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IN THE SUPREME COURT OF BRITISH COLUMBIA
Citation: Timberwolf Log Trading Ltd. v. British Columbia (Forests, Lands and Natural Resource Operations), 2012 BCSC 690 Date: 20120410 Docket: S 110508 Registry: Vancouver Between: Timberwolf Log Trading Ltd. Plaintiff And Her Majesty the Queen in the Right of the Province of British Columbia as represented by the Ministry of Forests, Mines and Lands and Daniel Smallacombe Defendants Before: The Honourable Madam Justice Wedge

Oral Reasons for Judgment
Counsel for the Plaintiff: Counsel for the Defendants: Place and Date of Hearing: Place and Date of Judgment: A. Wade A. Mizrahi A.K. Fraser Vancouver, B.C. March 27-29,2012 Vancouver, B.C. April 10, 2012

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[1]

THE COURT: The plaintiff, Timberwolf Log Trading Ltd., commenced the underlying

action in January 2011 against the Queen in the Right of the Province of British Columbia and Daniel Smallacombe, claiming misfeasance or abuse of public office and defamation. Application to Strike the Claim [2] The defendants in the underlying action bring this application to strike all or part of claims. The defendants do so on the basis that it is plain and obvious, assuming claims cannot succeed at trial. The defendants

Timberwolfs

the fact pleaded to be true, that Timberwolfs are related to this action. [3]

also apply for a stay of any remaining claims pending resolution of other proceedings they say

It is common ground that an application to strike pleadings for failure to disclose a

reasonable cause of action proceeds on the basis that the facts pleaded are true unless manifestly incapable of being proven: R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45. [4] Bearing that principle in mind, I will now address the facts pleaded in this case.

The Facts [5] Timberwolf is a British Columbia company engaged in timber marketing and harvesting.

It operates primarily on coastal British Columbia. The Ministry of Forests and Range, or "MOFR," is the department of the defendant Province charged with managing provincial forests, including timber harvesting. The defendant Smallacombe is a compliance and enforcement officer who was at the material time employed by MOFR at its offices in Port McNeill, British Columbia. [6] Timberwolf retained the services of two independent log scaling companies during times

material to the underlying action. They were BC Log Inventory Services operated by Donald Good, and M & G Log Scaling Ltd. operated by Greg Walters and Max Perry. [7] In the spring and summer of 2008, the defendant Smallacombe began an investigation log harvesting operations on suspicion that the company was deliberately

into Timberwolfs

underreporting the quality and grade of its harvested timber in order to reduce the stumpage payable to the Province on the timber. [8] In the course of the investigation, Mr. Smallacombe conducted interviews with the

operators of the log scaling companies. Timberwolf alleges in its notice of civil claim that in the course of those interviews, Smallacombe abused his office and authority with MOFR in the following manner:

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a)

he offered criminal immunity to the operators of the log scaling companies for their cooperation when he knew or ought to have known he had no authority to offer such immunity;

b) c)

he seized scale documents and other records without legal authority; he refused to return scale documents when he knew Timberwolf was required by law to keep them on site;

d) e)

he seized timber without lawful authority; he deliberately delayed the rescaling of timber knowing that the delay would prevent Timberwolf from meeting production requirements;

f)

he unlawfully obtained a telephone search warrant pursuant to the Criminal Code against several contractors when he knew or ought to have known he had no legal standing to do so; and

g)

he suggested to persons he was interviewing that Timberwolf was involved in high level criminal activity and were dangerous, when he knew he had no reliable evidence to support such allegations.

[9]

Timberwolf alleges in its pleadings that Smallacombe's investigative tactics were business and reputation.

designed to injure and harm Timberwolfs [10]

In 2008, Smallacombe reported his findings to the Forest Revenue Audit Program, or

