Yukon North Of Ordinary

News archive for December 6, 2012

High court declines to hear Yukon case

The Supreme Court of Canada will not hear an appeal in the $67-million case between investors in the failed Watson Lake sawmill and the federal government.

By Chuck Tobin on December 6, 2012 at 3:17 pm

The Supreme Court of Canada will not hear an appeal in the $67-million case between investors in the failed Watson Lake sawmill and the federal government.

The highest court in the country issued its decision this morning.

It simply indicated it will not grant South Yukon Forest Corp. an opportunity to appeal a decision by the Federal Court of Appeal.

The decision closes the door on South Yukon’s lawsuit against the federal government.

“There’s really nothing left to be said,” South Yukon lawyer Len Sali said in an interview this morning from his office in Calgary.

“It’s not one of those days where there is going to be any joy in Mudville.”

Sali acknowledged there are investors who are out significant amounts of money. That has occurred in a case where the original trial judge thrashed the character of some federal officials in Whitehorse who handled the South Yukon file.

Don Oulton, a representative of South Yukon, has estimated more than 80 of the original 125 investors were Yukoners.

South Yukon sued Ottawa in 2002. It claimed the federal government failed to deliver on its promise of permitting the company to log enough timber to operate its mill profitably in the late 1990s.

The company was awarded a $67-million settlement in 2010 following 40 days of trial in the Federal Court, for its lost investment and lost economic opportunities.

Justice Elizabeth Heneghan also ordered Ottawa to pay South Yukon’s legal costs, as well as interest on the $67 million.

The federal government appealed to the Federal Court of Appeal. The three judges of the appeal court dismissed the $67-million settlement last May, and went on to order South Yukon to pay Ottawa’s legal costs.

Last August, South Yukon filed its request to have the Supreme Court of Canada hear an appeal of the decision by the Federal Court of Appeal.

The three judges of the Supreme Court of Canada did not issue reasons for refusing to hear the case.

As a general rule, the highest court does not provide reasons for refusing or agreeing to hear cases.

The Supreme Court of Canada receives approximately 600 requests to hear civil matters each year. It generally accepts about 60 of those cases, or 10 per cent

As a rule, the highest court only hears cases of national interest or significant public importance.

In the original decision, Justice Heneghan found federal officials in Whitehorse did indeed promise South Yukon a hearty supply of wood in southeast Yukon, in exchange for the company’s commitment to build a mill and create jobs.

Heneghan ruled the promise by federal officials created a legal, contractual obligation which was broken when the supply of timber never materialized, and the mill was forced to shut down.

In the ruling, the judge found federal officials actually manipulated the process to ensure South Yukon didn’t get the permits it needed.

“I find that the action of some of the defendant’s employees and agents were ‘harsh, vindictive, reprehensible and malicious,” Heneghan wrote in her 391-page decision.

The three judges of the Federal Court of Appeal, however, ruled that large-scale logging licences in the Yukon back then, when Ottawa was still in charge of the Yukon’s natural resources, could only be approved by the federal cabinet.

Federal civil servants in Whitehorse could not have entered into a legally-binding contractual agreement, because they didn’t have the authority to, the Court of Appeal ruled.

Furthermore, the three judges went on to say, South Yukon knew or should have known federal bureaucrats did not have the ability to make such promises.

The three judges found that when the company undertook construction of the mill, it did so at its own risk.

In applying to the Supreme Court of Canada for permission to appeal, South Yukon’s lawyer argued that in reaching their decision, the judges of the appeal court researched and raised matters of law that were not even mentioned at the original trial.

None of the parties were given the opportunity to respond to the position taken by the three judges on the new legal arguments before they rendered their decision, Sali wrote.

He pointed out in his arguments that by reversing the original award to South Yukon for legal costs, the Federal Court of Appeal was actually rewarding federal civil servants for the behaviour the trial judge called reprehensible.

For that reason alone, Sali argued in his application, the Supreme Court of Canada should agree to hear the appeal.

In opposing South Yukon’s request for an appeal, the federal government argued there was nothing outstanding about the case which qualified it as one of national interest or significant public importance.

There was also nothing unusual about the three judges of the Federal Court of Appeal researching previous cases to support their ruling, the federal government submitted.

Sali said because there are no reasons issued explaining the decision by the Supreme Court of Canada, he’s not able to offer anything about why the request to appeal was denied.

“It is difficult to offer an explanation to a client or indeed the average citizen as to how a court could award costs to the Crown having regard to the conduct of certain civil servants, as found by the court,” he said.

Sali pointed out the Federal Court of Appeal did not reject nor comment on findings by the trial judge that federal officials in Whitehorse behaved underhandedly.

As for how much South Yukon owes Ottawa for legal costs, Sali said he couldn’t say.

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