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Analysis of Platinex Inc. v. Kitchenuhmaykoosib Inninuwug First Nation case

Jamie Kneen Communications and Outreach Coordinator responsible for: strategic research, social media, and public engagement; our Africa program, environmental assessment, and uranium mining.

Borden Ladner Gervais LLP Aboriginal Legal Issues e-Newsletter

by Scott Kerwin

CASES: CANADA

Platinex Inc. v. Kitchenuhmaykoosib Inninuwug First Nation, [2006] O.J. No. 3140 (QL), 2006 CanLII 26171, Ontario Superior Court of Justice (G.P. Smith J.), 28 July 2006

The Ontario Superior Court of Justice granted an interim injunction to a First Nation in northwestern Ontario enjoining a company from engaging in any mining exploration activities for five months. The Court also ordered the First Nation to establish a "consultation committee" to negotiate with the exploration company and the provincial government. The Court dismissed the injunction application brought by the exploration company to prevent the Aboriginal community from interfering with its activities.

The case concerned what the Court described as a "clash" between a desire for "the economic development of the rich resources located on a vast tract of pristine land in a remote portion of Northwestern Ontario" and the First Nation's fight to "safeguard and preserve its traditional land, culture, way of life and core beliefs".

The Kitchenuhmaykoosib Inninuwug First Nation (the "KI First Nation") was described as an Ojibwa/Cree First Nation. It was a signatory to the 1929 adhesion to Treaty 9, and occupies a reserve near Big Trout Lake, approximately 380 miles north of Thunder Bay. In May 2000, the KI First Nation filed a Treaty Land Entitlement Claim on the basis that the calculation of the area of its reserve was improper. It sought further land in its traditional territory.

Platinex Inc. is a junior exploration company in Ontario that is in the business of exploratory drilling. Its main asset is a 100% interest in unpatented mining claims and mining leases near Big Trout Lake. Platinex was granted a number of extensions on these mining claims by the Ontario Ministry of Northern Development and Mines since 1999.

The area of land at issue in the injunction application covers 19 square kilometres of boreal forest near Big Trout Lake. It is not part of the KI First Nation's reserve, but the KI First Nation asserts that this area falls within its "traditional territory" and is therefore part of its Treaty Land Entitlement Claim.

Platinex and the KI First Nation had ongoing discussions since 1999 about the intended exploration and development of the area. In February 2001, the KI First Nation advised Platinex that it wanted a moratorium on all development until proper consultation had taken place. The KI First Nation stated that it was not opposed to development, but wanted to be a "full partner" and to be fully consulted.

Further discussions were held, but they did not comply with the KI First Nation's consultation protocol. In August 2005, the KI First Nation advised Platinex that all previous agreements were now "null and void". Nevertheless, in October 2005, Platinex made public its mining application on the TSX Venture Exchange and represented that the KI First Nation had "verbally consented" to low impact exploration. By December 2005, Platinex had raised over $1 million in private placements.

In February 2006, the Chief and Council of the KI First Nation wrote to Platinex advising that members of the community were committed to take any measures necessary to stop exploratory drilling in the area. A number of individuals from the community went to the drilling camp to protest. As noted by the Court, there is a large discrepancy between Platinex and the KI First Nation as to what happened next. Platinex alleged that the protest by the KI First Nation was hostile and threatening, and involved the seizure of equipment and the ploughing of an airstrip. The KI First Nation alleged that the protest was peaceful and involved elderly members and children. Members of the Ontario Provincial Police were present.

Platinex and the KI First Nation both sought injunctive relief. The Court reviewed the applicable RJR MacDonald test for injunctions as well as materials on the use of injunctions in the Aboriginal context. Justice George P. Smith noted that an injunction is "often not suited" to situations involving Aboriginal issues.

The Court held that both parties were able to satisfy the first prong of the RJR MacDonald test, as there was a serious issue to be tried.

The Court did not agree that Platinex would suffer irreparable harm. The Court found that Platinex had known as early as 2001 that the KI First Nation was not consenting to further exploration. The Court stated:

It is inconceivable that Platinex did not know that KI was strongly opposing any further drilling on the property.

Platinex decided to gamble that KI would not try to stop them and essentially decided to try to steamroll over the KI community by moving in a drilling crew without notice.

While I accept the evidence of Platinex that it will face insolvency if it cannot complete its drilling by the end of this year or shortly thereafter, Platinex is, to a large degree, the author of its own misfortune.

