Citation: 2011 TCC 269
Date: 20110524
Docket: 2007-1205(IT)I
BETWEEN:
JAMES DUGAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1217(IT)I
AND BETWEEN:
WAYNE
SAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-1831(IT)I
AND BETWEEN:
DOUGLAS HENHAWK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2006-3571(IT)I
AND BETWEEN:
TINA JAMIESON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-2222(IT)I
AND BETWEEN:
ALANA MCDONALD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2007-307(IT)I
AND BETWEEN:
LYNDEN HILL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
[1] The appeals are all
based on a claim that the assessments appealed imposed tax under the Income
Tax Act (the “Act”) on
employment income that was protected from taxation by subsection 87(1) of the Indian
Act and section 81 of
the Act. Section 81 of the Act simply reflects the protection
from taxation afforded by subsection 87(1) of the Indian Act which reads
as follows:
87.(1)
Property exempt from taxation --
Notwithstanding any other Act of Parliament or any Act of
the legislature of a province, but subject to section 83 and section 5 of the First
Nations Fiscal and Statistical Management Act, the following
property is exempt from taxation:
(a) the
interest of an Indian or a band in reserve lands or surrendered
lands; and
(b) the
personal property of an Indian or a band situated on a reserve.
[2] The issue in each of
these appeals is whether the employment income so assessed is personal property
of an Indian situated on a reserve.
[3] All six appeals were
heard in Toronto the week of November
22, 2010. Although there was no formal consolidation there was a Joint Book of
Documents that included information about places where each of the Appellants
performed services and an agreed statement of facts in respect of one
Appellant, James Dugan (the “Dugan Agreed Facts”). As well, an agreed statement
of facts was provided in respect of the employers of each of the Appellants,
namely, Native Leasing Services (“NLS”) or OI Employee Leasing Inc. (“OIEL”) (the
“NLS/OI Agreed Facts”).
[4] The NLS/OI Agreed
Facts describe the role of and the operating details respecting these
employers. It was first filed with this Court in the appeal of Roger Obonsawin. Such descriptive material includes findings
made in respect of other appeals concerning NLS and OIEL. Aside from that common evidence, each
of the Appellant’s appeals were heard separately during the week without
argument. Argument in respect of each of them was heard on the last day of the
week; namely, on Friday, November 26, 2010.
Background
[5] The NLS/OI Agreed
Facts provide amongst other things that: OIEL leases its employees to
businesses and non-Native enterprises that may have Native people in their
program; NLS leases its employees to Native organizations; NLS and OIEL pay the
wages of the Appellants from their office on the Six Nations of the Grand River
reserve (“Six Nations reserve”) located near Brantford, Ontario; NLS/OIEL also
have offices in Toronto where they maintain their bank accounts; NLS/OIEL
receive revenue from the lessees of the services of NLS/OIEL employees which
fund the wages of such employees, its own employees on the Six Nations reserve
and elsewhere and its operating costs and provide a profit to NLS/OIEL; and,
NLS/OIEL provide a variety of particularized benefits to the Six Nations
reserve.
[6] The NLS/OIEL
employees such as the Appellants in the instant appeals claim their employment
income from NLS/OIEL is personal property of an Indian situated on a reserve.
[7] Four of the
Appellants, Douglas Henhawk, Lynden Hill, Alana McDonald and Tina Jamieson were
NLS employees whose services were leased to Brantford Native Housing (“BNH”).
James Dugan and Wayne Sault were OIEL employees. I will review the evidence
applicable to these two Appellants first and then deal with the work of BNH
under a separate heading before reviewing the evidence of the four Appellants
who provided their services there. The evidence concerning BNH is drawn from
the combined testimony of those four Appellants, material in the Joint Book of
Documents and from the Fresh Amended Notices of Appeal in respect of matters
seemingly accepted by the parties as agreed upon evidence. My analysis and
decision, based on my findings of fact and the relevant governing authorities,
as they apply to those facts in respect of each Appellant, will follow such
review of the evidence. This follows the approach taken at the hearing which
was to hear evidence in respect of all the appeals during the first four days
leaving argument in respect of each of them to the fifth day.
