On January 7, 2022, following a 189-day trial, the Supreme Court of British Columbia issued its 223-page decision in Thomas and Saik’uz First Nation v. Rio Tinto Alcan Inc., 2022 BCSC 15 (the Saik’uz decision), finding that private sector resource development companies may be held liable in nuisance for unreasonable interference with Aboriginal rights, Aboriginal title and reserve interests. However, the Court affirmed that the defence of statutory authority is available to defend such claims where such interference is authorized by regulatory authorizations, as the Court found to be the case with respect to the impacts of a hydroelectric development on a watershed. The Saik’uz decision has significant implications for both private sector and government liability where resource development activities impact Aboriginal rights.

Background

In the 1950s, the British Columbia government issued authorizations allowing the predecessor of Rio Tinto Alcan Inc. (Rio Tinto) to build the Kenney Dam (the Dam) and create the 233-kilometre-long Nechako Reservoir (the Reservoir) in the Nechako Watershed (the Watershed) in B.C.’s interior plateau. The Dam and Reservoir were constructed to facilitate the production of hydropower for the smelting of aluminum.[1] The Dam, Reservoir and related infrastructure regulate water flow regimes in the Nechako River, including volume and timing of flows, pursuant to subsequent authorizations and agreements.[2]

The Saik'uz First Nation and Stellat'en First Nation (collectively, the First Nations) both claim Aboriginal rights to fish in the Watershed and assert Aboriginal title to the lands from and the beds of the lake or rivers in which they have traditionally fished.[3] The First Nations commenced actions against Rio Tinto in 2011, and later amended their claims to add the provincial and federal governments as defendants, on the basis that the construction of the Dam and the subsequent water flow regulation has adversely impacted fish and related fisheries in the Watershed.[4]

Positions of the parties

The First Nations invoked their asserted Aboriginal rights to frame their claims against Rio Tinto in nuisance and wrongful interference with riparian rights. They claimed Rio Tinto was liable for damages for the First Nations’ loss of use and enjoyment of lands, waters, and fisheries, lost ability to exploit fisheries, loss of value of fisheries as well as title and reserve lands, reduced water flows and habitat alterations, and associated cultural impacts. The First Nations submitted further that, among other things, the statutory authorization defence (i.e., the defence that Rio Tinto’s activities were validly authorized by government) was constitutionally inapplicable and that legislated limitation periods and the common-law doctrine of laches (unreasonable delay in making a claim) did not bar their claims, given the ongoing impacts of Rio Tinto’s activities.[5] As against the provincial and federal governments, the First Nations asserted, among other things, that B.C. and Canada had failed to protect the First Nations’ interests and had failed, in their exercise of discretion over water flows resulting from the Dam and Reservoir, to act in accordance with their fiduciary obligations.[6]

The First Nations requested injunctive relief to restrain Rio Tinto from continued nuisance and interference with riparian rights, and to compel Rio Tinto and both the provincial and federal governments to restore natural flows and to restore fish populations.[7]

Rio Tinto denied liability on several bases, including, among others, that

  • private, non-governmental parties cannot be found liable in nuisance or for breach of riparian rights on the basis of Aboriginal rights
  • the Dam construction and Reservoir operation had been validly authorized by governments, and thus statutory authority protected Rio Tinto against liability for any inevitable consequences to the Nechako River and the fisheries within it
  • the claims could not succeed because of statutory limitation periods and the common-law doctrine of laches
  • the First Nations do not have property interests that support a claim in nuisance or for interference with riparian rights
  • Rio Tinto’s activities were reasonable and they did not unreasonably interfere with the First Nations’ rights, and, in any event, were justified by valid legislative objectives[8]

The provincial and federal governments denied owing a fiduciary duty to the First Nations with respect to water flows in the Watershed. While acknowledging by the end of trial that the First Nations held an Aboriginal right to fish, they submitted that such rights did not ground a claim in nuisance and they denied that Rio Tinto’s statutory authority defence was constitutionally inapplicable. The governments further maintained the First Nations had not proven their claims to Aboriginal title over lands and the beds to streams and waterbodies within the Watershed.[9]

The Court’s findings

The Court began by finding that the First Nations hold an Aboriginal right to fish for food, social and ceremonial purposes in their respective areas of the Watershed.[10] With respect to Aboriginal title, the Court declined to make any findings sought by the First Nations on the basis that several neighboring First Nations had overlapping claims to Aboriginal title, and these overlapping title claimants were not parties or witnesses to the proceeding.[11] With respect to reserve interests, the Court found that the First Nations’ interest in and occupancy of their respective reserves is legally sufficient to ground an action in private nuisance.

