2274659 Ontario Inc. v. Canada Chrome Corporation and MNRF

This reasoned decision has been issued by the Ontario Mining and Lands Commissioner under the Mining Act.

File No. MA 005-12

L. Kamerman
Mining and Lands Commissioner

M. Orr
Deputy Mining and Lands Commissioner

Tuesday, the 6th day of November, 2012.

The Mining Act

In the matter of

Mining Claims P-4251521, 4251523, 4251524, both inclusive, situate in the BMA 522 862 Area, 4251514 to 4251520, both inclusive, situate in the BMA 523 862 Area, 4250189, 4251434, 4251510 to 4251513, both inclusive, 4254220, situate in the BMA 524 862 Area, 4248438, 4248439, 4251502 to 4251509, both inclusive, situate in the BMA 525 862 Area, 4256490, situate in the BMA 526 862 Area, situate in the Porcupine Mining Division, TB-4251534 to 4251542, both inclusive, situate in the BMA 521 863 (TB) Area, 4248592, 4251525, 4251527 to 4251533, both inclusive, situate in the BMA 522 863 (TB) Area, 4251698 to 4251700, both inclusive, 4251881, 4252051 to 4252056, both inclusive, 4252058, situate in the Dusey River Area (TB), 4251543 to 4251546, both inclusive, situate in the Hale Lake Area, 4251688 to 4251697, both inclusive, situate in the Kagiami Falls Area (TB), 4251656 to 4251658, both inclusive, 4251660 to 4251662, both inclusive, situate in the Sherlock Lake Area, 4248432 to 4248434, both inclusive, 4252059 to 4252064, both inclusive, situate in the Tanase Lake Area (TB), 4251547 to 4251550, both inclusive, 4251651 to 4251655, both inclusive, situate in the Tillett Lake Area and 4251663, situate in the Venton Lake Area (TB) and 4251664 to 4251667, both inclusive, both inclusive, situate in the Wowchuk Lake Area, situate in the Thunder Bay Mining Division, recorded in the name of Canada Chrome Corporation, (hereinafter referred to as the "Mining Claims");

And in the matter of

Mining Claims P-1192735, 1192740 and 1192743, situate in the BMA 523 862 Area and 1192755, 1192756, 1192759, 1192769 and 1192772, situate in the BMA 524 862 Area, situate in the Porcupine Mining Division, recorded in the name of Canada Chrome Corporation by transfer, after the above-noted application was filed, on the 11th day of April, 2012, (hereinafter referred to as the "Transferred Mining Claims");

And in the matter of

A referral by the Minister of Northern Development and Mines to the tribunal pursuant to subsection 51(4) of the Mining Act, R.S.O. 1990, c. M. 14, as amended, of an application under the Public Lands Act, R.S.O. 1990, c P. 43, as amended, PLA for disposition under the PLA of surface rights over portions of the Mining Claims and the Transferred Mining Claims.

Between:

2274659 Ontario Inc.
Applicant

and

Canada Chrome Corporation
Respondent

and

Minister of Natural Resources
Party of the Third Part

Order on Preliminary Motion to Exclude Evidence

Whereas on the 28th day of May, 2012, the Applicant filed an application with this tribunal to exclude two sentences in the affidavit of Mr. Frank Smeenk filed by the Respondent on the 30th day of May, 2012;

And whereas the parties were able to settle a number of issues among themselves dealing with the confidentiality of proprietary material including the content of certain Exhibits to the Smeenk affidavit, but were unable to settle the question of the content of certain sentences within the Smeenk affidavit;

And whereas a Motion in this matter to consider the question of whether two sentences in the Smeenk affidavit should be considered "evidence of settlement discussions" was heard in the courtroom of this tribunal on the 6th day of July, 2012;

  1. It is ordered that this Motion be and is hereby dismissed in that the two sentences are not to be considered "evidence of settlement discussions".
  2. It is further ordered and declared that the reference to a dollar figure found in paragraph 50 of the Affidavit of Mr. Frank Smeenk dated the 30th day of May, 2012, being Exhibit 5a in the Merits of this matter, is to be treated as confidential and is hereby redacted.
  3. It is directed that the applicant, 2274659 Ontario Inc., file two copies with the tribunal and serve on the respondent one copy of written submissions on costs, by no later than the 26th day of November, 2012.
  4. It is further directed that the respondent, Canada Chrome Corporation, file two copies with the tribunal and serve on the applicant one copy of written submissions on costs by no later than the 17th day of December, 2012.

