Article
BC Supreme Court Update on Reconciliation and Forest Tenure Rights in BC
Overview:
About 95% of the forests in British Columbia are managed by the provincial government. Generally, forestry companies follow a regulatory framework to obtain provincial approval prior to harvesting trees on Crown land. Recent agreements between First Nations and the province reflect a shift toward collaborative governance for eco-based management and reconciliation through the acknowledgment of First Nations jurisdiction over their unceded territories.
In March 2025, the BC Supreme Court released Teal Cedar Products Ltd. v. British Columbia, dismissing an action brought by Teal Cedar Products Ltd. (“Teal“) against the Province of British Columbia and the Haida Gwaii Management Council (“HGMC“) over alleged financial losses resulting from changes to forest management regulations on Haida Gwaii. Justice Brown ruled that the province and HGMC were not liable to Teal for any compensation. This decision affirms the Province’s authority to manage forest resources in alignment with reconciliation principles and clarifies the scope of rights attached to forest licences amid ongoing regulation changes.
Facts:
In 2008, Teal acquired two forest tenures on Haida Gwaii, a Forest Licence and a Tree Farm Licence. Eight years later, Teal sold its operations on Haida Gwaii to A&A Trading Ltd. (“A&A“), with the understanding that Teal would continue to source fibre from A&A’s licenses to supply its mills.
Beginning in 2007, three major changes happened in Haida Gwaii’s forest governance framework.
First, in September 2007, BC and the Council of Haida Nation (“CHN“) entered a Strategic Land Use Agreement (“SLUA“). The SLUA provided that BC and CHN would complete a joint plan to protect the Haida Nation’s cultural values and to establish and develop a series of ecosystem-based management objectives.
Second, in December 2010, the CHN and BC entered into Kunst’aa guu–Kunst’aayah Reconciliation Protocol (the “KKRP“), which committed the parties to creating the Haida Gwaii Management Council (“HGMC“). The purpose of the HGMC was to implement the SLUA and develop land-use objectives and determine the Allowable Annual Cut (“ACC“) for Haida Gwaii.
Third, in December 2010, the Haida Nation and BC enacted the Haida Gwaii Land Use Objectives Order (“LUOO“). The LUOO created major changes to the forestry regulation on Haida Gwaii, including:
- New reserves where no harvesting was permitted; and
- Increased harvesting constraints.
Naturally, the changes caused by the LUOO reduced the available land base for licensees to harvest trees and source fibre on Haida Gwaii. Typically, when the available land base for forest operations is constrained, forestry companies must source timber from more remote areas, or areas that do not have established access and require road construction. Therefore, these constraints usually increase the cost of planning, harvesting, and processing timber.
The Claim
Teal claimed that it suffered business losses due to the enactment of the LUOO and initiated a cause of action against BC and the HGMC on three grounds:
- Breach of the duty of good faith to Teal;
- Constructively taking land base from Teal; and
- Breach an alleged promise to “keep Teal whole.”
Court’s Decision
- Duty of Good Faith
Teal argued that BC failed to exercise its contractual discretion in good faith, because the purpose of reconciliation was extraneous to the purpose of the venture to which the tenures give effect. BC disagreed, stating that the LUOO is closely controlled by statute, which is underscored by the purpose of reconciliation.
The court reasoned that the LUOO stemmed from a statutory authority rather than contractual discretion. Section 93.4 of the Land Act states that the Minister may establish objectives for the use and management of Crown land for the purposes of the Forest and Range Practices Act. Further, the power to amend the AAC is given to the Minister in the Forest Act. Therefore, the Minister’s powers to establish the LUOO and to change the AAC on Haida Gwaii are powers conferred by statute, not discretionary powers conferred by contract.
The court further explained that Teal’s tenure agreements are a part of a broad statutory framework. The rights conferred by tenure agreements are subject to a statutory scheme that recognizes and affirms Aboriginal rights and the honour of the Crown.[1] Further, the tenure agreements themselves contain language that recognizes Aboriginal rights. Teal’s own management plan noted that “On June 25, 1993, the British Columbia Court of Appeal ruled that Aboriginal rights were not extinguished on Crown land. As a result, resource management decisions must now be examined to determine if they will infringe on aboriginal rights. Teal will cooperate with the MOF in meeting its aboriginal rights policy.”[2]
The court concluded that “reconciliation” is not extraneous to the tenure agreements.
- Constructive Taking/Injurious Affection
Teal argued that the LUOO caused a constructive taking and injurious affection of Teal’s harvesting rights in its licences. Teal further argued that this constructive taking diminished the value of Teal’s harvesting rights and effectively depleted its licenses of any remaining reasonable use. Additionally, Teal also argued that BC owes teal compensation for the diminution of land value for its partial taking of Teal’s property interests. The HGMC and BC argued that Teal’s injurious affection claim is not supported by law because the law does not recognize partial constructive takings as a legal basis capable of supporting an injurious affection claim, and damages from injurious affection must stem from the Expropriation Act.
The court concluded that BC did not constructively expropriate Teal’s interest, because there was no benefit appropriated to BC. Further, the court did not agree that Canadian law recognizes a partial constructive expropriation. Finally, the court did not find that the injurious affection claim was supported, because the case law advanced by Teal was concerned with de jure taking and a statutory right to compensation.
- Promise to Keep Teal Whole
Teal argued that it entered an oral contract with BC, where representatives of the province promised to “keep Teal whole.” Teal claimed that in this contract, BC promised to provide replacement volume if Teal’s AAC decreased. Teal advanced several pieces of evidence to support the claim that there was a valid and enforceable oral contract.
BC disagreed, stating that there was no evidence that the province entered a contract with Teal to ensure that they were kept whole with regard to their AAC allocations, timber type, accessibility and operability.
The court was not persuaded that the terms of the supposed contract were sufficiently clear to create a binding legal agreement. The court accepted that the representatives for the Province would not have told Teal that they would be kept whole at any time. It was unbelievable that a contractual commitment of that magnitude would be made in a brief discussion as described by the parties. Whatever was said by the Minister, would not have been understood by a reasonable person at the meeting to have contractual force.
Conclusion
The Court dismissed Teal’s action in its entirety, finding no liability against the Province or the HGMC for any of the above issues.
This case underscores that when the Crown takes regulatory action under its statute authority, such action does not amount to an exercise of contractual discretion. This decision further affirms that reconciliation, which includes the recognition and protection of Aboriginal interests and rights, forms an integral part of forestry statute mandates and that all tenures in BC explicitly contemplate reconciliation as an operation of law.
For more information about this decision and how it may affect your business or rights, please contact Chelsea Gladstone or Lauren Sansregret.
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