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Service d'actualité juridique LAW/NETMC

Case Name:
Moulton Contracting Ltd. v. British Columbia

Between
Moulton Contracting Ltd., Respondent (Plaintiff), and
Her Majesty the Queen in Right of the Province of British
Columbia, Appellant (Defendant), and
Sally Behn, Susan Behn, George Behn, Richard Behn, Greg Behn,
Rupert Behn, Lovey Behn, Mary Behn, Chief Liz Logan on behalf
of herself and all other members of the Fort Nelson First
Nation, and the said Fort Nelson First Nation, Respondents
(Defendants)

[2015] B.C.J. No. 331
2015 BCCA 89
Docket: CA41524

British Columbia Court of Appeal
Vancouver, British Columbia
R.E. Levine, E.C. Chiasson and S.D. Frankel JJ.A.

Heard: September 3 and 4, 2014; written submissions,
December 5, 2014.
Judgment: February 26, 2015.
(119 paras.)

Court Summary:

The appellant, the Province of British Columbia, appeals from an order that it pay damages of $1,750,000 to the respondent, Moulton Contracting Ltd., for breach of an implied term of a contract entered into on the sale of two timber sale licences by the Province to Moulton, and concurrent liability in negligent misrepresentation for breach of an implied continuing representation. The damages were for losses suffered by Moulton when it was prevented from logging under the timber sale licences by a blockade on the road access to the timber harvest areas put up by the respondents, George Behn and members of his family, all but one of whom were members of the respondent, the Fort Nelson First Nation. The trial judge held that the Province had impliedly promised and represented to Moulton that it had engaged in all necessary consultation with First Nations and had discharged its duty to consult, and was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. Subsequent to Moulton and the Province entering into the timber sale licences, George Behn told an employee of the Province he intended to "stop the logging". The Province did not inform Moulton of this threat until two months later, after Moulton had started logging. The blockade went up a few days after that, and Moulton was never able to complete the logging under the timber sale licences. In effect, the Province was found liable for failing to inform Moulton of George Behn's threat to stop the logging at the time the threat was made. The damages were for Moulton's lost opportunities to enter into alternative logging contracts.

On appeal, the Province claims the trial judge erred in implying contractual terms into the timber sale licences, and in finding liability in negligent misrepresentation based on an implied continuing representation that the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. It claims further that the trial judge erred in failing to consider whether an exemption clause in the timber sale licences applied to bar Moulton's claims. It also claims the trial judge erred in assessing Moulton's damages, and in making certain costs orders against the Province.

Held: appeal allowed. The law does not support the trial judge's conclusion that it was an implied term of the timber sale licences that the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. Nor does it support liability for negligent misrepresentation for an implied continuing representation in the same terms. Further, the exemption clause in the timber sale licences exempts the Province from liability in the circumstances.

The trial judge's orders for costs payable by the Province, including the costs payable to the FNFN, are set aside. Moulton is ordered to pay the costs of the FNFN.

The Province is entitled to its costs of the appeal, payable by Moulton. The FNFN will bear its own costs of the appeal.

Appeal From:

On appeal from: Orders of the Supreme Court of British Columbia, dated December 23, 2013 and June 5, 2014 (Moulton Contracting Ltd. v. British Columbia, 2013 BCSC 2348 and 2014 BCSC 993, Vancouver Docket S067611).

Counsel:

Counsel for the Appellant: K. Horsman, Q.C. and J. Oliphant.

Counsel for the Respondent, Moulton Contracting Ltd.: C.
Willms and B. Gilbride.

Counsel for the Respondent, Chief Liz Logan and Fort Nelson First Nation: A. Rana.


Reasons for Judgment

       The judgment of the Court was delivered by

       R.E. LEVINE J.A.:—

Introduction

 1      The appellant, the Province of British Columbia, appeals from an order that it pay damages of $1,750,000 to the respondent, Moulton Contracting Ltd., for breach of an implied term of a contract entered into on the sale of two timber sale licences by the Province to Moulton, and concurrent liability in negligent misrepresentation for breach of an implied continuing representation.

 2      The damages were for losses suffered by Moulton when it was prevented from logging under the timber sale licences by a blockade on the road access to the timber harvest areas put up by the respondents, George Behn and members of his family (collectively the "Behns"), all but one of whom were members of the respondent, the Fort Nelson First Nation ("FNFN"). The trial judge held that the Province had impliedly promised and represented to Moulton that it had engaged in all necessary consultation with First Nations and had discharged its duty to consult, and was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. Subsequent to Moulton and the Province entering into the timber sale licences, George Behn told an employee of the Province he intended to "stop the logging". The Province did not inform Moulton of this threat until two months later, after Moulton had started logging. The blockade went up a few days after that, and Moulton was never able to complete the logging under the timber sale licences.

 3      In effect, the Province was found liable for failing to inform Moulton of George Behn's threat to stop the logging at the time the threat was made. The damages were for Moulton's lost opportunities to enter into alternative logging contracts.

 4      On appeal, the Province claims the trial judge erred in implying contractual terms into the timber sale licences, and in finding liability in negligent misrepresentation based on an implied continuing representation that the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. It claims further that the trial judge erred in failing to consider whether an exemption clause in the timber sale licences applied to bar Moulton's claims. It also claims the trial judge erred in assessing Moulton's damages, and in making certain costs orders against the Province.

 5      It is my opinion that the law does not support the trial judge's conclusion that it was an implied term of the timber sale licences that the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as disclosed to Moulton. Nor does it support liability for negligent misrepresentation for an implied continuing representation in the same terms. Further, the exemption clause in the timber sale licences exempts the Province from liability in the circumstances.

 6      Accordingly, I would allow the Province's appeal and set aside the trial judge's order to the extent that it affects the Province.

 7      It follows that I also would set aside the trial judge's orders for costs payable by the Province, including the costs payable to the FNFN. I would substitute an order that Moulton pay the costs of the FNFN.

Background

 8      This litigation has a long history, both factually and procedurally. The trial judge discussed the background and the evidence in significant detail in his reasons for judgment. At this stage, the issues are narrowly focused on the legal issues raised by the grounds of appeal. I will therefore outline the background only to the extent necessary to elucidate those issues. The parties' factums are of assistance in summarizing these matters.

The Timber Sale Licences

 9      In issue on this appeal are two timber sale licences entered into between the Province and Moulton that permitted Moulton to harvest timber in the Fort Nelson Timber Supply Area (the "TSLs"), a geographic area of B.C. located within lands covered by Treaty No. 8, signed in 1899 by a number of First Nations and adhered to by the FNFN in 1910.

