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FOREST FIRES-WHO PAYS?The law respecting forest fires changed somewhat in the spring of 2005 when the Wildfire Act became law. The purpose of my column is not to educate logging contractors about preventing, reporting, and extinguishing forest fires. Nor do I intend to address permissible open fires or the need to engage in hazard assessment and hazard abatement. There are many courses offered on these subjects that can deal with those issues better than I. As a lawyer, my involvement always comes after the fact, when issues arise as to who is to pay and who is to blame. Let's talk first about a contractor's own expenses in fighting a fire that erupts on his block. Particularly I am talking about the contractor's expenses prior to the government taking over firefighting responsibilities. If it can be said that the contractor or his subcontractor or employee "caused or contributed to the fire" then that contractor bears all of his firefighting expenses himself. Importantly, even an accidental fire caused by a spark coming off a machine is going to make the contractor responsible for his own firefighting costs. If the contractor did not cause or contribute to the fire, then the contractor is entitled to be reimbursed by the government for all of his equipment time spent firefighting at the blue book rates, and also for his employees' wages. Eventually, of course, the fire is either extinguished or the government takes over the firefighting obligations. Government may use helicopters and water bombers in a very costly firefighting exercise. It may engage the equipment and personnel of the contractor and of other contractors. Parties engaged by the government at this point in time are entitled to be paid compensation for equipment and personnel. One can see how the government's total cost of fighting a fire can rapidly climb into the hundreds of thousands of dollars. As well, the government is entitled to take into account the value of the standing timber that it lost in the fire. The government lumps together these two items and then asks the question: can it be said that the licencee or its contractors, subcontractors, or employees "caused or contributed to the fire or the spread of the fire"? Again, the issue of whether the fire was started accidentally, deliberately, or carelessly, doesn't arise. Only things like a lightning strike or a carelessly tossed cigarette by an unrelated person would excuse liability. Now, of course, if the government looks first to have the licencee pay those expenses, that licencee will in turn be looking for reimbursement from the contractor. In fact, not only will the licencee be doing that, but it may also be adding its own expenses and losses to the bill and asking the contractor to pay those. Prior to the Wildfire Act, if a licencee didn't voluntarily pay then the government was obligated to sue. Now the Minister of Forests can hold an administrative hearing and make a decision, and that decision is binding (although subject to appeal). It is a much simpler and more cost effective recovery system for the Ministry. When a contractor is facing an enormous bill from a licencee in respect of a forest fire, two questions arise for me. First I look at the contract. Particularly, I carefully examine the firefighting clauses and the indemnity (sometimes called "hold harmless") provisions. Those provisions vary from contract to contract, although generally speaking they make the contractor liable to reimburse the licencee unless fault can be laid at the licencee's feet. A similar sort of obligation exists on the part of the licencee towards the government, due to an indemnity clause in the forest licence. The second consideration is the contractor's fire insurance. I cannot stress enough the importance of reviewing your contract with your insurance agent prior to purchasing insurance, and making sure that you have a good policy with appropriate coverage. Beware of this pitfall, which has caught many contractors by surprise at great expense. Some insurance policies only cover losses that arise from a contractor's negligence. Sometimes it may be said that the contractor was the cause of the fire but, at the same time, that the fire was entirely accidental and not the result of any contractor negligence. In that situation the contractor becomes responsible for all of the costs and losses, but his insurance company refuses to cover because there is no negligence! Everything I have referred to above speaks to compensation for expenses and losses. Quite apart from the issue of compensation is the issue of penalty. If a person has contravened the legislation he subjects himself either to charges before the Court or, more likely, the imposition by the Minister of Forests of an administrative penalty. In many respects the issues and procedures are similar to those for a Forest and Range Practices Act violation. It is possible, before the Court or before the Minister, to raise a defence of due diligence and that defence, if proved, will exonerate the person from any penalty. If the licencee can demonstrate due diligence, then the Minister may look to the contractor for a penalty. (Again, though, this only addresses the penalty issues, not the compensation issues.) Contractors should know of one important thing. Licencees have the option, but not the obligation, to enter into a service agreement with the government. That sort of agreement is similar to an insurance policy, in that the licencee will pay money to the government in exchange for an agreement to waive or reduce any claim that the government may make once a fire occurs. Obviously this sort of cost recovery program has advantages to both the licencee and the contractor, and contractors are advised to ask their licencees whether they are participating in the program or not. As I frequently do, I must conclude my column by advising that this is only a summary of the law, and that the Wildfire Act and Regulation are more complex than I have described. John Drayton is a Kamloops lawyer practicing in the area of motor transport and forestry law. Back to Articles Index
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