James Dugan
[8] Mr. Dugan is a member of the Thames First Nation in
Muncey, located near London, Ontario. Mr. Dugan is a status Indian by definition under the
Indian Act. He appeals his 2002, 2003, 2004 and 2006 taxation years.
[9] It was acknowledged
at the outset that Mr. Dugan’s appeal in respect of his 2006 taxation year must
be dismissed for want of this Court’s jurisdiction to hear it. No Notice of
Objection to the assessment appealed from had been filed within the required
time period and time limit for extensions had expired as well. Accordingly,
this recitation of Mr. Dugan’s evidence applies in respect of his 2002, 2003, and 2004 taxation years.
[10] At all relevant
times, Mr. Dugan resided in Toronto. Mr. Dugan has never resided on a reserve. His mother
grew up on the reserve and he has relatives on various reserves. He does not
visit at his reserve regularly but votes for his band chief.
[11] During the
relevant period Mr. Dugan was employed by Foster Printing and Digital
Communications (“Foster”) which offers custom printing services to the general
public including several First Nations organizations. Mr. Dugan performs his
services for Foster primarily in Toronto with some visits to Scarborough. Mr. Dugan has never
performed his duties on a reserve.
[12] Mr. Dugan was a
production plant manager. His duties included overseeing all stages of print
and finishing production but he also handled customer relations focusing that
aspect of his work on First Nations.
[13] After being employed
by Foster for some four years, Mr. Dugan requested that Foster engage his
services as a leased employee. The arrangement requested was that he become an
employee of OIEL and that OIEL would enter into a contract whereby his services
would be leased to Foster.
[14] Under this
arrangement, Mr. Dugan was an employee of OIEL paid by OIEL. OIEL maintained offices
on the Six Nations reserve but paid Mr. Dugan from off-reserve bank accounts.
[15] After the change in
the employment arrangement Mr. Dugan continued to report to Foster and follow
directions from it. Mr. Dugan’s salary was determined by Foster notwithstanding
that Foster paid OIEL under the leasing arrangement.
[16] The Crown admits
that OIEL, being located on the Six Nations reserve resulted in the arrangement
providing some benefit to that reserve.
Wayne Sault
[17] Mr. Sault is a
member of the Mississaugas of the New Credit First Nation. He is a status
Indian by definition under the Indian Act. He appeals his 1999, 2001 and
2002 taxation years.
[18] During the years
under appeal, Mr. Sault resided in Hagersville, Ontario which is located on the New Credit
reserve. The New Credit reserve is adjacent to the Six Nations reserve which is
just south of Brantford, Ontario.
Mr. Sault was born on the Six Nations reserve which is where his mother was
from. His father was from New Credit. Mr. Sault moved to the New Credit reserve
when he was six years old and has never lived off-reserve. He has two sisters,
one lives on the Six Nations reserve where her husband is from and the other
lives on the New Credit reserve. Two brothers live off-reserve and his
surviving parent, his mother, still lives on the New Credit reserve. One of his
four children live on the Six Nations reserve where his mother is from.
[19] Mr. Sault performs
his services for Hamilton Sod which is a division of Greenhorizons Group of Farms
Ltd. (“Greenhorizons”). Greenhorizons has several divisions located throughout
central and southwestern Ontario. This is a commercial business dealing with the production
and delivery of sod. It is not what might be referred to as an aboriginal
business and has no direct connection with a reserve. It is located in Mount Hope, Ontario which is not on a
reserve. Mr. Sault was first employed by OIEL to work at Hamilton Sod in 1993
after one year of having worked there as an employee. He followed his father’s lead to sign
on with OIEL as he understood it had tax advantages. He and his father were the
only ones at Hamilton Sod, out of some 40 workers, that provided their services
through OIEL.
[20] Mr. Sault performed
his duties at Hamilton Sod’s place of business in Mount Hope and also made deliveries to
customers off-reserve. Mount Hope is south of Hamilton. He commuted to work every day. It was about a 25
minute drive.
