IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2009 SKPC 31 Date: February 27, 2009 Information: 37262946 Location: Prince Albert Between: Her Majesty the Queen and Chisum Log Homes and Lumber Ltd., Corporation 309621 And Garry Varga Appearing: Inez Cardinal, Q.C. For the Crown Eric Lanoie For the Accused JUDGMENT H. M. HARRADENCE, I. INTRODUCTION [1] The defendant, Chisum Log Homes and Lumber Ltd. (referred to as “Chisum”) and Garry Varga (referred to as “Varga”) are charged as follows:Information 37262946: Count 1: between the 7th day of August, 2007 and the 8th day of September, 2007, did operate a processing facility without a licence, contrary to section 18.1(1) of The Forest Resources Management Act, F-19.1. [2] Varga is the President and sole Director of Chisum. Chisum assembles log home packages in the Weyakwin district north of Prince Albert. These packages are sold to customers across Canada and around the world. Chisum buys wood from area operators to be used in its packages. One of these operators is Wood Products (1985) Ltd. (referred to as “L M”). Wood Products, through its contractor, Logging (referred to as “P E”), harvest wood from the forest in and around Glaslyn. They sell this wood to pulp mills, saw mills and other customers such as Chisum. Steps are taken by and to identify and sort to ensure that the logs provided to Chisum are satisfactory for their purpose. and have both Forest Management Agreement and Forest Product Processing Facility Licence. [3] Specifically in August to September, 2007, delivered logs to Chisum. Chisum took additional steps to prepare these logs for inclusion in the log home packages which it sold. Chisum does not have Forest Product Processing Facility Licence. The issue in this case is whether the Crown has shown that Chisum requires such a licence. II. THE EVIDENCE [4] The majority of evidence was tendered by agreement. The Agreed Statement of Facts, filed as P-1, reads in its entirety as follows: 1. Chisum Log Homes and Lumber Ltd. (hereinafter “Chisum Log”) is registered business corporation in Saskatchewan, being entity number 309621, whose Director is Garry Varga. The nature of the business as noted in the Corporate Registry is “logging, manufacturing building products”. copy of the Corporate Registry is attached. 2. Chisum Log operates facility at or near Weyakwin, Saskatchewan that produces log home packages for sale to Canadian and international customers. 3. Chisum Log purchases cut to length aspen from Wood Products (1985) Ltd. (hereinafter M) in Glaslyn, Saskatchewan. Wood Products holds valid licence, issued by Saskatchewan Ministry of Environment, to harvest forest products, namely trees. hires contractor, Logging (hereinafter E), to fell, de-limb and deliver the trees to the yard. cuts down aspen trees, and cuts off the top of the tree to 10 inch top. The top part of the tree is sold to for pulp to pulp mill in Meadow Lake. The rest of the tree is limbed and checked for “trueness” to ensure straight stock. These cut to length aspen logs, with the bark remaining on, are then loaded onto semi-truck and hauled to M’s yard. Although has Chisum Log in mind when they harvest the tree, and in some cases the tree is specifically cut for sale to Chisum Log, the cut to length logs can be sold to another log home builder or saw mill as the dimensions at this stage are suited to both. 4. Once the logs are delivered to M, nothing further is done to them. The length of the logs vary in size and can be anywhere from approximately 20 feet to 40 feet with diameters of 10 inches at the top to over 20” at the stump end. Chisum Log cannot use logs less than feet in length or less than 10 inches. 5. Chisum Log purchases these aspen logs from in round form: de-limbed with the bark on. Chisum Log, through the direction of Garry Varga, cuts these logs to various sizes. Each log is then put through process whereby the log is debarked, turned down to uniform diameter (usually inches) on large lathe machine. double tongue and groove pattern is cut into the bottom (the tongue) and the top (the groove) of each log. Saddle notches are then cut into each end of the log. The finished logs are marked for ease of home construction, packaged, sold to customers in Canada and internationally. 6. Between August 7, 2007 and September 8, 2007, Chisum Log under the direction of Garry Varga received five loads of aspen logs from and using his facility at Weyakwin, Saskatchewan, turned these logs into chisum logs for resale to the public. These loads were delivered on August 27, 30, 21 and September and 5, 2007 for total weight of approximately 133,130 kg which Chisum Log paid $6656.60 plus GST of $399.39 for total of $7055.89. This is approximately $50 per tonne. 7. Chisum Log sells directly to the consumer, with the price of the log home package varying depending upon the size of the package chosen. For example, the Weyakwin package, comprised of 8” logs, with floor plan of 672 sq. ft sells for $19,901.04. The Athabascan package, comprised of 10” logs, with floor plan of 1421 sq. ft sells for $78,530.73; or the same floor plan with inch logs sells for $46,946.59. These packages are logs only and ready for assembly, with the roof and floor extra. 