Decision Date: May 16, 2007

Court: B.C.S.C. Johnston, J.

Cite: 2007 BCSC 696

British Columbia appealed a decision by the Forest Appeals Commission (the “Commission”) to the Supreme Court of British Columbia. The decision at stake was the Commission’s determination that a log dump at Jordan River was unsuitable as an appraisal log dump for the purpose of calculating stumpage to be paid by Western Forest Products Ltd. (“Western”) to the Province. The Coast Appraisal Manual (the “CAM”) contains the policies and procedures regarding stumpage in the Coast Region that have been approved by the Minister under the Forest Act (the “Act”). The policies and procedures set out in the CAM must be applied when calculating stumpage. The version of the CAM that was in effect in this case required that cost estimates for harvesting and transportation be determined in a way that assumes the cheapest method of harvesting and transportation available. However, it also stipulated that the cheapest method need not be determinative if it is determined to be “unsuitable for the cutting authority area.” The Province argued that the Commission wrongly interpreted the phrase “unsuitable for the cutting authority area” and was led into error when it admitted into evidence extrinsic documents purporting to state or explain the policy underlying the CAM.

The Court dealt with three issues: the standard of review to be applied on the appeal, the admissibility of the evidence relied upon by the Commission, and whether the Commission’s interpretation of the CAM should be overturned.

Turning to the first issue, the Court applied the factors set out in Pushpanathan v. Canada (Minister of Citizenship and Immigration). Balancing the expertise of the Commission with the availability of a statutory appeal to the court, the purpose of the CAM and the Act, and the Court’s determination that the issue faced by the Commission was a question of law, the Court found that the appropriate standard of review lay between reasonableness simpliciter and correctness, but closer to reasonableness simpliciter.

In addressing the second issue, the Court determined that, while the evidence of the witnesses appeared to be more argument and conclusion than statements of fact, policy statements and explanatory documents issued by the Ministry were properly admissible as evidence aiding the interpretation of the CAM. In that regard, the Court held that, while the CAM is akin to legislation, it is neither a statute of the Legislature, nor a regulation; rather it is a “statement by the Minister.” The Court also noted that the CAM is drafted by Ministry employees and is then approved by the Minister. Consequently, the Court found that policy statements and explanatory documents issued by the Ministry are part of the context in which the CAM operates and out of which it emanated.

Finally, the Court turned to the issue of the reasonableness of the Commission’s finding that the Jordan River log dump, which is owned, operated and utilized by Western only, was unsuitable. The Court found that the concepts of licensee neutrality and “notional average operator” or “average efficient operator” were important to the Commission’s interpretation of the phrase “unsuitable for the cutting authority area”, yet those two concepts are not expressly used in the CAM. Rather, those concepts were repeatedly referred to by Western’s witnesses. The Court held that the Jordan River log dump only becomes unsuitable if the concepts of “licensee neutrality” and “notional average operator” are read into the CAM to defeat what would otherwise be the result of a plan and unambiguous reading of the CAM. The Court found that such a reading of the CAM leads to the conclusion that the suitable log dump for Western is the Jordan River log dump. Applying the concept of licensee neutrality to find that Western should pay stumpage as if it were trucking logs to a further log dump simply because other licensees cannot use Jordan River produced an absurd result. Therefore, the Court found the Commission’s decision unreasonable and stayed it under section 150 of the Act.