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Company fined $1.1 million for devastating fish-bearing streams in Haida Gwaii

January 18, 2017

By: Campbell River Mirror

“Cataclysmic” damage to fish habitat on Haida Gwaii has lead to $1.1 million in fines to a now-dissolved company controlled by Campbell River-based Pallan Group Ltd.

The fines to Howe Sound Forest Products Ltd. are part of a sentencing by Judge Michael Brecknell in Masset provincial court on Jan. 9 that include fines to two other companies, I. Crosby Contracting Ltd. and Gwaii Wood Products Ltd., that total $2.2 million.

“It would not be an exaggeration to describe the damage to DL (District Lot) 413 from the actions of I. Crosby under the lack of supervision by Howe Sound and Gwaii as cataclysmic,” Judge Brecknell said in his reasons for sentencing.

The three defendants were each found guilty on Oct. 19, 2015 on 20 counts of Fisheries Act violations arising from logging and related activities carried out on DL 413, located adjacent to Highway 16 approximately 3.5 kilometres northeast of the Village of Port Clements between June 24 and Oct. 20, 2010. The counts relate to the defendant unlawfully carrying on works or undertakings involving logging and road construction that resulted in harmful alteration, destruction or disruption of fish habitat, riparian vegetation and wetlands of three tributaries which flow into the Kumdis Bay estuary, three tributaries of another nearby creek and the creek itself.

The Crown’s submission to the court was that:

a) the harmful alteration, disruption and destruction (aka HADD) of fish habitat in this case was of the greatest degree of seriousness involving extensive destruction of a unique and productive fish environment;

b) the damage to fish habitat was as a result of a willful, reckless or extremely negligent series of decisions by the defendants;

c) there was an extensive loss of fish habitat over a wide area and the destruction will require a concerted effort over a lengthy period of time, at great expense to effect even a modest rehabilitation;

d) given the numerous aggravating factors and a lack of any mitigating factors, there is a need for severe penalties which result in the defendants being stripped of any financial benefits they may have obtained through their actions.

The Crown’s submission said “the damage done to the area may require a century or more to be fully naturally rehabilitated.”

The Crown also said that none of the defendants have taken any steps to attempt any sort of rehabilitation or reclamation of the area.

The Crown’s submission, Judge Brecknell said in his reasons for sentence, stated that “Howe Sound had been incorporated for approximately two decades prior to it dissolving after the events of DL 413 and is part of a larger group of corporations and operated as the middleman, buying logs from Gwaii, overseeing the logging operation by I. Crosby and attending to the sale of the timber. The directors of Howe Sound continued to own and operate businesses under different corporate names engaged in timber harvesting and sales from offices in Campbell River.”

The Campbell River Mirror reported on Dec. 3, 2013 that in October, 2013, Campbell River-based Pallan Group was going through a restructuring process and the accounting firm KPMG was appointed receiver of three limited companies: Pallan Timber Products, Pallan Holdings and Howe Sound Forest Products.

Company President Derik Pallan told the Mirror that negotiations with the bank broke down and those three companies were going bankrupt.

In a legal notice in the Nov. 29, 2013 Mirror, KPMG reported the three companies had filed for bankruptcy on Nov. 22, 2013.

None of the companies in the 2010 Fisheries Act violations on Haida Gwaii had any prior convictions for similar contraventions of the Fisheries Act.

The Crown said none of the defendants made any genuine attempt to comply with the Inspectors Directions issued by Fisheries Officers and Howe Sound did not comply with a request to provide a forest harvesting plan.

Crown also said I. Crosby refused to take steps to comply with the Inspectors Directions issued by the Fisheries Officers.

It indicated no remorse and took no steps to effect any clean-up of DL 413, the Crown contended.

The Crown also submitted that Howe Sound provided no real assistance in the investigation of the events, showed no remorse, made no attempts to have I. Crosby stop its destructive practices and took no steps to assist in the clean-up of DL 413. The company had subsequently dissolved and did not appear at trial.

The directors of Gwaii, owners of the land and Haida Gwaii residents, all cooperated with the investigation and diligently attended the trial but made no voluntary reporting of what was occurring on DL 413 before the investigation began.

Neither Howe Sound nor I. Crosby attended the trial or provided any submissions on the sentence.

‘Devastation’

In his reasons for sentence, Judge Brecknell said, “It is difficult to accurately and completely express in words the extent of the devastation to the fish bearing streams and wetlands depicted in the photographic evidence and described by the Fisheries Officers and the expert witness.”

