s. 36(4)(b) of the Fisheries Act 74 Celgar submits that even assuming the effluent deposited on Novem- ber 20 to 22, fell within the definition of a deleterious substance pursuant to s. 34(1) of the Fisheries Act, it matters little as Celgar’s effluent was well within the prescribed limits for the deposit of deleterious substances under the PPER on those days. While s. 36(3) of the Fisheries Act provides that it is an offence to deposit a deleterious substance, s. 36(4)(b) provides that no person contravenes s. 36(3) by depositing a deleterious substance of a class, in a quantity or concentration, and under conditions authorized by or pursuant to applicable regulations. 296 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

75 Section 6(1) of the PPER authorizes a pulp mill to deposit BOD matter and suspended solids up to a certain daily maximum. Section 6(5) provides however that subsection (1) does not confer authority on a pulp mill operator to deposit acutely lethal effluent. Acutely lethal effluent is defined as effluent that fails the 96 hour Rainbow Trout Test. 76 The evidence in this case is that pursuant to the PPER, Celgar’s authorized daily deposits of TSS in 2008 was 29,644 kg/ day and in the case of BOD, 19,763 kg/day. It is clear that the effluent deposited into the Columbia River from the mill on November 21 and 22, 2008, the days on which I have found Celgar deposited a substance defined as deleterious under s. 34(1) of the Fisheries Act, did not exceed these maximum quantities. Celgar admits that on November 23 and 24, its effluent was acutely lethal and therefore not authorized by the PPER. In the absence of any evidence its effluent was acutely lethal on November 21 and 22, 2008, Celgar submits that its effluent deposits on these days were authorized by the PPER and therefore not in contravention of s. 36(3) of the Act. 77 The Crown submits that the definition of a deleterious substance in s. 34(1) is broad and includes those substances prescribed by regulation as being a deleterious substance. Celgar appears to have understood this and count 1 to mean that even if it could show its deposits were authorized by regulation and thus protected by s. 36(4)(b), if its effluent met the broader definition of deleterious under s. 34(1) of the Fisheries Act, it could still be convicted of the offence of depositing a deleterious substance contrary to s. 36(3). As such, Celgar made extensive written submissions regarding the correct interpretation of the Fisheries Act and the PPER. 78 While the Crown did underscore the general and broad nature of the definition of deleterious substance under s. 34(1), it seems to have conceded at para. 85 of its written submissions that if Celgar could show that what was deposited on the days in issue was a deleterious substance of a class, and in a quantity or concentration authorized by the PPER, it could bring itself within the protection of s. 36(4)(b) of the Fisheries Act. I find that Celgar has proven that its effluent on November 21 and 22, 2008, did not exceed the BOD and TSS limits authorized by the PPER. The question then becomes whether Celgar must also prove its effluent was not acutely lethal on those days in order to bring itself within the protection of s. 36(4)(b). If so, Celgar has not met its onus. R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 297

79 The question of onus in this regard is a matter of statutory interpretation. In my view it turns on the question whether Celgar is correct in its interpretation of the statutory scheme under the Fisheries Act and the PPER that pulp mill effluent is governed by the PPER alone. 80 In advancing this interpretation, Celgar submits that on any given day its effluent, like that of every other pulp mill in Canada, contains substances that would almost certainly meet the definition of deleterious pursuant to s. 34(1) of the Fisheries Act. Nonetheless, Celgar is authorized by provincial permit to deposit effluent into the Columbia River which may be deleterious provided it meets certain parameters. It is also not an offence under the Fisheries Act to deposit effluent which otherwise meets certain parameters under the PPER except unless it is acutely lethal. The question is, if Celgar’s effluent meets those federal and provincial parameters can it nonetheless still be found to have violated the Fisheries Act if its effluent falls within the broad definition of a deleterious substance under s. 34(1)? Celgar submits that if this is the case, it and every other pulp mill in Canada is likely in daily violation of the Fisheries Act. It seeks a determination that as far as federal law is concerned, the Celgar mill is governed solely by the PPER concerning the deposit of effluent and provided it complies with the PPER, it is not in violation of the Fisheries Act. Celgar submits that this is the only reasonable interpretation of the Act. 81 As the Supreme Court of Canada stated in Rizzo & Rizzo Shoes Ltd., Re, [1998] 1 S.C.R. 27 (S.C.C.) at para. 40, when interpreting legislation, the words of a provision must be interpreted by giving them their ordinary and grammatical meaning when read in harmony with the scheme, intent and object of the legislation. 82 In determining legislative intent in this case I have considered the Regulatory Impact Analysis Statement appended to the PPER, though explicitly not itself part of the PPER. Nonetheless, in R. v. Boutcher, 2001 NFCA 33 (Nfld. C.A.) at para. 76, the Newfoundland Court of Ap- peal was satisfied that Regulatory Impact Statements are recognized as authoritative sources for the purpose of construing federal legislation. Though not binding on the courts in this province, it is a well considered judgement and persuasive authority. 83 The Statement begins by identifying certain pollutants of concern associated with pulp and paper industry, those being suspended solids, biochemical oxygen-demanding matter, and effluent that is acutely lethal to fish. Prior to the coming into force of the PPER, the Statement indicates 298 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

that regulation of the pulp mill industry was scattered and in some cases, inapplicable to certain mills. The PPER was an attempt to streamline the regulatory framework and improve the protection of fish habitat. The pulp mill industry saw in the PPER a chance to eliminate legislative dis- tortions that may have negatively impacted the industry, while environmental groups favoured increasing regulations on the discharge of those common pulp mill pollutants and better monitoring requirements. These comments form the backdrop of the PPER. 84 Section 34(1) of the Fisheries Act provides a broad definition of a deleterious substance. The breadth of that definition has been confirmed in R. v. MacMillan Bloedel (Alberni) Ltd., [1979] B.C.J. No. 1498 (B.C. C.A.) and in the Fletcher decision noted above. While s. 36(3) of the Fisheries Act makes it an offence to deposit a deleterious substance in water frequented by fish, the Act also authorizes Cabinet to make regulations prescribing certain deleterious substances that may be deposited despite s. 36(3). I have already noted that in the case of pulp mills, s. 6 of the PPER authorizes the deposit in any water of BOD matter or suspended solids provided the matter or the quantity of the solids does not exceed an authorized load limit. Section 6 expressly states that it does not authorize the deposit of acutely lethal substances. 85 Acute lethality is determined by the 96 hour Rainbow Trout Test. If effluent tested at 100% concentrations kills more than 50% of the rainbow trout subjected to it during a 96 hour period, the effluent is determined to be acutely lethal. Section 3 of Schedule II of the PPER provides for a scheduling of testing to monitor for the presence of acutely lethal effluent and the effect of the effluent on Daphnia magna. Section 5(2) provides that if a sample of effluent from an outfall structure, here Cel- gar’s foam tank outlet, fails the Daphnia magna test, a grab sample from the outfall shall be collected without delay and subject, in effect, to an acute lethality test. As Celgar submits, for the purposes of the PPER, a Daphnia magna test is an indicator test for acute lethality. Effluent that fails a Daphnia magna test is not itself defined as a deleterious substance under the PPER. 86 If a mill operator does not commit an offence under s. 36(3) unless its effluent is acutely lethal (provided it is also not in excess of prescribed TSS and BOD load limits), it cannot be that this same operator can be convicted of depositing a substance that is less than acutely lethal. Efflu- ent that fails the Daphnia magna test may well be deleterious to fish or fish habitat, but it is not by definition acutely lethal. I do not see how in R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 299

the scheme of the Fisheries Act and the PPER, a mill operator can be subject to the definition of deleterious substances in both the Act and the regulations: the two clearly cannot coexist in this context. In my view the clear intent of the legislative scheme is to subject pulp mill operators to the PPER. 87 It follows that if Celgar is to be found to have contravened the Fisher- ies Act, the Crown must prove Celgar deposited a deleterious substance as that is defined in the PPER. To avail itself of the protection under s. 36(4)(b), Celgar must prove it deposited a deleterious substance of a class and in a quantity or concentration approved. In this case, that is that it deposited no more than the authorized amounts of TSS and BODs. As Celgar never had approval under the PPER to deposit acutely lethal substances, it need not prove it deposited any amounts of that substance to warrant the protection of s. 36(4)(b). It is for the Crown to prove Celgar contravened the Fisheries Act by depositing a deleterious substance, viz., acutely lethal effluent, and in this case that has not been proven for No- vember 20, 21 or 22, 2008. 88 Given the foregoing, I find that even though Celgar’s effluent deposited on November 21 and 22, 2008, was a deleterious substance as evidenced by its failure of the Daphnia magna tests, Celgar cannot be convicted on count 1 for those days as the Crown has not shown the deposits were acutely lethal and Celgar has otherwise brought itself within the protection of s. 36(4)(b) of the PPER. 89 However, as Celgar concedes it contravened the PPER on November 23 and 24, 2008, when it deposited acutely lethal effluent into the Co- lumbia River, and given my findings with regard to due diligence, Celgar must be convicted on the charge in count 1 that on November 23 and 24, 2008, it contravened s. 36(3) of the Fisheries Act.

Kienapple on Counts 1 to 4 90 Celgar submits that the principles set out in R. v. Kienapple (1974), 15 C.C.C. (2d) 524 (S.C.C.) must apply as counts 1 and 2 are duplicitous and a conviction on only one may be entered. Celgar also submits that counts 2 to 4 are duplicitous so that a conviction on only one of these counts may be entered if Celgar is found guilty on all four. 91 The Crown submits that as all the charges relate to different days and different conditions of the Permit, and in the case of count 1 to federal rather than provincial legislation, it is appropriate to enter convictions on all four counts. 300 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

92 In considering whether to apply Kienapple to stay any of the above four counts, I have been referred to a number of decisions. In R. v. Deslisle, 2003 BCCA 196 (B.C. C.A.), the Court of Appeal set out a convenient summary of the Kienapple test at para. 12 as follows: 12 The application of the Kienapple principle, which is designed to prevent multiple convictions arising from the same “matter”, “cause” or “delict”, was described by the Supreme Court of Canada in the following passage of Wigman v. The Queen (1987), 33 C.C.C. (3d) 97, at p. 103: ... it is sufficient to simply reiterate that a two-part test must be met for the Kienapple rule to apply: there must be both a factual and legal nexus between the several charges. Multiple convictions are only precluded under the Kienapple principle if they arise from the same “cause”, “matter”, or “delict”, and if there is sufficient proximity between the offences charged. This requirement of sufficient proximity between offences will only be satisfied if there is no additional and distinguishing element contained in the offence for which a conviction is sought to be precluded by the Kienapple principle. [emphasis added] 93 I do not think there is any doubt in this case that the cause or delict of these offences is the deposit of a toxic substance in Celgar’s ETS which I have found Celgar ought to have been able to avoid. The question is whether given this single cause there are any distinguishing elements of the offences contained in counts 1 and 2, firstly, and secondly, between counts 2 to 4. 94 To prove Count 1 of the Information, the Crown had to establish that Celgar deposited a deleterious substance, as defined by the PPER, into water frequented by fish. Effectively the Crown had to prove Celgar deposited acutely lethal effluent which is defined as effluent that failed the Rainbow Trout Test. To prove Count 2 of the Information, the Crown was required to prove that on November 23 and 24, Celgar violated s. 120(7) of the EMA by depositing effluent that failed to meet the Rainbow Trout Test contrary to the requirements of its Permit. 95 The Crown relies on the decision of Hutchison J. in R. v. Chung [1999 CarswellBC 492 (B.C. S.C.)], 1999 Can LII 6419, as authority for the proposition that charges under federal and provincial legislation even though similar are not duplicitous. The accused Chung was charged with possession of cigarettes on which federal and provincial taxes had not R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 301

been paid. In holding that the charges were not duplicitous, Hutchison J. noted that in a federal system such as ours, persons must expect to be subject to both federal and provincial regulation and, in that case, to pay federal and provincial taxes even on the same product albeit at different rates. Also notable is Justice Hutchison’s comment at para. 16 of the reasons that “(I)t is also a principle of law that each government may enforce their respective taxes by charges under the relevant acts and even though they involve the same transactions they create different and separate delicts within the meaning of the Kienapple principle.” 96 Despite the principle that in our federal system both levels of government must have authority to regulate within their sphere and to enforce their laws, I find that the Kienapple principle must apply to counts 1 and 2. In both counts the actus reas is the deposit of acutely lethal effluent into the Columbia River. In count 1, that act constitutes a violation of the Fisheries Act, while in count 2, that act constitutes a violation of the EMA. Were I to convict on both counts, Celgar would be punished twice for the identical delict. As I find the Kienapple principle to apply in this case, I enter a stay on count 1 of the Information. 97 In my view, however, the elements necessary to establish the offences charged in counts 3 and 4 are not duplicitous of those in count 2. Counts 2, 3 and 4 allege violations of Celgar’s Permit on different days and in regard to different terms of its Permit. I find that the Kienapple principle does not apply to these counts. 98 Given these findings, Celgar stands convicted on counts 2, 3 and 4 of the Information. I now turn to consider the charges in counts 5 and 6.

