2274659 Ontario Inc. v. Canada Chrome Corporation

In an important decision interpreting s. 50 and s. 51 of the Ontario Mining Act (Act), the Ontario Court of Appeal has held that surface rights in unpatented mining claims are restricted to prospecting and development of mines, minerals and mining rights on the claims themselves, and that claims cannot be staked to protect transportation corridors or to prevent competitors from accessing other mining interests.

At the heart of the dispute was the desire by each to build a transportation link to chromite deposits in the “Ring of Fire” in northern Ontario. The respondent, 2274659 Ontario Inc. (227), wished to build a road from the CN Railway at Cavell, Ontario, to its mining interests in the Ring of Fire, 340 km to the north. However, in 2009, the appellant, Canada Chrome Corporation (CCC), had staked over 200 unpatented mining claims in a linear fashion along the 340 km corridor (CCC Claims) to a location near a mineral deposit in which it had a minority interest, ostensibly to build a railway.

The route of 227’s proposed road would cross some of the CCC Claims, and CCC had refused to grant 227 consent to an easement on the claims. An application to dispense with CCC’s consent was, therefore, initially brought before the Ontario Mining and Lands Commissioner (MLC), under s. 51(4) of the Mining Act.

The MLC dismissed the application to dispense with CCC’s consent, holding that CCC could refuse the easement because it might interfere with plans to build a railway. The Divisional Court allowed 227’s appeal and, rather than remit the matter to the MLC, made an order dispensing with CCC’s consent. CCC was granted leave to appeal the decision to the Court of Appeal.

In dismissing the appeal, in reasons written by Chief Justice Strathy, the Court of Appeal agreed with the Divisional Court that it was unreasonable for the MLC to have considered whether the proposed easement to build a road would interfere with CCC’s plan to build a railway because CCC could not claim priority for a railway under s. 51(1) of the Mining Act.

The Court of Appeal stated that “the only reasonable interpretation of the Act is to read it as meaning that a proposed railway is not a ‘mine’. The surface rights of the holder are limited to the parts necessary for prospecting, exploration and mining ‘therein’ — that is, in the claims themselves, not in claims at a distant location.”

The Court of Appeal upheld the Divisional Court’s remedy of remitting the matter to the MLC for reconsideration, saying that aspect of the decision was one was of mixed fact and law. The Court of Appeal stated “In coming to this conclusion, the Divisional Court was required to review the evidence (or lack thereof) on the factors relevant to dispensing with consent: whether there was interference with the respondent’s mining claims; the feasibility of the respondent’s plan to build a railway; the presence or absence of mineral deposits on the claims; and what inferences could be made as to the respondent’s motives in staking the claims along the transportation corridor.”

Blake, Cassels & Graydon LLP represented 2274659 Ontario Inc. before the Divisional Court and the Court of Appeal with a team led by Paul Schabas and that included Robin Linley and Iris Antonios.

Neal Smitheman of Fasken Martineau DuMoulin LLP acted for Canada Chrome Corporation.

John Kelly and Michael Burke of the Ministry of the Attorney General acted for the Ministry of Northern Development and Mines, which intervened in the appeal.