The judge said I. Crosby “paid little, if any, heed to proper logging practices…”

I. Crosby continued to log after being given Inspector’s Directions requiring immediate remedial measures, further aggravating factors.

Howe Sound was part of a consortium that had been involved in log buying and selling in coastal B.C. for many years. It did not operate or provide to I. Crosby a forest harvesting plan and did not properly supervise I. Crosby’s work on DL 413, the judge said. Its representatives misled Gwaii with regard to the steps it would take to bring I. Crosby into compliance, the judge said. Company representatives also misled Fisheries Officers who were investigating matters, including its acceptance of responsibility to remediate the damage done by I. Crosby.

Howe Sound also made little, if any attempts to meet its obligations within the regulatory framework, the judge said. It did not prepare a forest harvesting plan and did not properly supervise I. Crosby’s activities.

“It deflected and misled the Fisheries Officers in their investigations,” the judge said.

“Howe Sound did exhibit some professed responsibility and concern when initially confronted by Fisheries Officers in the early part of the investigation but that attitude was not genuine,” Brecknell said. “It took no steps to act on its obligation to supervise I. Crosby’s actions.”

Gwaii’s legal culpability lies in not properly supervising the activities of I. Crosby and Howe Sound and in failing to put a stop to the damaging logging and road construction activities before they went too far, even though Gwaii’s directors were concerned about I. Crosby’s actions one month into the timber harvesting.

The judge said the directors of Gwaii were “somewhat cooperative with the investigation” and diligently attended the trail and participated by cross-examining witnesses.

Fines handed down in such a case are meant to be penal in nature, the judge said, and there must be some recovery of what each defendant received as a result of their illegal actions on DL 413.

The Crown also sought an order requiring payment of money for the purpose of providing management, control, conservation and protection of fish habitat on Haida Gwaii.

Such a payment is meant to assist in the rehabilitation and amelioration of damage done to fish habitats similar to that done to DL 413.

The Crown also sought a period of prohibition on I. Crosby and Howe Sound from doing any act or engaging in any activity that may result in the continuation or repetition of the offences.

That would impose a hardship on I. Crosby because of the size of the company and the financial status of its principals and subcontractors or employees but it is necessary to impress upon it the need to comply with the regulatory provisions designed to protect the environment, according to the Crown.

A prohibition on Howe Sound, however, will be somewhat moot, the judge said.

“In the case of Howe Sound, given its present legal status, such an order will be a somewhat pyrrhic result for the community at large but it may serve as general deterrence to other corporations inclined to such illegal activities,” the judge said.

‘Howe Sound most responsible’

In his reasons for sentences, the judge said that “when it comes to the totality principle for fine amounts, Howe Sound clearly stands out as the main player and the most responsible for the destruction of DL 413. It had many years’ experience in log buying contracts and it failed in its responsibility to properly supervise I. Crosby’s work and to protect Gwaii’s position as landowners. It took advantage of Gwaii’s inexperience in the area of log buying agreements to Gwaii’s great detriment.”

I. Crosby’s actions make it far more liable than Gwaii for the damage done to DL 413, as it was experienced in logging and road construction on Haida Gwaii and ignored regulations and sound logging practices, the judge said.

Gwaii’s accountability is tempered by the naivety of its directors when it came to the legal requirements and responsibilities of logging private land. But Gwaii did profit from the actions of Howe Sound and I. Crosby and it didn’t intervene once it became aware of the destructive practices until Fisheries and Oceans Canada became involved.

The judge’s sentence included:

  • Nine fines of $15,000 each and one of $45,000 on I. Crosby Contracting Ltd.
  • Nine fines of $25,000 each and one of $75,000 on Howe Sound Forest Products Ltd.
  • Nine fines of $10,000 each and one of $30,000 on Gwaii Wood Products Ltd.

In addition, now-dissolved I. Crosby is ordered to pay Her Majesty $400,000 for the benefit of Fisheries and Oceans Canada for the purposes of promoting proper management and control of fisheries or fish habitat or the conservation and protection of fish or fish habitat on Haida Gwaii.

The now-dissolved Howe Sound is ordered to pay Her Majesty $800,000 also for the benefit of Fisheries and Oceans Canada for the purposes of promoting proper management and control of fisheries or fish habitat or the conservation and protection of fish or fish habitat on Haida Gwaii.

By: Campbell River Mirror

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