[21] Mr. Sault was a sod
technician or perhaps otherwise described as a general labourer. His duties
included maintaining and harvesting sod and providing regular maintenance on
farm machinery. As well, he made deliveries.
[22] Payment was made by
direct deposit to Mr. Sault’s on-reserve bank account.
[23] Although the
Appellant did not work on the reserve, the Respondent acknowledges that OIEL’s
presence on the Six Nations reserve resulted in some benefit to that reserve.
BNH
[24] As noted at the
outset of these Reasons four of the Appellants, Douglas Henhawk, Lynden Hill,
Alana McDonald and Tina Jamieson were NLS employees whose services were leased
to BNH. BNH is a non-profit charitable organization and an understanding of its
work is of considerable importance as a potential connecting factor in the
analysis that will determine the outcome of the appeals of each of these
Appellants when considered together with other factors applicable to each of
them. The following is comprised of information taken from material in the
Joint Book of Documents and testimony heard during the hearing of these
appeals. It will be augmented by further evidence that I will set out under my
review of the testimony of the individual Appellants.
·
The
incorporating document refers to low income housing objects as well as the
provision of cultural, educational, rehabilitation and medical facilities for
low income families and persons. The organizational objectives of BNH are not
intended to discriminate against clients they serve unless a program
specifically requires it. It is a registered charity.
·
The
operational realities and actual focus of BNH is on aboriginal people
recognizing homelessness due to migration caused by housing difficulties
experienced on nearby reserves. There are no other low income housing
facilities in the area that focus on aboriginal people. As well, mainstream
facilities lack cultural appropriateness and sensitivity to aboriginal people’s
distinct needs.
·
BNH
offers special services for transition to city living including a 14 bed
Aboriginal Transitional Home.
·
BNH
is not on a reserve but is a short distance from the Six Nations reserve.
·
In
2004 and 2005, there were nine employees at BNH. Four were engaged in
maintenance services, one was engaged as a manager, one as a receptionist, one
as an administrator and two as tenant counsellors.
·
Not
all of the members of BNH’s board of directors were aboriginal or Native
persons.
·
BNH
has a housing portfolio of 140 units scattered throughout the city of Brantford. It has a two story
administrative centre in Brantford.
·
There
is no requirement for tenants living in BNH housing to have lived on a reserve
or to return to a reserve after they cease to occupy a BNH unit. To be eligible
to rent, at least 50% of the household had to be of Native ancestry.
·
BNH
provided Native oriented cultural programming to its aboriginal tenants.
·
Canada
Mortgage and Housing Corporation (“CMHC”) provided funding to BNH for its
housing programs.
·
BNH
acted as agent for CMHC’s Residential Rehabilitation Assistance Program
(“RRAP”) in Brantford and in other regions surrounding Brantford. The RRAP was a separate program
distinct from the housing project operated by BNH.
·
In
spite of the organizational objectives, the parameters of the CMHC programs and
funding criteria, each of the four Appellants that performed their employment
services through NLS to BNH testified that, in fact, BNH throughout the
relevant periods was for the most part an overflow housing facility for
aboriginal persons (status Indians) waiting for residential placements on the
Six Nations reserve.
·
The
credible and consistent testimony of these Appellants was that there were
serious housing shortages on the First Nations reserve and, as a result, there
were long waiting lists sometimes amounting to ten years before housing could
be provided on the reserve. Even BNH had a waiting list at least partly due to
the overflow from the reserve who came to BNH pending accommodation on the
reserve.
Douglas Henhawk
[25] Mr. Henhawk has
lived on the Six Nations reserve his entire life. He is part of the Mohawk
Turtle Nation. His seven brothers and sisters and their children all live on
the Six Nations reserve. One of his two children live on the reserve. He is the
third generation on 16 acres of land he owns on the reserve. He is a status
Indian by definition under the Indian Act. He appeals his
1995, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008
taxation years.