Reasons for this Order are attached.

Dated this 6th day of November, 2012.

Original signed by L. Kamerman

L. Kamerman 
Mining and Lands Commissioner

Original signed by M. Orr

M. Orr
Deputy Mining and Lands Commissioner

 

File No. MA 005-12

L. Kamerman
Mining and Lands Commissioner

M. Orr
Deputy Mining and Lands Commissioner

Tuesday, the 6th day of November, 2012.

The Mining Act

In the matter of

Mining Claims P-4251521, 4251523, 4251524, both inclusive, situate in the BMA 522 862 Area, 4251514 to 4251520, both inclusive, situate in the BMA 523 862 Area, 4250189, 4251434, 4251510 to 4251513, both inclusive, 4254220, situate in the BMA 524 862 Area, 4248438, 4248439, 4251502 to 4251509, both inclusive, situate in the BMA 525 862 Area, 4256490, situate in the BMA 526 862 Area, situate in the Porcupine Mining Division, TB-4251534 to 4251542, both inclusive, situate in the BMA 521 863 (TB) Area, 4248592, 4251525, 4251527 to 4251533, both inclusive, situate in the BMA 522 863 (TB) Area, 4251698 to 4251700, both inclusive, 4251881, 4252051 to 4252056, both inclusive, 4252058, situate in the Dusey River Area (TB), 4251543 to 4251546, both inclusive, situate in the Hale Lake Area, 4251688 to 4251697, both inclusive, situate in the Kagiami Falls Area (TB), 4251656 to 4251658, both inclusive, 4251660 to 4251662, both inclusive, situate in the Sherlock Lake Area, 4248432 to 4248434, both inclusive, 4252059 to 4252064, both inclusive, situate in the Tanase Lake Area (TB), 4251547 to 4251550, both inclusive, 4251651 to 4251655, both inclusive, situate in the Tillett Lake Area and 4251663, situate in the Venton Lake Area (TB) and 4251664 to 4251667, both inclusive, both inclusive, situate in the Wowchuk Lake Area, situate in the Thunder Bay Mining Division, recorded in the name of Canada Chrome Corporation, (hereinafter referred to as the "Mining Claims");

And in the matter of

Mining Claims P-1192735, 1192740 and 1192743, situate in the BMA 523 862 Area and 1192755, 1192756, 1192759, 1192769 and 1192772, situate in the BMA 524 862 Area, situate in the Porcupine Mining Division, recorded in the name of Canada Chrome Corporation by transfer, after the above-noted application was filed, on the 11th day of April, 2012, (hereinafter referred to as the "Transferred Mining Claims");

And in the matter of

A referral by the Minister of Northern Development and Mines to the tribunal pursuant to subsection 51(4) of the Mining Act, R.S.O. 1990, c. M. 14, as amended, of an application under the Public Lands Act, R.S.O. 1990, c P. 43, as amended, PLA for disposition under the PLA of surface rights over portions of the Mining Claims and the Transferred Mining Claims.

Between:

2274659 Ontario Inc.
Applicant

and

Canada Chrome Corporation
Respondent

and

Minister of Natural Resources
Party of the Third Part

Reasons

Appearances:

Mr. Chris W. Sanderson, Q.C. ­ co-counsel for the Applicant
Mr. Toby Kruger ­ co-counsel for the Applicant

Mr. Neal J. Smitheman ­ co-counsel for the Respondent
Mr. Richard Butler ­ co-counsel for the Respondent

Ms. Peggy Thompson ­ co-counsel for the Party of the Third Part
Mr. Michael Burke ­ co-counsel for the Party of the Third Part

Introduction

The Issue:

  1. Should two sentences contained in the affidavit of Frank Smeenk, filed by the Respondent and identified by the Applicant be struck from the evidence on the grounds that they are "evidence of settlement discussions"?