"FRAP," which commenced an audit of Timberwolf. In April 2010, FRAP issued an assessment of nearly $3.5 million against Tiniberwolf on the basis that it had misreported its harvesting of timber. Timberwolf appealed to the Minister, who upheld the assessment. Timberwolf intends to appeal the Minister's decision to this Court. [11] In December 2010, in a related proceeding, a judge of this Court asked counsel for the

defendants to ensure that certain materials relating to the investigation be disclosed to Mr. Good, the principal of BC Log Inventory Services, who had been interviewed by Mr. Smallacombe. Mr. Good was not a party to the proceeding but appeared at the hearing and requested disclosure of the audio taped interview between himself and Mr. Smallacombe. [12] Following Mr. Good's appearance, counsel for the defendants disclosed to Mr. Good the

audio tape of the interview. The audio tape disclosed that during the interview with Mr. Good, Mr. Smallacombe said the following:
Maybe it's not about wood at all. It's on the surplus list as "X" and "I" and pass the surplus test and gets approved for export and goes to the major drug trafficking routes in the

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world South Korea, China, Washington. Who cares what wood is in it. All that wood goes into a container.

[13]

Timberwolf pleads in its notice of claim that by reason of the conduct of the defendants, it

has suffered financial loss and has been seriously injured as to its character, credit and reputation. [14] In the underlying action, Timberwolf seeks damages for misfeasance or abuse of public

office and damages for defamation (among other heads of damage and relief). [15] With respect to the claim for misfeasance or abuse of public office, Timberwolf states as

the legal basis for the claim that Smallacombe knew it was beyond his powers and authority to offer criminal immunity to witnesses he interviewed, to seize scale documents and timber, to obtain telephone search warrants and other conduct as alleged. [16] Timberwolf alleges that Smallacombe knew or ought to have known that these actions involvement in trafficking illegal drugs was business.

were unlawful and outside the scope of his office. It is also alleged that Smallacombe's assertions to Good regarding Timberwolfs slanderous and intended to cause harm to Timberwolfs [17] [18]

Timberwolf alleges the Province is vicariously liable for the actions of Smallacombe. The defendants brought their application to strike Timberwolfs (1) pleadings on two bases:

The first is that the notice of civil claim does not disclose a reasonable cause of action. The defendants acknowledge that no evidence is admissible on this application.

(2)

The second is that the notice of civil claim is an abuse of process. Evidence is admissible on that application.

The Application to Strike the Claim [19] The central position advanced by the defendants in support of their application to strike is

that Timberwolf has deliberately pleaded the actions of misfeasance and public office and defamation in order to avoid the immunities and privileges that would otherwise protect Smallacombe in his investigative role. The defendants argue that their investigation of Timberwolf was undertaken with a view to possible criminal charges and civil proceedings. That investigation necessarily involved questioning witnesses, seizing records and timber, issuing warrants and submitting reports for purposes of a statutory assessment of stumpage owing. The defendants argue they are entitled to immunity from tort claims in respect of anything done

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or said in furtherance of its investigation unless the actions are shown to be an abuse of process. [20] The defendants say the plaintiffs ought properly to have brought an action against the

defendants framed in any of the torts associated with abuse of process, such as malicious prosecution, malicious procurement of a search warrant or the tort of abuse of civil process. Had the plaintiff done so, all of the conduct alleged would be protected by the immunities and privileges. [21] As I understand the defendants' argument, they say that the only possible cause of

actions arising on the facts as alleged in the pleadings is the tort of abuse of civil process and claims within that family of torts. At the same time, the defendants argue that if Timberwolf had pleaded such causes of action, they would have been certain to fail because of the various immunities available. [22] With respect to its application to strike the defamation pleadings, the defendants argue

that the material on which the plaintiff relies cannot be used as the basis for a defamation claim. The defendants submit that the audio recording of the interview between Smallacombe and Good was disclosed by counsel for the Crown in the course of other litigation in accordance with the defendants' disclosure obligations under the Rules. That being the case, the disclosure was subject to an implied undertaking that the recording would not be used for any other purpose. [23] The defendants argued, in the alternative, that even if the plaintiff has properly pleaded

the tort of misfeasance in public office, the claim is premature. The defendants say that at this stage of the proceedings, the claim amounts to a collateral attack on the decision of the minister upholding the $3.5 million stumpage assessment against Timberwolf and the appeal process is pending with respect to that decision. [24] The plaintiff, in response to the defendants' applications, says it does not bring a claim

against the defendants for malicious prosecution or abuse of process. The facts as pleaded give rise to actions for abuse or misfeasance of public office and defamation. It is specifically alleged in the pleadings that Smallacombe acted outside the scope of his office with the intention of injuring the plaintiff when he investigated the plaintiff for offences under the Criminal Code and obtained search warrants under the Criminal Code knowing he had no jurisdiction, illegally seized the plaintiff's property and committed other acts of alleged misfeasance. [25] In addition, says the plaintiff, Smallacombe slandered the plaintiff when he circulated

rumours that the plaintiff was involved in illegal drug trafficking.

