Jack Caldwell - Mining Engineer - Robertson GeoConsultants

If you are interested in how mining companies fared in Canadian courts last year, you would do well to download and read the McCarthy Tetrault Mining in the Courts Year in Review Vol IV – March 2014 available at this link.

The volume includes detailed information about the facts leading to 21 court cases and decisions in Canadian courts that involved mining companies. More important the volume provides clear and concise information about the court decisions and what these decisions mean for mining companies.

A good example is the following:

In Association canadienne contre l’impunité v. Anvil Mining Limited, the Supreme Court of Canada refused leave to appeal from a decision of the Québec Court of Appeal. The Court of Appeal had decided that a Québec court did not have jurisdiction over claims sought to be brought by five NGOs against an Australian-based mining company for alleged complicity in the military repression of an insurrection in the Democratic Republic of Congo. The Québec proceedings followed earlier litigation over the same events in both the DRC and Australia.

The proposed claims in Québec were to be (i) brought on behalf of foreign nationals, (ii) against a foreign-based defendant, (iii) on the basis of alleged wrongdoing committed exclusively outside Québec at a time when the foreign defendant neither had an establishment nor carried on any activities in Québec, and (iv) to remedy harm suffered entirely abroad. The only “connection” with Québec was the fact that the mining company had opened a small office in Montreal some six months after the subject events.

In effect, the case stands for the proposition that Canadian jurisdiction over an off shore mining company cannot be based on connections that are established in Canada only after the events giving rise to the underlying dispute.

Here is an interesting finding from the case of Louis v. British Columbia. We are told as follows:

The Stellat’en First Nation (First Nation) claimed Aboriginal title to the land on which the mine was located. The provincial government therefore attempted to enter into consultations with the First Nation about aspects of the mine expansion; however, the parties had different views on the proper scope of consultation. The First Nation insisted that the province conduct an overall review of the mine expansion project on the basis that the effect of the expansion would be to extend the life of the mine beyond its previously projected closure date. The province was only prepared to consult on each of the discrete permit applications required for the expansion as they were submitted by Thompson Creek and took the position that the closure date for the mine was for the company, not the province, to determine. The First Nation refused to participate in the consultation process as envisaged by the province and eventually commenced litigation.

The Court of Appeal found that the Crown had repeatedly attempted to engage with the First Nation, but that the First Nation effectively refused to do so unless past infringements were recognized as part of the process. In addition, the First Nation failed to identify which of its rights would be impacted by any part of the expansion. While the Court of Appeal found that the First Nation was not under a “duty” to participate in the consultation process, its refusal to participate and its failure to identify specific impacts meant that it could not now complain about the adequacy of the process.

Another case that caught my attention was the finding in the case of the failure of the Bellavista heap leach pad in Costa Rica. I have previously blogged extensively about the facts of the pad failure that lead to the demise of the mining company involved. The case is Central Sun Mining Inc. v. Vector Engineering Inc. et al. The reports tells us the following:

Central Sun was an Ontario company with its head office in Toronto. It retained various global engineering firms to assist with the siting and the design of a proposed open pit gold mine and heap leach operation to be built in Costa Rica.

The individual consulting engineers were based in various American states and Central and South American countries. They prepared various geotechnical and mine engineering reports, some of which were sent to Central Sun technical staff in Vancouver (others were sent to Ontario directly). The Vancouver staff then made recommendations to the head office in Toronto, where the strategic investment decisions were made. The mine and heap leach pad were constructed in Costa Rica.

In 2007 a catastrophic landslide occurred at the mine that led to the shutdown of the mine, significant remediation costs and the plummeting of Central Sun’s stock price on the Toronto Stock Exchange. Central Sun sued the engineers in its home jurisdiction of Ontario for negligently misrepresenting the stability of the project site (among other causes of action). Directly after the case was commenced, Central Sun was obliged to allow itself to be taken over by a Vancouver-based intermediate mining company.

The engineers sought to stay the Ontario action, claiming that Ontario courts did not have jurisdiction at all, or that in any event, Ontario was not a convenient forum in which to litigate the action. A motions judge granted the stay as requested, and Central Sun appealed.

The essence of the engineers’ argument was that the tort of misrepresentation did not occur in Ontario (but rather in Vancouver or Costa Rica), or that only a minor part of the tort occurred in Ontario. The Court of Appeal disagreed, ruling that the site of a misrepresentation is the place where it is received and relied upon.

The misrepresentations here, the court concluded, were received and relied upon in Toronto. The controlling mind of the company was in Ontario, even though the misrepresentations were first sent in some cases to Vancouver.

The receipt of, and reliance upon, a misrepresentation are “core” aspects of a misrepresentation and such receipt and reliance had occurred in Ontario. The engineering companies had every reason to expect to be called to account in the courts of the jurisdiction where their client was based. As the court noted, “In the modern world where corporations have various offices in various locations, corporate defendants should not escape liability simply because they send their studies to an office of the plaintiff outside Ontario with the clear understanding that it will be acted on in Ontario.”

Finally the report ends with this comment on how to avoid litigation:

On December 20, 2013, African Barrick Gold announced that it had concluded a two-year investigation, through independent experts, into potential sexual assaults by police and site security personnel at its North Mara Mine in Tanzania. After a process of victim interviews and advice to the women from a retired judge of the High Court of Tanzania, 14 women were provided with remediation packages that variously included cash compensation, sponsored employment to learn new skills, financial and entrepreneurial training, education expenses for dependents, relocation expenses, home improvements, health insurance for the women and families, and counselling services.

The case stands as an example of how a global mining company has chosen to manage reputational and social-license challenges through early recognition of claims and non-adversarial approaches to them, thereby avoiding many of the formal legal intricacies outlined in the cases that occupy most of this comment.