[26] Mr. Henhawk speaks proudly of the association of
Nations that comprise the Six Nations reserve which he speaks of as a
confederacy. He started work with BNH in about 1993 and was from the outset
employed by NLS. He said he applied with NLS to work at BNH as a job there was
posted on the reserve by NLS. He wanted to work at BNH because it dealt with
Native people. He was given the job by the Manager of BNH, Chel Niro, after an
interview. He worked there throughout the period that includes all the years
under appeal. The main office of BNH is a ten minute drive from his home on the
reserve. He commutes daily. He regards Brantford as reserve lands.
[27] His duties included
making minor plaster repairs to walls and ceilings; preparing surfaces for
painting and properly applying paint to interior and exterior surfaces;
constructing and preparing fences, partition walls, decks, roofs; cleaning;
replacing and repairing doors, locks, windows, screens; maintaining
landscaping; replacing roof shingles; installing siding, flooring and
carpeting; and general repairs including repairs of plumbing and foundations.
[28] Mr. Henhawk talked
about how BNH had grown from just a housing facility to a centre for various
types of community support including court workers, youth workers, counsellors
and Native liaisons. There are men’s and women’s circles where issues and
traditions are discussed and traditional activities are taught. Different
Natives, Indians, from different areas come, not just from Six Nations. He
testified, however, that he knew many of the residents over the years, some
family and friends and that 75-80% of the tenants would have been from Six
Nations reserve.
He also said that 80% of the Native people that used the other services that
BNH offered would be from the Six Nations reserve.
[29] Mr. Henhawk was paid
by NLS at its office located on Six Nations either by cheque at NLS’s office on
the reserve or by direct deposit to his reserve bank account. The payment was
made from NLS’s off-reserve bank accounts.
[30] The Appellant was
under the supervision of BNH, reporting to BNH staff on a daily basis. There is
no evidence that NLS provided any training to Mr. Henhawk. The General Manager
of BNH completed the Appellant’s performance evaluations. BNH determined the
Appellant’s salary and wage increases. Mr. Henhawk did not perform any of his
work duties on a reserve.
Lynden Hill
[31] Mr. Hill is a member
of the Upper Mohawk First Nation located in Ohsweken, Ontario which is on the Six
Nations reserve. He was born on the Cape Croker reserve where his mother is from. His father is from the
Six Nations reserve. He moved to the Six Nations reserve when he was 12 years
old. Mr. Hill testified that he resided
on the Six Nations reserve at all times relevant to his appeals. His parents live there as
do his brothers and sisters and their children, as do his cousins. He is a status Indian by
definition under the Indian Act. He appeals his
1995, 1996, 1997, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 taxation
years.
[32] It was acknowledged at the outset that Mr. Hill’s appeal in
respect of his 2006 taxation year must be dismissed for want of this Court’s
jurisdiction to hear it. No Notice of Appeal was filed within the required time
period and the time limit for extensions has expired as well. Accordingly, this
recitation of Mr. Hill’s evidence applies in respect of the other taxation
years under appeal.
[33] Mr. Hill provided
maintenance services for BNH throughout the city of Brantford, Ontario. His duties related to
general maintenance of the BNH properties all of which were located
off-reserve. His specific duties are the same as that noted above for Mr.
Dugan. He commutes daily to work by car. It takes about ten minutes each way.
[34] Mr. Hill gave
similar testimony as Mr. Dugan that BNH offered cultural programs and noted
that certain special programs or activities would be organized at other centres
such as the community swimming pool.
[35] Mr. Hill was
employed by BNH before being employed in 1992 by NLS to provide his services
there. He understood the new arrangement would mean his income would be tax
free. He testified that working with NLS also gave him health and insurance
benefits. He was the only Appellant that testified to receiving such benefits
and on cross-examination he wavered somewhat. I find his evidence on that one
point not very reliable. His evidence as the nature of BNH’s activities was
likely the least reliable as well, although in general terms it corroborated
the evidence of the other Appellants who worked there.
[36] Mr. Hill did not
purport to know if all the housing tenants at BNH were Indians but he said they
all appeared to be Native. His aunt and her family lived there because they
needed subsidized housing which she would have to be on a 20 year waiting list
to get on the reserve. People on the BNH waiting list might only have had to wait
18 months or two years.
[37] Mr. Hill was paid by
NLS by direct deposit to an on-reserve bank account. The payment was made from
NLS’s off-reserve bank accounts.