 10      A timber sale licence is a form of agreement granting harvesting rights to Crown timber, authorized under s. 12(2)(a) of the Forest Act, R.S.B.C. 1996, c. 157. A timber sale licence may be issued, following a competitive process, for a portion of the annual allowable cut in an area that has been approved for timber harvesting (Forest Act, ss. 10, 20).

 11      At the relevant time, the timber sale licence program in B.C. was administered by British Columbia Timber Sales, a stand-alone agency within what was then called the Ministry of Forests and Range (referred to by the trial judge as the Ministry of Forests or MOF). In this case, BCTS acted on behalf of the Province in seeking and obtaining approval from the MOF in 2005 to amend the forest development plan for the Fort Nelson Timber Supply Area; undertaking consultation with the FNFN regarding the amendment in 2004 and 2005; offering the TSLs for sale in June 2006; and entering into the TSLs with Moulton.

 12      Timber sale licences are sold by BCTS through a bid process. Moulton, a logging contractor who had been in business for several years and who had previously purchased a timber sale licence from the Province, successfully bid on the TSLs. The TSLs were granted to Moulton on June 27, 2006.

 13      The TSLs granted Moulton the right to harvest timber in defined areas and the right to enter the timber harvest areas. The blockade by the Behns of Moulton's access to the timber harvest areas gave rise to the issues in the litigation, and at trial, the scope and nature of those access rights was a significant issue. The trial judge's decision with respect to Moulton's claims to access rights is not an issue on appeal.

 14      On appeal, the issues focus to a large extent on the legal consequences of the terms of the TSLs that addressed liability for interference by third parties with Moulton's rights to access the timber harvest areas.

 15      The Province points out that as part of the bid process for the TSLs, Moulton received and reviewed a document entitled Particulars of the Invitation for Applications, which included clause 19:

Despite access rights and obligations which may be conferred through a timber sale license or associated road permits or road use permit, applicants are advised that BC Timber Sales does not warrant nor has it ever warranted, the Licensee's right of unfettered access to the cutting authority area which may be impeded by the actions of third parties including acts of disobedience or natural occurrences [emphasis added].

 16      The TSLs contained the following clauses, which are particularly relevant and in issue on the appeal:

9.0 ABORIGINAL RIGHTS, ABORIGINAL TITLE, TREATY RIGHTS

9.01  Notwithstanding any other provision of this Licence, if a court of competent jurisdiction


(a)

determines that activities or operations under or associated with this Licence will unjustifiably infringe an aboriginal right or title, or a treaty right,

(b)

grants an injunction further to a determination referred to in subparagraph (a), or

(c)

grants an injunction pending a determination of whether activities or operations under or associated with this Licence will unjustifiably infringe an aboriginal right or title, or a treaty right,


the Timber Sales Manager, in a notice given to the Licensee, may vary or suspend this Licence, in whole or in part, or refuse to issue a Road Permit or other permit given to the Licensee, to be consistent with the court determination.

14.00 LIMITATION OF LIABILITY

14.01  The government is not liable to the Licensee for injuries, losses, expenses, or costs incurred or suffered by the Licensee as a result, directly or indirectly, of an act or omission of a person who is not a party to this Licence, including but not restricted to an act or omission of a person disrupting, stopping or otherwise interfering with the Licensee's operations under this Licence by road blocks or other means.

Consultation by the Province with the FNFN

 17      The adequacy of the Province's consultation with the FNFN before granting the TSLs to Moulton was the focus of the trial. In his reasons for judgment, the trial judge reviewed in great detail the steps taken by the Province, and the participation and response by various members of the FNFN. He concluded that the consultation was not adequate, but imposed no liability on the Province for this failure as he found it was not causative of the blockade by the Behns that led to Moulton being unable to harvest timber. He also found that clause 14.01 of the TSLs exempted the Province from liability for the blockade in respect of the inadequate consultation.

 18      It is not necessary for the purposes of the appeal to describe the Province's consultation with the FNFN in detail. The Province's summary in its factum is sufficient:

In general terms, the record indicates a history of communication between BCTS and the FNFN around the 2005 amendment to the FDP which approved the cutblocks in the TSLs issued to Moulton. The consultation process included notice to the FNFN in 2004 of the proposed amendment, commitments by BCTS to conduct site-specific archeological impact assessments ("AIAs"), the provision of AIAs on completion to the FNFN, and a 2005 helicopter flyover of the area for FNFN representatives. The respondent George Behn participated in the 2005 helicopter flyover.

 19      The consultation process was completed before the 2005 amendment to the forest development plan, and no further consultation took place at the time the TSLs were granted to Moulton.

 20      Moulton had no knowledge of the consultation that had taken place between the Province and the FNFN. The evidence is that Kevin Moulton, the principal of Moulton, had not previously experienced any difficulties associated with aboriginal rights or blockades. He asked no questions, and had no discussions with any representatives of the Province, about the consultation that had occurred.

Events Leading to the Blockade

 21      The Province describes the events leading to the blockade in its factum:

On June 28, 2006 BCTS wrote to the Respondent George Behn to advise that the TSLs were issued to Moulton for locations within Mr. Behn's licensed trapline. Mr. Behn was encouraged to contact Moulton to confirm the proposed start date for harvesting in order that Mr. Behn had sufficient opportunity to remove his traps from the cutblock areas. The final cutblock boundaries were identified in maps provided to George Behn by BCTS on July 17, 2006.

On July 31, 2006, George Behn telephoned BCTS representative Jason Smith to voice opposition to the harvesting under the TSLs. Mr. Smith's notes of this conversation recorded that Mr. Behn stated "he would be going out to stop it [the logging]". Mr. Smith testified at trial that he interpreted this statement to mean that Mr. Behn would be either seeking an injunction, or seeking to publicize his opposition to the logging.

Mr. Smith telephoned Mr. Behn later on July 31, 2006 after Mr. Smith had an opportunity to review the consultation records. In the second conversation, Mr. Behn suggested four action points for BCTS that might satisfy his concerns - direct personal consultation with Mr. Behn with maps and air photos, an on-site visit, providing a copy of the AIAs to Mr. Behn, and the establishment of a 100-mile radius around Fort Nelson as a no harvest zone. Mr. Smith advised Mr. Behn that the first three requests were reasonable, but Mr. Smith could not commit to the establishment of a no harvest zone. ...

...

On August 31, 2006, George Behn sent a letter to Bill Warner, an Executive Director with [the Ministry of Forests], copying Mr. Smith. The letter stated that timber harvesting in the vicinity of the TSLs would constitute an infringement of aboriginal and treaty rights, and that these rights had not been accommodated by [the Ministry of Forests]. Mr. Behn requested that cumulative impact studies be carried out to assess the degree of infringement and wrote as follows:


Until these studies are completed, and the agreement negotiated, myself and my family take the position that our Aboriginal and Treaty Rights are being infringed. We could now apply for an injunction to stop the work, since there has been no effort from government to show that the Ministry of Forests was attempting to accommodate our Aboriginal and Treaty Rights.