The Spill Ponds 99 As previously noted, when the spill occurred at Celgar’s mill site on November 18, 2008, a decision was made not to divert the spilled material to the spill ponds because they were full. It is not disputed by Celgar that the ponds were full for some time before November, 2008. Celgar submits that despite its best efforts it was unable to engage its reclamation strategy because of overall poor health problems with its ETS. 100 The Crown charges that Celgar’s failure to ensure its spill ponds had capacity constitutes an offence under the EMA. Celgar is charged with two counts of failing to comply with its Permit requirement to maintain its authorized works, viz., its spill ponds, in good working order between September 7 and November 25, 2008. Count 5 charges a failure to main- 302 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

tain the ponds in good working order contrary to s. 120(7) of the EMA and Count 6 charges a failure contrary to s. 120(6) of the Act. 101 Celgar maintains that though the spill ponds had no spill retention capacity, they were nonetheless in good working order. 102 Section 2.1 of the Celgar’s waste Permit requires Celgar to regularly inspect its authorized works and maintain them in good working order. The authorized works are defined in s. 1.1.3 of the Permit as follows: The authorized works are low rate activated sludge effluent treatment system which includes spill ponds, primary and secondary clarifiers, cooling ponds, leachate collection system associated with PR-01768, aerated biological pond and sludge handling/dewatering system, foam tank, cooling water heat exchangers and related appurtenances approximately shown on attached Site Plans A and B. 103 As the above definition evidences, the spill ponds are an integral part of Celgar’s ETS. The spill ponds cannot operate in isolation of the remainder of the authorized works, and their proper operation is somewhat dependent on the health of the other component parts of the ETS just as the function of the ponds are to assist in the health of the ETS, particularly the aeration basin. 104 The question with respect to counts 5 and 6 is whether the Crown has proven beyond a reasonable doubt that at the material times, the ponds were not maintained in good working order. The Crown submits that the very fact the ponds had no spill capacity between September 7 and No- vember 25, 2008, is sufficient evidence of the charges. 105 Celgar submits that the phrase in good working order must be interpreted as meaning in functioning order. Celgar maintains the spill ponds were functioning at the material times and thus were in good working order. 106 In support of its submission, Celgar relies on the definition of the word “working” as that is found in the Oxford English Dictionary (“OED”). The OED defines the word “working” as functioning or able to function. By way of example, Celgar submitted the case of R. v. Sera- phim (January 18, 1993), Doc. Rossland 4745 (B.C. Prov. Ct.) as a example wherein a works, in that case an effluent pond, was held not to have been in good working order because the pond’s liners had been breached. Clearly, if the purpose or function of the pond was to contain effluent, it would follow from a breach of the liner allowing an escape of effluent, that the pond was not in good working order. R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 303

107 In this case, as Celgar submits, there is no evidence the ponds were not in good working order in the sense they could not hold effluent. The problem in this case however, is that the ponds had no capacity to accept effluent. Whatever the purpose of the pond in R. v. Seraphim, the evidence is clear that in this case the purpose of the spill ponds is to protect the biology in the aeration basin. This is accomplished by receiving effluent that may otherwise be harmful to the bacteria in the aeration basin. Once there, one would obviously expect the ponds to be able to hold the effluent but it does not follow from the fact the ponds could hold the effluent that they were in good working order when they had no spill capacity over a period of several months. At that point, the spill ponds are really functioning only as storage ponds. 108 I find that the function of the spill ponds is to accept effluent which could endanger the bacteria in the aeration basin and to store that effluent for so long as may be necessary to ensure it can be received into the ETS without harming the bacteria. In this regard, the ponds serve two functions: on the one hand, the ponds offer spill capacity which is essential when the mill is running; on the other hand, the ponds offer storage capacity which is essential both when the mill is running and when it is in shut down mode. 109 In order to preserve the proper functioning of the ETS, of which the ponds are a component part, Celgar must maintain the ponds in such a manner as to keep them in good working order. I find that when the mill is operating, it is essential to the proper functioning of the ETS as a whole that the ponds be maintained in such a manner that they have both spill and storage capacity. In this context, when the ponds have no spill capacity, they cannot be said to be in good working order. The question why they were not in good working order, or what steps were taken to avoid such an occurrence is a matter for the defence of due diligence. 110 As there was no spill capacity in the two spill ponds at Celgar mill from September 7 to November 25, 2008, a time when the mill was fully operational, I find the Crown has proven the actus reas of counts 5 and 6. It remains to be determined whether Celgar exercised reasonable care in attempting to avoid committing these offences.

Due Diligence in regard to the Spill Ponds 111 The substance of Celgar’s case with respect to the lack of capacity of its two spill ponds in the fall of 2008 was that it was unable to reclaim the materials in them because of the condition of the bacteria in the ETS. 304 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Specifically, during those brief instances when Celgar attempted reclamation in September, October and November of 2008, on-line monitoring showed a direct correlation between these attempts and high TSS levels at the secondary clarifiers. In other words, Celgar concluded that its reclaiming efforts were adversely affecting the biology of the ETS - the very outcome the spill ponds were intended to protect against. 112 Celgar led evidence of efforts it made dating from April, 2005, to address its ETS performance. Ms. Mckay provided details of various efforts made as outlined in a list of actions and activities over those years. While all of these were not necessarily relevant to the health of the ETS in 2008, I accept that for much of 2007 and 2008, Celgar was making considerable effort to understand and address various ETS issues. 113 In October 2008, Ms. Mckay and her colleagues began to see elevated spikes in TSS levels at the foam tank. Those levels were charted on a graph entered in this trial as Exhibit 42 which among other things indicates that high TSS levels had been an ongoing concern for Celgar since 2006. Upon noting these levels, Ms. Mckay and others decided to seek the assistance and advice of Paul Klopping, an acknowledged expert in pulp waste management systems. Up to that point, Celgar had been using the services of an effluent treatment specialist who it had retained in 2007 but concluded that it needed a new approach. 114 In the trial of this matter, Mr. Klopping was tendered as an expert in pulp and paper effluent treatment systems able to give an opinion on the health of Celgar’s ETS in the fall of 2008. Mr. Klopping’s opinion, which was based on his consulting work done both before and after the November 18 spill, was that the suspected source of the high TSS levels at the secondary clarifier rested with the biology of the ETS. Among the several possible causes of the biological unrest in the ETS, Mr. Klopping testified that he quickly identified a flocculation issue with the effluent in the secondary clarifiers. In layman’s terms, Mr. Klopping observed that the bacteria in the secondary clarifiers was not coalescing in a manner that allowed it to settle properly in the secondary clarifier which in turn made it difficult for Celgar to capture the biological matter before it travelled to the foam tank from where it would be released into the Columbia River. 115 Among the several recommendations Mr. Klopping made to address this problem was for Celgar to take care with respect to in-mill spill control so as to avoid depositing into the ETS any material that would further exacerbate the flocculation problem. R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 305

116 At this point, the value of spill capacity in the spill ponds is obvious. However, I accept on the evidence that Celgar’s attempts at reclamation of the spill ponds in September, October and November leading up to the spill at issue tended to result in an elevation of the TSS levels at the secondary clarifier. In effect, Celgar found itself in a sort of catch-22 situation: if it reclaimed, it risked the health of the ETS; if it did not reclaim, it risked the health of the ETS. It’s only way out, short of finding other mechanisms for draining the spill ponds was, as Mr. Klopping put it, to take care with its in-mill spill practices. 117 I have no difficulty finding on the evidence that throughout the fall of 2008 it was not prudent for Celgar to reclaim from the spill ponds to the ETS. As Mr. Klopping put it, it was not only reasonable for Celgar to have used the spill ponds for longer term storage in the fall of 2008 pending resolution of the problems with the ETS, it was Celgar’s only option. 118 The Crown submitted that Celgar had several options by which it could have addressed its lack of spill capacity short of reclaiming to the primary clarifier. The first, a short term solution noted by Celgar in a document sent to the Ministry of Environment outlining options for dealing with the November 18 spill and entered as Exhibit 59 in the trial, was to use a surface pump to direct liquid from spill pond number 1 directly into the aeration basin. When asked about this option on cross examination, Ms. Mckay agreed that while this would resolve the problem of reclaiming fibre from the bottom of the spill ponds into the primary clarifier, it would not necessarily avoid impacting the bacteria in the aeration basin. 119 Given Mr. Klopping’s finding about the state of the health of the ETS in October 2008, and what I accept to have been Ms. Mckay’s observations regarding TSS levels at the foam tank as well as dissolved oxygen levels in the aeration basin after reclamation attempts in September, Oc- tober and November, I cannot accept that it was imprudent for Celgar not to have redirected spill pond material to the aeration basin in the circumstances. 120 In reaching this conclusion on the evidence it follows that I accept the evidence of Ms. Mckay regarding the apparent impact on the ETS by reclamation attempts in the fall of 2008. The Crown submits that her evidence and that of Mr. Browne must be rejected in its entirety as neither were credible witnesses. Both Ms. Mckay and Mr. Browne gave lengthy evidence in direct and on cross. I am satisfied that both gave their evidence honestly, directly and without any hesitation. There was nothing in 306 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

the demeanour of either witness that would suggest they lacked credibility, or that they were attempting to mislead the court. 121 It is the case that Ms. Mckay wrongly testified in direct that she sent the document entered in this trial as Exhibit 56 to the Ministry of Envi- ronment when in fact she had sent a similar document (entered in this trial as Exhibit 59) to the Ministry. The two are nearly identical but for the omission of a reference in the document entered as Exhibit 59 to the possibility of pumping liquid from spill pond number 1 to the aeration basin in Exhibit 59. I have no hesitation in accepting that Ms. Mckay was confused about the documents. 122 The Crown also points to Ms. Mckay’s testimony regarding spill pond capacity. Throughout the trial, the court was told that the spill ponds were full for most of September and all of October and November 2008, up to the time of the spill at the least. On cross examination Ms. Mckay agreed Celgar distinguished between spill pond capacity and what Celgar considered to be a full spill pond for operational purposes. Technically, the spill ponds had some 4,500 m3 of capacity from Sep- tember to November, 2008. Operationally they were regarded as having no capacity. 123 The Crown asks this court to infer from Ms. Mckay’s evidence that the reports may be inaccurate or misleading as they suggest spill capacity while Ms. Mckay maintains the ponds were full. I find that I cannot draw such an inference. I accept Ms. Mckay’s distinction between what is operationally considered a full pond and what technical capacity the ponds may have. I can in no way conclude from this that Ms. Mckay fabricated reports to or otherwise attempted to mislead the Ministry. 124 The Crown submits that contrary to the testimony of Ms. Mckay and Mr. Browne regarding Celgar’s attempts to reclaim from September through to November 25, 2008, Celgar’s own reclaim flow graph for 2008, entered as Exhibit 54 in the trial, demonstrates that Celgar made no attempts to reclaim during the time period charged. Ms. Mckay’s evidence is that the chart does show attempts to reclaim, albeit for short periods of time. For the remainder of the time, given the TSS levels, and other indicators pointing to the ill health of the biology in the aeration basin, decisions were made not to attempt a reclaim. 125 Tab D of Exhibit 1 contains Celgar’s effluent and emissions data for the months in issue as well as for August, 2008. Included are reports showing spill pond capacity. In September, 2008, it is noted that due to primary clarifier torque, spill pond reclaim was limited. For October and R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 307

