Logs are unloaded from a truck at the Menzies Bay sort where Timberwolf Log Trading formerly ran a scaling operation that came under scrutiny by the Ministry of Forests.

Stumped on Stumpage; Part II

Timberwolf paying off stumpage debt

Timberwolf Log Trading has begun paying off a $3.4-million stumpage royalty debt, but the company continues to challenge government rulings.

On Tuesday, the B.C. Court of Appeal dismissed a petition from Timberwolf to overturn a lower court ruling. However, last December, the timber harvesting and log marketing company – which operates in Campbell River, and has offices in Burnaby and Naniamo – successfully had search warrants quashed in B.C. Supreme Court.

“We were pleased with the way that went,” said Timberwolf owner Tom Smith, referring to the supreme court ruling.

During a brief phone interview on Wednesday, Smith said Timberwolf remains involved in the appeal process with the government and wouldn’t elaborate. However, he promised to say more at a later date.

According to court documents, the government – under the former Forests and Range Ministry – alleges Timberwolf did not accurately report the true value on thousands of scaled logs between April 1, 2006 and Dec. 31, 2008.

An investigation by the ministry contends that high-value logs – commanding more than $30 a cubic metre in stumpage royalties – were reported as low value logs which required just 25 cents a cubic metre in stumpage.

Following checks of Timberwolf log booms at Menzies Bay, as well as an investigation in Campbell River – which included executing search warrants at companies working under contract for Timberwolf – a ministry commissioner revised the company’s stumpage bill at $3.44 million. It is believed that figure also included a 25 per cent penalty.

However, before the reassessment was even levied, Timberwolf was given ample opportunity to explain the discrepancies, but chose not to do so. Instead, the company kept asking for more and more disclosure of documents from the ministry. Some of the requests were met, others were not.

“…the commissioner has already afforded Timberwolf significant accommodation,” wrote Justice Christopher Hinkson of the B.C. Court of Appeal. “…the commissioner had provided Timberwolf with detailed notice of the proposed reassessment, time to respond, several hundred pages worth of documentary discovery and more time to respond. It is clear the commissioner’s delegate went far beyond the duty of procedural fairness required in the circumstances.”

On Tuesday, Justice Hinkson dismissed Timberwolf’s appeal of the first supreme court decision which the company had launched to challenge the fairness of the ministry’s investigation.

He also noted that Timberwolf had invoked its right to appeal the reassessment to the provincial Minister of Finance. The ministry has not yet confirmed if that appeal has been heard.

Also revealed in the court document was Timberwolf’s deal to begin repaying the stumpage owed. In June 2010, Timberwolf began paying $50,000 a month and had paid $350,000 by Dec. 10.

Smith also told the court that should Timberwolf lose its appeal on the reassessment, “it has the capacity of meeting the obligation.”