BCTS did not notify Moulton of either the July 31, 2006 telephone call or the August 31, 2006 letter from Mr. Behn.

Between September 19 and 22, 2006, Moulton moved its equipment via the Canfor road to TSL A66573. ...

Moulton carried out harvesting between September 22 and 26, 2006. At a meeting on September 28, 2006, George Behn complained to Jason Smith (of BCTS) about a lack of consultation, and advised of his intention to block Moulton's access to the TSLs. Mr. Smith advised Moulton the next day (on September 29, 2006) that there was a potential problem with a trapper, and Moulton agreed to suspend logging until October 1, 2006.

By the evening of October 2, 2006, a blockade was established on the [access road for the timber harvest areas]. The blockade was initially a barricade consisting of a 2x4, supported at either end and placed across the road. Eventually, tents were erected and a fire built. The trial judge found that the blockade was constructed by George Behn, assisted by a number of the Behn Respondents.

Events Following the Blockade

 22      After the blockade went up, Moulton's crew was allowed to leave, but its equipment remained on the site. The Behns offered to allow Moulton to remove the equipment, but would not allow any more harvesting. Moulton released all of its workers over the following weeks.

 23      Between October and December 2006, the Province unsuccessfully attempted to resolve the dispute. In November 2006, Moulton was allowed to remove equipment, but not to harvest any additional timber.

 24      In early January 2007, the Behns allowed Moulton to bring equipment into the timber harvest areas to process logs that had been harvested in September 2006. Moulton agreed that it would not attempt to harvest any additional timber. It removed the previously harvested logs and sold them to Canfor for $67,971.

 25      Moulton was unable to obtain other logging work. In November 2006 and January 2007, the equipment it intended to use to harvest was repossessed. In April 2007, it sold all of its remaining equipment.

 26      Following negotiations, the Province returned the deposits that Moulton had paid under the TSLs, less a deduction on one for slash piling and burning.

Procedural History

 27      Moulton commenced the action against the Province, the Behns and the FNFN in November 2006.

 28      Moulton challenged the claims of the Behns in their defence that their aboriginal and treaty rights had been infringed by a lack of adequate consultation between the Province and the FNFN, and therefore the TSLs were invalid. The issue ultimately went to the Supreme Court of Canada, which decided that the Behns, as individual band members, were not entitled to raise a defence based on aboriginal collective rights without the authority of the collective. The attempt to raise lack of consultation as a defence in this case was also an abuse of process -- the licences and permits should have been challenged at the time they were issued by way of judicial review. The Court also clarified that the consultation duty was owed only to the band (the FNFN), and not to individual members of the band (the Behns): Behn v. Moulton Contracting Ltd., 2013 SCC 26 at paras. 30, 31 and 42, [2013] 2 S.C.R. 227.

 29      The trial of Moulton's action was originally scheduled to be heard in March 2010. It was adjourned pending the hearings on the motion to strike the Behns' pleadings. The trial commenced in September 2011 and proceeded through to December 2011. Judgment was reserved until after the Supreme Court of Canada released its judgment on May 9, 2013. The trial judge released his reasons for judgment on December 23, 2013.

The Issues and Results of the Trial

 30      Moulton sued the FNFN and the Behns for intentional interference with economic relations and civil conspiracy. These claims were dismissed, essentially on the basis that Moulton did not establish that the Behns had committed an unlawful act. There is no existing appeal on these issues.

 31      Moulton's claims against the Province were for breach of contract and concurrent liability for negligent misrepresentation. The pleadings alleged two promises: the Access Promise to "provide Moulton with access to the lands designated under the licenses"; and the Consultation Promise "that the Crown had consulted with all relevant aboriginal groups, including the FNFN" in respect of the TSLs.

 32      The trial judge rejected Moulton's claim that the Access Promise was an implied term of the TSLs, citing the limiting effect of clauses 9.01 and 14.01 "under which the Province clearly exempted itself from liability for losses arising out of interference with the licensee's operations by road blocks or other means" (at para. 275).

 33      The trial judge found that the Consultation Promise was an implied term of the TSLs; the Province had impliedly represented "That the Province had engaged in all necessary consultation with affected First Nations, and had discharged its duty to consult" (at para. 291). He did not discuss the implications of clauses 9.01 and 14.01 in implying this term.

 34      The trial judge held that the Province had breached the Consultation Promise in its consultations with the FNFN, but the breach was not causative of Moulton's loss because George Behn would have proceeded with the blockade in any event (at paras. 297-299). He also found that clause 14.01 exempted the Province from liability for losses resulting from the blockade, finding that it unambiguously covered fault on the part of the Province (at paras. 300-301).

 35      The trial judge found the Province liable for breach of an implied term in the TSLs, and for concurrent breach of an implied continuing representation in the same terms, for failing to inform Moulton of George Behn's threats to block physical access to the timber harvest areas during telephone conversations with a BCTS employee, Jason Smith, on July 31, 2006. He found that as a result of those conversations (at para. 99):

... Mr. Smith knew of Mr. Behn's opposition to logging of the Cutting Authority Areas covered by Moulton Contracting's TSLs; knew of Mr. Behn's determination to take steps to prevent the logging; and knew or ought to have known that Mr. Behn was threatening to block physical access.

 36      The implied term and representation breached by the Province was, in the trial judge's words (at para. 291):

That the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as the Province had disclosed to Moulton Contracting.

 37      The trial judge's finding of liability of the Province is encompassed in one paragraph of his reasons for judgment (at para. 302):

I do, however, find liability on the part of the Province for breach of an implied term of the TSLs that the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province. As I have found, BCTS knew or ought to have known, as of July 31, 2006, that Mr. Behn was threatening to block physical access. At no time over the month that followed did Mr. Behn resile from his threat. BCTS kept the plaintiff in the dark, and did so at a critical point in time, when the plaintiff would have to be making definite plans - for example, as to whether to attend the Canfor Contractors' Meeting - for the coming season. I find that the Province was obliged, as a matter of contract, to advise Moulton Contracting of Mr. Behn's threat, in a timely manner, and that it failed to do so. This finding may also be made on the basis of concurrent liability in negligence based on an implied continuing representation, which the Province learned to be false. Clearly, a duty of care was owed by the Province to Moulton Contracting, arising out of their contractual relationship, to pass on information of fundamental relevance to its ability to avail itself of its rights under the licenses.