8. Neither Chisum Log Homes and Lumber Ltd. nor Garry Varga holds Forest Product Processing Facility Licence issued by the Saskatchewan Ministry of Environment pursuant to The Forest Resources Management Act, c. F-19.1. [5] In addition to P-1, the Crown called two witnesses. Trevor Davies is the owner of Wood Products. buys and sells forest products. is operated by the same family. The wood is harvested from Provincial Crown lands. is the harvester. Mr. Davies knows that the limbs are taken off in the forest, but the bark is left on the logs. He also knows that delivered logs to Chisum. The logs delivered to Chisum would be cut as logs used for log homes and are not true tree length. Mr. Davies is responsible for invoicing, and he indicated in cross-examination that logs sold for log homes sell for approximately double the price of logs sold to the Meadow Lake Pulp Mill. [6] Chris Brown is forester with the Ministry of Environment. He testified for the Crown. He described chisum log as specific manufactured product. In order to create chisum log the forest product must be debarked and cut to length. Chisum logs must also have the required tongue and groove and saddle notches cut into the logs in order that they will fit together in the assembly process. In the opinion of Mr. Brown, the creation of chisum log is processing and must require Forest Product Processing Facility Licence. [7] The defence called two witnesses. Brent Delainey has been logger for 25 years. He works for harvesting timber, but is also part of the family ownership group that has an ownership interest in M. Mr. Delainey testified that in the forest there are certain steps taken to sort the logs which will be used for log homes. In addition to delimbing them they must be straight with ten inch top and have no rot. He says he does have homemade caliper to take measurements to ensure the logs are suitable for use in log homes. He agreed that all of these steps are taken in the field and very few, if any, steps would be taken at the processing facility except the occasional trimming of log. [8] Dean Millard operates Turtle Lake Wood Products in the Glaslyn area. In 2007 this operation possessed both Forest Product Permit, D-1 and Forest Product Processing Facility Licence, D-2. He says that he has sold logs to Chisum and he is of the opinion that logs sold to Chisum were processed because they were tailored to the specifications of the customer. III. STATUTORY PROVISIONS [9] Section 18.1(1) of The Forest Resources Management Act, F-19.1 reads as follows: No person shall operate processing facility without licence. [10] This legislation also defines “processing facility”, “manufacture” and “harvest” in s. as follows: (m) “harvest” means to cut, pick, gather, collect, accumulate, alter, disturb or remove forest products by any means and includes the grazing of livestock; (r) “manufacture” means any step taken to prepare forest product for market, and includes the sawing, peeling, chipping, debarking, preserving, cleaning, drying, extracting and packaging of forest products, but does not include harvesting; (w) “processing facility” means pulp mill, sawmill, plywood mill, fibre or strand board mill, post plant or any other facility, fixed or mobile, designed for manufacturing forest products and includes slasher, chipper, debarker, fuelwood processor or any other mechanized equipment, fixed or mobile or any component of the equipment, designed for manufacturing forest products; IV. POSITION OF THE PARTIES a) Crown Position [11] The Crown says that in order to create chisum log certain steps must be taken as indicated by Mr. Brown. [12] The Crown also points to paragraph of P-1 the Agreed Statement of Facts. This process is clearly, in the Crown’s view, processing as defined in the legislation and requires Processing Facility Licence. [13] The Crown indicates in their written brief that the interpretation suggested by the defendants would create an absurdity[1]: The defendants suggest that once forest product is harvested and the dues and fees paid, they are no longer forest products and are thus no longer governed by provincial legislation. To assign the interpretation put forward by the defendants does not avoid absurdity or inconsistency in the legislation, but rather creates absurdity and inconsistency. This would render meaningless many provisions of the FMPA, such as the requirement for licence to operate processing facility of any description, such as sawmill. b) Defence Position [14] The defence takes the position that once the logs reach Chisum, given the broad definitions contained in the legislation, they have already been processed, and to require Chisum to have processing licence is unnecessary. Further, this conclusion would lead to every value added process involving forest products requiring Processing Facility Licence. Mr. Lanoie, in oral argument submitted that has processed or manufactured the wood[2]: The manufacturing the manufacturing step is, it was selected specifically, there are steps taken outside of the harvesting process specifically done in order to produce this item for the market. They separated them out, they hand-inspected them. They trimmed them to 10 inch top. They had to ensure that they were straight. They