November, it is noted that a decision was made not to reclaim the spill ponds due to upset or unstable conditions in the ETS and, in the case of November, also due to high primary clarifier torque. 126 The notes at Tab D of Exhibit 1 correspond with Ms. Mckay’s testimony and that of Mr. Browne. Their reasoning was supported by Mr. Klopping who opined that Celgar had no other choice. Given this evidence, I cannot draw the inference that Celgar acted imprudently in failing to reclaim the ponds over the material times. 127 With respect to the TSS, the Crown asks the court to conclude based on the graph entered as Exhibit 42 that in fact Celgar was not having TSS problems in September 2008, despite the testimony of Ms. Mckay. I find that I cannot conclude from Exhibit 42, which is based on a monthly average of TSS and BOD, that Celgar had no TSS problems in Septem- ber. It is obvious that Celgar’s TSS problems in September were less serious relative to October and November but they bear close similarity to TSS measurements in December when TSS levels were still problematic. 128 Finally, it is implicit in the Crown’s submissions that another option open to Celgar in September to November 2008, was to shut down operations until it resolved its ETS problems. I find it clear on the evidence that this was not a realistic option. Rather, I am satisfied that had the mill shut down without undertaking the requisite long term planning for a shut down which Ms. Mckay measured in three months or more, the effect would have been to starve and thereby destroy the bacteria in the aeration basin. Celgar cannot be faulted for failing to take such a dra- matic and potentially harmful step. 129 On all of the evidence, I find that Celgar had no realistic option but to limit or cease altogether its reclamation attempts during the months charged while it attempted to resolve its ETS problems. In my view, the central question on due diligence in regard to counts 5 and 6 is whether Celgar acted reasonably in attempting to address its ETS problems knowing that it was unable to reclaim the spill ponds and knowing of the risk of a permit failure created by that fact. 130 In terms of assessing due diligence, I have found it helpful to consider the factors referred to by counsel for Celgar and taken from the cases R. v. Commander Business Furniture Inc., [1992] O.J. No. 2904 (Ont. Prov. Div.) and R. v. Placer Developments Ltd. (1983), [1985] B.C.W.L.D. 581 (Y.T. Terr. Ct.) [(1983), 1983 CarswellYukon 14 (Y.T. Terr. Ct.)]. 308 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

131 I have already noted that due diligence at this juncture must be considered bearing in mind that Celgar knew its ETS was in a fragile state and that it had no realistic option other than to keep operating even though it had limited or no reclamation ability. In these circumstances, it knew that a Permit failure was likely particularly if great care was not taken at the operational end to ensure against unnecessary spills of toxic material into the main sewer line. 132 In these circumstances, it would be expected that Celgar would make all reasonable efforts to resolve its ETS problems as quickly as possible. I note also by way of background that though Celgar had been wrestling with ETS issues since 2005, as evidenced by records and viva voce evidence in this trial, these were not continuing problems of the same kind. Rather, there appears to have been a litany of problems with the ETS both mechanical and biological and from time to time Celgar worked on those problems and at the same time attempted to engineer the ETS such that it would work optimally and there would be no Permit violations. 133 As Mr. Klopping testified, problems with the ETS, particularly biological problems, can arise with little or no notice. It is clear from the evidence that in the months leading up to the November spill, Celgar had been wrestling with biological problems in the ETS. It contracted with Mr. Klopping in October, 2008, before the spill in an attempt to understand and resolve those problems. 134 I cannot say based on all of the evidence in this trial that Celgar did not move quickly or act reasonably in attempting to understand and resolve its ETS issues before the spill on November 18, 2008. I find that although Celgar’s spill ponds were not maintained in good working order on the dates charged, Celgar made all reasonable efforts and in doing so exercised due diligence in its efforts to avoid the commission of these offences. In the result, Celgar is acquitted of the charges in counts 5 and 6.

Summary of Reasons 135 Celgar has conceded the actus reas of counts 2 through 4 of the Infor- mation and the actus reas of count 1 for the days of November 23 and 24, 2008. Celgar submitted that though it exercised all due diligence, it could not avoid having committed these offences. I am not satisfied on the evidence that Celgar has discharged its onus with regard to the defence of due diligence with respect to these counts and therefore I have convicted Celgar of these offences. However, I have found that the R. v. Zellstoff Celgar Ltd. Partnership L.J. Mrozinski Prov. J. 309

Crown has not proven the charge in count 1 for the days of November 20, 21 and 22, because, at least with respect to the 21 and 22, the Crown has not shown Celgar deposited an acutely lethal substance into the Co- lumbia River on those dates. Having concluded that proof of both count 1 and 2 required the Crown to prove Celgar deposited effluent that did not pass the Rainbow Trout Test, i.e., that it was acutely lethal, I have applied the principles of Kienapple to counts 1 and 2 and I enter a stay on count 1. 136 Though I found that Celgar failed to maintain its spill ponds in good working order contrary to ss. 120(6) and (7) of the EMA, I am satisfied Celgar exercised due diligence in attempting to avoid these offences and as such I have acquitted Celgar on counts 5 and 6 of the Information. Celgar is hereby convicted on counts 2, 3 and 4 of the Information as charged. Defendant convicted of three counts. 310 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

[Indexed as: Nortel Networks Corp., Re] In the Matter of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as Amended And In the Matter of a Plan of Compromise or Arrangement of Nortel Networks Corporation, Nortel Networks Limited, Nortel Networks Global Corporation, Nortel Networks International Corporation and Nortel Networks Technology Corporation (Applicants) Ontario Superior Court of Justice [Commercial List] Docket: 09-CL-7950 2012 ONSC 1213 Morawetz J. Judgment: March 9, 2012 Bankruptcy and insolvency –––– Companies’ Creditors Arrangement Act — Initial application — Proceedings subject to stay — Miscellaneous –––– Remediation orders by Ministry of Environment — Insolvent company made filing and obtained stay under Companies’ Creditors Arrangement Act (CCAA) — Insolvent company identified environmental impacts arising from terminated operations at five sites, and disposed of its interests in most sites — Ministry of Environment (MOE) purported to make orders requiring extensive remediation steps at sites pursuant to Environmental Protection Act (EPA) — Insolvent company brought motion for declaration that MOE orders were stayed by CCAA — Motion granted — MOE orders were stayed by CCAA — Issuance of MOE orders would result in insolvent company being required to incur financial obligation, which was prohibited by stay under CCAA — Issue as to how insolvent debtors should deal with environmental conditions was addressed in s. 14.06(8) of Bankruptcy and Insolvency Act (BIA) — Section 14.06(8) of BIA made it clear that any claim of MOE arising from environmental conditions was provable claim in CCAA proceeding — Section 11.8(9) of CCAA applied, which was similar to s. 14.06(8) of BIA — Once MOE required insolvent company to take steps that require monetary expenditure, such actions were considered to be part of claims process and must be stayed — There was no distinction in insolvency context based on whether order was regulatory or financial — If insolvent company had no ongoing operations, environmental regulator had to rely on its security, failing which it had unsecured status. Bankruptcy and insolvency –––– Proving claim — Provable debts — Miscel- laneous –––– Remediation orders by Ministry of Environment — Insolvent company made filing and obtained stay under Companies’ Creditors Arrangement Nortel Networks Corp., Re 311

Act (CCAA) — Insolvent company identified environmental impacts arising from terminated operations at five sites, and disposed of its interests in most sites — Ministry of Environment (MOE) purported to make orders requiring extensive remediation steps at sites pursuant to Environmental Protection Act (EPA) — Insolvent company brought motion for declaration that MOE orders were stayed by CCAA — Motion granted — MOE orders were stayed by CCAA — Issuance of MOE orders would result in insolvent company being required to incur financial obligation, which was prohibited by stay under CCAA — Issue as to how insolvent debtors should deal with environmental conditions was addressed in s. 14.06(8) of Bankruptcy and Insolvency Act (BIA) — Section 14.06(8) of BIA made it clear that any claim of MOE arising from environmental conditions was provable claim in CCAA proceeding — Section 11.8(9) of CCAA applied, which was similar to s. 14.06(8) of BIA — Once MOE required insolvent company to take steps that require monetary expenditure, such actions were considered to be part of claims process and must be stayed — There was no distinction in insolvency context based on whether order was regulatory or financial — If insolvent company had no ongoing operations, environmental regulator had to rely on its security, failing which it had unsecured status. Environmental law –––– Constitutional issues — Jurisdiction to enact environmental legislation — Conflicting legislation –––– Companies’ Creditors Arrangement Act — Insolvent company made filing and obtained stay under Companies’ Creditors Arrangement Act (CCAA) — Insolvent company identified environmental impacts arising from terminated operations at five sites, and disposed of its interests in most sites — Ministry of Environment (MOE) purported to make orders requiring extensive remediation steps at sites pursuant to Environmental Protection Act (EPA) — Insolvent company brought motion for declaration that MOE orders were stayed by CCAA — Motion granted — MOE orders were stayed by CCAA — Issuance of MOE orders would result in insolvent company being required to incur financial obligation, which was prohibited by stay under CCAA — Issue as to how insolvent debtors should deal with environmental conditions was addressed in s. 14.06(8) of Bankruptcy and Insolvency Act (BIA) — Section 14.06(8) of BIA made it clear that any claim of MOE arising from environmental conditions was provable claim in CCAA proceeding — Section 11.8(9) of CCAA applied, which was similar to s. 14.06(8) of BIA — Once MOE required insolvent company to take steps that require monetary expenditure, such actions were considered to be part of claims process and must be stayed — There was no distinction in insolvency context based on whether order was regulatory or financial — If insolvent company had no ongoing operations, environmental regulator had to rely on its security, failing which it had unsecured status. 312 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Cases considered by Morawetz J.: AbitibiBowater Inc., Re (2010), 68 C.B.R. (5th) 1, 52 C.E.L.R. (3d) 17, 2010 QCCS 1261, 2010 CarswellQue 2812, [2010] Q.J. No. 4006, EYB 2010- 171844 (Que. S.C.) — considered AbitibiBowater Inc., Re (2010), 68 C.B.R. (5th) 57, 52 C.E.L.R. (3d) 1, 2010 CarswellQue 4782, 2010 QCCA 965, EYB 2010-174149 (Que. C.A.) — referred to AbitibiBowater Inc., Re (2010), (sub nom. Newfoundland and Labrador v. Abitibibowater Inc.) 413 N.R. 397 (note), 2010 CarswellQue 11963, 2010 CarswellQue 11964 (S.C.C.) — referred to Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2000), 2000 CarswellOnt 3258, 191 D.L.R. (4th) 210, 50 O.R. (3d) 670, 37 R.P.R. (3d) 144, [2000] O.J. No. 3386 (Ont. S.C.J.) — referred to Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 58 O.R. (3d) 481, 211 D.L.R. (4th) 1, 157 O.A.C. 135, 2002 CarswellOnt 850, 50 R.P.R. (3d) 1, [2002] O.J. No. 1023 (Ont. C.A.) — referred to Canadian Imperial Bank of Commerce v. Isobord Enterprises Inc. (2002), 32 C.B.R. (4th) 185, 44 C.E.L.R. (N.S.) 281, 164 Man. R. (2d) 315, 2002 MBQB 127, 2002 CarswellMan 185, [2002] M.J. No. 172 (Man. Q.B.) — considered Canadian Western Bank v. Alberta (2007), [2007] I.L.R. I-4622, 281 D.L.R. (4th) 125, [2007] 2 S.C.R. 3, 409 A.R. 207, 402 W.A.C. 207, 49 C.C.L.I. (4th) 1, 2007 SCC 22, 2007 CarswellAlta 702, 2007 CarswellAlta 703, 362 N.R. 111, 75 Alta. L.R. (4th) 1, [2007] 8 W.W.R. 1, [2007] S.C.J. No. 22 (S.C.C.) — referred to General Chemical Canada Ltd., Re (2006), 53 C.C.P.B. 284, 22 C.B.R. (5th) 298, 2006 CarswellOnt 4675, 23 C.E.L.R. (3d) 184, [2006] O.J. No. 3087 (Ont. S.C.J. [Commercial List]) — considered General Chemical Canada Ltd., Re (2007), 228 O.A.C. 385, (sub nom. Harbert Distressed Investment Fund, L.P. v. General Chemical Canada Ltd.) 2007 C.E.B. & P.G.R. 8258, 35 C.B.R. (5th) 163, 61 C.C.P.B. 266, 31 C.E.L.R. (3d) 205, 2007 ONCA 600, 2007 CarswellOnt 5497 (Ont. C.A.) — considered General Chemical Canada Ltd., Re (2008), 2008 CarswellOnt 879, 2008 Cars- wellOnt 880, 385 N.R. 395 (note), 252 O.A.C. 396 (note) (S.C.C.) — referred to Lamford Forest Products Ltd., Re (1991), 10 C.B.R. (3d) 137, 8 C.E.L.R. (N.S.) 186, 63 B.C.L.R. (3d) 388, 86 D.L.R. (4th) 534, 1991 CarswellBC 443, [1991] B.C.J. No. 3681 (B.C. S.C.) — considered Nortel Networks Corp., Re (2009), 256 O.A.C. 131, 2009 CarswellOnt 7383, 2009 ONCA 833, 59 C.B.R. (5th) 23, 77 C.C.P.B. 161, (sub nom. Sproule v. Nortel Networks Corp.) 2010 C.L.L.C. 210-005, (sub nom. Sproule v. Nortel Nortel Networks Corp., Re 313