The Appeal

 38      The appeal concerns the liability of the Province for breach of the implied term and representation:

That the Province was not aware of any First Nations expressing dissatisfaction with the consultation undertaken by the Province, save as the Province had disclosed to Moulton Contracting.

 39      For ease of reference in the balance of these reasons for judgment, I will refer to this as the "Dissatisfaction Term".

 40      The Dissatisfaction Term was not expressly pleaded or argued at trial, either as an implied term of the TSLs or a representation. Moulton pleaded that terms and representations were implied in the form of the Access Promise, which the trial judge rejected, and the Consultation Promise, which the trial judge accepted but for which he did not impose liability because it was not causative of Moulton's losses and it was excluded by clause 14.01. It appears the trial judge developed the Dissatisfaction Term on his own.

 41      The Province complains that the trial judge found it liable on a basis that was not pleaded, but on appeal argues the application of the Dissatisfaction Term on the merits. Moulton points out that all of the material facts necessary to the Dissatisfaction Term were pleaded and proved.

 42      Had the pleadings expressly set out the basis for implying the Dissatisfaction Term, the trial judge's reasons would likely have been more explicit about how he arrived at its form and legal consequences. As it is, his reasoning and reference to the law is sparse. It has not been argued, however, that the reasons are not amenable to appellate review.

The Trial Judge's Reasoning

 43      In considering the issues raised on the appeal, I have drawn certain inferences from the trial judge's reasoning in imposing liability on the Province for breach of the Dissatisfaction Term.

 44      First, the Dissatisfaction Term is a discrete implied term, separate from the Access Promise and the Consultation Promise.

 45      The trial judge did not accept Moulton's claim to the Access Promise. He held that the Province had not promised, guaranteed or undertaken to assist Moulton in achieving access to the timber harvest areas in the TSLs. He found the wording of clauses 9.01 and 14.01 is "completely inconsistent with any notion of access being guaranteed" (at para. 275). Thus, whatever the Province's obligations were in respect of Moulton's performance of the TSLs, ensuring Moulton's access to the timber harvest areas was not part of them.

 46      The trial judge accepted Moulton's claim to the Consultation Promise. He found that the Province had impliedly promised and represented that it "had engaged in all necessary consultation with affected First Nations, and had discharged its duty to consult" (at para. 291). The trial judge dealt with this term in the context of the Province's duty to consult with the FNFN (at paras. 3(2), 292-297). Although he did not explicitly say that the duty was owed only to the FNFN and not to the Behns, as held by the Supreme Court of Canada, in finding that the Province was not liable for failing to discharge its duty to consult the FNFN, the trial judge clearly distinguished the actions of the Behns from any consequences of the failure to adequately consult the FNFN (at para. 299). Thus, the Province's liability for breach of the Dissatisfaction Term, which relates to its knowledge of George Behn's threats, does not arise out of or relate to its breach of the Consultation Promise.

 47      Further, the trial judge held that the Province had validly exempted itself from liability for breach of the Consultation Process. He held that Moulton's loss was "a direct result of the blockade", that "it was clearly of the type encompassed by the TSL Blockade Exemption" (clause 14.01) and that "it would not assist [Moulton] to demonstrate that the blockade was caused or contributed to by negligence or fault on the part of the Province" (at para. 300).

 48      Despite his findings that clause 14.01 was inconsistent with a guarantee of access, and exempted the Province from liability for its failure to adequately consult with the FNFN, the trial judge did not address the effect of clause 14.01 on the Province's liability for its breach of the Dissatisfaction Term.

 49      The result of the trial judge's reasoning is that he imposed a duty on the Province to inform Moulton during its performance of the contract (the TSLs) of any dissatisfaction expressed by any individual member of a First Nation (perhaps, but not clearly, restricted to the FNFN) with the consultation undertaken by the Province with the FNFN. The trial judge found this "duty of care was owed by the Province to Moulton Contracting, arising out of their contractual relationship, to pass on information of fundamental relevance to its ability to avail itself of its rights under the licenses" (at para. 302).

 50      I will deal with the Dissatisfaction Term first as an implied term of the TSLs, and then in the context of negligent misrepresentation.

Implied Term

 51      The trial judge held that the Consultation Promise and the Dissatisfaction Term "must be implied" in the TSLs "to give business efficacy" to them. He said (at para. 290):

The need to engage in meaningful consultation with aboriginal groups is fundamental to questions of land use in territory covered by Treaty 8. If adequate consultation were not to take place, the legitimacy of the "taking up" under the Treaty would stand to be challenged, and a party given license by the Crown to use land would inevitably run the risk of conflict. The Crown must be taken to be aware of this risk in any given situation, and a party engaging in negotiations with the Crown for license to use Crown land must be entitled to assume that the Crown has taken adequate steps to discharge its obligation. The commercial reality of dealing with land subject to aboriginal claims justifies and necessitates such expectations being recognized as forming implied terms of a contract with the Crown: see the discussion of implied terms in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at paras. 27, 29.

 52      As the trial judge did not find the Province liable for breach of the Consultation Promise, whether it should have been implied is not directly in issue on this appeal. I therefore find it is unnecessary to determine whether it was appropriate to imply the Consultation Promise as required for business efficacy.

Business Efficacy

 53      In M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at para. 27, cited by the trial judge in support of the implied terms, Justice Iacobucci for the Supreme Court summarized the three circumstances (identified in Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711 at 774-776) where terms may be implied in a contract:

(1)

based on custom or usage; (2) as the legal incidents of a particular class or kind of contract; or (3) based on the presumed intention of the parties where the implied term must be necessary "to give business efficacy to a contract or as otherwise meeting the 'officious bystander' test as a term which the parties would say, if questioned, that they had obviously assumed" [citation omitted].

 54      Justice Iacobucci noted that while it was not clear from Canadian Pacific Hotels Ltd. whether the "business efficacy" and "officious bystander" tests were two separate tests, what was "important in both formulations is a focus on the intentions of the actual parties", and not "the intentions of reasonable parties" (at para. 29 [emphasis in original]):

This is why the implication of the term must have a certain degree of obviousness to it, and why, if there is evidence of a contrary intention, on the part of either party, an implied term may not be found on this basis.

 55      The key element is that the implied term is more than just reasonable; it is necessary to make the contract as the parties intended. That is, without the term, the contract, as intended by the parties, would not be effective.

