Mining and Lands Tribunal
Tribunal des Mines et des Terres
ISSUE DATE: December 21, 2020
CASE NO(S).: MA 016-18
PROCEEDING COMMENCED UNDER section 181 of the Mining Act, R.S.O. 1990, c. M. 14, as amended
Applicant: IAMGOLD Corporation
Respondents: Treelawn Capital Corp. and Wood Family Wealth Corporation
Subject: Claim for payment of expenditures
Patented Mining Claims: Chester 2 Properties on Young-Shannon Lands, District of Sudbury (See Schedule “A”)
MLT Case No.: MA 016-18
MLT Case Name: IAMGOLD Corporation v. Treelawn Capital Corp.
Heard: June 2, 2020 by video hearing
APPEARANCES:
Parties
Counsel
IAMGOLD Corporation
Neal Smitheman
Vaso Maric
Harry Skinner
Treelawn Capital Corp. and
Martin R. Kaplin
Wood Family Wealth Corporation
Ian Katchin
ORDER OF THE TRIBUNAL DELIVERED BY D. STEPHEN JOVANOVIC
INTRODUCTION
1IAMGOLD Corporation and its joint venture partner SMM Gold Cote Inc., collectively referred to as IAMGOLD, own the majority percentage of the Chester 2 Properties, also known as the Young-Shannon Lands, in the District of Sudbury (as described in the attached Schedule “A”), consisting of freehold and leasehold patents. Treelawn Capital Corp. and the Wood Family Wealth Corporation, collectively referred to as Treelawn, own 7.5% of the Chester 2 freehold and leasehold patents. IAMGOLD, SMM and Treelawn also co-own unpatented mining claims on the Chester 2 Properties.
2A dispute arose as to obligation of Treelawn to pay or reimburse IAMGOLD for expenditures it made over a number of years for the development of the Properties. The amount claimed to be owing is substantial, over three million dollars, and increasing. The principal defence of Treelawn is that an oral agreement had been reached and subsequently confirmed in writing with representatives of IAMGOLD or its predecessor(s) that Treelawn would not be responsible for any of these expenditures. In other words, Treelawn would enjoy a free carried interest. IAMGOLD denies that any such agreement was reached.
3On August 7, 2018, IAMGOLD, filed with the Mining and Lands Tribunal (the Tribunal) an application for an Order to Pay against Treelawn, pursuant to s. 181 of the Mining Act (the Act). Section 181(2) reads as follows:
Where lands or mining rights that are subject to rents or expenditures for development work are held by two or more co-owners and all such rents or expenditures have been paid by one or more of them and the other or others has or have neglected or refused to pay that other’s or those others’ proportion of the rents or expenditures for a period of four or more consecutive years, the Tribunal, upon the application of any co-owner or co-owners who has or have paid the rents or met the expenditures for the period of four or more consecutive years immediately prior to the date of the application and upon the receipt of such other information and particulars as the Tribunal requires, may make an order requiring the delinquent co-owner or co-owners to pay, within three months of the date of the order or such further time as the Tribunal may fix, the delinquent owner’s or co-owners’ fair proportion of the rents or expenditures to the co-owner or co-owners who has or have paid all the rents or expenditures, together with interest at the prescribed percentage rate per year compounded yearly, and such costs of the application as are allowed by the Tribunal.
4Typically, in accordance with the procedure set out in this section, the Tribunal issues the requested order which must be then be served on the co-owner or co-owners. If there is a dispute as to liability to pay or the quantum of the amount of rents or expenditures alleged to be owing, the co-owner or co-owners bring an application to the Tribunal for a hearing under s. 181(4) which provides as follows:
If a co-owner upon whom an order made under subsection (2) has been served disputes his, her or its liability to another co-owner or otherwise to make any payment under the order or the amount thereof, the co-owner may, within the time limited by the order for making payment, apply to the Tribunal for a hearing and the Tribunal shall, after a hearing, determine the dispute and may affirm, amend or rescind the order or make such other order as it considers just, and, if the Tribunal orders that a payment be made, it may fix the time for payment thereof.
5That statutory procedure, however, has not been followed by Treelawn in this case. Instead, Treelawn issued a Notice of Application on August 18, 2018, in the Ontario Superior Court of Justice, for an Order transferring the Tribunal’s proceeding to the Superior Court, pursuant to s. 107 of the Act.
6Upon review of Treelawn’s request and submissions from counsel for the parties, in what proved to be an unsuccessful attempt to avoid a multiplicity of proceedings, the Tribunal granted an “adjournment” on August 31, 2018, to allow time for the Treelawn Superior Court Application to be heard and decided.
7The Treelawn Application to the Superior Court was dismissed on May 17, 2019 by Justice O’Brien: see Treelawn Capital Corp. v. IAMGOLD Corporation, 2019 ONSC 1935. An appeal by Treelawn was subsequently dismissed with reasons reported at 2019 ONCA 1022 on December 24, 2019.