Networks Corp., Re) 99 O.R. (3d) 708, [2009] O.J. No. 4967 (Ont. C.A.) — referred to Nortel Networks Corp., Re (2009), 2009 CarswellOnt 4467, 55 C.B.R. (5th) 229, [2009] O.J. No. 3169 (Ont. S.C.J. [Commercial List]) — considered Parkinson v. Reid (1966), [1966] S.C.R. 162, 1966 CarswellOnt 58, 56 D.L.R. (2d) 315 (S.C.C.) — referred to Royal Bank v. MacPherson (2009), 2009 CarswellOnt 5391, 311 D.L.R. (4th) 361, 86 R.P.R. (4th) 253 (Ont. Div. Ct.) — referred to Shirley, Re (1995), 36 C.B.R. (3d) 101, 18 C.E.L.R. (N.S.) 43, 129 D.L.R. (4th) 105, 1995 CarswellOnt 936, [1995] O.J. No. 3060 (Ont. Bktcy.) — considered Stelco Inc., Re (2005), 253 D.L.R. (4th) 109, 75 O.R. (3d) 5, 2 B.L.R. (4th) 238, 9 C.B.R. (5th) 135, 2005 CarswellOnt 1188, 196 O.A.C. 142, [2005] O.J. No. 1171 (Ont. C.A.) — considered Strathcona (County) v. Fantasy Construction Ltd. Estate (Trustee of) (2005), 47 Alta. L.R. (4th) 138, 12 M.P.L.R. (4th) 167, [2006] 3 W.W.R. 195, 386 A.R. 338, 2005 ABQB 559, 2005 CarswellAlta 1018, 13 C.B.R. (5th) 145, 256 D.L.R. (4th) 536, [2005] A.J. No. 915 (Alta. Q.B.) — considered Ted Leroy Trucking Ltd., Re (2010), (sub nom. Century Services Inc. v. Canada (A.G.)) [2010] 3 S.C.R. 379, [2010] G.S.T.C. 186, 12 B.C.L.R. (5th) 1, (sub nom. Century Services Inc. v. A.G. of Canada) 2011 G.T.C. 2006 (Eng.), (sub nom. Century Services Inc. v. A.G. of Canada) 2011 D.T.C. 5006 (Eng.), (sub nom. Leroy (Ted) Trucking Ltd., Re) 503 W.A.C. 1, (sub nom. Leroy (Ted) Trucking Ltd., Re) 296 B.C.A.C. 1, 2010 SCC 60, 2010 Car- swellBC 3419, 2010 CarswellBC 3420, 409 N.R. 201, (sub nom. Ted LeRoy Trucking Ltd., Re) 326 D.L.R. (4th) 577, 72 C.B.R. (5th) 170, [2011] 2 W.W.R. 383 (S.C.C.) — considered Statutes considered: Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 Generally — referred to s. 2 “claim provable in bankruptcy” — referred to s. 14.06 [en. 1992, c. 27, s. 9(1)] — considered s. 14.06(8) [en. 1997, c. 12, s. 15(1)] — considered s. 121 — referred to s. 121(1) — considered Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 Generally — referred to s. 2(1) “claim” — referred to s. 11 — considered s. 11.1(2) [en. 1997, c. 12, s. 124] — considered s. 11.8(8) [en. 1997, c. 12, s. 124] — considered s. 11.8(9) [en. 1997, c. 12, s. 124] — considered s. 12(1) — considered 314 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Environmental Protection Act, R.S.O. 1990, c. E.19 Generally — referred to s. 150 — referred to s. 157 — referred to s. 157.1 [en. 1998, c. 35, s. 16] — referred to s. 157.1(1) [en. 1998, c. 35, s. 16] — referred to s. 196(1) — referred to s. 196(2) — referred to s. 197(1) — referred to s. 197(2) — referred to Words and phrases considered: claim Subsection 12(1) of the CCAA [Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36] (as it existed in January, 2009, and which applies in the present case) defines “claim” as “any indebtedness, liability or obligation of any kind that, if unsecured, would be a debt provable in bankruptcy within the meaning of the Bankruptcy and Insolvency Act” [R.S.C. 1985, c. B-3 (the “BIA”)]. The meaning of “indebtedness, liability or obligation” is to be determined by reference to whether a claim is a debt provable in bankruptcy. The reference to “debt provable” in s. 12(1) of the CCAA, which references the BIA, has to be considered in the context of s. 2 of the BIA, which refers to “claim provable” and directs that “claim provable in bankruptcy”, “provable claim” and “claim provable” include any claim or liability provable by a creditor in proceedings under the BIA. Subsection 121(1) of the BIA addresses what are claims provable. It provides: All debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt shall be deemed to be claims provable in proceedings under this Act. defining event . . . it is necessary to take into account the defining event for a claim [in bankruptcy]. In this case, the defining event is the point at which the [environmental] condition arose or the damage occurred.

MOTION by insolvent company for authorization that it cease performing remediation and declaration that claims in relation to remediation requirements by Ministry of Environment be subject to stay under Companies’ Creditors Ar- rangement Act. Nortel Networks Corp., Re Morawetz J. 315

Alan Mersky, Nicholas Daube for Applicants, Nortel Networks Corporation et al Joseph Pasquariello, Christopher Armstrong for Monitor, Ernst & Young Inc. Ian Brady, Matthew Page for Sydney Street Properties Corp. Lyndon Barnes for Directors of Nortel Networks Corporation Leonard Marsello, William MacLarkey, Joshua Hunter for Her Majesty The Queen in Right of Ontario, as Represented by the Ministry of the Environment R. Benjamin Mills for Corporation of the City of Belleville, Algonquin and Lakeshore Catholic District School Board Andrew Gray for Nortel Networks Inc. Craig Mills, Tamara Farber for 2058756 Ontario Limited Lee Cassey, Jonathan Bell for Nortel Informal Noteholder Group Jane Dietrich, Alex MacFarlane for Official Committee of Unsecured Creditors Thomas McCrae, Arthur O. Jacques for Nortel Canadian Continuing Employees Brett Harrison for Rogers Corporation

Morawetz J.:

1 A number of motions, detailed below, were brought in connection with environmental issues affecting Nortel Networks Corporation et al (collectively, “Nortel”). 2 The primary motion was brought by Nortel (the “Nortel Motion”). Nortel seeks authorization and direction that it cease performing any remediation at or in relation to the Impacted Sites (defined below) and a declaration that any claims in relation to such current or future remediation requirements by the Ministry of the Environment (“MOE”) or any other person (as defined in the Initial Order) against Nortel or their current or former directors or officers in relation to the Impacted Sites be subject to resolution and determination in accordance with the terms of the Amended and Restated Claims Procedure Order dated July 30, 2009 (the “CP Order”) and the Claims Resolution Order dated September 16, 2010 (the “CR Order”). 3 Nortel also seeks an order repudiating or disclaiming any contractual obligations to carry out remediation requirements at the Impacted Sites; an order declaring that the relief sought by the MOE Orders (defined below; referred to as the “2009 Order” in Nortel’s Notice of Motion) is financial and monetary in nature and that the MOE Orders are stayed by the Stay of Proceedings (the “Stay”) set out in paragraphs 14 and 15 of the Initial Order dated January 14, 2009, as amended and restated (the “Initial Order”); a declaration that the proceedings before the Ontario En- vironmental Review Tribunal in relation to the MOE Orders be stayed 316 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

and finally, advice and direction with respect to the Retained Lands at the London site (defined below). 4 Sydney Street Properties Corporation (“SSPC”) brought a motion re- questing that Nortel and its environmental consultants disclose and produce to SSPC all non-privileged documentation relating to the historical remediation and monitoring of the environmental condition of the property located at 250 Sydney Street, Belleville, Ontario and surrounding properties. The SSPC motion also requested an order extending the claims bar date to allow SSPC to file an amended claim related to the pollution at 250 Sydney Street, Belleville, to the later of 90 days from the date of determination of the Nortel Motion or 15 days from the date of approval by the MOE of the work plan required pursuant to the Direc- tors’ Order of September 7, 2011. The SSPC motion also requested a declaration that the revised proof of claim dated August 22, 2011 of SSPC is permitted to be filed with the Monitor and is not barred under the CP Order. 5 The SSPC motion was adjourned to a scheduling appointment within 30 days of the disposition of the Nortel Motion. 6 The Corporation of the City of Belleville and the Algonquin and Lakeshore Catholic District School Board brought a motion similar to that of SSPC, relating to property in Belleville, Ontario. This motion was also adjourned to a scheduling appointment within 30 days of the disposition of the Nortel Motion. 7 Nortel also served a Notice of Constitutional Question indicating that Nortel intended to question the constitutional applicability of the Envi- ronmental Protection Act, R.S.O. 1990, c. E. 19 (the “EPA”), in particular sections 18, 157, 157.1 (1), 196 (1), 196 (2), 197 (1) and 197 (2).

Overview 8 The Nortel Motion arises from the untidy intersection of the CCAA and, in particular, the Stay provided for in the Initial Order and the powers of the MOE to make orders with respect to the remediation of real property in Ontario. 9 Nortel and its predecessors once conducted manufacturing operations in Ontario which were largely terminated and the sites disposed of in the late 1990s. Nortel advises that in conjunction with the disposition of these sites, it identified environmental impacts arising from past operations at five Impacted Sites. Nortel Networks Corp., Re Morawetz J. 317

10 At the time of its CCAA filing on January 14, 2009, Nortel had disposed of the Impacted Sites with the exception of a partial interest in one Impacted Site in London, Ontario. At the time of filing, Nortel was not subject to any MOE remediation orders. Nortel takes the position that it was conducting limited remediation of some of the Impacted Sites on a contractual or voluntary basis. 11 Nortel takes the position that subsequent to the CCAA filing, but prior to the filing of the Nortel Motion, the MOE purported to make an order at one Impacted Site in London, Ontario and since the service of the Nortel Motion, the MOE has purported to: (a) revoke, reissue and serve a new order for the Impacted London Site; and (b) prepare orders concerning three other Impacted Sites (collectively, with the order for London, the “MOE Orders”). 12 Nortel raises the concern that the MOE Orders require extensive further remediation steps and it estimates that fully responding to the MOE Orders would require minimum expenditures of $18 million. 13 Nortel takes the position that the MOE Orders are in substance and effect requirements for it to pay money. 14 Nortel submits that the MOE already may access certain statutory remedies in insolvency and that the MOE Orders fall outside those remedies, effectively creating an unlegislated priority and exceeding the ambit of a regulatory action. 15 Consequently, Nortel requests a declaration that the MOE Orders are stayed by the Stay and of no force and effect. 16 Not surprisingly, the overview provided by the MOE is significantly different. 17 The MOE points out that Nortel, as a former and current owner of environmentally contaminated property, is subject to regulatory obligations under the EPA which are in the nature of performance obligations. Further, on the facts of this case, the MOE submits that these performance obligations have not advanced to the point of being “claims” that can be stayed pursuant to s. 11 of the CCAA or compromised under a plan of arrangement.

The Facts 18 As early as the 1940s, Nortel and its predecessors operated manufacturing facilities in Ontario which involved the use of various hazardous 318 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

substances, particularly, chlorinated solvents (also known as volatile or- ganic compounds, “VOCs”). In the late 1990s, Nortel disposed of the majority of its land holdings in Ontario and, in conjunction with such dispositions, identified environmental impacts in soil and groundwater at manufacturing sites in Brampton (the “Brampton Site”), Brockville (the “Brockville Site”), Kingston (the “Kingston Site”), Belleville (the “Belleville Site”) and London (the “London Site”) (collectively, the “Im- pacted Sites”). 19 As of the date of CCAA filing, Nortel retained a partial interest in one of the Impacted Sites (London). The other sites were sold off in the prior two decades. 20 Notwithstanding the sales, Nortel had undertaken investigation, remediation, monitoring and risk assessment activities at the Impacted Sites. The MOE was generally apprised of such activities, with variations on a site-by-site basis. Nortel advises that it has invested approximately $30.2 million on these remediation efforts since the late 1990s. 21 In the facta filed by Nortel and the MOE, considerable detail is provided with respect to the status of remediation at the Impacted Sites as well as the status of various orders issued by the MOE. 22 Summary information was also set out in the 66th and 74th Reports of the Monitor.

Brampton 23 Nortel ceased manufacturing operations at the Brampton Site in 1999 and the property was sold in 2005. On June 30, 2011, Nortel entered into a Transition Agreement (the “Brampton Transition Agreement”) with Rogers Communication Inc. (“Rogers”). Under the Brampton Transition Agreement, Nortel and Rogers agreed to a gradual cessation of Nortel’s environmental risk assessment obligations at the Brampton property in order to effect an orderly transition of environmental responsibilities in relation to the property. Nortel has obtained court approval of the Bramp- ton Transition Agreement. There are no MOE Orders relating to the Brampton Site. The execution of Nortel’s obligations under the Bramp- ton Transition Agreement has concluded all issues relating to the Bramp- ton Site.

