Lubicon Lake Nation v Penn West Petroleum

The Alberta Court of Queen’s Bench released a decision on June 5, 2015 in Lubicon Lake Nation v. Penn West Petroleum Ltd., allowing in part an application to strike portions of the Lubicon Lake Nation’s statement of claim.

Background – Application to strike

The Chief and five councillors of the Lubicon Lake Nation have filed two actions in relation to their asserted Aboriginal rights and title in an area of land east of Peace River, Alberta. The first of these actions is against the Attorney General of Canada and the Province of Alberta (the “Crown action”). The second of these actions, at issue in this case, is against Penn West, seeking a declaration that approvals granted for the production of oil in the area over which Lubicon Lake Nation asserts Aboriginal rights and title were illegal and void (the “Penn West action”). In the Penn West action, the Nation also alleges trespass and interference with its rights in two small parcels of land included in the area claimed in the Crown action.

Penn West applied to strike Lubicon Lake Nation’s statement of claim in the action brought against it on the basis that the Penn West action is an abuse of process since it is virtually identical to the Crown action. Penn West also argued that this action was a collateral attack on approvals granted to Penn West by the provincial government with respect to roads, drilling, mineral leases, facilities, and pipelines.

Background – Underlying litigation

Lubicon Lake Nation refers to an Indigenous collective led by Chief Bernard Ominayak that claims to be the appropriate entity to assert Aboriginal title and rights within the traditional territory of the Lubicon Cree. A second Indigenous collective, the Lubicon Lake Band led by Chief Billy Joe Laboucan, also claims to represent Lubicon Cree with respect to its asserted rights. Lubicon Lake Band is registered with the federal department of Aboriginal Affairs and Northern Development Canada and recognized by the provincial and federal government as the elected body representing Lubicon Cree. Since February 2013, the provincial government has advised parties proposing projects in lands affecting Lubicon Cree to only consult with Chief Laboucan and the council of the Lubicon Lake Band. Chief Laboucan is not a party to either action.

Penn West is an oil and gas company that received a number of provincial approvals to engage in oil and gas exploration, development and production within the traditional territory of Lubicon Cree. As part of its efforts to obtain these approvals, Penn West consulted with Lubicon Cree through actions that included sending materials to the Nation’s band office. After Penn West obtained licences for its activities, the Nation filed letters of objection with the provincial regulator, which were considered and rejected on the basis that approval of the licences did not directly and adversely affect the Nation. The Nation took no further steps to challenge these approvals, such as filing an application for judicial review.

Lubicon Lake Nation subsequently filed the Crown action asserting Aboriginal rights and title and seeking a declaration establishing these rights and declaring that all oil and gas leases, permits and licences granted by Alberta within this claim area are either illegal and of no effect or are burdened and encumbered by the Nation’s Aboriginal rights. The licences at issue include the approvals granted to Penn West. The Nation also subsequently initiated the Penn West action claiming that Penn West’s operations infringed their rights and seeking, among other things, a declaration that all Penn West’s permits and licences are illegal, null, void and have no effect.

Court’s decision

The Court rejected Penn West’s argument that the duplication in the Penn West action amounted to an abuse of process. It found that while the Penn West action and the Crown action were identical in many respects, the causes of action were not.

Going further, the Court noted that the causes of action could not be the same “since the claims in the Crown action are against different defendants and involve public, not private, law claims”. The Court also noted the recent decision of the British Columbia Court of Appeal in Saik’uz First Nation v. Rio Tinto Alcan that found it appropriate for First Nations to pursue private causes of action based on Aboriginal title prior to a declaration of Aboriginal title having been made. The Court stated that this was a reasonable conclusion since Aboriginal title and rights either exist or they do not and a declaration “merely confirms their existence or not”. The Court opined that concerns about inconsistent verdicts could be dealt with by consolidation of actions or perhaps an adjournment of one action until the other is concluded.

On the other hand, the Court found that Lubicon Lake Nation’s claim that the approvals for Penn West’s oil and gas activities were invalid amounted to a collateral attack. The Court wrestled with the reasoning in Saik’uz that rejected a defense based on collateral attack in that case, but was unconvinced that it should follow Saik’uz in this regard. The Court found that in the Penn West action, the Nation had expressly attacked the validity of the approvals in spite of the fact that the Nation had failed to judicially review the provincial regulator’s decision to reject the Nation’s objections to these approvals. The Court also noted that the Nation took no issue with the approvals during its consultations with Penn West, making this an even stronger case of “a repudiation of the duties of mutual good faith that animates the discharge [of] the Crown’s constitutional duty to consult First Nations”.

The Court held that the Lubicon Lake Nation’s claim for Aboriginal rights and for wrongdoing with respect to these rights could continue. However, it held that the portions of the statement of claim that challenged the validity of the approvals must be struck on the basis that permitting these portions to proceed “would render the tribunal, judicial review and appellate review process irrelevant”. The Court expressed concerns with the possibility that the Nation would otherwise be allowed to ignore the judicial review process or, as the evidence suggested in this case, state no concern at the consultation stage only to later invalidate the approvals through a claim for Aboriginal title. The Court also suggested that allowing such collateral attacks might “give rise to a high degree of risk for corruption” in that it could “create great temptation for corporations to offer payoffs to claimants or provide contracts to them for little or no service so as to avoid collateral attacks”. Furthermore, the Court held that allowing these portions of the statement of claim to stand would create legal and economic uncertainty by allowing the authorization process to be “hijacked by later [A]boriginal rights claims”.

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