Company claimed damages from province after BC signed land use deal with Indigenous nation
The British Columbia Supreme Court recently ruled that an integrated forest company failed to show that the provincial government engaged in constructive expropriation or breached its duty of good faith or an oral agreement to keep the company whole.
The regulatory regime applicable in Teal Cedar Products Ltd. v British Columbia, 2025 BCSC 595, was BC’s Forest and Range Practices Act, 2002. Teal Cedar Products Ltd., the plaintiff in this case, operated two tenures on Haida Gwaii – a tree farm licence and a forest licence.
The licensee had the exclusive right to harvest from certain lands over a specific period upon obtaining a cutting, road, or special use permit. For a cutting permit, the licensee had to apply to a district manager appointed under BC’s Ministry of Forests and Range Act, 1996.
The district manager could consult with Aboriginal people or set conditions addressing an Aboriginal interest before issuing a cutting permit. The manager could also refuse to issue a permit if doing so would unjustifiably infringe on an Aboriginal interest.
BC enacted the Haida Gwaii land use objectives order (LUOO) in December 2010. Teal sold its operations on Haida Gwaii to A&A Trading Ltd. six years later.
In the present case, Teal claimed damages from the province on three bases: breach of the duty of good faith, constructive taking, and a promise to keep Teal whole. Teal alleged that the LUOO negatively impacted its ability to harvest on its tenures and caused business losses.
The Supreme Court of British Columbia ruled that the province did not act in bad faith when it enacted the LUOO. The court found that the tenure agreements contemplated reconciliation, encompassing the recognition and protection of Aboriginal rights and interests.
The court concluded that the tenures, legislation, and relevant case law all recognized and safeguarded Aboriginal rights and interests on Haida Gwaii and required decision-makers like BC, the chief forester, and the district manager to protect such interests.
The court decided that the province did not constructively expropriate Teal’s interest. The court applied the two-part test for establishing constructive taking to reach this conclusion.
First, the court held that BC appropriated no benefit in this case and had, in fact, been regulating forest harvesting for decades. The court explained that the LUOO regulated the “what, where, and how” of forestry on Haida Gwaii but did not benefit or advantage BC any more than other legislation or regulation benefited the province.
Second, the court determined that the LUOO did not virtually abolish Teal’s rights or deprive it of reasonable use of its tenures.
The court noted that the LUOO applied throughout Haida Gwaii and did not target Teal. The court added that the LUOO promoted key public interests that existed when Teal acquired the tenures and imposed restrictions Teal could have anticipated.
According to the court, these public interests were the recognition of the Haida Nation and the implementation of an ecosystem-based management framework (EBM). The court said that changes in forest regulation were common and that players in forestry and environmental circles have been discussing the EBM for many years.
The court accepted that the LUOO arguably reduced the value of the tenures to Teal. However, the court found that the tenures still had use and economic value, as shown by A&A’s readiness to pay over $5 million for them and A&A’s subsequent harvesting activities. The court noted that Teal retained rights via an agreement with A&A.
Teal claimed that the province made an oral agreement at a meeting in November 2008. According to Teal, the contract required the province to keep Teal whole and give it replacement volume upon reducing its allowable annual cut.
The court rejected Teal’s claim. The court found that the things said at the meeting did not have contractual force and that the supposed contract’s terms were not clear enough to create a binding agreement. In making this finding, the court relied on the evidence of three witnesses based on their understanding of the conversations at the meeting.
