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A Railway Is Not a Mine: Ontario Court of Appeal Rules on Surface Rights in Unpatented Mining Claims

By Robin Linley, Iris Antonios and Paul Schabas
February 28, 2016

On February 24, 2016, the Ontario Court of Appeal released its decision in 2274659 Ontario Inc. v. Canada Chrome Corporation, confirming the interpretation of sections 50 and 51 of the Ontario Mining Act (Act) as they relate to surface rights in a mining claim. The Court of Appeal 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 between the parties 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 kilometers to the north. However, the appellant, Canada Chrome Corporation (CCC), had, in 2009, staked over 200 unpatented mining claims in a linear fashion along the 340 kilometre corridor (CCC Claims), to a location near a mineral deposit in which it had a minority interest. 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 to surface rights on the claims. An application to dispense with CCC’s consent was therefore initially brought before the Ontario Mining and Lands Commissioner (MLC), under section 51(4) of the Mining Act (as that provision existed at the time, prior to the coming into force of certain amendments).

The application turned on the interpretation of sections 50 and 51 of the Act. Subsections 50(1) and (2) of the Act set out the rights attached to a mining claim, as defined in the Act. Under section 50(1), staking a claim confers only the right to perform the assessment work prescribed by the Act or to obtain a lease from the Crown. Subsection 50(2) deals with the extent of the mining claim holder’s right to use the surface, and permits the holder to enter and use the part or parts of the surface of land that are “necessary” for the purpose of prospecting and development of the mines, minerals and mining rights “therein”. Subsection 51(1) deals with the priority of the holder of an “unpatented mining claim” to use the surface rights for prospecting and the efficient exploration, development and operation of the mines, minerals and mining rights.

The MLC dismissed the application to dispense with CCC’s consent, and 227 appealed the MLC’s decision to the Divisional Court. The Divisional Court allowed 227’s appeal. In its decision dated July 30, 2014, the Divisional Court held that section 51(1) of the Act does not confer additional surface rights, beyond what is conferred in section 50(2) of the Act, on those who hold unpatented mining claims on Crown lands, but rather section 51(1) confers priority to the unpatented mining claim holder only to use those limited surface rights that were accorded by section 50(2). Rather than remit the matter to the MLC, the Divisional Court made an order dispensing with CCC’s consent. CCC sought and was granted leave to appeal the decision to the Court of Appeal.

Chief Justice of Ontario G. Strathy, writing for the Court of Appeal, dismissed CCC’s appeal. The Court of Appeal agreed that the interpretation of sections 50(2) and 51(1) by the Divisional Court was the only reasonable one. The Court of Appeal found that the limited priority conferred by section 51 of the Act protects the multiple use of Crown lands through the dispute resolution procedure contained in section 51(4) and following (now s. 51(2) and following). It held, “The priority is for the purpose of prospecting and exploring and developing mines, minerals and mining rights. Section 51(1) does not confer additional surface rights beyond those conferred by s. 50(2).”

The Court of Appeal found that the Divisional Court was correct to hold 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 section 51(1) of the Mining Act. The Court of Appeal went on to hold, 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 decision of the Court of Appeal brings welcome guidance and clarity to the scope of an unpatented mining claim holder’s surface rights.

Blakes acted for 2274659 Ontario Inc. before the Divisional Court and the Court of Appeal.

For further information, please contact:

Paul Schabas                          416-863-4274
Robin Linley                            416-863-3047
Iris Antonios                            416-863-3349

or any other member of our Litigation & Dispute Resolution group.