8Extracts from the reasons of Justice O’Brien relevant to the proceeding before the Tribunal are as follows:
[34] Section 105 of the Act grants the Tribunal broad jurisdiction over matters covered by the Act, using expansive language: “No action lies and no other proceeding shall be taken in any court as to any matter or thing concerning any right, privilege or interest conferred by or under the authority of this Act, but every claim, question and dispute in respect of the matter or thing shall be determined by the Tribunal except as otherwise provided…”(emphasis added).
[35] Here, the matters in dispute relate directly to a “right, privilege or interest” conferred by the Act. That is, s. 181(2) expressly and specifically addresses how co-owners of land or mining rights are to address rents or expenditures. It provides, in short, that a co-owner to and or mining rights may apply to the Tribunal for proportionate contribution to those expenditures by another co-owner and provides an efficient procedure for doing so.
[36] Treelawn argues that s. 182 does not apply to its situation, since, due to the alleged oral agreement, it has no obligations whatsoever to pay rents or expenditures with respect to the Chester 2 property. The problem with this argument is that s. 181(4) provides it with a procedure to raise this objection. That is, where a co-owner (here Treelawn) disputes its liability to pay expenditures (as Treelawn does here), it can apply to the Tribunal for a hearing to determine the issue. In other words, Treelawn can request a hearing before the Tribunal and raise all of its evidence about the oral agreement [footnote omitted]. While s. 181(4) does not enumerate the arguments that would limit or eliminate a co-owner’s liability, I find that particular contractual terms between the parties would be an available defence. Far from being “incidental” to a mining dispute, as argued by Treelawn, a defence to claim expenditures for the development of a mining property is directly provided for in the Act.
[37] Counsel for Treelawn also submits that Treelawn and IMG had “contracted out” of s. 181(2) by their oral agreement. In effect, Treelawn submits that one of the terms of the agreement was that it would not pay its proportionate share of expenses. In my view this is one of the arguments s. 181(4) is designed to address. There is no distinction in the present case between “contracting out” of a requirement to pay expenditures and defending against a claim for payment of expenditures by raising a contractual defence. Even if it were possible for a party to “contract out” of the Tribunal’s jurisdiction (an issue which I do not decide), that issue does not arise in the present case. In any event, the Tribunal is capable of determining its own jurisdiction, and indeed has superior expertise in doing so, as this would involve an interpretation of its home statute…
[38] [Omitted]
[39] On a related note, the remedy for a breach under s. 181(2) is, as set out in s. 181(5), an order vesting the interest of the “delinquent owner or co-owners” in the lands or mining rights to which the payment relates in the co-owner who has paid the expenditures. Again, this is a remedy that the Tribunal and not necessarily the court, is well-positioned to implement.
[40] [Omitted]
[41] It would not be appropriate to transfer the Tribunal Application in this case, given that the application is directly reliant on a provision and procedure set out in the Act. The Tribunal has the expertise to deal with this matter and a specific procedure for doing so.
9I will refer to the reasons of Justice O’Brien further later in these reasons.
10Pre-Hearing Conferences (PHC) usually deal with routine procedural matters as set out in the Tribunal’s Rule 11.(1)(a) through (f). Subsection (g), however, enables the Tribunal to deal with “any other matter that may assist in the just, most expeditious and least expensive disposition of the proceeding”. The essence of the dispute between the parties would appear to fall under (g). The parties have already agreed to bifurcate the proceedings with the issue of liability for the expenditures proceeding first. Then, after a decision is rendered, a hearing as to the quantum of the expenditures will proceed if necessary.
11Treelawn advised that there was an agreement between the parties as to the following procedural matters:
a) Treelawn will be treated as the Applicant for the liability phase of the hearing;
b) Before the hearing, the parties shall exchange opening statements (similar to pleadings); and
c) At the hearing,
i. It will be an evidentiary hearing;
ii. The Tribunal will hear viva voce evidence both in-chief and by cross-examination; and
iii. Oral closing submissions shall be made at a separate hearing after the evidence in the dispute has been given and a transcript of that evidence has been made available.
12The parties disagree on four other items, namely:
i. the exchange of witness statements;
ii. pre-hearing documentary and oral discovery;
iii. the delivery of document briefs in advance of the hearing; and
iv. the section of the Act under which this Dispute is to be heard.
13Although the Tribunal will first deal with the liability for the expenditures claimed, whatever decision is made may ultimately determine the liability for three or more million dollars. The significance of such a potential award, should, in my view, be of paramount consideration when considering the procedural safeguards to be afforded to both parties; while at the same time also providing for the efficiency that administrative tribunal hearings were designed to, but cannot always produce.