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[26]

The plaintiff's position is that Smallacombe cannot claim witness immunity with respect to

torts he committed while investigating the plaintiff. [27] With respect to the pleadings in which it is alleged that Smallacombe "ought to have

known" his actions were beyond the scope of his office, the plaintiff seeks to amend its pleadings to delete that phrase. The plaintiff argued it is sufficient for purposes of the cause of action of misfeasance to plead that Smallacombe had actual knowledge, and the facts as pleaded support that allegation. [28] The plaintiff says the audio recording produced by the defendants and upon which the

plaintiff relies to advance the defamation claim is not subject to an implied undertaking because it was not produced under compulsion of discovery procedures. [29] Finally, argued the plaintiff, the underlying action is not a collateral attack on the

proceedings concerning the stumpage assessments. No other proceedings are capable of dealing with the issues raised in this action. The only other extant action brought by the plaintiff is its appeal of the Minister's decision to uphold the stumpage assessment. The appeal does not concern the issues in the underlying action. [30] As noted earlier, the test on an application to strike pleadings is well known and

accepted. So long as the pleading discloses a triable issue, either as they exist or may be amended, the issue should go to trial. The case for dismissal must be "beyond doubt" or "plain and obvious": [31] Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.

I will turn first to the defendants' argument that the plaintiff ought to have advanced the

cause of action of malicious prosecution rather than abuse of public office or misfeasance. [32] I observe at the outset that it is not the role of this Court to determine what other causes

of action mayor may not have been available to the plaintiff. The Court must examine the pleadings and, more specifically, the facts as pleaded, to determine whether they disclose an arguable claim in abuse or misfeasance in public office. [33] To paraphrase the comments of the Court in Canada v. Imperial Tobacco, it is the facts

as pleaded which are the firm basis upon which the possibility of success of the claim must be evaluated. It is on the facts as pleaded that the judge on a motion to strike must ask whether the claim has any reasonable prospect of success. [34] The leading case concerning the tort of misfeasance in public office is Odhavji Estate v.

Woodhouse, [2003] 3 S.C.R. 263. While an evolving cause of action, malfeasance is a well recognized one. As noted by Iacobucci J. at para. 17 of the decision:
...the class of conduct at which the tort is targeted is not as narrow as the unlawful

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exercise of a particular statutory or prerogative power, but more broadly based on unlawful conduct in the exercise of public functions generally. [35] At para. 20 of that decision, the Court said: "... there is a broad range of misconduct that

can found an action for misfeasance in a public office." [36] The Court went on to describe the specific elements of the tort, which can rise in one of

two ways. "Category A" involves conduct specifically intended to injure a person or class of persons. "Category 8" involves a public officer who acts with knowledge both that he or she has no power to do the act complained of and that the act is likely to injure the plaintiff. [37] These two categories represent two different ways in which a public officer can commit

the tort. The plaintiff must, however, prove each of the torts' constituent elements. In each case, the tort involves deliberate disregard of official duty with knowledge or awareness that the misconduct is likely to injure the plaintiff. [38] The Court in Odhavji also made clear at para. 25 that: ...the ambit of the tort is limited not by the requirement that the defendant must have been engaged in a particular type of unlawful conduct, but by the requirement that the unlawful conduct must have been deliberate and the defendant must have been aware that the unlawful conduct was likely to harm the plaintiff. [39] The underlying purpose of the tort, as described at para. 30 is to: ...protect each citizen's reasonable expectation that a public officerwill not intentionally injure a member of the public through deliberate and unlawful conduct in the exercise of public functions. [40] The Odhavji decision, like the application currently before this Court, concerned an

