Thursday, February 18, 2010

Supreme Court of Canada rejects claims by Giant Mine Widows and Orphans

Thomas Cromwell, the most recent appointee to the Supreme Court of Canada, and a Queen's University graduate, has been busy writing judgments. The SCC released another today in the case of Fullowka v. Pinkerton's of Canada Ltd.:

In May 1992, a strike began at the Giant Mine near Yellowknife. The employees' bargaining agent, CASAW Local 4, and the mine owner, Royal, had reached a tentative agreement, but it was rejected by the Local's membership. Royal decided to continue operating the mine during the ensuing strike with replacement workers. The strike rapidly degenerated into violence. Faced with attacks on its security guards and unable to control the situation, the private security firm Royal had hired withdrew. Royal turned to Pinkerton's for security services and by the end of May, Pinkerton's had 52 guards on site.

The violence continued and escalated after Pinkerton's arrival. In mid-June, a large number of strikers rioted, damaging property and injuring security guards and replacement workers. Following the riot, Royal fired about 40 strikers, including W, and the police laid many criminal charges. Later in the same month, three strikers, including B, entered the mine through a remote entrance. While underground, they stole explosives and painted graffiti threatening replacement workers.

As the summer progressed, the atmosphere grew calmer although some trespassing, property damage and violence continued. On Royal's urging, Pinkerton's reduced its force to 20 guards. The police presence was also reduced. In late July, some strikers, including B, set an explosion which blew a hole in a satellite dish on mine property and, in early September, set a second explosion which damaged the mine's ventilation shaft plant. In the early morning hours of September 18, W evaded security, entered the mine and, while underground, planted an explosive device. When a man car carrying nine miners triggered the trip wire, they were all killed in the explosion. N was among the first on the scene and discovered the dismembered bodies of his colleagues, including a close friend. The territorial government ordered closure of the mine following the bombing. At the time of the fatal blast, CASAW Local 4 was affiliated with CASAW National which, in 1994, amalgamated with CAW National.

The miners' survivors sued Royal, Pinkerton's and the territorial government for negligently failing to prevent the murders. They also claimed against the strikers' national union, some union officials and members of CASAW Local 4 for failing to control W and for inciting him. As for N, he brought an action against the same defendants and Local 4, seeking damages for post traumatic stress disorder which he alleged resulted from his having come upon the scene of the fatal explosion. Their claims largely succeeded at trial but were dismissed by the Court of Appeal.

The SCC dismissed the appeals.

Justice Cromwell wrote on behalf of a unanimous court as follows:

"During a bitter strike at the Giant Mine in Yellowknife, N.W.T., one of the strikers, Roger Warren, evaded security and surreptitiously entered the mine. He set an explosive device which, as he intended, was detonated by a trip wire, killing nine miners. Their survivors and another worker who came upon the carnage after the explosion sued the mine owner, its security firm and the territorial government for negligently failing to prevent the murders. They also claimed against the strikers' union, some union officials and members for failing to control Mr. Warren and for inciting him. Their claims largely succeeded at trial but were dismissed on appeal to the Court of Appeal. The principal issues on the appeal to this Court are whether the security firm and the government should be liable in negligence for failing to prevent the murders and whether the unions should be responsible, directly or vicariously, for the miners' deaths. The claims involving the mine owner, its chief executive officer and one of its directors have been settled and are therefore not before us.

In my opinion, the appeals should be dismissed. Although I would find that the security firm and the government owed a duty of care, my view is that the trial judge erred when he found that they had breached that duty. With respect to the claims against the union, union officers and members, I agree with the Court of Appeal that the trial judge's findings of liability cannot be sustained. I also agree with the Court of Appeal that the claims of Mr. O'Neil (the worker who came upon the carnage) should have been dismissed.

Did Pinkerton's and the government owed a duty of care to the murdered miners to take reasonable steps to prevent Mr. Warren's intentional wrongful act and, if so, whether they breached that duty. My conclusion is that they did owe a duty of care but that they did not breach it.

Did the trial judge applied the wrong legal test for causation. In my respectful view, he did.

In respect of the claims against the union. The questions to be answered are whether a national union and its local union are separate legal entities, whether vicarious liability should be found and whether the trial judge's findings concerning incitement are sound. I conclude that the national and the local unions are separate legal entities, that vicarious liability should not have been found and the national union cannot be found to have incited Mr. Warren.

In respect of the claim against Mr. Bettger and the claim advanced by Mr. O'Neil. In my view, the claims against Mr. Bettger and by Mr. O'Neil should be dismissed."

Regards,

Blair

Wednesday, February 17, 2010

The Supreme Court of Canada Weighs in on Contract Interpretation Principles

The Supreme Court of Canada recently released an important decision (Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) dealing with two issues:
1. principles of contractual interpretation; and
2. interpretation of exclusion of liability clauses.

The province of British Columbia (the "Province") issued a request for expression of interest for the design and construction of a highway. Six parties responded with submissions, including Tercon and Brentwood. A few months later, the Province informed the six respondents that it intended to design the highway itself and issued a request for proposals ("RFP") for constructing the highway. Under its terms, only the six original respondents were eligible to submit a proposal. The RFP also included an exclusion of liability clause which provided:
"Except as expressly and specifically permitted in these instructions to proponents, no proponent shall have any claim for any compensation of any kind whatsoever, as a result of participating in this RFP, and by submitting a proposal each proponent shall be deemed to have agreed that it has no claim."

