Overview

In the decision of 1520658 Ontario Inc. v. Her Majesty the Queen, 2017 ONSC 4141 released earlier this month, Justice Goldstein of the Ontario Superior Court of Justice determined that a mining claim is not an equitable interest in land under the Ontario Expropriations Act.

This decision lays out the framework for the analysis of determining the definition of land, specifically the interplay between the Mining Act and the Expropriations Act, and may have broader implications for the mining and excavation industries as a whole.

Facts Giving Rise to the Action

In the Spring of 2003, the plaintiff corporation staked out a claim on Crown property south of Sudbury, Ontario (the “Property“). The property contained quality aggregate that could be used for road construction, including highways.

However, several months earlier, following consultations with the community and the issuance of public notices, the Ministry of Transportation (“MTO“) completed survey work for a new 400-series highway that would cut through the Property. By the time the plaintiff had staked its claim, the MTO had already completed its survey work, cut a centre line swath for the highway, and used heavy machinery to conduct geotechnical testing.

Approximately two years later, in May 2005, construction of the highway through the Property was completed. Around the same time, the plaintiff submitted two aggregate permit applications to the Minister of Natural Resources (“MNR“). The plaintiff sought two permits because the highway effectively split the Property in two.

Shortly thereafter, the MTO applied for a declaration that the mining claims were invalid on the basis that the lands were in use or occupation by the Crown. The Commissioner of Mines ultimately found that the MTO failed to meet its evidentiary burden. The mining claims were declared valid, a decision upheld by both the Divisional Court and Court of Appeal.

Though the plaintiff obtained its permits in 2013, after the resolution of the claim validity action, it was no longer economically feasible to mine the aggregate given that the Property was split and the total amount of accessible aggregate on the Property was diminished as a result of the construction of the highway. Shortly thereafter, the Plaintiff ultimately sold its permits for $425,000 to the holder of permits adjacent to the Property.

The plaintiff commenced an action against the Crown, arguing that its mining claims were expropriated when the highway was built.

Summary of the Decision and Analysis

Justice Goldstein dismissed the action. In his reasons, he found that mining claims are not considered “land” for the purpose of application of the Expropriations Act. In doing so, he distinguished this case from other out-of-province decisions that concluded that a mining claim may be considered an equitable interest in land.

The Court in this instance found that a mining claim amounts only to “the right to proceed with assessment work”. The holder of a mining claim is merely a licensee of the Crown. Justice Goldstein also noted that the staking of a mining claim confers no ability to exclude other users of the land.

A key consideration that made its way into the reasons was the Court’s finding that the plaintiff never actually intended to mine the Property, and that the venture of staking the claim and applying for a permit was simply to seek compensation from the Crown once the highway was built. The Court determined that the plaintiff was aware that a highway was being built through the Property at the time the mining claim was staked. Further, the permit was sought after the construction of the highway, and a single permit for the entirety of the Property would never have been granted given the opposition from the MTO.

Conclusion

One has to wonder whether the decision may have been different had the Court found that the plaintiff had a bona fide intention to mine the Property, and where plaintiff had applied for the permit at an earlier date. Nevertheless, the Court was clear in this instance that a mining claim does not create an equitable interest in land, at least as it relates to the Ontario Expropriations Act.