Brockville 24 In 1999, Nortel sold the Brockville Site and its associated manufacturing operations. The subsequent owner (SCI) ceased manufacturing op- Nortel Networks Corp., Re Morawetz J. 319

erations in approximately 2004. The Site was then sold in 2006 and is now used as a warehouse facility. 25 At the time of Nortel’s acquisition of the Brockville Site, environmental impacts to groundwater had been identified, including trichloro- ethylene (“TCE”). Remediation activities to extract and treat impacted groundwater were initiated during Nortel’s ownership. At the time of its sale of the site, Nortel arranged access to conduct environmental work. To date, Nortel continues to conduct remediation activities on a contractual basis by pumping and treating impacted groundwater. 26 Nortel has provided annual updates to the MOE and the owner of the Brockville Site. Prior to this motion, there were no MOE Orders sought or enforced with respect to the Brockville Site. 27 After service of this motion, the MOE posted a draft order on the Environmental Bill of Rights (“EBR”) registry for public comment. The draft order requires Nortel and other responsible parties to submit and implement a workplan for additional groundwater investigations at and related to the Brockville Site in order to confirm the extent of contamination. The draft order will also require the implementation and completion of the remaining remediation and/or monitoring work and the decommissioning of the monitoring and recovery wells. 28 Nortel estimates these environmental efforts will cost a minimum of $4.5 million over an estimated period of 18 years. The current property owner has filed a claim $16.5 million in the CCAA claims process for related amounts. 29 The MOE submits that it is premature to fix the costs of the work required by the draft order. The draft order requires the submission of a workplan for review and approval, which will include investigations to determine the nature and extent of contamination. The MOE further takes the position that until these investigations are undertaken and the workplan is approved, the costs associated with the workplan are unknown. 30 At the current time, Nortel is engaged in minimal maintenance operations at the Brockville Site.

Kingston 31 Nortel sold the Kingston Site and its associated manufacturing operations in 1995. Manufacturing operations were subsequently discontinued around 2003. 320 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

32 Impacts to soil and groundwater were identified with respect to aboveground and underground storage tanks (containing VOCs) formerly located at the Kingston Site. In the course of Nortel’s remediation efforts to address the contamination, numerous monitoring wells were installed at the Kingston Site. 33 Nortel has provided updates regarding the status of remediation activities to the owner of the Kingston Site and the MOE has been aware of this work. Prior to the Nortel Motion, there were no MOE Orders sought or enforced with respect to the Kingston Site. 34 In contrast to Nortel’s statement, the MOE alleges that it appears that between 1996 and April 2011, Nortel did not make any contact with the MOE concerning the Kingston Site, nor did it provide the MOE with any reports. 35 Nortel, with the assistance of its environmental consultant, Golder Associates Ltd. (“Golder”), has assessed the risk to human health and the environment at the Kingston Site as low. Contrary to Nortel’s assertions, however, the MOE alleges that adverse effects related to soil vapour and groundwater impacts may arise, and migration may continue if an appropriate remediation and monitoring program is not implemented. 36 After service of the Nortel Motion, the MOE posted a draft Director’s Order on the EBR Registry for public comment. This draft order requires Nortel and other responsible parties to propose additional groundwater investigations, identify the remaining remediation and/or monitoring work required to remediate the site to appropriate cleanup standards, propose a timetable for the completion of the investigations, remediation and monitoring, and propose a decommissioning plan for the existing monitoring and recovery wells. 37 Nortel estimates these efforts will cost a minimum of $1 million. The current property owner has filed a claim of $5.2 million in the CCAA claims process. 38 The MOE alleges that it is premature to quantify the cost of required work under the draft order because the MOE does not know whether and to what extent the environmental conditions at the Kingston Site have been addressed since 1996. Consequently, the MOE contends that it is speculative to attach a cost estimate to the work required by the draft order. Nortel Networks Corp., Re Morawetz J. 321

Belleville 39 Nortel ceased active manufacturing activities at the Belleville Site in late 1999 and 2000, when the Belleville Site was sold. In conjunction with the sale, Nortel entered into a lease with SSPL in order to conduct research and design activities as well as environmental work at the Belle- ville Site. Nortel’s research and design activities continued at the site until 2009, when the operations were sold and the operating facilities sublet for a short period. 40 Nortel conducted an environmental investigation at the time of the Belleville Site’s sale and discovered impacts to soil and groundwater, including TCE impacts. To date, Nortel has performed remediation work on the Belleville Site on a contractual basis. 41 Nortel and Golder have assessed the risk to human health and the environment at the Belleville Site as low. The MOE disputes these assertions. 42 Prior to this motion, there were no MOE Orders sought or enforced with respect to the Belleville Site. After service of the Nortel Motion, the MOE posted a draft order on the EBR Registry for public comment. 43 Nortel estimates these remediation efforts will cost a minimum of $2.5 million. The current property owner has filed a claim of $10 million in the CCAA proceedings for related amounts. 44 The MOE disputes these figures and submits that it is premature to fix the costs of the work required by the draft order and that until the nature and extent of the required work is identified by Nortel and approved by the MOE, the costs associated with such work are unknown.

London 45 Nortel terminated manufacturing operations at the London Site in 1994. Nortel has identified environmental impacts to soil and groundwater, including the presence of TCE. 46 In 1997 and 1998, Nortel sold portions of the London Site (the “Transferred Lands”) while maintaining ownership of the remainder (the “Retained Lands”). 47 To date, Nortel has performed remediation activities on various portions of the London Site, doing so on a voluntary basis or subject to contractual obligations with purchasers, with notice provided to and approvals obtained from the MOE as necessary. In October 2009, the MOE issued an order (the “First London Order”) which, according to Nortel, 322 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

requires investigation and reporting as to the contamination at, and ongoing treatment activities conducted on the boundary between the Retained Lands and the Transferred Lands. 48 In November 2009, Nortel requested particulars and filed an appeal of the First London Order before the Environmental Review Tribunal (“ERT”). The appeal has been adjourned pending Nortel’s motion in these proceedings. 49 After service of this motion, the MOE posted a draft Director’s Order on the EBR Registry. The order requires Nortel to provide the MOE with adequate information to make a proper evaluation of the environmental situation. 50 Nortel estimates that the remediation efforts set out in the Second London Order will cost a minimum of $12 million. The MOE disputes these figures, contending that any estimate of remediation cost at this point is premature because the order first requires an assessment of the nature and extent of contamination, the results of which will determine the extent of any remedial work. 51 Currently, Nortel has arrived at a mutual accommodation with the MOE pending the release of these reasons. This accommodation provides that Nortel will continue in its small scale maintenance efforts at London. The ERT hearing rights have been preserved and adjourned.

Issues and Law 52 Nortel sets out the issue raised on this motion as follows: “Are the MOE Orders subject to the Stay?”. 53 From the standpoint of the MOE, Nortel’s motion raises the following issues: (a) whether the MOE Orders referenced constitute compromisable claims under the CCAA; (b) whether the MOE Orders referenced are stayed by operation of paragraphs 14 and 15 of the Initial Order or should be otherwise stayed; and (c) whether, given principles of constitutional law, the MOE Orders ought to be characterized as compromisable “claims” and stayed. 54 The relevant portion of the Initial Order reads as follows: [14] THIS COURT ORDERS that until and including February 13, 2009 or such later date as this court may order (the “Stay Period”), Nortel Networks Corp., Re Morawetz J. 323

no proceeding or enforcement process in any court or tribunal (each, a “Proceeding”) shall be commenced, or continued against or in respect of any of the Applicants or the Monitor, or affecting the Busi- ness or the Property, except with the written consent of the affected Applicant and the Monitor, or with leave of this court, and any and all Proceedings currently under way against or in respect of the affected Applicant or affecting the Business or the Property are hereby stayed and suspended pending further order of this court. [15] THIS COURT ORDERS that during the Stay Period, all rights and remedies of any individual, firm, corporation, governmental body or agency, or any other entities (all of the foregoing, collectively being “Persons” and each being a “Person”) against or in respect of the Applicants’ or the Monitor, or affecting the business or the property, are hereby stayed and suspended except with the written consent of the affected Applicants and the Monitor, or leave of this court, provided that nothing in this order shall (i) empower the Applicants to carry on any business which the Applicants are not lawfully entitled to carry on, (ii) exempt the Applicants from compliance with statutory or regulatory provisions relating to health, safety, or the environment, (iii) prevent the filing of any registration to preserve or protect a security interest, or (iv) prevent the registration of a claim for lien.

Position of Nortel 55 Counsel to Nortel submits that the basis for the Stay was founded in s. 11 of the CCAA, which, as noted by the Court of Appeal in Stelco Inc., Re, [2005] O.J. No. 1171 (Ont. C.A.) at para. 36, is the engine that drives the broad and flexible statutory scheme of the CCAA. As noted by the Court of Appeal in these CCAA proceedings, exceptions to the Stay should be narrowly interpreted. See Nortel Networks Corp., Re, 2009 ONCA 833 (Ont. C.A.) at para. 17. 56 Counsel to Nortel also referenced Ted Leroy Trucking Ltd., Re, 2010 SCC 60 (S.C.C.) at para. 22 for the proposition that stays provided for by the CCAA and other insolvency regimes enable the centralization and maximization of a debtor’s assets for the benefit of all creditors. 57 Counsel to Nortel submits that the MOE Orders conflict with the aforementioned goals of the CCAA, as the MOE Orders would entail an expenditure of funds to remedy past actions on lands Nortel, for the most 324 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

part, no longer owns. Counsel contends that the necessary effects of the MOE Orders are to: (a) require directly and indirectly the expenditure of a minimum of $18 million; and (b) consequently, prioritize environmental liabilities over all other unsecured claims against Nortel, such as those asserted by pension, employee, trade and financial creditors. 58 The thrust of the argument put forth by Nortel is that the true nature and substance of the MOE Orders is financial, not regulatory and thus the MOE Orders give rise to an operational conflict with the CCAA. 59 Counsel to Nortel states that s. 11.8(8) of the CCAA provides for the preferred treatment of environmental liabilities in certain circumstances: 11.8(8) Any claim by Her Majesty in right of Canada or a province against a debtor company in respect of which proceedings have been commenced under this Act for costs of remedying any environmental condition or environmental damage affecting real property of the company is secured by a charge on the real property and on any other real property of the company that is contiguous thereto and that is related to the activity that caused the environmental condition or environmental damage, and the charge (a) is enforceable in accordance with the law of the jurisdiction in which the real property is located, in the same way as a mortgage, hypothec or other security on real property; and (b) ranks above any other claim, right or charge against the property, notwithstanding any other provision of this Act or anything in any other federal or provincial law. 60 Section 11.8(9) is also relevant. It reads: A claim against a debtor company for costs of remedying any environmental condition or environmental damage affecting real property of the company shall be a claim under this Act, whether the condition arose or the damage occurred before or after the date on which proceedings under this Act were commenced. 61 Counsel to Nortel contends that the effect of the above-referenced sections provides a specific remedy: “a super priority” over real property that is contaminated. 62 Counsel also referenced General Chemical Canada Ltd., Re, 2007 ONCA 600 (Ont. C.A.), leave to appeal to the Supreme Court dismissed 2008 CarswellOnt 879 (S.C.C.), where the court noted, at paragraph 46, Nortel Networks Corp., Re Morawetz J. 325

in reviewing similar provisions in the Bankruptcy and Insolvency Act (“BIA”): To give effect to provincial environmental legislation in the face of these amendments to the BIA would impermissibly affect the scheme of priorities in the federal legislation. 63 Nortel acknowledges that the MOE retains the ability to act unilater- ally against a debtor, where the MOE’s orders are in substance regulatory. This exception is explicitly recognized in the Initial Order. 64 Counsel to Nortel emphasized that it is important to note that Nortel no longer conducts operations at any of the Impacted Sites and the contamination on such sites has been present for decades. 65 Further, counsel submits that there are no compliance obligations under Ontario’s environmental legislation with respect to historic contamination and there is no mandatory duty or positive directive under any Ontario statute or regulation to undertake cleanup of impacted soil, remediate groundwater, or prevent offsite migration of contaminants. 66 Counsel further submits that against this background, the court in its supervisory authority under the CCAA is required to determine the actual character of orders made by a regulator. In this respect, counsel to Nortel referenced the following passage from AbitibiBowater Inc., Re, 2010 QCCS 1261 (Que. S.C.), at paras. 144, 148, and 157, leave to appeal to QCCA refused, 2010 QCCA 965 (Que. C.A.), leave to appeal to SCC granted (2010), 413 N.R. 397 (note) (S.C.C.) [“AbitibiBowater”] (the appeal of which was heard by the Supreme Court of Canada on November 16, 2011): Applying these considerations to the situation at hand, the Court is of the view that it has the authority to decide if the EPA Orders qualify as claims under the CCAA and can be described as provable or contingent claims under the BIA. ... Accordingly, environmental obligations arising from a regulatory order that remain, in a particular fact pattern, truly financial and monetary in nature can be qualified as claims under the CCAA. Likewise, if one is convinced that there exists, in such a fact pattern, a claim that “might” be filed, it is open to be compromised on the plain read- ing of s. 12 of the CCAA. ... Parliament has therefore confirmed that the CCAA may be employed to place an appropriate check on regulatory actions, particularly 326 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

