In Carhoun & Sons Enterprises Ltd. v. Canada (Attorney General), the British Columbia Court of Appeal allowed a lawsuit to proceed against the federal government by a private developer for losses caused by delays in the environmental approvals process. While the suit may not ultimately succeed, the court confirmed that the government could be liable and that the review of applications for environmental approvals may entail a consideration of the proponent’s (business) interests, especially in circumstances where the legislated goal includes the promotion of economic development.

BACKGROUND

Carhoun & Sons Enterprises Ltd. (Carhoun) applied for an authorization under section 35(2) of the Fisheries Actfrom Fisheries and Oceans Canada (DFO) to fill in ravines for a private commercial development. In considering the application, DFO was required to conduct an environmental assessment screening under the Canadian Environmental Assessment Act (CEAA). The DFO initially advised Carhoun that the authorization would not be issued because it would result in unacceptable harm to fish habitat and as a result, the DFO would not be conducting the CEAA screening. After two further requests, DFO reconsidered its decision, undertook the screening and eventually issued the Fisheries Act authorization. It took 993 days between the initial application and the receipt of the authorization. However, by the time the authorization was issued, financing for the project had collapsed.

Carhoun commenced a lawsuit against the federal government for negligence and misfeasance in public office, claiming economic loss from the unreasonable delay in completing the environmental assessment process. The government attempted to have the company’s action dismissed before it could go to trial. The British Columbia Supreme Court dismissed the government’s motion, holding that the case could proceed.

COURT OF APPEAL DECISION

On appeal, the federal government argued the authorization process was governed by public legislation “where the purpose is to protect the environment and federal fishery resources and not to advance the profit-seeking interests of developers” and that regulators “do not owe a duty of care to those seeking to profit at the expense of the environment.”

The Court of Appeal disagreed, confirming that government is not exempt from civil liability and that—based on the legislated goals in CEAA regarding economic development—the government is to conduct environmental assessments having regard to multiple interests, including both the public interest in maintaining healthy fisheries and the private interest in efficiently processing an application. (We note the new CEAA 2012 contains an identical clause in the purpose statement).

The court ruled that the interests of environmental protection and private interest in economic development are not irreconcilable, and that the law does not expressly or implicitly prohibit the government from considering a private company’s interests. The court allowed the case to proceed to trial.

IMPLICATIONS

Although it may be that Carhoun is not ultimately able to prove the necessary requirements for a successful claim against the government at trial, the significance of the court’s ruling that private interests are relevant to the manner in which environmental assessments and Fisheries Act authorizations are undertaken is important and significant.

Historically, proponents have experienced delays with environmental approval processes. If nothing else, the prospect of a successful claim for losses arising from such delays may encourage more rigour in processing applications and changes to policy to impose (more) mandatory time-frames.

As a practical matter, proponents can manage the delay risk by planning and applying for environmental approvals at an early stage in the project, monitor and work closely with the regulator during the application process, and have contingency plans for delays that may be experienced, despite all best efforts.