had to cut any butt-rot off. Cutting and cutting is part of is part of the definition of sawing. [15] The defence also says that Processing Facility Licence is required for one of the steps in manufacturing wood product, but not each and every step[3]: But it doesn’t say that every step. It says any step and that any step has already been taken, Your Honour. That step has already been taken and that’s our position is that our understanding is that the step for manufacturing has already taken place. Any step has taken place. It has been cut, its been selected, its been cleaned specifically for this market. [16] The defence maintains in its brief that the Crown’s interpretation would create an absurdity[4]: Importantly, the Crown’s position creates an absurdity in that: one, it would require any manufacturer, at any point in the market chain, to obtain processing licence for any processing of product that had as its point of origin, Crown Forest Land; and two, it creates two tiered system of regulation of processing facilities, those that process product originating from Crown Forest Land and those that only process product originating from private land. V. ANALYSIS [17] The definition of “manufacture” in The Forest Resources Management Act, F-19.1 is extremely broad as it says, “means any step taken”. Given this definition it is not difficult to find based on the evidence presented that the steps taken by Brian Delainey of P & E Logging, which included cutting the logs were specifically taken to prepare them for the log home market. These steps may not be significant but I am satisfied that the process utilized by P & E is more than simply harvesting as it is defined in the legislation. am assisted in reaching this conclusion by the Saskatchewan Court of Queen’s Bench decision in R. v. Provincial Forest Products[5] referred to in the written brief of the defence. [18] This is not the end of the matter. I am also satisfied that Chisum took steps to manufacture the forest product for the log home market. I find that paragraph 5 of P-1 clearly establishes the steps taken by Chisum, including debarking, were steps taken in the manufacturing of a forest product for market. [19] As indicated, the definition of processing facility is broad and applies to any mill, plant, or other facility designed for manufacturing forest products. It specifically does not say only one facility or the first facility but rather any facility. [20] Given this wide definition it is my view that many facilities, including retail lumberyard could be captured within this definition. My understanding based on the argument in this case, is that it is not the policy of the Crown to require this broad application of the legislation. The issue at this stage is whether these potential negative consequences of the legislation are relevant. [21] pause at this stage, to note that this case does not involve retail lumber yard, but rather process undertaken by Chisum which it is agreed is quite extensive. [22] Ruth Sullivan in the text Driedger on the Construction of Statutes[6], summarizes the modern absurdity rule as follows: (1) It is presumed that legislation is not intended to produce absurd consequences. (2) Absurdity is not limited to logical contradictions and internal incoherence; it includes violations of justice, reasonableness, common sense and other public standards. Also, absurdity is not limited to what is shocking or unthinkable; it may include any consequences that are judged to be undesirable because they contradict values or principles that are considered important by the courts. (3) Where the words of legislative text allow for more than one interpretation, avoiding absurd consequences is good reason to prefer one interpretation over the other. Even where the words are clear, the ordinary meaning may be rejected if it would lead to an absurdity. (4) The more compelling the reasons for avoiding an absurdity, the greater the departure from ordinary meaning that may be tolerated. However, the interpretation that is adopted should be plausible. [23] In considering statute it is appropriate to refer to the purpose of the statute and if necessary interpret the statute to conform to its purpose[7]: In the conventional rhetoric of statutory interpretation, purposive interpretation is often associated with breadth, liberality, fullness, expansiveness and the like. In practice, however, legislative purpose is as likely to be invoked to justify narrow or restrictive interpretation as broad or expansive one. This is because such modern legislation is drafted in broad and abstract terms. Rules are stated in general language and the facts to which they apply are described in terms of general categories, classes and types. Qualification and exceptions are kept to minimum. This results in style that is often vague and tends to be over-rather than under-inclusive. Where the ordinary meaning of legislation is too broad, the effect of purposive analysis is to narrow its scope by excluding applications within the ordinary meaning that are not rationally related to the purpose. [24] As indicated by the Crown the purpose of The Forest Resources Management Act, F-19.1 is stated in s. 3: The purpose of this Act is to promote the