 56      In Olympic Industries Inc. v. McNeil, 86 B.C.L.R. (2d) 273, [1993] B.C.J. No. 2565 at para. 31 (decided before M.J.B. Enterprises), Finch J.A. (as he then was) set out the approach to analyzing the parties' intentions:

The question as to what the parties must have intended as a matter of necessity is a question of fact to be decided in the circumstances of each case. The party who seeks to have a term implied into the contract bears the onus of persuading the court of that necessity. It is not sufficient to show that it would be reasonable or logical to imply such a term, or that the parties would probably have agreed upon such a term if they had put their minds to it, or, that having put their minds to it, chose not to express it. A higher burden of proof must be met[.]

 57      This approach to determining whether to imply a term for business efficacy has been followed in this Court after M.J.B. Enterprises: see Perrin v. Shortreed Joint Venture Ltd., 2009 BCCA 478 and Zeitler v. Zeitler (Estate), 2010 BCCA 216.

 58      Thus, the intention of parties is not what reasonable parties would intend, but rather what the actual parties in the actual circumstances of the contract intended.

 59      In this case, the trial judge implied the Dissatisfaction Term on the basis of the "commercial reality" from the point of view of parties who contract with the Province. This is not the legal test for implying a term into a contract for business efficacy. The legal test is whether the parties to a contract intended such a term. The trial judge did not apply that test. Nor did he find or make findings of fact that would support that the Dissatisfaction Term was intended by these parties, and was necessary to give effect to the TSLs.

 60      The trial judge did not consider, in this context, the limiting effect of clauses 9.01 and 14.01 of the TSLs, though in refusing to imply the Access Promise, he found it to be inconsistent with the parties' intentions (at para. 275), and he found that clause 14.01 clearly exempted the Province from liability for the Consultation Promise (at para. 300). These clauses, on their face, are inconsistent with a conclusion that these parties intended that the Province had a duty to inform Moulton of information relevant "to its ability to avail itself of its rights under the licenses" or would be liable for any losses resulting directly or indirectly from interference or threats of interference with Moulton's operations under the TSLs "by road blocks or other means".

Bhasin v. Hrynew

 61      In further written submissions, Moulton argued that the decision of the Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71, supports the implied terms.

 62      In Bhasin, the Supreme Court of Canada considered whether Canadian law recognizes a general duty of good faith in contractual performance. The case involved a breach of contract in a commercial dealership agreement. The trial judge held that the respondent dealt dishonestly with the appellant in failing to renew the agreement, and awarded damages. The Court upheld the trial judge's judgment, though it varied the damage award.

 63      The Supreme Court of Canada articulated three principles of contract interpretation relevant to the doctrine of good faith in contract law. These are (at para. 93):

(1)

There is a general organizing principle of good faith that underlies many facets of contract law.

(2)

In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships.

(3)

It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations.

 64      In the course of discussing these principles, Justice Cromwell (for a unanimous Court) referred to the doctrine of good faith in relation to the law of implied terms (at para. 44):

Good faith also plays a role in the law of implied terms, particularly with respect to terms implied by law. Terms implied by law redress power imbalances in certain classes of contracts such as employment, landlord-lessee, and insurance contracts: London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299, at p. 457, per McLachlin J.; see also Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, per McLachlin J., concurring. The implication of terms plays a functionally similar role in common law contract law to the doctrine of good faith in civil law jurisdictions by filling in gaps in the written agreement of the parties: Chitty on Contracts, at para. 1-051. In Mesa Operating, the Alberta Court of Appeal implied a term that a power of pooling properties for the purpose of determining royalty payments be exercised reasonably. The court implied this term in order to give effect to the intentions of the parties rather than as a requirement of good faith, but Kerans J.A. stated that "[t]he rule that governs here can, therefore, be expressed much more narrowly than to speak of good faith, although I suspect it is in reality the sort of thing some judges have in mind when they speak of good faith": para. 22. Many other examples may be found in Waddams, The Law of Contracts, at paras. 499-506.

 65      Moulton argues that this discussion of implied terms supports the trial judge's "finding that the implied terms were necessary to give business efficacy" to the TSLs. Moulton says that the trial judge's finding "accords with the more general principle of good faith which authorizes the implication of terms to give effect to the intentions of the parties and to redress power imbalances".

 66      In my opinion, the discussion of implied terms in Bhasin (at para. 44) does not assist Moulton. In that paragraph, Cromwell J. identified implied terms generally as an area where good faith obligations already exist. For example, as he points out, good faith obligations are implied as a matter of law to address power imbalances in certain classes of contracts such as employment, landlord-lessee, and insurance contracts. He also notes that good faith obligations may also be implied as a matter of fact to give effect to the intentions of parties.

 67      Moulton's submission that Bhasin buttresses the trial judge's decision to imply the terms to give effect to the parties' intentions and to redress power imbalances conflates the test for implying terms at law (which may be to redress power imbalances) with the test for implying terms for business efficacy (which requires that the terms be intended by the parties). In my view, Bhasin does not suggest that the two tests should be combined to reach a hybrid law-fact conclusion on whether to imply terms. Rather, Bhasin clarifies that good faith is not an implied term, but is an organizing principle that manifests in particular doctrines, such as the duty of honest contractual performance.

 68      I agree with a similar conclusion reached by the Ontario Court of Appeal in High Tower Homes Corporation v. Stevens, 2014 ONCA 911. One of the issues was whether the trial judge erred in failing to imply a term into the contract regarding notice. Associate Chief Justice Hoy, writing for the Court, commented in her discussion of implied terms on the effect of Bhasin on the implication of a term requiring good faith performance, as the Court had done in CivicLife.com Inc. v. Canada (Attorney General) (2006), 215 O.A.C. 43. She said (at paras. 36-37):

In Bhasin ... Cromwell J., writing for a unanimous court, clarified that the duty of good faith should not be thought of as an implied term. He recognized a new duty of honest contractual performance as a general doctrine of contract law that operates irrespective of the intentions of the parties. As such, the parties cannot exclude it by an entire agreement clause: Bhasin, at para. 74.

Seen in the light of Bhasin, CivicLife is about the importance of acting in good faith in contractual dealings, and not about the general ability to imply terms - whatever their nature - notwithstanding an entire agreement clause.

[Emphasis added.]

 69      Moulton also suggests that the organizing principle of good faith supports the trial judge's decision to impose liability on the Province for failing to inform Moulton of Mr. Behn's threats when they were made. It says the Province failed to have regard to Moulton's "legitimate contractual interests".

 70      Justice Cromwell described the organizing principle of good faith in this way: "that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily" (at para. 63).

 71      As explained by Cromwell J., this organizing principle "underpins and is manifested in more specific legal doctrines and may be given different weight in different situations" (at para. 64). It "manifests itself through the existing doctrines about the types of situations and relationships in which the law requires, in certain respects, honest, candid, forthright or reasonable contractual performance" (at para. 66). Thus, the nature of the obligation of good faith requires "a highly context-specific understanding of what honesty and reasonableness in performance require so as to give appropriate consideration to the legitimate interests of both contracting parties" (at para. 69).