application by the defendants to strike the plaintiff's pleadings on the basis that they disclose no reasonable cause of action. Thus the question before the Court was whether the statement of claim pleaded each of the constituent elements of the tort. [41]In Odhavji, the plaintiff's pleading asserted that the public officers "knew or ought to have

known" that their alleged unlawful conduct would cause the plaintiff harm. The Court observed that the requisite element of the tort was actual awareness that the misconduct was likely to harm the plaintiff. However, the Court emphasized that this aspect of the pleadings was not sufficient to cause the entire claim to be struck, and directed that only the words "ought to have known" be struck. [42] The plaintiff in the present case has made the same error in its pleadings but has

advised the Court that it will amend to strike the words "ought to have known". I conclude that it is appropriate to permit the plaintiff to do so.

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[43]

In the present case, the plaintiff has properly pleaded the constituent elements of the tort.

The plaintiff has alleged that Smallacombe knowingly engaged in unlawful conduct outside of the scope of his legislative authority in order to injure the plaintiff, knowing his actions would likely result in harm to the plaintiff. [44] Specifically the plaintiff has alleged that Smallacombe acted outside the scope of his

office with the intent of causing the plaintiff harm when he obtained search warrants knowing he lacked the jurisdiction to do so, investigated the plaintiff for Criminal Code breaches, unlawfully seized documents and timber and committed the other acts described in the pleadings. [45] I reiterate the statement of the Court in Odhavji that the tort does not require that the reiterated this

defendant be engaged in a particular type of unlawful conduct. It is sufficient that the unlawful conduct is alleged to be deliberate and likely to harm the plaintlff.lhave statement from Odhavji in response to the defendants' submission in the course of the present application that the alleged unlawful conduct must be of a particular kind relating to the public duties of the officer, rather than simply unlawful conduct generally. [46] As I read Odhavji, the defendants' submission is not a correct statement of the law. The

conduct of Smallacombe as alleged in the plaintiff's pleadings is, in fact, precisely the kind of conduct the tort of misfeasance in public office is designed to enjoin: His conduct as alleged involved the exercise of powers which in law he did not possess at all. [47] The Court in Odhavji (at para. 19) citing the landmark decision of Roncarelli v. Duplessis,

[1959] S.C.R. 121, emphasized that misfeasance is not limited to circumstances in which a public officer has abused a power actually possessed by virtue of occupying that public office. The Court in Roncarelli held that Mr. Duplessis had committed misfeasance because he purported to exercise a statutory power which he did not, in fact, have. Thus, said the Court in Odhavji: "... it is clear that the tort is not restricted to the abuse of a statutory or prerogative power actually held." [48] The Court went on to say (quoting Northern Territory of Australia v. Mengel (1995),129
Any act or omission done or made by a public official in the purported performance of the functions of the office can found an action for misfeasance in public office. [Emphasis added by S.C.C.]

A.L.R.I. (H.C.)) that:

[49]

In the present case, the facts as pleaded, which must be accepted as true, make out an

action for misfeasance in public office. [50] I have reviewed the authorities cited by the defendants in support of their arguments

concerning malicious prosecution. Those authorities are not helpful, however, because on the

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facts as pleaded by the plaintiff in this case, an action in misfeasance is made out. At the very least, it is not plain and obvious that the plaintiffs claims cannot succeed. [51] Further, the defendants' authorities are distinguishable because in the underlying action,

no criminal prosecution by authorities with legislative power to investigate and/or initiate criminal offences has been commenced against the plaintiff. [52] It is not alleged in the pleadings that Smallacombe is a peace officer with authority to

obtain search warrants or investigate or initiate criminal proceedings. To the contrary, the pleadings allege he did not have authority to perform those acts and exceeded his authority by purporting to perform them. [53] Further, the facts as pleaded by the plaintiff do not give rise to the claim in tort of abuse

of civil process. For that reason, the cases cited by the defendants concerning abuse of civil process are not relevant. [54] The defendants argued that the plaintiffs claim of misfeasance is bound to fail because

of the doctrine of witness immunity. As I understand the argument, the defendants say the plaintiffs claims against Smallacombe cannot succeed because his actions are protected by absolute privilege in his role as an investigative officer under the applicable provincial legislation. [55] I have difficulty with this argument in several respects. First, on the facts as pleaded,

