Please read the disclaimer before perusing the following article.
written June 6th, 2000, published in Agridigest
Highwood Developments Ltd. v. Her Majesty the Queen in Right of the Province of British Columbia says that private land owners may not have to pay stumpage on logs cut from private land, even where the crown grant for that land contains a reservation of timber to the Crown.
The crown grant is the original transfer of land from the Crown to the first owner, issued under the provincial Land Act of the day. Crown grants have various reservations (rights to the land which are kept by the Crown). For example crown grants have a reservation of minerals, but the exact nature of the reservation depends on the law when the crown grant was issued.
Some crown grants reserve timber, and where that is the case, when the landowner applies for a timber mark, the Ministry of Forests tells the landowner that a payment to the provincial government must be made if the land is to be logged.
In the Highwood case, the province issued the crown grant on May 11, 1888.
When Highwood Developments Ltd. applied for a timber mark, the Ministry of Forests saw that the grant contained a reservation of timber, and refused to issue a timber mark until Highwood got a licence to cut timber and agreed to pay stumpage.
Highwood complied, and partially logged the property. It paid stumpage of $8,694.48, which it then claimed back. It also claimed $5,894.79, being the profit on more logging that Highwood originally planned, but cancelled because it did not want to pay additional stumpage.
The Supreme Court of BC considered whether the reservation reserved timber then on the land, or all timber in perpetuity.
The wording of the reservation follows. The provincial government will be trying to limit the impact of this case based on the exact wording of the grant, so it is important to see the exact words of this reservation.
PROVIDED, Also, that it shall be at all times lawful for any person duly authorized in that behalf by Us, Our Heirs and Successors, to take from or upon any part of the hereditaments hereby granted, without compensation, any gravel, sand, stone, lime, timber, or other material which may be required in the construction, maintenance, or repair of any roads, ferries, bridges, or other public works. PROVIDED, also, that there shall be and there is hereby reserved unto Us, Our Heirs and Successors, all timber upon the lands hereby granted; provided that the aforesaid Angus Rutherford Johnston, his heirs and assigns, may cut any of such timber for domestic or farm purposes, for the purpose of making improvements upon the lands hereby granted, and for clearing the same; and except for such purposes the said Angus Rutherford Johnston, his heirs and assigns, shall not cut any of such timber: Provided, always, that the said Angus Rutherford Johnston, his heirs and assigns, may, upon obtaining a licence from Us, Our Heirs, or Successors, in that behalf, and upon payment of the dues in such case provided, but not otherwise, cut, manufacture into lumber, remove or sell such of the timber upon the land hereby granted as in such licence shall be mentioned.
PROVIDED, Also, that it shall be at all times lawful for any person duly authorized in that behalf by Us, Our Heirs and Successors, to take from or upon any part of the hereditaments hereby granted, without compensation, any gravel, sand, stone, lime, timber, or other material which may be required in the construction, maintenance, or repair of any roads, ferries, bridges, or other public works.
PROVIDED, also, that there shall be and there is hereby reserved unto Us, Our Heirs and Successors, all timber upon the lands hereby granted; provided that the aforesaid Angus Rutherford Johnston, his heirs and assigns, may cut any of such timber for domestic or farm purposes, for the purpose of making improvements upon the lands hereby granted, and for clearing the same; and except for such purposes the said Angus Rutherford Johnston, his heirs and assigns, shall not cut any of such timber: Provided, always, that the said Angus Rutherford Johnston, his heirs and assigns, may, upon obtaining a licence from Us, Our Heirs, or Successors, in that behalf, and upon payment of the dues in such case provided, but not otherwise, cut, manufacture into lumber, remove or sell such of the timber upon the land hereby granted as in such licence shall be mentioned.
The judge looked at the legislative history of the Land Act and amendments to it, and at several previously decided cases interpreting a reservation of timber.
The judge said that the language of the crown grant is not ambiguous. He said “[T]he words used are in the present tense and speak about all timber on the lands hereby granted. That is a clear reference to timber then on the land and not to timber in perpetuity. There is nothing in the document to suggest that after the removal of the timber the grantee would be unable to enjoy the land as any other owner of the fee simple in land.”.
The judge went on to say that if he is wrong and the language of the crown grant is ambiguous, then that ambiguity must be resolved strictly in favour of the landowner. He concluded again that the reservation does not apply to timber in perpetuity but only to timber on the land at the time of the grant.
He then found that “none of the trees cut and removed in 1996 was merchantable or of commercial timber size in May of 1888. Fifty per cent to fifty-five per cent of the trees harvested in 1996 were not alive in 1888 and the balance were from 1 to 25 years old, seedlings or juvenile trees.”. (Note that Highwood must have had an expert give evidence to prove this at trial.)
He also decided that the word “timber” does not include seedlings, juvenile trees, ornamental or shade trees but rather means trees that can be being sold and manufactured into lumber.
Highwood was awarded its full claim, which included the stumpage improperly claimed by the government, and the profits Highwood would have received if it had completed logging as it intended, before the claim for stumpage was made.
The lawyer for the government confirmed to me that the government will not be appealing this case. Therefore this case stands as the state of the law in British Columbia.
Should further claims be made, the government will try to restrict the effect of the Highwood decision to the exact wording of the Highwood crown grant, which may not be all that usual.
But when one reads the case, the judge’s reasoning relates more to the “present tense” wording of the grant than to the exact words of the grant or even the legislation in effect at the time of the grant. It is also important to the judge that the grant has no provision preventing the landowner from using the land normally after logging it.
While there may be few crown grants with the exact same wording as the crown grant in the Highwood case, there may be a considerable number of crown grants which reserve timber, where that reservation is phrased in the present tense, and where there is no restriction on use of the property post-logging. As well, the landowner must be able to evidence that the timber harvested was not merchantable at the date that the grant was issued.
If a landowner claims that he or she should not pay stumpage on the basis of the Highwood case, no doubt the government will vigorously defend the claim. But for the landowner with enough money to sue, the Highwood case may provide good support for a successful claim.