when they are purely “monetary orders”. This is exactly the kind of jurisdiction the court is exercising here. Of course, this exercise requires the court looking at substance over form. 67 Counsel to Nortel further submits that there are competing interests in insolvency proceedings and that courts have adopted the “single proceeding model” so as to ensure a fair and orderly assessment of claims. The Supreme Court in Century Services, supra, at para. 22 stated: Grouping all possible actions against the debtor into a single proceeding controlled in a single forum facilitates negotiation with creditors because it places them all on an equal footing, rather than ex- posing them to the risk that a more aggressive creditor will realize its claims against the debtor’s limited assets while the other creditors attempt a compromise. With a view to achieving that purpose, both the CCAA and the BIA allow a court to order all actions against a debtor to be stayed while a compromise is sought. 68 In this case, counsel to Nortel submits that the MOE Orders are promulgated with only one societal interest in mind: protection of the environment from and remediation of contaminants. That interest, counsel submits, however valid, is generally superseded by the “single proceeding model” of insolvencies. 69 This issue was identified and addressed in AbitibiBowater, supra, at paras. 160 and 170-172, where the court stated: The true regulatory character or otherwise financial and monetary nature of a given order is influenced by who issues the order, who stands to benefit from it, what remains its genuine objective and what means of enforcement truly exist in reality. ... While the dividing line between regulatory claims and their financial consequences may be blurred at times, there can be no confusing the two when the regulatory authority is seeking to make orders concerning solely past actions and activities in relation to properties that the debtor has disposed or been dispossessed of. The broad CCAA and BIA provisions referred to above contain no comfort for a regulatory authority seeking to limit the Claims Proce- dure Order from impacting their plainly financially material actions with artificial distinctions about “regulatory” orders and “financial” ones. To an insolvent company in CCAA restructuring, an order to pay tens of millions of dollars directly is no different from an order to spend an equivalent amount on specific actions that will benefit others. Nortel Networks Corp., Re Morawetz J. 327

Where, as here, the EPA Orders are moreover founded exclusively upon alleged actions in the past and relate in no way to activities taken after the commencement of proceedings, the supervising CCAA court applying such broad definitions has the jurisdiction to intervene. 70 Nortel submits that the MOE Orders are, in reality, orders to pay money. They may be framed in the terminology of ordering investigations, or the drafting and implementation of workplans, but the inevitable consequence of those workplans and investigations is to cause Nortel to spend substantial funds at the behest of the MOE, on lands it largely no longer operates upon or owns. 71 Counsel further contends that if Nortel fails to comply, it may be found guilty of an offence with various financial consequences. In addition, in the event the MOE Orders are not stayed, the EPA permits the Director to order Nortel to pay the costs for work performed should Nortel fail to perform that work itself. The provisions of the EPA thus contemplate, from Nortel’s standpoint, a monetary judgment as an ultimate means of enforcing an order. 72 Counsel to Nortel submits that, in the circumstances, there is no meaningful distinction between the MOE presenting Nortel with a bill for remediation conducted by the MOE, and the MOE directing Nortel to conduct the remediation in the first instance. 73 It was also put forth by Nortel that none of the above circumstances engage the MOE’s core regulatory function of prevention and deterrence. According to Nortel, it is those functions which are untouched by the Stay and preserved by the Initial Order, where it stipulates that it does not: “... exempt the Applicants from compliance with or regulatory provisions relating to health, safety or the environment”. To the extent that the MOE is concerned with events of non-compliance, Nortel contends that they are decades past, non-recurring, and have no connection to Nortel’s current operations. 74 Accordingly, counsel argues that, as was found in AbitibiBowater, the MOE’s Orders are “plainly material financial actions” that are caught by the Stay. 75 As indicated above, Nortel has served a Notice of Constitutional Question. The Attorney General of Canada declined to respond. The At- torney General of Ontario is present on behalf of the MOE. 76 Counsel to Nortel submits that, if the MOE’s orders are primarily monetary in nature, an operational conflict with the CCAA will exist and 328 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

it is uncontroversial that, at that juncture, otherwise valid provincial legislation will be superseded. See Canadian Western Bank v. Alberta, 2007 SCC 22 (S.C.C.); Nortel Networks Corp., Re, 2009 ONCA 833 (Ont. C.A.) at paras. 36-38; General Chemical Canada Ltd., Re, 2007 ONCA 600 (Ont. C.A.), leave to appeal to the Supreme Court dismissed 2008 CarswellOnt 879 (S.C.C.); AbitibiBowater, supra, at para. 270. 77 Counsel to Nortel concludes that the MOE Orders require the payment of large sums in direct contravention of the CCAA priority structure for claims, at the expense of recovery for all other creditors. As such, counsel argues that the MOE Orders must yield to the CCAA for the operational conflict they produce. 78 The position of Nortel was supported by the Official Committee of Unsecured Creditors, the Nortel Informal Noteholder Group, the Nortel employee groups, and the directors of Nortel. 79 The Monitor also recommended that the relief requested by Nortel be granted.

Position of the Moe 80 The MOE argues that Nortel’s position is incorrect regarding the statutory priority scheme in the CCAA. It submits that s. 11.8(8) of the CCAA addresses the priority standing of the MOE only when it is acting in its capacity as a creditor to recover costs. The MOE submits that Nortel’s argument mischaracterizes performance obligations as financial or monetary obligations owed to the Crown. It argues that giving effect to Nortel’s submission would unfairly shift any expense associated with environmental remediation to the taxpayers of Ontario and away from the company’s creditors who chose to do business with the company in the first place. 81 The MOE takes issue with Nortel’s argument that any MOE order relating to its responsibility for historic contamination must be monetary in nature. The MOE takes the position that, apart from the Quebec Supe- rior Court decision in AbitibiBowater, this submission has no foundation in law. Further, as the MOE points out in Part II of its factum, Nortel acknowledges having conducted environmental work on properties it no longer owns. The MOE questions the position put forth by Nortel since, if the obligations were monetary in nature, on Nortel’s theory of the case, Nortel need not have done the work after the date of the Initial Order. 82 The MOE also takes the position that Nortel’s analysis ignores the fact that obligations for historic contamination only become “claims Nortel Networks Corp., Re Morawetz J. 329

provable” when the Minister exercises his discretion in such a way as to transform the performance obligations into monetary ones, thereby creating a debtor/creditor relationship. The MOE argues that it is not legitimate for Nortel to purport to exercise discretion on behalf of the Minister so as to create a debt owed to the Crown. The MOE acknowledges that in discharging its obligations as a regulator, it may, on occasion, take steps that constitute it as a “creditor”. In this case, however, they take the position that ministerial discretion has not been so exercised. 83 The MOE disputes Nortel’s submission that because the MOE Orders require it to spend money, they are “orders for the payment of money”. The MOE argues that any financial obligations Nortel might incur to third parties as a function of retaining their services for the purpose of complying with the MOE Orders are entirely different than monetary obligations incurred directly to the Crown itself. 84 In its factum, the MOE states that its involvement with any particular site ranges along a regulatory continuum. On one end of that continuum, the MOE, acting as regulator, may impose performance obligations on a responsible party. On the other end of the continuum, the MOE, acting as creditor, may seek the recovery of money from the responsible party, thereby creating a financial obligation which is properly subject to a CCAA stay and a compromisable claim. 85 The MOE sets out the continuum as follows, moving from regulatory actions to more creditor-like actions: (i) receive and consider applications for Certificates of Approval in respect of regulated facilities, where applicable; (ii) conduct announced or unannounced inspections of a site, but take no action/issue no orders to the regulated entity. This is sometimes done in conjunction with a plan of voluntary compliance agreed to by the regulated entity, but such a plan is not always necessary if the MOE is of the view that the status quo of the site is not an environmental concern; (iii) issue a provincial officer’s order/Director’s order, for example under sections 18 and 157.1 respectively of the EPA, requiring the regulated entity to undertake a range of possible actions that could include retention of a consultant, assessment of the nature and extent of contamination, development of a workplan to address the contamination, and implementation of that workplan, which might include monitoring of groundwater, surface water and/or soil conditions, and remediation in one or more forms. These orders deal 330 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

with existing environmental concerns or with conditions that may lead to an environmental concern; (iv) if it appears the regulated entity will not do the work, or if the regulated entity otherwise fails to do the work, the MOE will look to other parties such as former owners or those formerly in management or control of the property, and may issue orders to these other parties to assess and address the environmental concerns; (v) if no other parties can be located to answer the environmental liability, the MOE may issue a notice of intent to do the work itself; however, this is a discretionary decision of the Director exercised only upon a consideration of many factors; (vi) the MOE, in fact, does the work itself because there is no one else to do it and the environmental or human health concern is significant; (vii) the MOE issues an order to recover costs pursuant to s. 150 of EPA; (viii) the MOE takes steps to enforce its recovery order. 86 The MOE contends that MOE Orders are not compromisable “claims” and should not be stayed for three principal reasons: (a) The CCAA is an insolvency statute and is properly concerned only with obligations that create financial obligations owed to the MOE in its capacity as a creditor. On the facts, Nortel’s environmental performance obligations are not monetary claims because any contingent financial liability remains inchoate, is too remote and speculative in nature and is not recoverable by legal process. Transforming regulatory performance obligations into an enforceable right to payment requires, among other things, the exercise of ministerial discretion that might never occur; (b) By its terms, the Initial Order specifically preserves Nortel’s obligation to comply with regulatory provisions relating to the environment and, accordingly, any actions taken by the MOE (short of seeking to enforce the recovery of money as a creditor) are not stayed. Given this result, there is no conflict between the Initial Order and the MOE Orders and accordingly, the constitutional doctrine of para- mountcy need not be considered; Nortel Networks Corp., Re Morawetz J. 331

(c) In any event, any interpretation of the CCAA that would permit the characterization of environmental regulatory performance obligations as compromisable claims would usurp the province’s regulatory powers and exceed the federal power over “Bankruptcy and Insolvency”. 87 Counsel to the MOE submits that Nortel’s position would mean that any order issued by the MOE that requires Nortel to spend money to deal with historical pollution would constitute a compromisable claim. How- ever, counsel submits that it is not the spending of money by Nortel or the fact that Nortel is no longer operating on the properties that makes an EPA order a claim. The MOE submits that Nortel’s argument mischaracterizes what are in their nature performance obligations and ignores the fundamental trigger that transforms public regulatory obligations into claims, namely, the exercise of ministerial discretion. 88 At the heart of its argument, counsel to the MOE submits that the EPA contemplates a number of remedial and preventative measures, (stages (i) to (iv) on the regulatory continuum referenced above) that are injunctive in nature rather than monetary. Counsel submits that these remedial measures do not create a debtor/creditor relationship. They are consistent with the “polluter pays” principle which seeks to hold the pol- luting party responsible for remedying environmental contamination. 89 In contrast, the MOE contends that the super priority created by sections 11.8(8) and (9) of the CCAA, which specifically referenced the “costs of remedying any environmental condition or environmental damages”, were clearly intended to give the MOE a priority only when acting as creditor at stages (v) through (viii) of the regulatory continuum. Spe- cifically, counsel contends that “costs” for the purposes of the super priority are only created where the regulator seeks to recover the costs of work the MOE has done from the responsible party or where the regulator has committed to spending public funds to undertake such environmental remediation, even though the costs have not yet been incurred. 90 Counsel further argues that the CCAA applies only to liabilities or obligations in the nature of debts owed to the MOE in its capacity as creditor. Counsel submits that “claim” as defined in s. 12(1) of the CCAA applicable to this proceeding, currently s. 2(1), means any indebtedness, liability or obligation of any kind that, if unsecured, would be a debt provable (now called a “claim”) in bankruptcy within the meaning of the BIA. 332 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

