Yukon Water Board treated Victoria Gold unfairly when coming up with $74M security increase, judge rules

The Yukon Water Board acted unfairly when it raised Victoria Gold's financial security by $74 million in 2022 without allowing the company to see and respond to the third-party analysis it relied on to come up with the increase, a judge has ruled.

In a decision issued last month, Yukon Supreme Court Justice Karen Wenckebach acknowledged the case was largely moot given that the Yukon government successfully petitioned in August to have the company placed into receivership following the heap leach failure at its Eagle Gold mine. 

However, she wrote that it was still worthwhile to decide if the board's policy of not disclosing reports from external experts violated procedural fairness, noting that the issue extended beyond Victoria Gold's specific interests. 

Victoria Gold took the Water Board to court in August 2022 after the board issued a decision rejecting the company's updated reclamation and closure plan and increasing the mine's security from roughly $30.7 million to more than $104.9 million. 

The Yukon Water Board is an independent body responsible for issuing and reviewing water licences in the territory, which typically come with a number of conditions including mandatory financial deposits meant to cover clean-up costs should projects go sideways. 

Victoria Gold, in October 2020, had submitted its updated reclamation and closure plan and security estimate for Eagle Gold for review. Wenckebach wrote that the board hired a technical consultant to assist with the process, and that the consultant provided the board with analysis of Victoria Gold's submissions in late 2021 and early 2022 as well as suggested follow-up questions that the board ultimately gave the company. 

Wenckebach wrote that there was "no dispute" that the board "heavily" relied on the consultant's analysis documents to arrive at its decision to reject Victoria Gold's plan and substantially increase the company's security. She also wrote that it was "uncontroverted" that the board never provided Victoria Gold with those documents, with the board stating it had a "policy not to disclose reports obtained from external experts to parties in proceedings before it."

While the board had claimed Victoria Gold was still treated fairly, the company argued it should have been able to see and respond to the consultant's documents as part of the review. 

Wenckebach, in her decision, agreed with Victoria Gold, writing that a "party's right to know the adverse material facts the decision-maker has before them and to respond is a basic element of procedural fairness.

"Here, the [consultant's documents] analysed Victoria Gold's submissions and information and provided alternative ways and numbers to calculate security costs," she wrote.

"This was adverse material information that should have been disclosed to Victoria Gold; and Victoria Gold should then have been given adequate time to respond."

Wenckebach did not order any remedies, again noting that the matter was "moot." 

Asked for comment about the decision and whether it would be changing its policy on sharing reports by external experts, Yukon Water Board Secretariat director Karen Clyde wrote in an email last week that the board "welcomes the court's comments and is carefully considering the decision."

However, she added that it was "too early… to provide any comments on how the Board's process may or may not be revised as a result."