When an election results in the formation of a new government there can be uncertainty around what policies, or changes to policies, the new government might impose. A recent case before the Supreme Court of Newfoundland and Labrador recently looked at what happens when regulatory approval is granted for a construction project and then subsequently withdrawn after a change in government.

Background

The dispute arose after a mining company had obtained approval to construct an 11km gravel road to be used to carry out mineral exploration on lands for which it held mining licenses. The previous Minister of Environment (the “previous Minister”) had granted approval under the relevant environmental legislation on October 10, 2014. A group of citizens filed an appeal, though they did so  outside the window of time (60 days) in which an appeal is allowed. To further complicate things, the previous Minister, who was responsible for hearing the appeal, did not issue a decision within the timeframe needed (30 days). On March 9, 2015, the previous Minister indicated the conditions required to move forward with the project had been met. Throughout all of this, the mining company continued to invest in the project, with the amount of money spend exceeding $400,000.

The election

After a provincial election on December 14, 2015, a new government took office. The new Minister of Environment (the “new Minister”) wrote to the mining company to advise it that the appeal, which had previously been on “hold” was being revived. This was the first time the mining company had heard anything about a “hold” or anything else relating to the appeal decision. The mining company wrote to the new Minister on February 22, 2016 to challenge the legal status of the appeal, but received no response. They followed up by submitting written submissions for it on March 22, 2016.

A reversal

On May 20, 2016, the new Minister overturned the earlier decision made by the previous Minister, which resulted in the mining company having to undertake a full Environmental Impact Statement, citing “the effects of the project on the biophysical and socio-economic environments of the project area, significant public concerns, and the recommendations of the Environmental Assessment Committee.”

The court’s analysis

The court was critical of the new Minister’s decision to use the appeal as a means to prevent the project from going forward, stating it was a breach of natural justice in that it denied the mining company the opportunity to state its case. However, that didn’t mean that the government did not have the power to call for a full Environmental Assessment (“EA”). While the government does have that authority, it also has to respect the mining company’s right to the administrative law doctrine of public law estoppel. The Supreme Court of Canada outlined a citizen’s (or in this case, a corporation’s) right to recourse through public law estoppel in a 2014 decision. In that decision, the court stated ,

“In the public law context, promissory estoppel requires proof of a clear and unambiguous promise made to a citizen by a public authority in order to induce the citizen to perform certain acts. In addition, the citizen must have relied on the promise and acted on it by changing his or her conduct… However, the doctrine of estoppel must yield in the public law context to an overriding public interest and may not be invoked to prevent the application of an express legislative provision”

In the case at hand, the government’s position was that the public interest in protecting the environment by ordering a full EA was enough to override the application of promissory estoppel. Bt the court didn’t buy this, noting that the previous government did not determine that there was enough environmental risk to require a full EA. The court ruled “It goes without saying that environmental considerations are important in assessing the public interest . But defining the public interest is the role of elected officials not the Court,” adding “If the government determines by a lawful means that the release should be reversed, or at least altered, then (the mining company), under the doctrine of public interest estoppel, is entitled to claim its reasonable costs associated with its actions in pursuance of the release.”

The construction team at HMC Lawyers has over 130 years of cumulative litigation experience, and have acted for clients in the construction industry for decades. We have dealt with everything from straightforward lien matters to complex multi-party litigation, representing parties from all sides of the construction industry. Our team is comprehensive and technically minded, relying on a background of experiences to bring a unique perspective to the table. If you are involved, or want to be prepared to deal with issues relating to construction law, call us 403-269-7220 or reach us online to talk today.