Miner’s costly lesson: Consult with First Nations

 

Miner's costly lesson: Consult with First Nations

 

Julius Melnitzer

Financial Post

(c) 2007 National Post . All Rights Reserved.

 

(From the National Post, May 19, 2007) Kate Kempton is a partner, and Bryce Edwards an associate, with Olthuis, Kleer, Townshend. Incorrect information appeared in Wednesday's Legal Post. The Post regrets the errors. *****

 

As a junior exploration company with a market capitalization of only about $7-million, Platinex Inc. isn't the sort of enterprise usually found on the cusp of creative jurisprudence.

 

Indeed, there's little doubt that — given a choice in the matter — the company would have preferred to avoid entirely its 15-month dispute with the Kitchenuhmaykoosib Inninuwug First Nation (KI) in the Ontario Superior Court of Justice, a case that pushed it to the verge of bankruptcy.

 

Fortunately, Justice Patrick Smith's decision of May 1 in Platinex v. Kitchenuhmaykoosib Inninuwug First Nation offered welcome relief by dissolving an earlier injunction he had granted in July, 2006, prohibiting Platinex from drilling on KI's traditional lands near Big Trout Lake, some 500 kilometres north of Thunder Bay in northern Ontario. KI had surrendered the lands by treaty in 1929, but retained traditional rights to hunt, fish, and trap, subject to the Crown's use of the land for development purposes such as mining.

 

In his 2006 decision, Justice Smith reasoned that KI's right to harvest was the essence of its cultural identity, an identity that faced irreparable harm if exploration went ahead without adequate consultation, which had not then occurred. The appropriate remedy was to grant an interim injunction and order the parties to negotiate in good faith.

 

"The decision set off shock waves in the resource industry because it left people wondering whether it amounted to a moratorium on resource development even at the earliest stages," says Sandra Gogal of Miller Thomson. "It seemed to suggest that consultation was necessary even when all someone was doing was drilling a test hole two inches in diameter [Platinex's project consisted of 24-80 holes of such size]."

 

But Kate Kempton of Olthuis, Kleer, Townshend, the associate who assisted partner Bryce Edwards in representing KI, doesn't quite see it that way.

 

"Until this case came along, anyone and their dog could pay a small fee, stake a claim, record it and immediately get an exclusive and incremental right to explore with hardly any governmental supervision of the environmental and cultural effects on aboriginal people," she said.

 

The duty to consult that is at the core of the injunction stems from the Supreme Court of Canada's "consultation trilogy" in 2004 and 2005. The trilogy — which consisted of the Haida, Taku River Tlingit, and Mikisew Cree cases — established that both federal and provincial Crowns had a duty to consult with aboriginal groups before making decisions that might adversely affect their asserted but unproven aboriginal rights.

 

While the Crown could delegate the implementation of its duty to third parties, the burden of ensuring that meaningful consultation occurred remained with the Crown. What was meaningful depended on the circumstances, including the strength of the aboriginal claim and the seriousness of the adverse effects on that claim.

 

What has in fact happened is that governments have used their right of delegation to offload the consultation process to the private sector, meaning that since the trilogy, aboriginal rights have had a direct impact on the way resource harvesters did business.

 

In this case, however, Platinex and the provincial government didn't bother consulting with KI although they had been aware of KI's rights and claims since 1999. In February, 2006, KI confronted Platinex by blockading a public road and plowing an airstrip in an attempt to prevent the company from moving a drill to the property to begin its exploration activities.

 

"Platinex was caught in a shift between the way things had been done for years and a paradigm shift in the law," says Maria Morellato of Blake Cassels &Graydon.

 

Unfortunately, the parties were unable to reach agreement during the nine months of negotiations that occurred after Justice Smith granted the injunction. In April, 2007, KI applied to extend the injunction.

 

Justice Smith refused to do so. While the consultations had not produced agreement, he noted they "have been beneficial in identifying KI's concerns and fears, and in exchanging information." Platinex had been ready to sign a draft memorandum of understanding that identified and mitigated the adverse effects of Platinex' activities on KI's treaty rights.

 

This, Justice Smith concluded, was a "reasonable and responsible beginning of accommodating KI's interest and, at this point in time, is sufficient to discharge the Crown's duty to consult."

 

The balance of convenience had also shifted in favour of Platinex because the passage of time had made it apparent the company would go out of business if it could not proceed expeditiously.

 

The dissolution of the injunction, however, did not mean that Platinex now had carte blanche.

 

"Development should proceed slowly, with Ontario, Platinex and KI fully engaged in the consultation process each step of the way, and with each prepared to make accommodations as the need arises," Justice Smith stated.

 

Justice Smith ordered the parties to reach agreement by May 15, failing which the court would craft one with the intention of getting Platinex, now in a precarious financial position, on the property by June 1.

 

"The dissolution of the injunction doesn't change the fact that the judge put meat on the bones of the consultation process by reserving the right to order an agreement," Ms. Kempton says. "And it doesn't change the fact that aboriginal people must be consulted before any exploration begins."

 

As it turned out, it's a good thing that Justice Smith kept his hand in it. By May 15, no agreement had been reached.

 

"I'm anticipating instructions to ask for a hearing soon," says Neal Smitheman of Fasken Martineau Dumoulin, who represents Platinex.

 

Still, Ms. Morellato maintains that Platinex is an important advance in the duty to consult jurisprudence. "This is the farthest a court has gone in supervising, shepherding and monitoring the consultation process throughout."

 

There's a clear message for the resource sector, she says: "The message is that you better make sure you start working with First Nations from the get go when you have an interest to explore."