sustainable use of forest land for the benefit of current and future generations by balancing the need for economic, social and cultural opportunities with the need to maintain and enhance the health of forest land. [25] Given this purpose it is appropriate that the requirement for Processing Facility Licence be restricted so that it does not apply to every entity that manufactures forest product. However, can not say that it is reasonable to restrict the legislation to the point that only one processing facility is required to be licenced for the manufacture of forest product. This must be factual determination made on case by case basis. [26] In this case, given the evidence, it is my view that Chisum was involved in the manufacture of forest product for the log home industry. It is further my view that the process detailed in P-1 encompassed the substantial conversion of the forest product into logs to be used in the log home industry. The process is not an insignificant process, nor is it process which is removed from the sustainable use of forest lands and the need to maintain and enhance the health of forest lands. I have therefore concluded that Chisum was required to have a Processing Facility Licence. VI. LIABILITY OF GARRY VARGA [27] Section 81 of The Forest Resources Management Act, F-19.1 reads as follows: Any officer, director or agent of corporation who directed, authorized or participated in an act or omission by corporation that would constitute an offence by that corporation is guilty of that offence, whether or not the corporation has been prosecuted or convicted. [28] Paragraphs and of the Agreed Statement of Facts refer to Chisum acting under the direction of Garry Varga. Also as part of the Agreed Statement of Facts the Corporate Registry shows Garry Varga as the President of Chisum. CONCLUSION [29] I therefore find Chisum Log Homes and Lumber Ltd. and Garry Varga guilty of violating s. 18.1(1) of The Forest Resources Management Act, F-19.1. [30] am very thankful for the extensive written material provided by counsel as well as their able oral submissions. [31] Dated at the City of Prince Albert, in the Province of Saskatchewan this 27th day of February, 2009. H. M. Harradence, [1] Brief of Law on Behalf of the Crown, dated September 24, 2008, paragraph 31. [2] Transcript of Oral Argument by Counsel, September 30, 2008, page 10, lines to 14. [3] Ibid, page 9, lines to 10. [4] Brief on Behalf of the Defendant, Garry Varga, carrying on business as Chisum Log Homes Lumber Ltd., paragraph 30. [5] See R. v. Provincial Forest Products, 2000 SKQB 371 (CanLII). [6] Driedger on the Construction of Statutes, Ruth Sullivan, Third Edition, Butterworths Canada Ltd. 1994, Toronto, and Vancouver, pages 85 and 86. [7] Ibid, page 69.
The accused, Chisum Log Homes and its sole director Gary Varga, are charged with operating a processing facility without a licence contrary to s. 18.1(1) of The Forest Resources Management Act. The accused corporation assembles log home packages. The packages are sold to customers across Canada. The accused corporation buys wood from area operators such as L&amp;M to be used in its packages. L&amp;M through its contractor P&amp;E, harvest wood from the forest and sell the wood to pulp mills, saw mills and other customers such as the accused. These area operators and their contractors have Forest Management Agreements and Forest Product Processing Facility Licences. In August and September 2007, the area operator L&amp;M delivered logs to the accused. The accused took additional steps to prepare the logs for inclusion in their log home packages which they sold. The accused does not have a Forest Product Processing Facility Licence. The issue in this case is whether the Crown has shown that the accused requires such a licence. HELD: 1) The definition of 'manufacture' in the Act is extremely broad as it says, 'means any step taken'. Given this definition is not difficult to find based on the evidence presented that the steps taken by the contractor in cutting the logs is more than simply harvesting as it is defined in the legislation. See R. v. Provincial Forest Products, 2000 SKQB 371. 2) The Court is satisfied that the accused corporation, Chisum, took steps to manufacture the forest product for the log home market. Steps such as debarking were steps taken in the manufacture of a forest product for market.  3) Given the wide definition it is the Court's view that many facilities, including a retail lumberyard, could be captured within the definition. Given the stated purpose of the Act, it is appropriate that the requirement for a Processing Facility Licence be restricted so that it does not apply to every entity that manufactures a forest product. 4) The processes Chisum is involved in encompass the substantial conversion of the forest product into logs to be used in the log home industry. The process is not insignificant, nor is it a process which is removed from the sustainable use of forest lands and the need to maintain and enhance the health of forest lands. The Court concludes that Chisum was required to have a Processing Facility Licence. 5) Pursuant to s. 81 of the Act, Gary Varga, as President of Chisum, is also guilty of violating s. 18.1 of the Act.