 72      In invoking its "legitimate contractual interests", Moulton adopts language used by Cromwell J. in describing the organizing principle (at para. 65):

The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While "appropriate regard" for the other party's interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first [emphasis added].

 73      Moulton's submission does not deal with Cromwell J.'s discussion of the common law duty of honesty in contractual performance that flows from the organizing principle of good faith (at para. 73):

This means that the parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one's contractual performance.

 74      Justice Cromwell discussed the duty of honest contractual performance further (at para. 86):

The duty of honest performance that I propose should not be confused with a duty of disclosure or fiduciary loyalty. ... [A] clear distinction can be drawn between a failure to disclose a material fact, even a firm intention to end the contractual arrangement, and active dishonesty.

 75      Moulton never pleaded nor argued that the Province has acted in bad faith or dishonestly. It says it relies on Bhasin for the principle that "the correct approach to the interpretation and performance of contracts must reflect the overarching and informing principle of good faith".

 76      Bhasin provides a new approach to the role of good faith in contract interpretation in Canadian law, but Moulton reads it too broadly in application to this case. There is no basis to say that the Province acted dishonestly, unreasonably, capriciously or arbitrarily (see para. 63) in failing to disclose to Moulton that Mr. Behn had threatened to disrupt the logging when the threats were made. The question in this case is whether it had any obligation to disclose that information within the relationship created by Moulton entering into the TSLs, given their terms, and, if the Province was so obliged, whether it is liable for failing to do so. No issues of honest contractual performance, as discussed in Bhasin, arise in this appeal.

Conclusion on Implied Term

 77      According to the decision of the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, contractual interpretation involves questions of mixed fact and law, and appellate courts are to show deference to trial judges on such questions (at paras. 50-52). An appellate court may generally only interfere with a trial judge's decision on a question of mixed fact and law if the trial judge made a palpable and overriding error: see Housen v. Nikolaisen, 2002 SCC 33 at para. 36, [2002] 2 S.C.R. 235. An extricable question of law in contract interpretation, however, such as applying the wrong principle, not considering part of a legal test or failing to consider a relevant factor, is reviewable on a correctness standard (Housen at para. 36 and Sattva at para. 53).

 78      In my opinion, the trial judge erred in law in implying the Dissatisfaction Term into the TSLs. He did not apply the proper test: whether the parties actually intended to agree to such a term. There is no basis in any evidence to say that they did. Rather, the terms on which the parties did agree were inconsistent with such a term. As the trial judge held, clauses 9.01 and 14.01 were clearly intended to limit the liability of the Province for the consequences of an event such as the blockade.

 79      I would accede to this ground of the Province's appeal.

Negligent Misrepresentation

 80      The trial judge's finding of liability of the Province for negligent misrepresentation tracked his finding of liability in contract for breach of the implied Dissatisfaction Term. He found "the Province was obliged, as a matter of contract, to advise Moulton Contracting of Mr. Behn's threat, in a timely manner, and that it failed to do so" (at para. 302). His discussion of liability for negligent misrepresentation consists of (at para. 302):

This finding may also be made on the basis of concurrent liability in negligence based on an implied continuing representation, which the Province learned to be false. Clearly, a duty of care was owed by the Province to Moulton Contracting, arising out of their contractual relationship, to pass on information of fundamental relevance to its ability to avail itself of its rights under the licenses.

 81      Moulton had not pleaded or argued at trial that the Province had made a representation in the terms of the Dissatisfaction Term. The trial judge pointed to no evidence, made no findings of fact and cited no law in support of his conclusion that the Province had impliedly made such a representation. This led to some confusion, reflected in the arguments on appeal, about what the trial judge actually decided.

The Province's Arguments

 82      The Province argues that the trial judge failed to find that the elements of the tort of negligent misrepresentation were satisfied. It says that the terms and timing of the representation are unclear and, if it is in the terms of the Dissatisfaction Term, not supported by the evidence. It points out that Kevin Moulton testified that he did not concern himself with risks such as blockades, and argues that he therefore did not rely on a representation in the form of the Dissatisfaction Term. The Province suggests that the Dissatisfaction Term is a promise of future conduct, which cannot ground liability in negligent misrepresentation. Further, it argues that the exemption clauses in the TSLs preclude finding liability on the part of the Province for losses suffered by Moulton as a result of the blockade.

 83      The Province also raised an argument that the trial judge had, in effect, imposed liability on it for breach of a positive duty of care tantamount to a duty to warn, which was not pleaded or supportable in law. At the hearing of the appeal, the Province abandoned the "duty to warn" characterization of Moulton's claim when Moulton responded that it was not relying on that basis for liability.

Moulton's Arguments

 84      To all of these arguments, Moulton responds that the Province's liability arises from its failure to inform Moulton in a timely way of circumstances that would interfere with Moulton's ability to perform the contract. The representation was not a promise of future conduct. It was a representation of an existing fact -- that no First Nations were dissatisfied with the consultation except as disclosed to Moulton -- that subsequently became false by George Behn's threats to disrupt the logging. This change of circumstances required the Province, in accordance with the Dissatisfaction Term, to disclose that new fact to Moulton. The Province's liability thus results from its own failure to advise Moulton of George Behn's threats, not from the blockade, and the exemption clauses in the contract exclude the Province's liability for the acts of third parties, not for its own negligence.

 85      At the hearing of the appeal, Moulton's counsel put forward a further legal explanation for the trial judge's conclusion, based on an analysis of the issuance and execution of the TSLs by Moulton as giving rise to Contract "A" and Contract "B". He abandoned this argument when it was pointed out by counsel for the Province that it had not been pleaded, argued at trial, or included in Moulton's factum.

The Province's Duty to Inform Moulton

 86      The parties' arguments on appeal attempt to find a legal framework for the imposition of a duty on the Province to inform Moulton, subsequent to the TSLs being entered into, of information relevant "to its ability to avail itself of its rights under the licenses" and, in particular, of "any First Nations expressing dissatisfaction with the consultation".

 87      Moulton finds authority for the imposition of such a duty in a statement made in George Spencer Bower, The Law of Actionable Misrepresentation, 4th ed. by The Honourable Mr. Justice K.R. Handley (London: Butterworths, 2000) at para. 76, that, where a continuing representation that was true when first made becomes false by supervening events, "the supervening events convert a true representation into a misrepresentation".

