Teal Jones: what the Forest Act would not let the order shed

When the court last saw this company in June, the American mills were sold and what remained to sell was the business Teal-Jones started as. The buyer for that has now been found: on July 17, 2026 the company entered a share purchase agreement with Gillfor Manufacturing Inc. covering a 31-acre log mill site on the Fraser River in Surrey and Tree Farm Licence 46, a Crown forest tenure on Vancouver Island, to be implemented by a reverse vesting order, per the Application Response of Ditidaht First Nation, Sept. 4, 2026, paras. 3–4. Gillfor would take the shares of the Teal entity that holds TFL 46; assets, liabilities and contracts not being retained would go to 1602755 B.C. Ltd., a newly incorporated subsidiary with no assets — "ResidualCo".

The hearing to approve that transaction was set for August 13. It did not go ahead, and the monitor's own account of why is two paragraphs long. The Attorney General of British Columbia informed the monitor "that it considered certain elements and relief set out in the RVO transaction to be in conflict with Provincial Statutes," and more particularly took the position "that statutory obligations arising section 79(1) of the Forest Act could not be expunged through a CCAA order or the RVO." On August 13 the monitor's counsel told Justice Weatherill about the email, gave him a copy of it, and asked for an adjournment, per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, paras. 5–7. The court adjourned to two days, September 8 and 9, and extended the stay from September 4 to September 10 to fit them in.

The obligations the province was talking about are the ordinary aftermath of logging. The monitor describes them as, first, "silviculture and tree re-planting requirements for areas previously harvested by the Company in the TFL 46 area," and second, "road maintenance and deactivation for roads created by the Company to access logging operations," per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, para. 6. Cut the trees and you owe the replanting; build the road in and you owe the taking of it out.

A notice that disputes the question it gives notice of

On August 24 the monitor filed a notice of constitutional question under s. 8(2)(a) of the Constitutional Question Act and served it on the Attorney General of British Columbia and the Attorney General of Canada. Its own description of the document is careful to the point of being pointed: the notice "disputed the suggestion that there was a constitutional issue but also addressed those matters," and was delivered to give the required notice so that the September hearing could proceed at all, per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, para. 9.

The notice itself sets out the province's list and the monitor's answer to it. The provincial laws whose constitutional applicability may be in issue run to five statutes and a regulation: the Forest Act, including the mandatory terms of tree farm licences, cutting-permit compliance, joint and several liability on transferor and transferee after a disposition, the change-of-control notification and ministerial review provisions at ss. 54.63 to 54.66, stumpage and waste assessments, road deactivation, and the s. 130 lien for money payable to the government; the Forest and Range Practices Act, including the s. 29 obligation to establish a free-growing stand on harvested ground; s. 7 of the Wildfire Act, on assessing and abating fuel hazards; the Timber Harvesting and Silviculture Practices Regulation; and s. 11(2) of the Crown Proceeding Act, to the extent the relief sought might be characterized as an injunction against the province, per the Notice of Constitutional Question, Aug. 24, 2026, pp. 1–3.

The province had also gone through the draft order line by line. It identified paragraphs 2(b), 7(b), 7(c), 8(a), 14, 15, 16, 21 and 26 of the RVO, and paragraphs 1, 5, 6, 12 and 14 of its Schedule "D", as provisions it says conflict with or are incompatible with the provincial statutes, per the Notice of Constitutional Question, Aug. 24, 2026, Schedule "B", para. 13.

The monitor's primary position is that the order raises no question of constitutional applicability at all. Its alternative is federal paramountcy: if the order is read to raise the question, then s. 11 of the CCAA authorizes it and the provincial statutes are inoperative to the extent of the conflict, per the Notice of Constitutional Question, Aug. 24, 2026, Schedule "B", para. 15. It pleads both branches — frustration of purpose and operational conflict — and states the operational conflict in a sentence that puts the whole fight on one line: "On one hand, the CCAA says the assets may be sold free and clear of any restriction; on the other, the Provincial Statutes say that silviculture, reforestation, road maintenance, hazard abatement, and other post-harvest obligations must remain attached to the licence holder. Compliance with both is impossible," per the Notice of Constitutional Question, Aug. 24, 2026, Schedule "B", para. 26.

On frustration of purpose the argument is commercial. The share purchase agreement is said to be the only viable going-concern transaction; the buyer requires TFL 46 free and clear of the pre-closing statutory obligations; if those obligations do not go to ResidualCo the transaction cannot close. The pre-closing obligations, the monitor says, are "finite and quantifiable, as they arise from discrete harvesting activities that have already occurred," and differ in character from the forward-looking regulatory obligations the buyer will assume in full on closing, per the Notice of Constitutional Question, Aug. 24, 2026, Schedule "B", para. 23.

The amendment that answered it

Having filed the notice, the monitor and the buyer went and negotiated with the province instead — "driven by a desire to avoid costly and complex litigation and any delays to the implementation of the SPA transaction," per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, paras. 10–11. Those discussions produced an amendment to the share purchase agreement, and it gives the province substantially what it asked for.

The definition of Assumed Liabilities was amended to include the silviculture liabilities and the road maintenance liabilities — the buyer takes them — with any estimated silviculture liability at closing above $836,000 becoming a dollar-for-dollar adjustment to the purchase price as between buyer and seller. An expired collective agreement between Teal-Jones Group and United Steelworkers Local 2009, dated February 14, 2022, moved from Excluded Contract to Retained Contract. And all "Bill 13 Contracts" — the replaceable contracts that the Forest Act and its regulations give to certain logging contractors — moved from Excluded to Retained, per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, para. 12. Other amendments pushed dates: the RVO and the Sumas approval and vesting order to be obtained by September 10, the recognition order from the US Bankruptcy Court by October 9, and the outside date to October 31, 2026, per the Second Supplement to the Twenty-Ninth Report of the Monitor, Sept. 3, 2026, para. 14.