91 Counsel for the MOE contends that s. 2 of the BIA defines “claim provable in bankruptcy” as including any claim or liability provable in proceedings under this Act by a creditor. Accordingly, counsel argues, an interpretation of “claim” that purports to include all performance obligations, including those that do not give rise to a right to payment to the MOE, would rewrite this express definition. In contrast to the position put forth by Nortel, the MOE argues that there is a very meaningful distinction between the MOE acting as a creditor to seek reimbursement for costs of work conducted by the MOE and the MOE acting as regulator issuing an order directing Nortel to carry out performance obligations. 92 Counsel also contends that the MOE does not have a “contingent claim” within the meaning of s. 121 of the BIA on the basis that, first, claims that are remote and speculative in nature are not contingent claims; and second, a provable claim must also be recoverable by legal process. Counsel contends that both of these factors militate against a finding that the MOE Orders amount to a monetary claim. A contingent environmental liability, counsel submits, is not created by the mere fact that a property is polluted, by the fact that a regulator has statutory remedies that might or might not develop into monetary claims, or because performance obligations may require responsible parties to spend money to discharge environmental obligations. 93 Counsel further submits that the MOE cannot enforce any right to receive payment until it exercises its broad regulatory discretion to do the requested work thereby transforming regulatory “obligations” owed to the public into compromisable claims owed to the regulator as a creditor. Further, counsel to the MOE contends that while orders at stages (i) through (iv) of the regulatory continuum may well require payment by a company to a third party, such a payment does not create the necessary debtor/creditor nexus between the company and the MOE. On the facts of this case, counsel contends that crystallization of any contingent liability on the part of Nortel is speculative at best. 94 Counsel to the MOE also takes issue with Nortel’s reliance on Abi- tibiBowater for the proposition that any MOE order relating to its responsibility for historic contamination must be monetary in nature. Counsel contends that the CCAA court in AbitibiBowater found that Newfoundland had expropriated the sites at issue in retaliation for an un- related claim by AbitibiBowater under NAFTA and, as owner, New- foundland stood to benefit directly from any remedial work. Moreover, Newfoundland had requested proposals for remedial work and done Nortel Networks Corp., Re Morawetz J. 333

emergency work to repair a dam. Compared factually with AbitibiBo- water, counsel argues, the situation in this case compels a very different result. Counsel argues that none of the facts as found by the Quebec Su- perior Court exist in the present cases: (a) No steps have been taken by the MOE to undertake any environmental work in Nortel’s place or to act as a creditor; (b) The MOE has not expropriated the subject properties from Nortel and does not stand to benefit financially as it does not own any of the Impacted Sites; (c) The MOE has issued regulatory orders to require Nortel to continue to perform ongoing work to protect the environment. The Orders are not disguised debt obligations; (d) The extent of and potential costs associated with environmental remediation on the properties cannot be reasonably identified and quantified at the present time; (e) The 2009 EPA Order respecting the London properties not owned by Nortel requires the current owners of these sites to grant access to Nortel for the purpose of discharging its obligations under the Orders; (f) The MOE’s “target” was the enforcement of statutory duties and obligations, it was not Nortel. The MOE, in its role as regulator, has followed the “polluter pays” philosophy of environmental legislation and sought compliance from the polluter — Nortel. But, the MOE has also issued orders against other responsible persons to deal with the outstanding environmental obligations on the Nortel sites; and (g) The MOE has and continues to act in good faith toward Nortel. There is no basis whatsoever in the evidence to, for example, conclude that the MOE has withheld making orders or taking action as any sort of legal tactic. 95 Counsel to the MOE also cites several other cases to support their argument that, in the present circumstances, the MOE is acting solely in a regulatory capacity, rather than as a creditor. Counsel submits that these cases demonstrate that not all environmental regulatory obligations fall within the scope of “claim” and the intended scope of ss. 11.8(8) and (9) of the CCAA. • In Shirley, Re, [1995] O.J. No. 3060 (Ont. Bktcy.) [Shirley (Re)], the fact that the company had dispossessed of the contaminated 334 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

property, as in the present case, did not bear on the court’s determination that the MOE was a creditor. In that case, the MOE had already issued orders, entered onto lands, commenced cleanup actions, and made it clear that it intended to look to the debtor for reimbursement. • In General Chemical Canada Ltd., Re, [2006] O.J. No. 3087 (Ont. S.C.J. [Commercial List]), aff’d 2007 ONCA 600 (Ont. C.A.), leave to appeal to the Supreme Court dismissed 2008 CarswellOnt 879 (S.C.C.) [“Harbert”], the court viewed the MOE as a creditor, rather than as a regulator, because the MOE had already made the decision to cause the bankrupt’s Soda Ash Settling Basin to be remediated in the event that no one else would undertake such work. • In Lamford Forest Products Ltd., Re, [1991] B.C.J. No. 3681 (B.C. S.C.) [Lamford Forest Products Re], the B.C. Supreme Court concluded that a Pollution Abatement Order was not a provable claim in bankruptcy because the Act did not expressly stipu- late that the regulator could go onto the land of the polluter, perform the removal or remedial action, and then seek to recover those costs from the responsible party, thereby becoming the holder of a claim for the amount it cost to clean up the damage. • In Canadian Imperial Bank of Commerce v. Isobord Enterprises Inc., [2002] M.J. No. 172 (Man. Q.B.) [CIBC v. Isobord], Mani- toba Conservation, as permitted by statute, contracted a third party to develop a rodent control program when the company failed to do so pursuant to an order of Manitoba Conservation. The regulator claimed a priority charge for the cost of the program, but lost its priority fight on the narrow ground that it had not complied with the statutory preconditions to acquire a claim under the provincial legislation. • In Strathcona (County) v. Fantasy Construction Ltd. Estate (Trustee of), [2005] A.J. No. 915 (Alta. Q.B.) [Strathcona] the court ordered that the cost of uncompleted drainage work required by Strathcona County as a condition of issuing development permits be paid from the assets of the bankrupt estate in advance of debts to secured creditors. The court concluded that the County never assumed the role of creditor. A court order contemplated the County doing the required work at the developer’s expense. The compliance plan also contemplated that the County would retain Nortel Networks Corp., Re Morawetz J. 335

an engineer to do the drainage design, would get the work done, and that the developers would pay funds into court. The plan failed because the developer did not pay the funds into court and without that security, the County did not do the work. 96 The MOE submits that not all environmental regulatory obligations fall within the definition of “claim” and the intended scope of ss. 11.8(8) and (9) of the CCAA, and that the court must first consider whether the environmental regulatory obligation is a certain and provable contingent claim within the meaning of the legislation. Counsel to the MOE suggests the following question is informative: “Is a debt presently due to the MOE or has the MOE exercised its discretion to spend public funds to undertake such environmental remediation even though it may not as yet have incurred such costs?” In other words, has the regulator exercised its statutory jurisdiction to crystallize its claim as a creditor? 97 Counsel to the MOE referred to the regulatory continuum discussed above, submitting that the parties are only at stage (iv), and that whether stage (v) is reached depends on certain factors, mainly: (a) whether Nortel fails to do the work the MOE ordered; (b) whether other potentially responsible parties will address the environmental liabilities; and (c) whether the MOE issues a Notice of Intent to do the work itself. Counsel to the MOE argues that the existence of fact (c) in this case is too speculative to constitute a “claim”, because it assumes facts and the exercise of ministerial discretion which may never occur. 98 Counsel to the MOE also submits that paragraph 15 of the Initial Or- der, which provides that “nothing in this Order shall (ii) exempt the Ap- plicants from compliance with statutory or regulatory provisions relating to health, safety or the environment,” requires Nortel to continue to comply with statutory or regulatory provisions relating to the environment. Further, counsel argues that s. 11 of the CCAA does not immunize companies under its protection from compliance with regulatory regimes. Be- cause s. 11.1(2) specifically contemplates that a regulator may continue to operate outside of the CCAA regime, counsel submits that to deem any regulatory performance order as a “payment ordered” would narrow this exception into “virtual nonexistence”. 99 Counsel to the MOE also argues that the Initial Order should not be interpreted in a manner that prohibits the issuing of EPA orders to Nortel 336 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

during the CCAA process and that the federal power over insolvency does not give Parliament the general power to release insolvent debtors from their obligations to comply with provincial legislation. 100 The position of the MOE was supported by the City of Belleville and by 2058756 Ontario Limited (“2058”).

Analysis 101 It is a simplistic statement but one that is necessary to emphasize: insolvency statutes such as the CCAA and the BIA do not mesh very well with environmental legislation. The environmental legislation and its regulatory framework functions more effectively when insolvency is not present. Unfortunately, that is not the situation that faces parties affected by the Nortel restructuring. 102 Despite the able arguments of counsel to the MOE, and others op- posed to the requested relief, I have concluded that the position put forth by Nortel must prevail. 103 Counsel to the MOE referenced, on a number of occasions, the regulatory continuum, submitting that the MOE is only at stage (iv) and has not crossed over to stage (v). I have reached the conclusion that it is not possible to draw such a bright-line distinction. 104 I do not take issue with the submission of counsel to the MOE that the Minister has the discretion under the legislation and, if the Minister is solely acting in its regulatory capacity, it can do so unimpeded by the Stay. This is the effect of s. 11.1(2) of the CCAA. 105 However, it seems to me that, when the entity that is the subject of the MOE’s attention is insolvent and not carrying on operations at the property in question, it is necessary to consider the substance of the MOE’s actions. If the result of the issuance of the MOE Orders is that Nortel is required to react in a certain way, it follows, in the present circumstances, that Nortel will be required to incur a financial obligation to comply. It is not a question of altering its operational activities in order to comply with the EPA on a going forward basis. There is no going forward business. Nortel is in a position where it has no real option but to pay money to comply with any environmental issue. In my view, if the MOE moves from draft orders to issued orders, the result is clear. The MOE would be, in reality, enforcing a payment obligation, which step is prohibited by the Stay. Nortel Networks Corp., Re Morawetz J. 337

106 In this respect, I am in agreement with the submissions made by counsel to Nortel. Regardless of whether the MOE’s activities result in a direct claim as against Nortel, or a claim against third parties who in turn will make a claim against Nortel, the result, for practical purposes, is the same. It seems to me that the critical point to be determined is not the distinction between performance obligations and monetary obligations, but rather it is whether the actions of the MOE are such that Nortel is required to react or respond to a step taken by the MOE and in doing so, incur a financial obligation. In my view, the effect of the MOE Orders, if issued, is to require Nortel to prepare an action plan, which results in Nortel having to incur a financial obligation. 107 I do not agree with the MOE’s contention that financial obligations incurred by Nortel for the purpose of complying with the MOE Orders are different from obligations incurred directly to the Crown. For the purpose of Nortel’s CCAA proceedings, what matters is that Nortel is obli- gated to undertake remedial work which will result in Nortel expending money. Any money expended by Nortel in respect of MOE obligations is money that is directed away from creditors participating in the insolvency proceedings. The same insolvency considerations ought to apply regardless of who receives the money. In my view, this view is consistent with the “single proceeding model” discussed by the Supreme Court in Century Services. 108 I also do not believe the MOE is aided in this regard by the decision in CIBC v. Isobord. On the MOE’s continuum, described above, this case would fit stage (vi). It supports the proposition that where a regulator contracts a third party to perform work that a debtor company has failed to perform, the regulator is acting as a creditor. However, it does not support the proposition that actions earlier in the MOE’s continuum can never be characterized as the actions of a creditor. That is, it does not support the proposition endorsed by the MOE: that ordering a debtor company to perform work that requires the expenditure of resources (stage (iii)) does not render the MOE a creditor unless and until the MOE expends its own resources to ensure that the work gets done (stage (vi)). 109 This interpretation is, in my view, the result directed by the governing insolvency statutes. 110 In Century Services, at paras. 23-24, the Supreme Court emphasized the convergence of the BIA and the CCAA in terms of priorities: Because the CCAA is silent about what happens if reorganization fails, the BIA scheme of liquidation and distribution necessarily sup- 338 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

plies the backdrop for what will happen if a CCAA reorganization is ultimately unsuccessful... With parallel CCAA and BIA restructuring schemes now an accepted feature of the insolvency law landscape, the contemporary thrust of legislative reform has been towards harmonizing aspects of insolvency law common to the two statutory schemes to the extent possible... 111 Subsection 12(1) of the CCAA (as it existed in January, 2009, and which applies in the present case) defines “claim” as “any indebtedness, liability or obligation of any kind that, if unsecured, would be a debt provable in bankruptcy within the meaning of the Bankruptcy and Insol- vency Act”. The meaning of “indebtedness, liability or obligation” is to be determined by reference to whether a claim is a debt provable in bankruptcy. 112 The reference to “debt provable” in s. 12(1) of the CCAA, which references the BIA, has to be considered in the context of s. 2 of the BIA, which refers to “claim provable” and directs that “claim provable in bankruptcy”, “provable claim” and “claim provable” include any claim or liability provable by a creditor in proceedings under the BIA. 113 Subsection 121(1) of the BIA addresses what are claims provable. It provides: All debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt shall be deemed to be claims provable in proceedings under this Act. 114 Section 14.06(8) of the BIA, entitled “Claim for clean-up costs,” contains an exception to s. 121(1): Despite subsection 121(1), a claim against a debtor in a bankruptcy or proposal for the costs of remedying any environmental condition or environmental damage affecting real property or an immovable of the debtor shall be a provable claim, whether the condition arose or the damage occurred before or after the date of the filing of the proposal or the date of the bankruptcy. 115 The impact of these statutory provisions requires a full consideration of the position of the MOE. In my view, it is necessary to take into account the defining event for a claim. In this case, the defining event is the point at which the condition arose or the damage occurred. Nortel Networks Corp., Re Morawetz J. 339