Background

This matter lends itself to confusion and unnecessary complication because a numbered company (its parent company being Cliffs Natural Resources Inc.) is on the record as applying to the MNR for disposition under the Public Lands Act. In actual fact, Cliffs Natural Resources Inc. wrote to the Ministry of Natural Resources on May31, 2011 asking to have an easement granted to the numbered company to permit the construction of a road. The letter itself is an exhibit in an affidavit filed by counsel for Cliffs in the main hearing (the section 51 hearing). The letter writer does not distinguish who will build the road or who will maintain it or anything of that nature. Nor is there any mention of KWG Resources Inc. or Canada Chrome Corporation in the letter. The letter writer does ask the Ministry to keep the request confidential and not discuss the request outside the Ministry.

The holder of the mining claims is a company formed for the purpose of supporting exploration and development of the Big Daddy Deposit, namely Canada Chrome Corporation. The parties involved in the section 51 hearing before this tribunal are the numbered company and Canada Chrome Corporation. Based on the materials (including affidavits) that have been filed, the parties actually engaged in the seeking of consent and refusing that consent are Cliffs Natural Resources Inc. and KWG Resources Inc. respectively. Whether this makes any difference in the decision to be made regarding settlement privilege will be dealt with below. Suffice to say, that up to this point, the parties and the tribunal have been referring to Cliffs in place of the numbered company for ease of reference. Also, while Canada Chrome is the respondent in the section 51 hearing, there seems to have been no difficulty in referring to its parent company, KWG Resources Inc. from time to time. The practice of referring to either the actual parties or their parent companies will continue unless one of the parties registers an objection.

Both the Applicant Cliffs and the Respondent Canada Chrome are before the tribunal pursuant to section 51 of the Mining Act as a result of Cliffs' seeking an easement from the Minister of Natural Resources. Before that Minister can grant an easement, it is necessary for Cliffs to obtain either the consent of affected unpatented mining claim holders (Canada Chrome), or an Order from the Mining and Lands Commissioner to the effect that the disposition of land can proceed without the aforementioned consent. Unpatented mining claim holders have a prior right to the subsequent user of surface rights under section 51 of the Mining Act.

Both parties filed materials that they intend to rely on in the hearing of the merits which has yet to occur. Both parties also agreed that some of those materials should be sealed and kept from public view. However, Cliffs objected to two sentences found in an affidavit filed by Canada Chrome. The deposer of the affidavit, Mr. Frank Smeenk, without identifying the source of his information (it was apparently a letter dated October6, 2011 and marked "without prejudice") made reference in two sentences of his affidavit to action taken by Cliffs whereby it offered compensation to KWG in order to gain access to the surface rights usage that is at the heart of the section 51 hearing. Cliffs has said that privilege attaches to the information in the two sentences as it arose out of settlement discussions that were held with Canada Chrome prior to the matter coming before this tribunal. Cliffs labelled the two sentences as "Evidence of Settlement Discussions" and sought their removal from the proceedings. Mr. William Boor, who deposed on behalf of Cliffs, made reference to a letter dated October6, 2011 (appended to his affidavit and not marked "without prejudice"), but made no reference to any correspondence of the same date that was marked "without prejudice". 

It is useful for the purposes of this motion hearing to point out that both parties are competing to establish a means of transportation to take a valuable resource (chromium) to a distribution point. The transportation route choices are limited by topography in an area known as the James Bay lowlands. Both companies say that there is a suitable corridor and they have both set their transportation sights on using that corridor. Canada Chrome staked mining claims in that north-south corridor. Cliffs seeks to locate a road within the corridor. Canada Chrome intends to build a railroad over its mining claims. Canada Chrome has also stated that it intends to develop the mining claims. To say that the competition between these two entities is keen is an understatement. It should also be noted that for purposes of this motion hearing, the specific routes for a railroad or road are not before the tribunal. 