 88      Spencer Bower cites, in support of this statement, With v. O'Flanagan, [1936] Ch. 575 at 584 (C.A.). In With, the parties entered into negotiations in January 1934 for the sale of a medical practice. The vendor represented the revenues of the practice were 200l. per annum. By the time the contract was signed on May 1, 1934, the vendor had been ill for several months and the practice had fallen off. The purchasers learned before signing the contract that a locum was managing the practice, but despite raising a concern with the vendor's lawyer, they were not informed of the loss in revenues. When they took possession, they found that the practice was almost non-existent. The purchasers sued for rescission of the contract.

 89      The headnote summarizes the decision of the Court of Appeal "that the representation was made to induce the purchasers to enter into the contract and must be treated as continuing until the contract was signed, and that it was the duty of the vendor to communicate the change of circumstances to the purchasers". Spencer Bower quotes from Lord Wright MR who referred (at 584) to "the duty which rests upon the party who has made the representation not to leave the other party under an error when the representation has been falsified by a change of circumstances" (Spencer Bower at para. 76, fn. 26).

 90      In support of the application of this principle in Canadian law, Moulton cites De Groot v. St. Boniface General Hospital, [1994] 6 W.W.R. 541, [1994] M.J. No. 290 at para. 16 (C.A.), rev'g on other grounds [1993] 6 W.W.R. 707, [1993] M.J. No. 278 (Q.B.). In De Groot, the plaintiff, a surgeon, applied for general and specialized surgical privileges at the defendant hospital on the basis that both privileges would be granted. The defendant subsequently learned the plaintiff would only be granted the specialized surgical privileges but did not inform the plaintiff of this change, even when the subject of both privileges was raised by the plaintiff. The plaintiff was only informed when he arrived to start his practice. The trial judge found that the defendant breached a duty of care to the plaintiff by failing to inform him of the material change in the circumstances of his employment (at para. 16).

 91      Neither With nor De Groot support the application to this case of the broad statement made by Spencer Bower about the duty on a party to a contract to advise the other party of a representation that has become false. Both of those cases dealt with classic contractual relationships where a party made a clear representation intended to induce the other party to enter into the contract, the other party continued to rely on the representation on entering into the contract after the representation had become false, and the representor failed to advise the other party of that fact (even after the representee raised the subject matter of the representation after it had become false).

 92      These cases, and the broad statement in Spencer Bower, are obviously distinguishable. In this case, there was no express representation, and no evidence that Moulton was induced by or relied on the Dissatisfaction Term in entering into the TSLs. The Dissatisfaction Term was true at the time Moulton entered into the contract with the Province. Unlike the circumstances in With and De Groot, the Dissatisfaction Term required the Province to provide ongoing information to Moulton after the contract was entered into. While Moulton says it is not arguing that the Province had a "duty to warn" (no doubt because that basis for liability was not pleaded and was likely legally unsupportable in any event), the obligation imposed by the Dissatisfaction Term appears to resemble such a duty more than the type of continuing representation described by Spencer Bower.

 93      Thus, the statements made in Spencer Bower do not provide legal support for imposing a positive duty on the Province to inform Moulton of information relevant to its ability to avail itself of its rights under the licences, or, in particular, to any dissatisfaction expressed by any First Nations with the consultation process. There is no basis to impose on the Province a duty to disclose to Moulton the details of the consultation process at any point, and particularly at the relevant point in this case. George Behn's statement in July 2006 that he intended to stop the logging was made after Moulton and the Province entered the TSLs. Further, the Behns had no legal claim to "express dissatisfaction with the consultation"; the Supreme Court of Canada found the duty to consult was owed only to the FNFN (at para. 31).

The Dissatisfaction Term

 94      The trial judge found that the Dissatisfaction Term was an "implied continuing representation ... arising out of [the] contractual relationship" between the Province and Moulton (at para. 302). By the trial judge's own reasoning, however, the Dissatisfaction Term is inconsistent with the contractual relationship between the parties. The Dissatisfaction Term is no more legally justifiable than the Access Promise as either an implied representation or an implied contractual term.

 95      Through the TSLs, Moulton and the Province entered a commercial relationship in which the Province licensed Moulton to harvest timber in the defined areas, and Moulton agreed to comply with the terms of the TSLs and to pay stumpage. As discussed above, the trial judge concluded there was no implied or represented Access Promise. That promise, in Moulton's submission, was an obligation on the Province to facilitate Moulton's access to the timber harvest areas.

 96      The Dissatisfaction Term, in effect, gives Moulton the benefit of the Access Promise by entitling Moulton to information about how its access to the timber harvest areas might be impeded by third parties. The rationale appears to be that the information would allow Moulton to make decisions about its affairs if that dissatisfaction hindered access. By requiring the Province to provide information to assist Moulton in accessing the timber harvest areas, the Dissatisfaction Term provides another legal route to obtain the Access Promise: failing to notify Moulton of George Behn's threat imposes liability on the Province for failing to facilitate Moulton's access to the timber harvest areas.

 97      In concluding there was no implied or represented Access Promise, the trial judge stated (at paras. 272-275):

[272] Moulton Contracting says that the combined effect of the TSLs and the [Road Permit (RP)] was to promise it access to the Cutting Authority Area; and, consequently, that the Province was under an obligation to take reasonable steps to fulfil the Access Promise, for example by obtaining an injunction to have the blockade removed, or to have the blockade participants arrested.

[273] Specifically, the plaintiff points to the language of clauses 1.01, 1.02 and 10.01 of each TSL, and clause 1.10 of the RP. The TSL clauses read:


1.01 Subject to this Licence, the Licensee


(a)

may ... harvest timber from the ... cutting authority area, and

(b)

for the purpose of exercising the rights under this Licence may enter onto those areas.


1.02  Subject to paragraph 1.03, the Licensee may harvest all species and grades of timber situated on the cutting authority area in accordance with this Licence and Road Permits issued in association with this Licence.

...

10.01  The Licensee may construct, maintain and use roads on the cutting authority area under the authority of this Licence.


[274] Clause 1.10 of the RP reads:


In consideration of the Permittee's right to harvest timber under Licence A66573 and to provide access to that timber, subject to all Ministry of Forests legislation and regulations as amended from time to time, the Ministry Official grants to the Permittee a non-exclusive right to enter on and construct within the Permit Area a road, ...as are necessary for construction of the road or for access to the timber and the right to use and maintain that road, or to use and maintain a road, within the Permit Area described in paragraph 2.01, in accordance with the conditions/specifications described in the attached schedules.


