Logging firm to sue province and to fight $3.5M penalty

B.C. Supreme Court ruled a trial can proceed to resolve a $3.5 million question about the value of logs from the Campbell River area

The province has struck out again in a protracted legal battle with Timberwolf Log trading.

In the latest of several court judgements, on Feb. 22, the B.C. Supreme Court ruled a trial can proceed to resolve a $3.5 million question about the value of logs from the Campbell River area.

As well, on Jan. 11, the B.C. Court of Appeal ruled Timberwolf (no connection with Timberwolf Tree Service of Campbell River) can proceed with a civil lawsuit against the province and Daniel Smallacombe, an investigator with the Forests Ministry.

“The claim in defamation (both slander and libel) advanced by Timberwolf is a serious one,” wrote Madam Justice D. Smith of the appellant court. “It is conceded that Mr. Smallacombe had no evidence to support the comments he made…

“…to foreclose Timberwolf from advancing its claim in libel at trial would, in these circumstances, result in an injustice.”

It is alleged that during the ministry’s investigation Smallacombe suggested Timberwolf deliberately misreported the grade of logs being scaled. As well, he implied that Timberwolf was shipping narcotics to other countries concealed in log exports.

Smallacombe made the comment to an independent log scaler, Donald Good, who was working for Timberwolf at Menzies Bay, located north of the city.

The investigator also recorded the conversation and this audio recording was later provided to Good, by the Crown, which expected him to testify at trial.

Good, however, turned the recording over to Timberwolf which responded by filing the civil lawsuit. In response, the government wanted the action against its officer halted and also claimed the recording was privileged information.

But the appellant court ruled against the province and the civil suit is slated to go to trial this summer.

The other issue for a separate trial is the $3,449,039 the province says is owed by Timberwolf.

According to court documents, the province believed Timberwolf was under-reporting the value of its logs coming though Menzies Bay between May 2006 and December 2008.

Timberwolf paid just over $6 million in stumpage fees to the province, but after further investigation by Smallacombe, the province issued a new bill, plus a 25 per cent penalty, for $3.5 million.

The revised amount was issued after a lengthy investigation by the province, led by Smallacombe.

However, at a 2011 court proceeding, it was found the investigator did not have the authority to apply for the search warrants he obtained for the investigation.

As well, he failed to provide full and frank disclosure to the justice of the peace who issued the warrants.

“Mr. Smallacombe is not a constable or a peace officer, and his powers are more limited than those of a game warden,” wrote Justice Miriam Gropper.

According to the provincial government director, Smallacombe is still working out of the Port McNeill Forestry office.

He was also involved in an investigation with Lemare Lake Logging where, again, the judge found that he failed to disclose “full and frank disclosure of material facts” in obtaining a tele-warrant from a justice of the peace.