The Arguments

Cliffs Submission

While the main submission was made by Mr. Toby Kruger, Mr. Sanderson opened with some preliminary points. He described the motion brought by Cliffs as one that sought the exclusion of two sentences from the record. As he put it, the idea of allowing Canada Chrome's to put settlement negotiations before the tribunal was "offensive". "[The sentences] ought not to be made available to the [tribunal]". In addition, on May13, 2012, Mr. Sanderson had written to the tribunal and relayed his concerns regarding the potential treatment of information that he described as "highly confidential and commercially sensitive". Cliffs was involved in the process of gaining the consent of other unpatented mining claim holders in the proposed transportation corridor and having its commercial affairs made public through the actions of Canada Chrome could prejudice its efforts with those third parties.

Mr. Toby Kruger opened the applicant's argument for exclusion by indicating to the tribunal that the offending sentences were contained in an affidavit deposed by Mr. Frank Smeenk for Canada Chrome. Mr. Kruger argued that the sentences in question fell into the category of communication made in furtherance of settlement and that the law (he included a reference to subsection 5.4(2) of the Statutory Powers Procedure Act said such discussions were prima facie privileged and prohibited from disclosure. A party that wishes to make such discussions part of the evidence must show a compelling or overriding interest of justice that requires disclosure. 

In his review of the law, Mr. Kruger identified the test for determining whether settlement privilege should apply. The case of Inter-Leasing, Inc. v. Ontario (Finance), 2009 Can LII 63595 (ON SCDC), provides the description of the test. It consists of three conditions that must exist:

  1. A litigious dispute must be in existence;
  2. The communication must be made with the express or implied intention that it would not be disclosed in a legal proceeding in the event negotiations failed; and
  3. The purpose of the communication must be to effect a settlement. 

Mr. Kruger maintained that Cliffs was always "clear" that if Canada Chrome did not consent to a disposition of its rights to its unpatented mining claims under the Public Lands Act, then Cliffs would seek a referral of the matter to this tribunal. Cliffs made Canada Chrome aware of its intention to seek an easement for a road corridor at least as far back as August 11, 2011. Canada Chrome's response was that Cliffs' road plans would make Canada Chrome's railroad plans "uneconomic". It came down to the fact that Canada Chrome had no financial interest in a road. 

According to the affidavit filed by Cliffs' Mr. Bill Boor, (a senior vice president in Cliffs' corporate structure), in August, 2011, he had corresponded with Mr. Frank Smeenk of Canada Chrome a number of times in an effort to explain Cliffs' having to seek Canada Chrome's consent in order to obtain an easement from the MNR. By September 9, 2011, Cliffs was formally requesting Canada Chrome's consent. This act itself did not crystallize the litigious dispute according to Mr. Kruger. Crystallization came with Canada Chrome's response which followed the September 9 request by Cliffs. On September 23, 2011, Canada Chrome (through its representative Mr. Smeenk) indicated that it could not consent for the purposes proposed by Cliffs. In Mr. Smeenk's words, Cliffs would have to "deliver an agreement with us [Canada Chrome] that adequate surface right compensation has been paid, or obtain an order of the Mining and Lands Commissioner". As Mr. Kruger put it, Canada Chrome's response could be characterized as "pay us a significant sum on our terms, or we'll see you in court." He argued that the first part of the Inter-Leasing test was met at that point.

Despite Canada Chrome's refusal to consent, Cliffs was prepared to continue to engage in settlement discussions to avoid litigation according to Mr. Boor's affidavit. In Mr. Kruger's words, "all of these discussions were clearly contemplated to be without prejudice". He pointed out that the only written document (one of two letters dated October 6, 2011) relating to the discussions was marked "without prejudice". This was indicative of the fact that the applicant was making an attempt to avoid litigation and settle the issue. According to Mr. Kruger, the letter marked "without prejudice" was the type of communication that should be subject to privilege in that it was made with the express intention that it would not be disclosed. Settlement communications were intended to result in a compromise or settlement and the letters that conveyed parties' positions were designed to open negotiations. Such letters recognized strengths as well as weaknesses of the opposing parties and should be subject to privilege. The second part of the Inter-Leasing test was met according to Mr. Kruger by this explicit reference to the letter's intended status.