[38] There is no evidence
that NLS provided any training to Mr. Hill. He reported to BNH on a daily basis
and his performance evaluation was completed by the General Manager of BNH. BNH
determined his salary and increases. None of his work was conducted on a
reserve.
Alana McDonald
[39] Ms. McDonald is a
member of the Cayuga First Nation located in Ohsweken, Ontario. It is one of the First Nations
that form part of the Six Nations reserve. She is a status Indian by definition
under the Indian Act. She appeals her 2002, 2003 and 2004 taxation years.
During the years under appeal the Appellant resided with her husband in Brantford, Ontario
and not on a reserve.
Her husband is not a status Indian; her children are status Indians.
[40] Ms. McDonald was born and raised in New York state completing grade 12 there.
In 1995 her family moved to the Six Nations reserve. She lived there for two
years. She completed grade 12 again and took several courses at Wilfrid Laurier University and obtained a Management
Certificate from McMaster
University. Her
parents and siblings do not reside on-reserve although she does have distant
cousins that reside there.
[41] For the last five years she has been Manager of
Residential Services on Six Nations reserve and in that capacity she spends
considerable time on the reserve. Prior to that, she attended events there.
[42] In the subject years, Ms. McDonald was employed by NLS
to work at BNH. She learned of the work opportunity from an ad in the Teka, the
local Six Nations newspaper. She applied and was interviewed by BNH’s Manager,
Mr. Niro. She was offered employment under a contract with NLS. She understood
she had no choice and that it was done that way for tax reasons. She was paid
by direct deposit to her bank account in Brantford.
[43] Ms. McDonald performed her duties in the office of BNH,
or within the housing units operated by BNH all of which are located
off-reserve in the city of Brantford. She
described her initial position as Tenant Counsellor Assistant.
[44] Ms. McDonald’s contract with NLS provides for the
services that she is to perform for BNH which are receptionist, secretarial and
administrative services; providing rental collection services for tenants at
the BNH office; maintaining the data base pertaining to tenants, prospective
tenants, housing units and rental incomes; assisting in income verification and
family composition review; assisting with lease renewal; communicating with
maintenance issues as they pertain to tenants and their units; and assisting in
evictions, arrears, collections and reporting.
[45] Ms. McDonald testified that later she held a different
position for a time as a RRAP administrator. RRAP, she testified, is an
off-reserve program to assist low income homeowners to fix and repair their
homes. There is no requirement for clients of the RRAP program to be of Native
descent; in fact, she said few were.
[46] After that she
became a tenant counsellor. During that time she was in contact with tenants
doing home visits and was familiar with people on the waiting list. She
testified that 80% of the tenants were from the Six Nations reserve. On
cross-examination she acknowledged the presence of non-status Indians such as
Inuit and Métis but she did not alter her testimony as to the high percentage
of tenants from Six Nations. She had a good working knowledge of waiting lists
for the units that varied from one to four bedrooms. The longest waiting list
would be for one bedroom units as there were fewer of these units. The waiting
list would be from two to five years. She acknowledged that not all tenants had
to produce their status cards unless there was a question -- presumably one
concerning their status.
[47] She acknowledged a
problem of homelessness on both the Six Nations reserve and in Brantford. There were not enough
low cost, safe accommodations for Native people who couch-jumped from home to
home; homes of family and friends; or, they lived on the street. Those that go
into BNH were treated as temporary in the sense that they were encouraged to
move on, to make room for others in need of housing. Some would go back to the
reserve, although there was no requirement for them to do so. Some would follow
different paths.
[48] Ms. McDonald also confirmed the
emergence of social programs during her tenure there.
[49] Ms. McDonald was paid by NLS from its office located on
Six Nations but payment was made from NLS’s off-reserve bank accounts.
[50] There is no evidence that NLS provided Ms. McDonald any
training. She reported to BNH on a daily basis and the General Manager of BNH
completed her performance evaluations. BNH determined her salary and increases
to it. None of her work was performed on-reserve.
