Decision Date: October 2, 2006

Panel: James S. Hackett

Keywords: Interior Appraisal Manual – s. 6.2(1)(a); stumpage rate; silviculture costs; silviculture levy; establish a free growing crop; officially induced error.

Michael and Corrina Hoffart (the “Appellants”) appealed the stumpage rates contained in three Stumpage Advisory Notices (the “SANs”) issued by the Timber Pricing Coordinator, Northern Interior Forest Region, Ministry of Forests and Range.

The Appellants submitted that a silviculture cost was incorrectly added to the sawlog stumpage rates set out in the Interior Appraisal Manual (the “IAM”).  Their licences required them to retain free-growing stands, and they viewed compliance with this requirement as a silviculture treatment.  Since silviculture obligations were included as part of their licences, they should not have had to pay additional silviculture costs as a part of the stumpage calculation.  The Appellants also submitted that an email from a District Tenures Forester indicated that they would not be required to pay a “silviculture levy”.

The Respondent submitted that the IAM required silviculture costs to be included in the stumpage rates.  It submitted that the SANs should be confirmed and the appeals dismissed.

The appeal turned on whether “establish a free growing crop” in section 6.2(1)(a) of the IAM meant the same thing as “retain a free-growing stand” in the licences.

The Appellants argued that “establish” means to “bring about permanently”, and that their selective harvesting would “bring about a free growing stand of timber”.  They further argued that the retention of a free-growing stand amounted to a silviculture treatment, so they should not have to reimburse the Crown for silviculture costs following harvesting.

The Respondent argued that retention of a free-growing stand was not the same thing as establishment of a free-growing stand.  Since neither the Appellants nor the Crown had silviculture obligations, section 6.2(1)(a) required the imposition of silviculture costs on the Appellants.

The Commission agreed with the Respondent’s interpretation.  The ordinary definition of the word “establish” suggests that a positive act is required.  In the context of the IAM, it means that a free growing crop of trees must be artificially or naturally regenerated, not merely retained.  The purpose of the cost estimate at issue is to recognize the additional costs that licensees incur when establishing a free-growing crop of trees.  The Appellants would not incur these costs in retaining the trees.  Thus, the Commission found that it was correct to include silviculture costs in the stumpage rates.

The Appellants also argued that the stumpage rate should be reduced because the District Tenures Forester’s email indicated that there would be no additional silviculture costs imposed.  The Commission concluded that the email was correct in saying that a “silviculture levy” would not be included, and that the email could not be understood to mean that no further “silviculture cost” would be applied to the stumpage rate.  The Appellants did not make out a claim with respect to officially induced error.

Accordingly, the Commission confirmed the SANs and dismissed the appeals.