The third part of the Inter-Leasing test was met by the fact that Cliffs' communication regarding proposed compensation could have been intended only to settle the matter. Compensation was not an issue to be decided in a section 51 hearing and so anything that resembled some sort of compensation could be intended only to end the dispute that was at the heart of the section 51 hearing.

As for the burden that Canada Chrome bore once it had been established that the information met the Inter-Leasing test, Mr. Kruger argued that Canada Chrome could not show that the communication was relevant and that disclosure was necessary to address a compelling or overriding interest of justice. There was nothing in the respondent's materials to show why disclosure of the communication was necessary. Furthermore, like the courts, the tribunal through its own procedures, demonstrated that it was interested in promoting settlement thereby saving potential litigants time and money. Mr. Kruger also referred the tribunal to other decisions in order to clarify how the courts have dealt with the question of whether settlement privilege is a class privilege or whether a case-by-case approach has to be taken.

Canada Chrome Submission

Mr. Smitheman opened his argument by categorizing the dealings between the two parties as being "simply an offer to purchase … with a threat of litigation". He argued that what really happened was that Cliffs tried to buy Canada Chrome's "property" and threatened to sue if Canada Chrome refused to sell. Cliffs was using the threat of litigation to "obtain a better bargain". Indeed, marking what he called an "offer to purchase" with the words "without prejudice", did not turn the document into privileged communication. He described the parties as simply engaging in negotiations to make a deal. He took issue with Cliffs' methods of acquiring mining claims in the area as well as the methods it used to further its business interests. He pointed out that some correspondence was not marked "without prejudice" and that the representative for Canada Chrome, Mr. Smeenk, held the view that Cliffs was simply trying to use the threat of a hearing before the Mining and Lands Commissioner as a means to an end, namely the acquisition of an easement. Cliffs was carrying out an "acquisition policy" regarding the mining claims and this was just part of that policy. It was not an offer to settle a contemplated dispute.

By taking the tribunal through the chronology that arose out of the various pieces of correspondence between Cliffs, the MNR and Canada Chrome, Mr. Smitheman argued that the information in question pre-dated the date when the request was actually made to refer the matter to this tribunal. That date was February 17, 2012. The information that Cliffs seeks to protect dates back to October, 2011. At that time, Mr. Smeenk claimed that he was unaware that any application had been made under the Public Lands Act. Mr. Smitheman contended that such an action was not even being contemplated by Cliffs in October, 2011.

Mr. Smitheman put forward the argument that with contemplated litigation, the courts said a case-by-case analysis was preferred. In taking the tribunal through an analysis of the case law, his point was that the parties were not settling litigation – they were trying to purchase an easement and the potential for litigation was being used as a threat to make things happen in Cliffs' favour. As Mr. Smeenk for Canada Chrome saw it, the settlement offer had everything to do with negotiating a bargain and nothing to do with settling litigation or contemplated litigation. Mr. Smitheman took the tribunal to the case of Liquor Control Board of Ontario v. Magnotta Winery Corporation et al., (2009) 97 O.R. (3d) 665 where the court questioned the characterization of settlement privilege as either "class" or "blanket" privilege. If the communications do not come within the blanket or class privilege the burden of establishing an exception lies with the party claiming the privilege. This "case by case" approach makes use of the so-called Wigmore test which was approved by the Supreme Court of Canada in the case of Slavutych v. Baker et al.,[1976] 1 S.C.R. 254 at 260. The Wigmore test has four parts. The communications must originate in confidence that they will not be disclosed. The element of confidentiality must be essential to the full and satisfactory maintenance of the relationship between the parties. The relationship must be one which in the opinion of the community ought to be sedulously fostered. The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit gained for the correct disposal of litigation. In applying the four-point Wigmore test, the impugned information fell short. 