[275] In my view, these particular clauses, and the TSLs and the RP as a whole, did nothing more than permit or authorize access to the Cutting Authority Areas for the purpose of timber harvesting, and permit or authorize construction of a road within the Cutting Authority Area of one of the TSLs, for that purpose. There is no ambiguity in the documents. The TSLs were a license, permitting entry onto the property for a specific use. There is nothing like a guarantee or a promise that access could be achieved, and nothing like an undertaking to assist the plaintiff in achieving access. To the contrary, the wording of clause 9.01 of the TSLs, the TSL Aboriginal Right Clause - under which the Province reserved the right to suspend a TSL in the event of, among other things, an interim or final injunction being granted on account of infringement of aboriginal rights - and clause 14.01, the TSL Blockade Exemption - under which the Province clearly exempted itself from liability for losses arising out of interference with the licensee's operations by road blocks or other means - are, I find, completely inconsistent with any notion of access being guaranteed.

[Italics emphasis in original. Underline emphasis added.]

 98      This analysis, in my view, applies equally to the Dissatisfaction Term. The practical effect of the Dissatisfaction Term is to oblige the Province to disclose any information that might "assist [Moulton] in achieving access" or, on these facts, to choose a course of conduct to limit its losses where access was impeded by third parties. As the trial judge correctly found with respect to the Access Promise, such an obligation is inconsistent with the terms of the TSLs that contemplate third parties interfering with Moulton's access to the timber harvest areas, and relieve the Province from liability for those interferences.

 99      The Dissatisfaction Term, as was the Access Promise, is inconsistent with the parties' contractual relationship. The result of implying such a representation makes the Province liable for the same interferences that precluded finding the Province had guaranteed access to the timber harvest areas.

Exemption Clause

 100      A further reason for rejecting the trial judge's finding of liability in respect of the Dissatisfaction Term is the application of clause 14.01 of the TSLs.

 101      Clause 14.01 dealt expressly with the consequences of losses suffered as a direct or indirect result of "an act or omission of a person who is not a party to the [TSL]" (which would include "any First Nations expressing dissatisfaction") including an act "disrupting, stopping or otherwise interfering with the Licensee's operations ... by road blocks or other means" (and including threats to carry out such acts).

 102      Moulton argues, relying on Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, that clause 14.01 does not apply to exempt the Province from its own failure to inform Moulton of Mr. Behn's threats to blockade the timber harvest areas. It says that if it does apply, it would be unconscionable to enforce it because the TSLs "were not freely negotiated but were a one-sided contract with terms dictated by the Province".

 103      As the trial judge held in concluding that the Province was not liable for failure to adequately consult with the FNFN, the clear intent of clause 14.01 was to exempt the Province from liability for the acts of third parties which disrupted, stopped, or interfered with timber harvesting under the TSLs. He said (at paras. 300-301):

... the loss of revenue from the TSLs was as a direct result of the blockade; it was clearly of the type encompassed by the TSL Blockade Exemption. On my interpretation of that exemption clause, it would not assist the plaintiff to demonstrate that the blockade was caused or contributed to by negligence or fault on the part of the Province. ...

I find no ambiguity in the language of the TSL Blockade Exemption. The words used are wide enough, in their ordinary meaning, to cover fault on the part of the Province.

 104      I agree with the trial judge's interpretation of the effect of clause 14.01 on the events that occurred. It clearly applies to any First Nations expression of dissatisfaction, including George Behn's threats, and to the blockade. It was not the Province that disrupted or interfered with Moulton's logging of the TSLs and therefore caused Moulton's losses. It was the blockade, as the trial judge found. Even if Moulton were obliged to inform Moulton of George Behn's threats and failed to do so, had the blockade not taken place, Moulton would not have suffered any losses.

 105      Nor is clause 14.01 unconscionable. Moulton was aware of it and, based on its past experience, was unconcerned with the risk of interference with its logging by First Nations. The TSLs were straightforward commercial contracts with which Moulton was familiar. They were not imposed on it; Moulton chose to bid on the right to harvest under the TSLs in accordance with the terms of the bid process and of the TSLs.

Conclusion on Negligent Misrepresentation

 106      The trial judge thus erred in finding the Province liable for negligent misrepresentation. There is no persuasive legal authority supporting the imposition of a duty on the Province to inform Moulton of any First Nations dissatisfaction with the consultation undertaken by it, and clause 14.01 of the TSLs expressly provides that Province is not liable for any losses suffered by Moulton as a result of an act of a third party, including any act or threat to act that interferes with accessing the timber harvest areas.

 107      I would accede to this ground of appeal.

Conclusion on the Province's Liability

 108      The trial judge erred in implying the Dissatisfaction Term into the TSLs as an implied contractual term, and in finding the Province liable in negligent misrepresentation for failing to inform Moulton of George Behn's threats to physically disrupt the logging.

 109      I would allow the Province's appeal of the trial judge's finding of liability against it.

 110      It is therefore unnecessary for me to address the Province's appeal of the trial judge's assessment of damages.

Trial Costs

 111      In separate reasons on costs, the trial judge awarded Moulton its costs payable by the Province with double costs after the date of a settlement offer in 2009. The trial judge, by virtue of a Sanderson order, also ordered the Province to pay two-thirds of the costs of the FNFN pursuant to Rule 14-1(18) of the Supreme Court Civil Rules. The trial judge reduced the FNFN's costs by one-third in light of their delayed disclosure during discovery.

 112      The Province appealed the trial judge's orders for costs payable by it. As it has succeeded on its appeal of its liability, it is unnecessary to address its submissions on the costs orders.

 113      I would set aside the trial judge's orders for costs payable by the Province, including the Sanderson order.

 114      At the hearing of the appeal, Moulton and the FNFN made submissions on how to address costs in the event that the Province's appeal of its liability succeeded. Counsel for Moulton submitted that the costs issues should be remitted to the trial judge. Counsel for the FNFN asked this Court to substitute an order that Moulton pay its costs or, in the alternative, to remit the issue of costs to the trial judge.

 115      I would vary the trial judge's order in respect of the trial costs of the FNFN by ordering that Moulton, instead of the Province, pay those costs, calculated in accordance with the trial judge's reasons for judgment.

 116      It is not clear to me what costs issues remain to be remitted to the trial judge, but if there are any, the parties do not require an order of this Court to bring them before him.

Conclusion

 117      I would allow the Province's appeal and set aside the orders requiring it to pay damages and costs to Moulton, and to pay costs to the FNFN. I would order that Moulton, not the Province, pay the trial costs of the FNFN, calculated in accordance with the trial judge's reasons for judgment.

 118      I would order that the Province is entitled to the costs of the appeal, payable by Moulton.

 119      I would order that the FNFN bear its own costs of the appeal.

R.E. LEVINE J.A.
E.C. CHIASSON J.A.:— I agree.
S.D. FRANKEL J.A.:— I agree.

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