The Court held that the "unilateral" actions of Platinex were "disrespectful" of the First Nation's interests and were interpreted as an insult. Such actions were likely motivated by the "severe financial pressure" being felt by Platinex. The Court continued:

For Platinex to now say that it will suffer irreparable harm if an injunction is not granted flies in the face of the equitable basis upon which injunctive relief is premised. The circumstances giving rise to the economic harm that will be potentially suffered by Platinex relate directly to decisions and choices that it made after KI had said that further exploration would be resisted. In making those choices, including the choice to raise funds by means of flow-through shares, and in understating its problems of access to the property, it ignored or was wilfully blind to the concerns and position of the KI community. The financial and time pressures Platinex is now experiencing are self-created and are based on an unreasonable belief that KI would not defend its interests when push came to shove. Platinex had the choice to continue with the process of consultation and negotiation with KI and the Crown and chose not to do so.

The Court held that the KI First Nation satisfied this prong of the RJR MacDonald test for an injunction. The Court stressed that the loss of traditional lands could constitute irreparable harm. The issue of "loss" must be considered from the Aboriginal perspective. The Court was satisfied that, for the KI First Nation, land was important from both a cultural and spiritual perspective, as it was "the very essence of their being" and their "very heart and soul". He stated:

No amount of money can compensate for its loss. Aboriginal identity, spirituality, laws, traditions, culture, and rights are connected to and arise from this relationship to the land. This is a perspective that is foreign to and often difficult to understand from a non-Aboriginal viewpoint.

The Court also found that the KI First Nation satisfied the "balance of convenience" prong of the RJR MacDonald test. There were two "very unique" aspects in this case: (1) the exploration may take place on lands subject to an ongoing treaty claim; and (2) both Platinex and the provincial Crown chose to ignore the concerns of the KI First Nation. If the exploration were allowed, the KI First Nation's treaty claim could be adversely affected. In regards to the public interest, the Court found that there would not be a loss of employment for a large number of citizens. On the other hand, the public interest favoured the "integrity of the consultation process itself". The Court stated:

A decision to grant an injunction to Platinex essentially would make the duties owed by the Crown and third parties meaningless and send a message to other resource development companies that they can simply ignore Aboriginal concerns.

The grant of an injunction enhances the public interest by making the consultation process meaningful and by compelling the Crown to accept its fiduciary obligations and to act honourably.

Balancing the respective positions of the parties, I find that the balance of convenience favours the granting of an injunction to KI.

In light of Platinex's claim for $10 billion in damages, the Court also considered whether the KI First Nation must provide an undertaking to pay damages in order to obtain an injunction. After reviewing various sources, the Court waived this requirement. Justice G.P. Smith stated:

Large wealthy corporations issuing law suits for many millions of dollars could disentitle First Nations from qualifying from the right to claim injunctive relief. This result cannot be deemed to be in accordance with the principles of equity.

To disentitle KI to a grant of an injunction in these circumstances cannot be fair or just.

The Court also rejected the argument that the KI First Nation did not have "clean hands" due to the nature of the protest at the drilling camp. The actions of the community members were "understandable", and no violence occurred. There was also no evidence that the KI First Nation had failed to make good faith efforts to consult.

The Court also made strongly-worded comments regarding the glaring absence of the Ontario government in the consultation process. The comments of the B.C. Court of Appeal in the Halfway River First Nation case, concerning the content of the duty to consult, were approved. Justice G.P. Smith stressed that the Crown must make good faith efforts to negotiate an agreement, and cannot delegate this duty to third parties. The evidentiary record in this case shows that Ontario "abdicated its responsibility", while also granting extensions to Platinex's mining leases despite the KI First Nation's treaty claims. There was no evidence that Ontario "maintained a strong supervisory presence in the negotiations". The Court commented that Ontario ignored its fiduciary role despite the "repeated judicial messages" since the Sparrow decision of 1990. He stated: "this case sadly reveals that the provincial Crown has not heard or comprehended this message and has failed in fulfilling this obligation". One of the unfortunate consequences of the Crown's failure was the resulting "industrial uncertainty".

The Court reviewed the options for the appropriate remedy in this case, such as ordering the creation of a consultative committee (as was the result in the Cheslatta Carrier Nation case), or an injunction. The promotion of "reconciliation" is the ultimate goal. The Court held that the possibility still exists in this case for a negotiated settlement.

The Court ordered that Platinex be enjoined from engaging in exploration at the Big Trout Lake site for five months, at which time the parties will re-attend at the Court. The granting of the interim injunction was conditional upon the KI First Nation releasing any property that had been removed from the drilling camp, and immediately setting up a "consultation committee" to meet with Platinex and the provincial Crown with the objective of developing an agreement with Platinex.

This newsletter is prepared as a service for our clients and other persons dealing with aboriginal issues. It is not intended to be a complete statement of the law or an opinion on any subject. Although we endeavour to ensure its accuracy, no one should act upon it without a thorough examination of the law after the facts of a specific situation are considered. No part of this publication may be reproduced without prior written permission of Borden Ladner Gervais LLP.