Smallacombe wrongly purported to have prosecutorial powers pursuant to the Criminal Code. It is common ground that he did not possess any authority under the Criminal Code. [56] Secondly, even if Smallacombe was a peace officer, as distinct from a public officer

under a provincial regulatory scheme, there is a serious question to be tried as to whether Smallacombe's actions were undertaken in the investigative stage as distinct from the judicial or quasi-judicial stage. As the case law establishes, absolute privilege attaches to the latter but not to the former. [57] Finally the doctrine of witness immunity is entirely fact dependent. The burden is on the

party seeking the immunity to prove the facts which bring the party within it. It is not pleaded, nor has Smallacombe or any representative of the Province deposed, that Smallacombe was considering prosecution of the plaintiff at the time he committed the actions forming the material allegations underlying the claim in misfeasance. [58] In summary, it is far from plain and obvious that the plaintiffs action will fail because

Smallacombe can claim some sort of immunity or privilege.

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[59]

The defendants argued further that the plaintiffs claims in misfeasance are bound to fail

due to the absence of particulars to support the allegation that Smallacombe's actions were motivated by malice. The defendants relied on English authorities for the proposition that particulars of malice must be pleaded. However, those authorities do not apply in British Columbia. Rule 3-7(17) expressly states that it is sufficient to allege malice without setting out the circumstances from which it is to be inferred. Malice is a state of mind concerning which precise details are not required. [60] In its notice of civil claim, the plaintiff has sought injunctive relief. The plaintiff

acknowledges that such relief cannot be sought as against the Crown in Right of the Province as a result of the provisions of the Crown Proceeding Act, R.S.B.C. 1996, c. 89. The plaintiff sought leave to amend its pleadings to delete the injunctive relief and instead seek declaratory relief which will conform with the limits imposed by the Crown Proceeding Act. [61] As this is the first such leave sought by the plaintiff, it ought to be allowed the opportunity

to plead a form of relief which conforms to the legislation. Leave is accordingly granted. [62] In summary, the defendants' application to strike the plaintiffs pleading with respect to its

claim in the tort of misfeasance in public office is dismissed. [63] I turn then to the defendants' application to strike the plaintiffs pleadings with respect to

the defamation action. The plaintiffs defamation claim is based on the alleged fact that Smallacombe uttered slanderous comments to certain individuals, including Donald Good. In paragraph 10(i) of the notice of civil claim, it is alleged that Smallacombe suggested or insinuated that MOFR was investigating the plaintiff because it suspected the plaintiff was involved in high level criminal activity, when he knew there was no evidence to support such an allegation. [64] Paragraphs 13 to 15 of the notice of claim state as follows:
13. Throughout the investigation and following the issued Assessments, Timberwolf through its counsel, made repeated requests for disclosure of the investigative report and interviews. Smallacombe and MOFR, purposely and deliberately withheld disclosure of the requested documents and materials. On December 1, 2010, during a related court proceeding, a judge of the Supreme Court of British Columbia requested counsel for the Defendants to ensure that certain investigative material be disclosed to Timberwolf and Good. Subsequent to the Court appearance of December 1, 2010, an audio recording of an interview of Good by Smallacombe was disclosed.

14.

15.

I will not cite the remainder of paragraph 15, which I have cited earlier. [65] The defendants seek to strike the plaintiffs pleadings on the basis that the tape recording

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in question cannot be advanced in support of claims in the underlying action because it was produced by counsel for the defendants under the compulsion of discovery procedures or a court order in other litigation. As such, say the defendants, the plaintiff is bound by the implied undertaking of confidentiality. [66] The circumstances surrounding the disclosure of the audio recording are as follows. In

2011, other proceedings were commenced by Timberwolf to quash several search warrants obtained by Smallacombe on the basis that Smallacombe obtained them without authority pursuant to the Criminal Code. [67] The evidence before the Court in that proceeding was a transcript of a taped interview of

