Conflicting decisions call duty to consult into question

A decision by the Ontario Superior Court to grant leave to appeal an interim injunction obtained by a First Nation against a junior mining company could have significant implications for the resource industry, First Nation communities, and government.

On Sept. 4, the Ontario Superior Court granted leave to appeal [see attached pdf] an injunction obtained by the Wahgoshig First Nation against prospecting company Solid Gold Resources Corp., based in Thornhill, Ont.

Justice Herman Wilton-Siegel granted Solid Gold leave to appeal a Jan. 3, 2012 injunction order from Superior Court Justice Carole J. Brown, who ordered all activity by Solid Gold stop for 120 days and they enter into consultation with the province and the First Nation regarding any further activity.

However, Wilton-Siegel ruled there is reason to doubt the correctness of the January order. He pointed to the Supreme Court of Canada decision in Haida Nation v. British Columbia, which determined third parties do not hold the Crown’s duty to consult.

The court said neither Solid Gold, nor any other junior mining company, has a duty to consult with First Nations before commencing its exploration on traditional territory and questioned whether even the Crown has a duty to consult in such situations given the free-entry system provided under the current mining regime in Ontario.

“As the present proceedings demonstrates, there is conflicting jurisprudence regarding the extent to which a third party can be required to comply with a consultation process where the Crown indicates to the third party that it views this as appropriate, notwithstanding a statutory right to proceed otherwise,” wrote Wilton-Siegel.

While there are proposed amendments to the Mining Act that address the duty to consult, until they become law, he stated the case raises important issues about the relationship among aboriginal communities, industry and government that should be addressed on appeal.

“Until the decision and the reasons of Justice Wilton-Siegel came out, it was assumed through a vague reference in the Haida case that junior exploration companies had some duty to consult, as does the Crown in these situations, and we argued and it has so far been accepted by the courts, that it is not the case,” says Neal Smitheman, a partner with Fasken Martineau DuMoulin LLP who represented Solid Gold.

Solid Gold is a junior mining exploration and development company that controls about a 200-square-kilometre prospect at Lake Abitibi in Northern Ontario. While the land the company was working on does not include the Wahgoshig reserve, Solid Gold’s mining claims block is in the heart of Wahgoshig’s traditional territory.

The lawyer representing the Wahgoshig First Nation says her clients intend to “vigorously fight” any appeal from Solid Gold.

“We obviously don’t agree with Justice Wilton-Siegel’s leave to appeal decision,” says Kate Kempton of Olthuis Kleer Townshend LLP who represents the Wahgoshig First Nation. “We’re not shocked leave was granted, but we do not agree with a number of the elements of his reasoning and we do think a definitive decision needs to be made at the Court of Appeal to make it clear when a private party infringes on a First Nation right an injunction does stand to be issued.

“We think Justice Wilton-Siegel is wrong in suggesting otherwise.”

At the crux of the matter seems to be a suggestion the issue of consultation is too arbitrary in Ontario’s “free-entry” system when it comes to who has a duty to consult and when it is triggered.

“That seems to be what the judge is getting at in this decision to allow the appeal to be heard,” says Thomas Isaac, a partner who leads the aboriginal law group with McCarthy Tétrault LLP in Vancouver.

Isaac says Ontario has been a “challenging jurisdiction” when it comes to mineral exploration and knowing what the rules of the game are in the province.

“Knowing as an applicant what the requirements are to successfully get an exploration permit there is certainly a question in Ontario when it comes to knowing what those rules are,” says Isaac. “It’s probably the most challenging jurisdiction in the country in terms of understanding the rules of exploration and regulatory requirements vis-a-vis aboriginal issues, and that’s not good for anyone.”

Smitheman says junior mining companies like Solid Gold typically don’t have the funds to conduct exploration and at the same time engage in consultation on the impact drilling may have on traditional aboriginal rights.

“When you have to deal with an injunction to stop drilling it means you can’t raise funds. ‘Junior exploration’ is just a fancy name for prospectors. The whole basis for the free-entry system in Ontario was to get mining into Ontario, and it’s done a very good job, but it’s often on a shoestring budget,” says Smitheman. “This kind of thing has a huge impact on the kind of exploration that is going to be done especially in this province.”

He points to Platinex Inc. v. Kitchenuhmaykoosib Inninuwug First Nation as an example of a company that was forced to abandon its project in a similar situation.

“This notion that the province can simply download its responsibility onto exploration companies is certainly not accepted right now, and I think more significantly overall is the fact that the Crown doesn’t have a duty to consult either,” he says.

Kempton says while changes are coming to the Mining Act that aren’t in force yet, most of her clients don’t think they go far enough in establishing that they should have the right to free prior and informed consent over activities that will “negatively impact their rights.”

Right now, exploration companies can file a claim and start drilling. Proposed changes would require a permit before engaging in exploration and the issuance of a permit would trigger a duty to consult by the Crown.

“Some of the changes bring the Mining Act more in the direction it needs to be in setting out certain requirements to consult and accommodate First Nations, such as requiring permits before there is any exploration which is not required now,” says Kempton, adding the Mining Act regime in Ontario is a “relic” created before First Nation rights were given much thought and constitutionalized.

When it comes to the issue of who has the duty to consult and accommodate, clarity needs to be established, says Kempton.

“What does delegating the procedural aspects mean to a proponent? Justice Wilton-Siegel seems to suggest that any right of the Crown to delegate aspects of consultation accommodation needs to be set out in statute. We do not agree with that. It will be helpful to have clarity on some of the issues that he raises at an Appeal Court level.”

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