Mr. Butler addressed the issue of waiver of the privilege and argued that Cliffs had made disparaging comments about Canada Chrome's activities and could not hide behind the concept of privileged communications. Canada Chrome had found it necessary to respond to Cliffs' allegations regarding Canada Chrome's acquisition of mining claims. Canada Chrome, he argued, needed to use the information in order to demonstrate the business rationale for its behaviour. Mr. Butler specifically identified comments made by Mr. Boor in the October 6, 2011, letter from Cliffs regarding the use to which Canada Chrome would put its mining claims, "namely to construct a railway". In Mr. Butler's words, "…Mr. Boor alleges that CCC's use of the mining claims to build a railway is actually unlawful." Canada Chrome, he argued, was obligated to respond. The two sentences "provide a logical business rationale for Canada Chrome's response.

Application of the Law and Findings

A section 51 hearing under the Mining Act is one in which the tribunal is charged with the task of trying to determine if a claim holder who refuses to consent to disposition of the surface rights (to which it has a prior right) should be required to share in the use of those surface rights. This is the nub of the multiple use principle. There is no award of compensation by the tribunal to the claim holder should the tribunal find that it should be made to share surface rights usage. 

Occasionally it may make good business sense for the party seeking access to the use of surface rights to offer some incentive to the claim holder in order to obtain consent and avoid spending time and money on a hearing. The claim holder's refusal to consent unlocks the door to a hearing under the Mining Act.

This tribunal has made it a practice to encourage settlement negotiations and to keep the discussions (including any offers of compensation) that take place during such negotiations private. This makes practical sense. After all, the party seeking a share may be conducting negotiations with other claim holders at the same time. Counsel for Cliffs rightly pointed out that parties entering into settlement negotiations should do so knowing that what gets said or written will not make its way into the hearing later on. This makes legal sense. Parties may admit weaknesses in their case in order to settle. Putting such information before the tribunal would raise the issues of bias and prejudice. The protection of settlement discussions and details has important public policy implications.

Are offers of money made to claim holders to make consent more palatable in the same realm as settlement discussions? The tribunal thinks not. However, such attempts should not be made public unless both parties are agreeable. The tribunal finds that in this instance the offering of a sum of money to obtain consent can be treated separately from any discussions the parties may have had concerning any strengths or weaknesses of their cases and that in this instance communication of that offer does not offend any rules regarding evidence of settlement discussions. In addition, the tribunal does not accept that its knowing about the offering of compensation or even the dollar amount affects its ability to determine the issues in the section 51 hearing.

While both parties focused their arguments on the topic of settlement privilege and how the case law applied to the two sentences found in Mr. Smeenk's affidavit, the tribunal was struck by the fact that the document that lay at the heart of the matter (a letter that Mr. Kruger said was marked "without prejudice") was never filed and of course was never seen by the tribunal. Nor did the parties seem eager to argue about its status. It was Mr. Smeenk's affidavit and his comments regarding compensation that set things off. The two sentences are not excerpts from the marked letter, but one of them does mention a dollar figure that one can reasonably conclude can be found in that letter. The tribunal finds that the reference to that dollar figure is really what lies at the heart of Cliffs' objections to the two sentences. The tribunal is unable to accept that the two sentences themselves form what Mr. Kruger kept saying was "evidence of settlement discussions". In combing through the materials filed for this motion and the transcript itself, the tribunal has come to the conclusion that the two sentences are an observation made by Mr. Smeenk as to what he thought about Cliffs' stating on the one hand that a decision from the Mining and Lands Commissioner in its favour would not be accompanied by compensation being awarded to Canada Chrome, yet on the other hand it (Cliffs) was prepared to offer compensation. In reviewing the materials and transcript in what amounted to a painstaking manner the tribunal found that Cliffs was really taking issue with the exposing of the dollar figure and not the fact that it had offered compensation in order to obtain consent to disposition. There was never any indication that anything, other than that dollar figure, had been referenced out of the marked letter by Mr. Smeenk's affidavit. With all of this in mind, the tribunal found it impossible to apply the law regarding settlement privilege to this situation. Trying to apply either party's argument simply did not work. The tribunal agrees with Mr. Smitheman that the parties were really sparing over the value of an easement to Cliffs, given how it might allegedly affect KWG's economic well-being. Cliffs offered money for the easement and while this fact is not relevant to what the tribunal has to decide at the section 51 hearing, it does constitute information that is commercially sensitive and must be kept confidential.