Brentwood had no experience in drilling and blasting. Accordingly, it entered into a pre-bidding agreement with another construction company which was not a qualified bidder. Brentwood submitted a bid in its own name with its partner construction company listed as a "major member" of its team. Brentwood and Tercon were the two short-listed proponents and the Province selected Brentwood for the project.

Tercon sued the Province for damages. The trial judge found that the Brentwood bid was submitted by a joint venture of Brentwood and its partner and that the Province, which was aware of the situation, had breached the express provisions of the tendering contract with Tercon by considering an ineligible bid and by awarding it the work. The trial judge also held that the exclusion clause did not prevent recovery of damages to Tercon because the Province's breach was fundamental and that it was not fair or reasonable to enforce the exclusion clause in the circumstances. She held that the clause was ambiguous and resolved the ambiguity in Tercon's favour.

The British Columbia Court of Appeal set aside the decision. It held that the exclusion clause was clear and unambiguous and barred compensation for all the Province's defaults.

The Supreme Court of Canada ("SCC") allowed the appeal by a surprisingly close 5 to 4 decision. Justice Cromwell wrote for the majority.

He held that the questions for the SCC were whether Brentwood, as the successful bidder was eligible to participate in the RFP and if not, whether Tercon's claim for damages was barred by the exclusion clause. He held that the trial judge had reached the right result on both issues.

In respect of the first issue, the SCC accepted the trial judge's reasoning that the Province not only acted in a way that breached the express and implied terms of the contract by considering a bid from an ineligible bidder, it did so in a manner that was "an affront to the integrity and business efficacy of the tendering process."

Secondly, as for the exclusion clause, the SCC found that it did not protect the Province from Tercon's damage claim which arose from the Province's dealing with an ineligible party and from its breach of the implied duty of fairness to bidders. The key principle of contractual interpretation was that the words of one provision must not be read in isolation but should be considered in harmony with the rest of the contract and in light of its purposes and commercial context. Further, tendering contracts have a special commercial context which called for treating parties participating in the process fairly so that all bidders would be treated on an equal footing. It was particularly true in the context of public procurement where there was a need for transparency for the public at large.

Justice Cromwell wrote that:
"It seems to me to make even less sense to think that eligible bidders would participate in the RFP if the Province could avoid liability for ignoring an express term concerning eligibility to bid on which the entire RFP was premised and which was mandated by the statutorily approved process. "

Both the integrity and the business efficacy of the tendering process supported an interpretation that would allow the exclusion clause to operate compatibly with the eligibility limitations.
Implying an obligation to treat all bidders fairly and equally meant that clear language was necessary to exclude liability for a breach of such a basic requirement of the tendering process, particularly in the case of public procurement.

Justice Cromwell held that the clause was also ambiguous and that any ambiguity was resolved in the favour of Tercon.

Regards,

Blair

Friday, February 5, 2010

NAN Grand Chief: What Treaties Mean

From a Letter by Nishnawbe Aski Nation Grand Chief Stan Beardy to the Thunder Bay, Ontario Chronicle Journal.

What treaties mean
Wednesday, February 3, 2010

I am writing in response to the anonymous letter titled Gov‘t Using Companies As Pawns To Avoid Forcing Treaty Compliance published on Jan. 23. I would like to thank that individual for making the public aware that this is a treaty issue. For First Nations, a treaty is an agreement between two sovereigns. This is recognized as common knowledge at the international level. Knowing so, the Supreme Court of Canada has determined that the Crown has a legal duty to consult. I wholeheartedly agree with the statement that the government is not complying with the treaty and that it is crucial for government to settle outstanding differences. It is truly unfortunate that the exploration and mining industry have to bear the brunt of our treaty partner‘s inability to do so. Until these outstanding differences are resolved between the First Nations and the Crown, blockades such as what is taking place in the Ring of Fire will become a common occurrence. It is plain and simple to First Nations; they are defending their constitutionally protected treaty, aboriginal and inherent rights which they believe come before any rights and interests the exploration and mining industry may have. Carts must not be put before the horse.

With respect to the misperceived notion that First Nations are contravening the treaty, I take great exception to the writer‘s interpretation of the words contained in Treaty 9. As many may not know, the manner in which the treaty making process took place in Canada was unjust. As such, First Nations take the position that in order to achieve true reconciliation, we also have to look at the context in which the treaty was signed and go beyond the words that were put before a nation of people whose mother tongue was inherently different. The discussion and resolution on the spirit and intent of the treaty has been long awaited by First Nations. For many years we have voiced the need to resolve this matter, but we have only been met by deaf and uncompromising ears. If the exploration and mining industry is ever to achieve the stability that they so naively expect to be in place without first resolving the treaty issue, then they should do their part in continuing to urge the Crown to be honourable treaty partners by living up to its spirit and intent. Recognizing that many may not truly understand what this means, NAN will be doing its part to educate.

Grand Chief Stan Beardy Nishnawbe Aski Nation

Regards,

Blair