Donald Good by Smallacornbe in the course of his investigation. Mr. Good was not a party to the proceeding and did not seek to obtain standing to participate. However, he appeared during the proceedings for the purpose of requesting a copy of the audio tape of the interview. He did so on the basis of his stated apprehension that the transcript did not accurately reflect comments he made to Smallacombe in the course of the interview. [68] Good had been asked, and he agreed, to meet with Smallacombe. When Smallacombe

completed his Information to Obtain the search warrants, he included in his materials excerpts from the transcribed interview with Good -.As noted, Good was not a party to the application of Timberwolf to quash the warrants, nor for that matter is Good a party to the assessment proceedings brought by the Provincial Crown against Timberwolf. [69] Good appeared at the hearing of the plaintiff's application to quash the warrants solely to

obtain a copy of the audio tape. Counsel for the Crown agreed in the course of the proceeding to obtain the audio tape and provide it to Good. After the hearing of the application was concluded, counsel for the Crown sent the audio recording to Good under cover of an e-mail in which he advised Good that the Crown had not provided the recording to counsel for Timberwolf. [70] Counsel for the Crown also advised Good that he had no objection to the recording

being released to third parties. [71] Those being the undisputed facts surrounding the release of the audio tape by the

Crown, I have difficulty accepting the submission of the defendants in this application that an implied undertaking of confidentiality attaches to the tape's production. First, the recording was voluntarily released to a non-party to the application to quash the search warrant. It was not released pursuant to any discovery obligation. The application to quash has, in any event, long since concluded.

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[72]

Second, counsel advised Mr. Good that the recording had not been produced to the

plaintiff in any proceeding, and he expressly advised Good that he could release it to whomever he pleased. [73] For these reasons, it is not plain and obvious that the plaintiff cannot claim in defamation

against the defendants. Accordingly, the application to strike that pleading is also dismissed. Application to Stay the Action [74] I will now address the defendants' application to stay the underlying action in light of the

proceedings for the recovery of stumpage against Timberwolf under Part 11.1 of the Forest Act, R.S.B.C. 1996, c. 157. As noted earlier, the Province initiated the Part 11.1 proceedings pursuant to which it assessed stumpage owing by Timberwolf. [75] Timberwolf appealed the assessment to the Minister of Finance in accordance with the

applicable review procedures under the legislation and the Minister upheld the assessment in its entirety. Timberwolf intends to appeal the decision of the Minister. [76] The defendants argue that the Court should order a stay pursuant to s. 8 of the Law and

Equity Act, R.S.B.C. 1996, c. 253 and the Court's inherent jurisdiction. In order to grant a stay, the Court must be satisfied that to permit the underlying action to continue would work an injustice to the defendants and would not cause an injustice to the plaintiff. [77] The defendants acknowledged that a stay should be ordered sparingly and only in the

clearest of cases. They argued, first, that if the plaintiff's actions in misfeasance and defamation proceed at the same time as the appeal of the Minister's decision concerning the stumpage assessment, there is the risk that the same issues of fact and law will be determined in separate actions by different judges. Accordingly, say the defendants, the underlying action should be stayed. [78] The defendants also argued that there are overlapping issues in the Part 11.1

assessment proceedings. Timber was seized and rescaled. The evidence gleaned on the rescaling was used in the Part 11.1 proceedings. The defendants say the lawfulness of the seizure may be placed in issue in the Part 11.1 proceedings, and that matter has been put in issue in the underlying action. [79] Further, argued the defendants, whether the forest officers had reasonable and probable of the grade of timber will

grounds for the various actions taken will be placed in issue in both proceedings. Moreover, whether the plaintiff was involved in fraudulent misrepresentation likely be an issue in both actions.