Secondly, the Court determined that a nuisance claim can be sustained against a non-government party on the bases of unreasonable interference with a First Nation’s interest in its reserve lands, Aboriginal title (where established) and a First Nation’s Aboriginal right to fish.[12] The primary focus in the Saik’uz decision was with respect to the latter finding with respect to Aboriginal rights. In reaching that finding, the Court agreed entirely with the First Nations’ submission that “the fact that [Aboriginal rights] are intimately related to a particular piece of land means that a claim in nuisance must be sustainable in law when there is an unreasonable interference with the right itself or the land to which the right is intimately related.”[13] The Court noted that recognizing Aboriginal rights as the basis for a nuisance claim would not give rise to indeterminate liability because causation of harm to an Aboriginal right can be extremely difficult, expensive and time consuming to prove (which would deter litigation), powerful defences to nuisance claims exist (e.g., for government authorized activities), and such claims can only be brought by Indigenous claimants.[14]

The Court went on to find that Rio Tinto’s construction of the Dam and subsequent water flow regulation had caused or contributed to a decline in fish population and health so severe that certain species are currently at risk of imminent extirpation, and thereby impaired the First Nations’ Aboriginal right to fish.[15] Rio Tinto was therefore liable to the First Nations for the tort of private nuisance, unless it could successfully rely on defences provided by statutory authority or legislated limitation periods.[16] The Court determined that while Aboriginal title or a freestanding Aboriginal right could also ground an action in tort for wrongful interference with riparian rights, there was insufficient evidence to make such a finding in this case.[17]

The Court ultimately held that Rio Tinto could rely on the defence of statutory authority to avoid liability to the First Nations because

  • the design and construction plans for the Dam were approved by both levels of government, water licences issued to Rio Tinto explicitly authorized water diversion from the Nechako River, and both levels of government are directly involved in setting the water flow regime[18]
  • Rio Tinto’s construction and operation of the Dam and Reservoir were always in compliance with government authorizations[19]
  • the impacts on fish populations were the inevitable consequences of the issued authorizations[20]

The Court found that the First Nations’ submission that the statutory authority defence was constitutionally inapplicable must fail on the basis that Aboriginal rights cannot be used to deflect an otherwise valid common-law defence in the case of a civil tort claim brought against a non-government party.[21] In effect, plaintiff First Nations can assert constitutional invalidly of government authorizations (this was not asserted in this case), but they cannot claim constitutional invalidity of an otherwise valid common-law defence in a private civil claim.

Had the First Nations maintained their claim for damages as a remedy, and in the event that the statutory authority defence had failed, the Court would have held that the First Nations’ claims against Rio Tinto in nuisance would not have been barred outright by legislated limitation periods.[22] This is because, as the Court found, regulating the flow of the Nechako River would cause fresh damage each year to fish and fish eggs which, while difficult to quantify, would sustain a claim for damages within the applicable limitation period.[23] The equitable doctrine of laches would also not protect against a damages award because it could not be said that the First Nations “acquiesced” to regulation of water in the Watershed or induced Rio Tinto into regulating flows as they did, given the First Nations’ history of repeatedly objecting to the Dam and the water regulation.[24]

Relief sought against Rio Tinto

The Court went on to discuss the issue of remedy had it found Rio Tinto liable. The Court confirmed that the presumptive remedy for nuisance claims is injunctive relief. However, injunctions remain a discretionary remedy and the Court should still have regard to relevant legal principles such as the possibility of damages as a substitute, efficiency, proportionality, and the possibility of serious harm to third parties. Here, the Court found several factors that militate against injunctive relief, including loss of jobs, increased risk of flooding, and likely increased incidents of downstream property damage.[25]

Relief granted against the Crown

In light of the Court’s finding that the First Nations hold an Aboriginal right to fish and that both levels of government had historically infringed on the First Nations’ Aboriginal rights by issuing authorizations or entering into agreements which inevitably resulted in harm to fish in the Watershed, the Court found it appropriate to issue declaratory relief against the Crown. The Court declared that the First Nations hold the right to fish for food, social, and ceremonial purposes in the Watershed and, as an incident to the honour of the Crown, both the provincial and federal governments have an obligation to protect that Aboriginal right.[26] The Court noted further that the First Nations may have been entitled to claim compensation from the provincial and federal Crown as a result of historical rights infringements, but no such claim for compensation was made in this case.[27]

Significant implications

The Saik'uz decision has important implications both within and outside British Columbia for governments and resource development companies. Most notably for companies, the decision holds that non-government entities can be held liable for common-law actions in tort, such as claims in nuisance, where a company’s activities interfere with Aboriginal rights (this would presumably extend to Treaty rights), interests in reserve lands or Aboriginal title. However, as demonstrated in this case, a company can protect itself against such actions by ensuring that it obtains the necessary authorizations for its activities, strictly complies with those authorizations and avoids any adverse effects that would not be considered inevitable results of its authorizations. The Court’s conclusions further reinforce the wisdom in project proponents reaching agreements for Indigenous involvement in project planning, environmental monitoring and sharing of economic benefits to avoid potential litigation.

The declaratory relief issued in the Saik'uz decision is likely to trigger further consultation and negotiations between the provincial and federal governments and the First Nations in regard to future authorizations and the regulation of water flows within the Watershed. This relief is also something likely to be considered by governments in relation to historic resource developments in other areas of British Columbia and in other provinces.

The Court noted that the Saik'uz decision “will almost certainly be appealed.”[28] Therefore, the Saik'uz decision may be the first word — and far from the last word — on potential private sector liability in the context of authorized resource development activities.