A common sense approach to the issue, the arguments, and the filed materials has provided the answer to the challenges faced by the tribunal in this matter in trying to determine how best to treat the impugned sentences.

The tribunal found it useful to begin its deliberations by reviewing the letters that were referred to by both parties during this motion hearing. These letters were contained in the affidavit filed on behalf of Cliffs by Mr. William Boor on April 30, 2012.

Cliffs requested Canada Chrome's consent to a disposition under the Public Lands Act in a letter dated September 9, 2011. In that letter, Cliffs outlined its plans for development of the Black Thor chromite deposit located in the McFaulds Lake area. One aspect of its plans was the building of a road from the proposed mine site south to Nakina, Ontario. At this point in time Cliffs was basing the location of its road on a "corridor" that could be refined later on. Cliffs sought Canada Chrome's consent to the use of surface rights as Canada Chrome has staked mining claims in the area of the corridor.

KWG Resources responded to the Cliffs letter of September 9, 2011, on September 23, 2011. In that letter, it outlined its plans for the Big Daddy deposit. It referred to the filing of a "Preliminary Economic Assessment", the acquisition of a corridor of mining claims and the carrying out of "considerable assessment work" on those claims. KWG indicated that it intended to proceed to obtain leases for the "corridor lands" . This would go to the construction of a railway to exploit the Big Daddy claims. KWG viewed Cliffs' actions as accruing to Cliffs' benefit only. While both companies have a joint interest in the project, KWG was concerned that the building of a road would harm their joint interest by "impeding or delaying the construction of the railway and perhaps eradicating entirely the economics of the railway…putting [KWG's] ability to maintain leases over the corridor at risk." KWG ended its letter by stating that for Cliffs to obtain an easement, it "would be required to deliver an agreement with us that adequate surface rights compensation has been paid, or to obtain an order of the Mining and Lands Commissioner". KWG further indicated that as far as "appropriate compensation" was concerned, "the impact of the easements on the Big Daddy project will be central and [the] Preliminary Economic Assessment in respect of the Big Daddy deposit will be provided to the Commissioner as the basis for measuring the amount of compensation required." KWG was interested in "sharing our mutual resources on a holistic basis and we would be interested in examining that concept further."

Cliffs responded in a letter dated October 6, 2011. This letter was not marked "without prejudice" and was submitted at the motion hearing. Cliffs took issue with KWG, saying that compensation had no role to play in a section 51 hearing and it would oppose any attempt to put evidence regarding compensation before the Commissioner. Cliffs indicated that it would move ahead with the section 51 hearing without KWG's consent "and without any compensation to KWG". Cliffs alluded to the validity of the use that KWG intended for its mining claims (i.e., the construction of a railroad), but argued that the construction of a road was not expected to interfere with KWG's use of its mining rights "for that purpose". In fact, Cliffs could foresee that KWG would need some form of road access to facilitate construction of its railroad. Cliffs would even consider making use of "any economically attractive railway services provided". Cliffs then set out its position regarding the relevance of compensation in a section 51 hearing. As well, Cliffs made reference to "a number of allegations concerning the relationship between KWG and Cliffs in the context of the Big Daddy Project" and argued that the allegations were groundless and were not relevant to the section 51 hearing. While Cliffs acknowledged that discussions with KWG were "good" Cliffs had to proceed with plans to develop the road. 

This letter was apparently followed by a letter of the same date wherein Cliffs attempted to (in its words) "negotiate a settlement" of what counsel for Cliffs and Mr. Boor have called "the central issue in these proceedings". The tribunal was told that the letter was marked "without prejudice" and that if necessary, it could be produced. This letter forms the basis, apparently, for Mr. Smeenk to depose an opinion regarding Cliffs' actions and position in terms of the issue of consent.