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[80]

Finally, argued the defendants, if the underlying action is allowed to proceed now, the

defendants will be required to waive privilege over a great deal of material in the underlying action, which would normally be the subject of litigation privilege. In order to advance the defence of reasonable and probable grounds to proceed as the Crown did will require disclosure of the litigation brief. This, said the defendants, will give the plaintiff an unfair tactical advantage. [81] The plaintiff resisted the application for a stay of this action on several bases. First, it

would be highly prejudicial to the plaintiff to be precluded from advancing its claims in misfeasance and defamation. It is alleged that Smallacombe, an employee of the Crown, misused his office with the intent to harm the plaintiff. The plaintiff has no other means to defend its reputation, which it alleges has been badly tarnished by Smallacombe's investigation. [82] Second, the plaintiff says the Part 11.1 proceedings involve the stumpage assessments,

not allegations of fraud. The Crown has not alleged in the Part 11.1 proceedings that Timberwolf defrauded the government. The assessment proceedings have been brought under provisions of the Act which does not involve allegations of misconduct. [83] issues. [84] Fourth, the defendants have shown no specific prejudice to it or any tactical advantage to Thirdly, the Part 11.1 proceeding will not deal with the misfeasance and defamation

the plaintiff in the disclosure of the litigation brief. [85] Finally, it cannot be said that the underlying action was brought for any improper or

collateral purpose. Timberwolf has not initiated any other proceedings against the Crown. It is appealing a decision made in proceedings brought by the Crown, but the issues are very different. It is the Crown that has initiated multiple proceedings against other parties as a result of the Part 11.1 assessment against Timberwolf. [86] I accept the plaintiff's argument that the Part 11.1 proceedings do not involve allegations

of fraudulent conduct on the part of Timberwolf. The Crown is proceeding under s. 142.61 (1)( a) of the Forest Act, which refers to an assessment by the commissioner if satisfied that it is based on a person's "willful contravention" of the Act. That provision is distinct from s. 142.61(1)(b), which permits the Crown to levy an assessment based on the provision of a "false or deceptive statement". The Crown has not proceeded against Timberwolf pursuant to the latter provision. [87] Further, the focus of the underlying action is not the amount of the stumpage

assessment. [88] On the appeal, by contrast, the narrow issue will be whether the Minister erred in 5/16/2012

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affirming the $3.5 million assessment. There will be no adjudication of issues such as misfeasance and defamation. [89] In the underlying action, Timberwolf seeks damages for misfeasance and defamation.

The amount of the stumpage assessment under appeal is not in issue in the underlying action. [90] It is not apparent that the Crown will be required to disclose otherwise privileged

information or documentation gathered in the Part 11.1 proceedings in the underlying action. The misfeasance and defamation action will focus on the alleged unlawful conduct of Smallacombe, not on whether the outstanding amounts of stumpage were properly approved at in light of the provisions of the Forest Act concerning the calculation of stumpage. [91] Finally, it is my view that the balance of convenience on the stay application strongly

favours Timberwolf. Timberwolf has no means of pursuing its action for the alleged unlawful conduct of Smallacombe unless it is permitted to proceed with this claim. [92] As noted by the Court in Odhavji, the underlying purpose of the tort of misfeasance is to

protect citizens' reasonable expectation that public officials will not intentionally harm them through deliberate and unlawful conduct in the exercise of public functions. A stay would not do justice to Timberwolf. The defendants have not persuaded me that the existence of the Part 11.1 proceedinqs ought to trump the right of Timberwolf to advance its claim for misfeasance in the underlying action. [93] [94] The application for a stay is accordingly dismissed. MR. WADE: My Lady, the plaintiff seeks costs payable of this application in any event of

the cause. [95] MR. FRASER: The ordinary order on this kind of application is application is plaintiffs

costs are plaintiffs costs in cause, so obviously if they are successful at the end of the day, they get their costs. But it would not be ordinary just following the event to make an order in any of the cause, which is plaintiffs costs [indiscernible]. And that should be the proper order. [96] MR. WADE: Well, My Lady, in my respectful submission, in reply, the application was

unnecessary. We did advise the defendant in advance of the hearing through our response to the notice of application that we would amend the statement of claim to remove the "if any" portions and also the plead the relief properly sought against the Crown. In my respectful submission, the application was totally unnecessary, given the reasons for judgment of the Court today and the position of the plaintiffs at the outset of the hearing, so in my respectful submission, costs in any event of the cause are the appropriate order.

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Trading Ltd. v. British Columbia (Forests, Lands and ... Page 15 of 15

[97]

THE COURT: I am inclined to agree with the plaintiffs submissions. This is an

appropriate case for costs in any event. The Honourable Madam Justice C.A. Wedge

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