14Treelawn submits that an oral agreement was reached between Jeff Wood, its President, in 2009, with Gregory Gibson, the then President of Trelawney Mining and Exploration Inc., the predecessor of IAMGOLD, that Treelawn would never have to contribute to any of the mining costs associated with the Chester 2 Property. Mr. Gibson has sworn an affidavit attesting to that agreement and has been cross-examined on that affidavit. Mr. Wood has also been cross-examined on his affidavit so their potential evidence, perhaps determinative of the formation of a binding agreement, is known.
15After taking into account the submissions of the parties, the Tribunal’s Procedural Rules, the Statutory Powers Procedure Act and, to a lesser extent, the Rules of Civil Procedure, as allowed by the Tribunal’s Rules, I am of the view that the fairest procedure for the parties would be as follows:
i. The parties will exchange will say statements of their witnesses, 30 days before the first day of the hearing of the liability portion of this matter.
ii. Each party shall be entitled to an oral examination for discovery of one representative of the other party, to be conducted by video conference, such examination to be limited to 7 hours, within 120 days of the date hereof, failing agreement of the parties. The parties shall exchange document briefs 30 days before conducting the examinations. A will say statement from these representatives is not necessary.
iii. All documents that a party intends to rely on at the hearing of the liability portion of this matter shall be filed with the Tribunal 30 days before the first day of this hearing.
16The above procedure would resolve the parties’ disagreements as set out in paragraph [12] i., ii., and iii. above; however, for the reasons that follow, I defer making an order pending the parties’ further submissions as set out below.
17The issue that has to be determined first is which section of the Act governs this application. Treelawn submits that s. 181 has no application to this matter while submitting that the application should be proceeding under s. 105. I disagree, as in my view it clearly sets out the procedure for resolving disputes relating to mining development expenditures and all related issues. Justice O’Brien’s decision says as much. Section 105 may set out the jurisdiction of the Tribunal, but s. 181 sets out the procedure to be followed. As a statutory body, the Tribunal has no authority to adopt an alternative procedure from the one explicitly provided for in the Act.
18Treelawn submits that s. 181(2) presumes liability between co-owners which it says it does not have because of the agreement, the existence and validity of which has yet to be determined. It is a circuitous argument at best. Paragraph [36] of the reasons of Justice O’Brien make it abundantly clear that the existence of the agreement is a potential defence to the application to be raised under the procedure specified in s. 181(4).
19Treelawn also argues that the application was filed by IAMGOLD under s. 181(2) of the Act and that it cannot now rely on s. 181(4). Again, this submission ignores how s. 181 is intended to operate and the method for a party to dispute the alleged liability following the filing of an application.
20The only difficulty in this matter is the fact that the parties requested that the Tribunal not issue the order under s. 181(2), initially, until the Superior Court application was heard. However, IAMGOLD is now equivocal as to whether an order under s. 181(2) should be issued. It did not request such an order in its written submissions and stated orally at the PHC that at some point it advised Treelawn that it would not seek such an order. IAMGOLD has suggested that the Tribunal “adopt a less formalistic approach to the Application and immediately proceed to the application contemplated by subsection 181(4) to determine the merits of Treelawn’s arguments regarding the Alleged Oral Agreement (and, by extension, Treelawn’s liability to [IAMGOLD] for unpaid expenses)”.
21To do so would ignore the opening words of s. 181(4) which are “If a co-owner upon whom an order made under subsection (2) [emphasis added] has been served disputes his, her or its liability…within the time limited by the order for making payment, apply to the Tribunal for a hearing and the Tribunal shall, after a hearing, determine the dispute…” What Treelawn appears to be suggesting is that if this were a normal civil action commenced by way of a Notice of Action, it could then proceed to trial with a statement of claim.
22In my view, an order must issue under s. 181(2) before there can be a hearing under s. 181(4). The only rational way to proceed given the reluctance of IAMGOLD to clearly request an order is to hear further submissions from the parties who now have the benefit of my analysis of s. 181. I see no impediment, other than this reluctance of IAMGOLD, to the Tribunal now issuing the s. 181(2) order. The parties are not to make any further submissions as to the procedures set out in paragraph [15] above and an order will issue in due course, incorporating those procedures.
23If IAMGOLD opposes the issuance of the order or does not request such an order, it risks the dismissal of its application.
ORDER
24The Tribunal directs that within 20 days of the date of the release of this Order, that IAMGOLD make further submissions and advise the Tribunal if it requests the issuance of an order under s. 181(2) of the Act. Treelawn shall respond to that request within 20 days of its receipt of the IAMGOLD submissions, if any.
25The Tribunal further directs that the PHC be adjourned pending receipt by the Tribunal of the above submissions.
“D. Stephen Jovanovic”
D. STEPHEN JOVANOVIC
ASSOCIATE CHAIR
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Mining and Lands Tribunal
A constituent tribunal of Ontario Land Tribunals
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