36595    Teal Cedar Products Ltd. v. Her Majesty the Queen in Right of the Province of British Columbia

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               Teal Cedar Products Ltd. v. Her Majesty the Queen in Right of the Province of British Columbia

Arbitration – Appeals – Commercial arbitration awards

The Forestry Revitalization Act, S.B.C. 2003, c. 17 (the “Revitalization Act” or the “Act”), permitted the Province of British Columbia (“Province”) to reduce by 20% the land base and allowable annual cut of forest tenures held by British Columbia forestry companies, including the applicant, Teal Cedar Products Ltd. (“Teal”). A dispute arose regarding compensation the Province must pay Teal for the “value of improvements made to Crown land” under s. 6(4) of the Revitalization Act. The parties settled Teal’s compensation under the Revitalization Act for the value of the lost harvesting rights. Although the Province had advanced a total of $4 million, the parties did not agree on the final compensation for the value of the related improvements. This dispute went to arbitration under theCommercial Arbitration Act, R.S.B.C. 1996, c. 55 (renamed the Arbitration Act, effective March 18, 2013), as required by the Revitalization Act. The Revitalization Act does not specify a methodology for valuing the improvements so the arbitrator relied on expert evidence and chose a “cost savings approach” to valuation. On April 27, 2011, the arbitrator awarded Teal $5,150,000 (as shown in the calculations in the corrigenda issued June 30, 2011 by the arbitrator), plus compound interest, in addition to the $4 million the Province had already advanced to Teal as compensation for the improvements. The arbitrator denied compensation for improvements relating to one of Teal’s forest licences.

Both parties applied to the Supreme Court of British Columbia for leave to appeal the arbitrator’s award. The Supreme Court of British Columbia set aside a portion of the arbitrator’s award and the Court of Appeal allowed the appeal. On application to the Supreme Court of Canada, the matter was remanded to the Court of Appeal to be decided in accordance with Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53. The Court of Appeal did not alter its disposition on reconsideration. The applicant then brought a second application for leave to appeal and the Supreme Court ordered an oral hearing on the application.