116 It is also important to note that s. 14.06(8), unlike other subsections of s. 14.06, is not restricted in its application to a trustee. On the contrary, the focus of s. 14.06(8) is related to s. 121(1) — provable claims. As such, it seems to me that Parliament clearly directed its mind to the issue of creating an exception to s. 121(1) of the BIA and in doing so addressed the issue as to how environmental conditions and damage were to be addressed by an insolvent debtor. The BIA and CCAA have to take into account the reality that a debtor may not have continuing operations. If there are continuing operations, there has to be ongoing compliance with environmental legislation. But if there are no ongoing operations, the environmental regulator has to rely on its security, failing which it has unsecured status. 117 Further, while it is apparent that s. 11.8(8) of the CCAA does not apply in the current circumstances as Nortel no longer owns any real property at the Impacted Sites, with the exception of the Retained Lands at the London site, s.11.8(9) does apply and is conspicuous in its similari- ties to s. 14.06(8) of the BIA. Subsection 11.8(9) of the CCAA, entitled “Claim for clean-up costs”, directs that: A claim against a debtor company for costs of remedying any environmental condition or environmental damage affecting real property of the company shall be a claim under this Act, whether the condition arose or the damage occurred before or after the date on which proceedings under this Act were commenced. 118 A priority scheme has also been enacted and is contained in s. 11.8(8). In this case, the priority scheme is of limited effect as Nortel does not own the property in question, save for the Retained Lands at the London site. The result, in my view, is straightforward. The MOE can look to whatever security may be available, failing which it has unsecured status. 119 I do not accept the MOE’s argument that the triggering event for a claim is when the Minister exercises his discretion. In my view, that is not what is directed by s. 14.06(8). Further, given the effect of s. 14.06(8), I do not believe that Shirley Re and Lamford Forest Products, relied upon by the MOE, are of any assistance, since both were decided before the addition of that subsection to the BIA. 120 This is consistent with the decision in Harbert. In that case, the bankrupt intended to make a distribution to secured creditors. The MOE objected on the basis that the costs of remediation exceeded the value of the real property over which the MOE had statutorily granted security. The 340 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

court ruled that, save for the real property, the MOE was an unsecured creditor. At para. 55, the court stated that although the MOE was acting as a creditor, it could “be nothing more than an unsecured creditor... for cleanup costs to the extent General Chemical’s real property and existing financial assurance are insufficient to meet those needs.” In that case, as here, the court order appointing an interim receiver did not exempt the debtor from complying with environmental regulatory provisions or MOE orders pursuant to the EPA. However, the court noted that “[t]he provisions of the order do not create a secured claim for the MOE’s orders, nor do they suggest the MOE has priority over the interests of secured creditors.” Thus, in my view, and contrary to the MOE’s contention, the case does not stand for the proposition that companies subject to CCAA proceedings must prioritize compliance with MOE orders over the claims of secured creditors. Rather, it supports the position of Nortel. 121 The event that gives rise to a CCAA claim against Nortel has already occurred, as the events giving rise to the “environmental condition or environmental damage” have taken place. The only step that has yet to take place is the quantification of the claim, but the absence of that quantification does not impact on the analysis of the position of the MOE. The MOE has the option of not filing a claim. If it chooses this route, there will eventually be a distribution to creditors without participation by the MOE. If the MOE attempts to crystallize its claim at some future time, it may have to accept the consequences of its failure to act in a more timely basis. Section 14.06(8) of the BIA makes it clear that any claim of the MOE is a provable claim in a CCAA proceeding. 122 The preceding statutory analysis echoes the observations of the court in AbitibiBowater, at paragraphs 118 to 120. In my view, given the Su- preme Court’s guidance with respect to the convergence of the two insolvency statutes, the proper interpretation of the above provisions is they direct that once steps are taken by the MOE to require Nortel to take actions in respect of a factual matrix that arose prior to the filing date, if those actions require a monetary expenditure they must, for the purposes of the CCAA, be considered to be part of a claims process and must also, by necessity, be stayed. 123 In my view, the distinction drawn by the MOE is blurred. In an insolvency context, the distinction should not be based on whether the order is characterized as a “regulatory” order or a “financial” order. Rather, it should be based on the real effect of the actions taken by the regulator. The MOE’s position regarding where on its continuum it ceases to act as Nortel Networks Corp., Re Morawetz J. 341

a regulator and commences acting as a creditor is not the determining factor in the analysis of this issue. 124 It seems to me that it is not open to the MOE to take the position that the fact situation is too speculative or too remote, such that they cannot formulate a claim. This argument is addressed by s. 14.06(8) of the BIA. 125 In my view, it is necessary to comment on the Strathcona case, relied upon by the MOE. I note that in this case the court applied what it referred to as the “Panamericana principle.” Abiding by this principle, the court characterized a debtor’s obligation to complete drainage work as an obligation owed to the public, not to the regulator per se. The regulator is just the vehicle that protects the public’s interest, and where the Panamericana principle applies, the debtor must pay to fulfill the obligation to the public in priority to all secured creditors. The court interpreted s. 14.06(8) narrowly, stating, at para. 42, that it is intended “only to over- come what would otherwise be the effect of s. 121(1).” The court reasoned that but for s. 14.06(8), s. 121(1) would direct that an environmental claim arising after the date of bankruptcy but before discharge might not be a provable claim. The court’s view was that s. 14.06(8) is designed only to deal with that timing issue. 126 In my view, the Panamericana principle, as articulated above, does not reflect the clear intention of Parliament as evidenced in the BIA. Sec- tion 11.8(8) of the BIA delineates, and thus limits, the scope of the MOE’s security in this context. It states that the “costs of remedying any environmental condition or environmental damage affecting real property of the company is secured by a charge on the real property and on any other real property of the company that is contiguous thereto.” If the MOE’s claim was characterized as an obligation Nortel owed to the public, and the Panamericana principle were applied, the MOE Orders would be granted priority over all secured creditors, placing the MOE in a better position than that which is directed by s. 11.8(8). 127 The MOE clearly does have options. It can maintain its position that it is not a creditor. However, if this position is maintained, the MOE must recognize that it will not be in a position to effect any remedy against Nortel arising out of any draft order that has been posted on the EBR Registry or any subsequent order. These draft orders “require” Nortel and other responsible parties to submit and implement workplans for certain investigations. The moment that Nortel is “required” to undertake such activity it is “required” to expend monies in response to actions being taken by the MOE. In my view, any such financial activity that 342 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

Nortel is required to undertake is stayed by the provisions of the Initial Order. 128 The assets of Nortel have been sold and substantial proceeds are being held pending a determination of the allocation of assets as between various Nortel entities and the quantification of claims as against various Nortel entities. At this point, a distribution to unsecured creditors seems likely. 129 It is open to the MOE to maintain its position that it does not have a claim as a creditor. If so, the consequences of taking such a position are obvious. Distributions will eventually be made to creditors of Nortel and, if the MOE chooses not to participate as a creditor, it will not receive a distribution. On the other hand, if the MOE decides to file a claim, it could very well be that its claim will be valued and a distribution provided to the MOE. Section 14.06(8) of the BIA makes it clear that any claim of the MOE arising from environmental conditions on properties which are or have been owned by Nortel are claims in Nortel’s CCAA proceedings.

The Position of 2058756 Ontario Ltd. 130 I will also deal with the submissions of 2058, which is the current owner of the Kingston Site. 2058 argues that Nortel should be precluded from disclaiming an Asset Purchase Agreement (“APA”) and Environ- mental Access Agreement (“Access Agreement”), both of which were agreements between Nortel and Cable Design Technologies, from which 2058 purchased the Kingston Site. 2058 argues that the APA and the Access Agreement are “covenants running with the land” and that it would be inequitable to disclaim Nortel from its obligations under those agreements. 131 In my view, Nortel has provided a complete answer to the arguments of 2058 in its Reply Factum. The APA and Access Agreement are not covenants that run with the land. A covenant that runs with the land can only bind persons with an interest in the land: Royal Bank v. MacPher- son (2009), 311 D.L.R. (4th) 361 (Ont. Div. Ct.), para 44. Nortel does not have an interest in the land in question. Further, as obligations that require the expenditure of money or the doing of an act, the APA and Access Agreement are positive covenants. A positive covenant does not run with the land, even if the parties’ intention is to the contrary: Parkinson v. Reid, [1966] S.C.R. 162 (S.C.C.), at 167; Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2000), 50 Nortel Networks Corp., Re Morawetz J. 343

O.R. (3d) 670 (Ont. S.C.J.), paras 15-17, aff’d (2002), 58 O.R. (3d) 481 (Ont. C.A.). 132 I also disagree with 2058’s submission that it would be inequitable to disclaim Nortel’s obligations under the APA and Access Agreement. In considering whether 2058 would be prejudiced by such an order, it is necessary to consider the interests of all stakeholders in this highly complex cross-border insolvency. 2058 accepted Nortel’s credit risk when it acquired the Kingston Site, and is in the same position as all other creditors of Nortel who accepted Nortel’s credit risk on an unsecured basis. 2058 may have a claim for damages, but it would be inequitable to prioritize that claim above all of the other unsecured creditors.

Conclusion 133 I agree with the court’s analysis in AbitibiBowater, and, in my view, it applies to the present case. As the court in that case recognized, the relevant case law directs that CCAA courts ought to take a substance over form approach. In my view, the MOE Orders, if issued, are, in substance, financial obligations for Nortel. 134 Further, through s. 11.8(8), the CCAA recognizes that claims for the costs of remedying environmental conditions and environmental damage can arise in an insolvency context. When this occurs, the CCAA stipulates the extent of the security accorded to the claimants: “a charge on the real property and on any other real property of the company that is contiguous thereto and that is related to the activity that caused the environmental condition or environmental damage” [emphasis added]. Where the security stipulated in s. 11.8(8) is absent, the claimant is unsecured. 135 In Nortel Networks Corp., Re (2009), 55 C.B.R. (5th) 229 (Ont. S.C.J. [Commercial List]), I recognized that the CCAA can be applied in a liq- uidating insolvency. In such circumstances, the CCAA directs that where the debtor does not own land on which an environmental condition or damage is present, any claim by the MOE in respect of that condition or damage is unsecured. 136 Given my conclusion that the MOE Orders are, in these circumstances, financial obligations, an operational conflict between the EPA and the CCAA exists. I accept counsel to Nortel’s submission that, given that conflict, otherwise valid provincial legislation is superseded. See Canadian Western Bank v. Alberta, 2007 SCC 22 (S.C.C.); Nortel Networks Corp., Re, 2009 ONCA 833 (Ont. C.A.) at paras. 36-38; 344 CANADIAN ENVIRONMENTAL LAW REPORTS 66 C.E.L.R. (3d)

General Chemical Canada Ltd., Re, 2007 ONCA 600 (Ont. C.A.), leave to appeal to the Supreme Court dismissed 2008 CarswellOnt 879 (S.C.C.); AbitibiBowater, supra, at para. 270.

Disposition 137 In the result, the Nortel Motion is granted. I have concluded that the MOE’s posting of a draft Director’s Order on the EBR Registry for public comment is the first step on the road to the enforcement of a financial and monetary claim. Because the MOE Orders are draft orders, they are not yet in breach of the Stay. However, if issued they would require Nortel to respond, causing Nortel to incur a liability which would be stayed by the Stay. It is not open for the MOE to take any steps to confirm the draft MOE Orders. It is open, however, for the MOE to take a step to withdraw the draft Director’s Order. 138 However, it is recognized that the MOE may have secured status under s. 11.8(8) with respect to the Retained Lands at the London site. 139 A declaration is also to be issued that all proceedings before the On- tario Environmental Review Tribunal in relation to the MOE Orders are stayed. 140 Authorization is also provided to the Nortel Applicants to cease performing any remediation at or in relation to the Impacted Sites and a declaration shall issue that any claims in relation to such current or future remediation requirements by the MOE against any of the Nortel Appli- cants or their current or former directors or officers in relation to the Impacted Sites, whether statutory, contractual, or otherwise, are subject to resolution and determination in accordance with the terms of the Amended and Restated Claims Procedure Order dated July 30, 2009 and the Claims Resolution Order dated September 16, 2010. 141 The Nortel Applicants are also released from all contractual obligations to carry out remediation requirements at the Impacted Sites. 142 I am indebted to counsel for their informative facta and oral argument on this motion. 143 An order shall issue to give effect to the foregoing. Motion granted.