Decision Date: January 5, 2010

Panel: Alan Andison

Keywords:  Environmental Management Act – ss. 80(4), 94, 102, 103; preliminary decision; hearing de novo; hearing on the record; written hearing; oral hearing

Worthington Mackenzie Inc. (“WMI”) and Daniel Alexander White appealed a decision and certificate issued by the Director, Environmental Management Act, Ministry of Environment.  The decision and certificate address the reasonableness of, and responsibility for, costs of the spill response actions incurred by the Province of British Columbia (the “Province”) at the Mackenzie Pulp Mill (the “Mill”), located in Mackenzie, BC.  The Director concluded that WMI and Mr. White are jointly and severally liable for the Province’s costs of $4,485,505.

In or about January 2009, the Province took over management of the Mill from WMI pursuant to section 80(2) of the Environmental Management Act (the “Act”), which addresses spill response actions.

In August 2009, the Director held an oral hearing to determine liability and costs for the spill response carried out by the Province.  The hearing was attended by WMI’s representatives, Mr. White, and the Province’s representatives.  All parties were represented by legal counsel.  The Director was also represented by legal counsel, who also represented the contractor in the spill response actions carried out by the government.  The contractor was not a party to the proceedings before the Director.  However, during the hearing before the Director, the contractor gave evidence regarding the costs of the spill response actions.

During the Director’s hearing, WMI and Mr. White alleged that the Director’s involvement with the spill response actions and his representation by the same lawyer as the contractor created a reasonable apprehension of bias, for which he should have recused himself.  The Director decided during the hearing that there was not a reasonable apprehension of bias.  The Director then issued the decision and certificate in September 2009.

In October 2009, WMI and Mr. White filed an appeal with the Board against the Director’s decision and certificate, on the basis that: the Director made errors in determining the reasonable costs of the spill response actions; the Director erred in concluding that Mr. White should be jointly liable for the Province’s costs; and, the Director’s appointment as the decision-maker for this matter and his representation by the same lawyer as the contractor created a reasonable apprehension of bias.

After the appeal was filed, the Province applied to the Board for an order that the appeal be conducted as an appeal on the record (i.e. a ‘true appeal’) conducted by exchange of written submissions.  The Board offered all parties an opportunity to comment on whether the appeal should be conducted as requested by the Province.

After considering the parties’ submissions, the Board found that the principles of fairness and judicial economy did not support the Province’s application.  The Board held that the matter should be conducted as a hybrid of a true appeal and a new hearing, where new evidence may be presented along with any relevant evidence from the record.  In addition, the Board found that the parties should be allowed to cross-examine witnesses and make submissions as to facts, law and jurisdiction, in the context of a full oral hearing.

Specifically, the Board held that the oral hearing before the Director cannot be considered a proxy or substitute for a full and fair oral hearing before the Board.  The Director is the decision-maker of first instance, and he is an administrative decision-maker within the Ministry.  He does not, nor is he intended to, perform the role of an independent tribunal.  The Act creates a legislative scheme for administrative appeals of decisions such as the Director’s.  Part 8 of the Act provides persons such as the Appellants with a right of appeal to an independent appeal board.  The Act empowers the Board to conduct appeals as a new hearing whereby the parties may participate fully in an oral hearing, including presenting evidence that was not before the Director, cross-examining witnesses, and making submissions as to facts, law and jurisdiction.

In addition, the Board found that the appeal is not restricted to purely legal questions.  The parties intend to introduce conflicting expert evidence on the issue of the Province’s reasonable costs of the spill response actions.  That evidence will go to the heart of the merits of the Director’s decision, and is likely to be complex.  There are likely to be questions of credibility regarding Mr. White’s personal liability.  The Board’s findings could have a substantial financial impact on one or both of the Appellants.  Much is at stake for the Appellants, and a full oral hearing before the Board is necessary for the Board to fully and fairly decide the issues.  In addition, the Board noted that there is likely to be a high degree of public interest in the appeal, and this supports holding an oral hearing.

Further, the Board held that it would be neither expeditious nor cost effective to hear the appeal based only on the record of the proceedings before the Director.  If the Board found that the Director made any errors, the likely remedy would be to refer the matter back to the Director or another person acting as a director, who would then make a new decision which could lead to a further appeal to the Board.  If the Appellants succeeded in their claim that there was a reasonable apprehension of bias in the Director’s proceedings, the matter would be referred back to a different director, who would have to hear the matter afresh, and their decision could be appealed to the Board.  In contrast, if the Board conducts the appeal as a new hearing, any errors in the proceedings before the Director will be cured by the new hearing before the Board.  Consequently, a new hearing before the Board is more expeditious and less costly overall for all of the parties.

Accordingly, the applications for a hearing on the record, and for proceeding based on written submissions, were denied.