In 1992, a fire swept through the interior of British Columbia, damaging 1491 hectares of forest in a region where tenure holders were licensed to log. There was no dispute that the appellant (“Canfor”), a major licensee, was largely responsible for the blaze. After the fire, the burned-over cutting areas were logged. The fire-damaged timber was sold at a reduced price.
The Crown claimed damages against Canfor for three categories of loss: (1) expenditures for suppression of the fire and restoration of the burned-over areas; (2) loss of stumpage revenue from trees that would have been harvested in the ordinary course (harvestable trees); and (3) loss of trees set aside for various environmental reasons (non-harvestable or protected trees) in sensitive areas.
The trial judge awarded the Crown $3,575,000 under the first category of loss, but otherwise dismissed the claim on the basis that the Crown had failed to prove a compensable loss with respect to either harvestable or non-harvestable trees. The trial judge concluded that, as the fire had accelerated the Province’s receipt of revenue that would otherwise have been spread over a period of up to 66 years and that as the fire damage was not so severe as to make the salvaged timber significantly less valuable than it was before the fire, the Province had not suffered a loss in purely financial terms other than restoration costs.
The Court of Appeal dismissed the Crown’s appeal on damages with respect to the harvestable trees, but awarded compensation for diminution of the value of the non-harvestable trees.
The Supreme Court analyzed the questions of the valuation of loss of harvestable trees and of non-harvestable trees in environmentally sensitive areas, examined the appropriate basis to calculate compensation, and addressed the question whether the Province could sue not only as ordinary landowner but also as parens patriae.
It also considered whether Province was entitled to the “auction value” of harvestable trees, and whether it was entitled to the commercial value of non-harvestable trees plus a premium for environmental value. Finally, it analyzed that question whether common law provided for environmental damages.
In conclusion, it held that the appeal should be allowed. The decision of the trial judge was restored.