From the beginning, Cliffs has characterized the two impugned sentences in the Smeenk affidavit as "evidence of settlement discussions". The tribunal does not agree that the sentences themselves should be characterized as such. The sentences refer to communications between both parties (both by way of discussions and by way of a letter which was marked "without prejudice"). Cliffs indicated in correspondence to the tribunal's Registrar that the "[e]vidence of [s]ettlement [d]iscussions contains highly confidential and commercially sensitive information that could prejudice the Applicant if disclosed to third parties. In particular, compensation discussions relating to claimholders can be expected to influence negotiations that the Applicant may conduct with other claimholders…." This reference to compensation is really at the heart of Cliffs' argument in this motion.

In his argument, Mr. Kruger said that there was no reason to disclose the terms of an offer to the respondent, but that this is "precisely what the two sentences at issue refer to". Again, the tribunal does not agree with this statement. There may be occasions when a reference to a document marked "without prejudice" should be treated in the same manner as the document itself. That is not the case here. The reference to the offering of compensation and the actual dollar figure is of no interest to the tribunal but should be protected from the eyes of third parties.

The tribunal is struck by the confusion that seems to pervade so many aspects of this hearing. For one thing, the letter that Cliffs says contains evidence of settlement discussions and which was marked "without prejudice" is not contained in any of the parties' materials and no attempt was made to argue that it should be entered. There have been numerous references to "settlement discussions" by both sides. Mr. Kruger summed up Cliffs' position when he said in reference to his client's attempt to reach a compromise, "[i]t was a compromise that was made by the applicant saying "We don't think you're entitled to compensation, but let's try and settle this anyways." That is precisely what Mr. Smeenk was commenting on in his affidavit. The problem for Cliffs really arose when Mr. Smeenk made reference to an actual dollar figure. 

The tribunal finds that the two sentences (excluding reference to a dollar figure) do not in themselves form "evidence of settlement discussions". Mr. Smeenk was free to make an observation regarding Cliffs' actions and position regarding the issue of compensation. Furthermore, aside from the reference to the dollar figure, the tribunal finds it difficult to understand why the sentences caused such consternation when both sides have been referring to compensation and what role they believed it would or would not play in the section 51 hearing. Mr. Kruger is correct in saying though that compensation is not awarded in a section 51 hearing. On the other hand, the tribunal can understand how one party might argue in a hearing dealing with the "multiple use principle" that being forced to share could have an economic impact on its activities. However, the tribunal is not in a position to award compensation to address any such impact. That point has to be made clear. 

With respect to the divulging of the dollar figure in open court, while it has served to create yet another issue between the parties, the tribunal finds that its knowledge of the figure has no bearing on its ability to conduct the hearing on the merits. The tribunal cannot think of an occasion when it could ever be of interest to the tribunal, given that the awarding of compensation is not relevant to the issues it must address in a section 51 hearing. 

On the other hand, the tribunal is concerned by the fact that the dollar figure was made public. Mr. Kruger is absolutely correct when he says that the discussions between an applicant and a claim holder leading up to a section 51 hearing are private and should not be made known to third parties. The tribunal finds that the reference to a dollar figure in Mr. Smeenk's affidavit is a reference to sensitive information which should be treated as confidential. The affidavit requires editing in this regard.

The tribunal does not agree with Mr. Smitheman that the parties involved in the negotiations were not a part of this motion. The tribunal finds that this has proved to be of no consequence to the decision here. The parent companies and their individual subsidiaries seem to be able to speak interchangeably about the issues and the desired goals, to the point that one easily accepted each side as talking with one voice.

Conclusions

The tribunals finds that paragraph 50 of the Affidavit of Frank Smeenk dated the 30th day of May, 2012, being Exhibit 5a in the Merits of this matter, contains confidential information in that it makes reference to a dollar amount offered by Cliffs to the respondent. The tribunal will therefore require that the dollar figure be treated confidentially by the parties and their counsel.

The tribunal is concerned that confidential or commercially sensitive information may still be lurking in the evidentiary materials that have been filed for the hearing on the merits. The parties are strong urged to review their filed materials in order to prevent unwanted publication. In addition, the tribunal will require that the parties give advance warning to the tribunal when confidential and sensitive information is to be introduced during the course of the hearing on the merits. Failure to do so may be taken into account in the awarding of costs in this matter.

Costs

The Applicant and the Respondent will be directed to make written submissions as to costs for this Motion.