Tina Jamieson
[51] Ms. Jamieson is a
member of the (Upper) Mohawk First Nation located in Ohsweken, Ontario which is located on the Six
Nations reserve. She is a status Indian by definition under the Indian Act.
She appeals her 2003, 2004 and 2005
taxation years. She was a resident of the Six Nations reserve during the relevant times.
She has never lived off-reserve and almost all her family live on the reserve.
She left BNH in 2005 to work in a doctor’s office on the reserve. She had done
one year of nursing at the McMaster University.
[52] In the subject years, Ms. Jamieson was employed by NLS
to work at BNH. She learned of the work opportunity from an ad in the Teka, the
local Six Nations newspaper. She applied and was interviewed by BNH’s Manager,
Mr. Niro. She was offered employment under a contract with NLS. She understood
that it was done that way for tax reasons. She commuted to work from her home
on the reserve. It was a seven minute commute in summer and 15 minutes in
winter. She was paid by direct deposit to her on-reserve bank account on the
reserve.
[53] Ms. Jamieson
performed her duties in the office of BNH in the city of Brantford. She said her duties
were as a receptionist with some involvement with the RRAP program. Her
contract with NLS lists her duties to include: delivering the RRAP program;
greeting the general public; providing rental collection services for tenants;
maintaining the data base pertaining to tenants, prospective tenants, housing
units and rental income; assisting in income verification and family
composition review; assisting with lease renewal; communicating with
maintenance issues as they pertain to tenants and their units and assisting in
evictions, arrears, collections and reporting.
[54] Ms. Jamieson testified that BNH assisted Natives currently
living off- reserve that needed housing or persons who could not find housing
on the reserve. She said there was a two to three year waiting list. A majority
of the tenants would be from Six Nations and 80% overall would be First Nations
people. She said 88% would be status Indians. She said there was low cost
housing on Six Nations and her view was that people would prefer to stay there
but came to BNH because they could not be accommodated on the reserve. She said
some might end up staying in Brantford – maybe 2%. She said that these tenants do not want urban
lifestyles. Their lives were on the reserve. It must be noted that although
such observations were based on her work and interaction at BNH and her
lifetime on the reserve, they were somewhat anecdotal made without supporting
documentary evidence.
[55] She also testified
as to the social and cultural events held, as well counselling was provided.
The counselling clients were primarily from Six Nations.
[56] Ms. Jamieson’s work
on the RRAP program could have involved about 50% of her time, however, when
asked if it could be more she said no as she dealt with BNH tenants every day.
As to her RRAP work she said she administrated that program for smaller towns
in southern Ontario. Her duties with respect to the RRAP program were not tied to a reserve
in any way. She testified, however, that BNH was paid an administration fee for
administering the program. It was a funding source for BNH.
[57] Notwithstanding the
admitted time spent on RRAP, even the Respondent’s recitation of facts in their
submission acknowledges that the duties performed by Ms. Jamieson appear to be
primarily tied to the housing provided by BNH. Regardless, I accept that her
function at BNH was very much tied to its administering temporary housing to
Indians a majority of whom came from the Six Nations reserve.
[58] Ms. Jamieson
received her payment from NLS at its office located on Six Nations but the
payment was made from NLS’s off-reserve bank accounts.
[59] There is no evidence
NLS provided any training to Ms. Jamieson. She reported on a daily basis to BNH
and the General Manager of BNH completed her performance evaluations. BNH
determined her salary and increases to it.
Appellants’ Submissions
[60] The Appellants rely
on the Supreme Court of Canada decision in McDiarmid Lumber Ltd. v. God’s Lake First Nation which is said to provide that the appropriate test is
the location of the debtor. The Appellant continues to suggest that this
decision implicitly overrules the decisions relating to the connecting factors
approach to determine whether employment income is situated on a reserve for
the purposes of section 87 of the Indian Act.
[61] The Appellants
assert that the Respondent has mischaracterized BNH as providing housing for
“urban Natives”. It is further submitted that Shilling v. Canada must be distinguished as the
appellant in that case worked at a Health Centre that did not provide any
direct benefit to her own Band. The majority of the clients of the Centre were
not from her Band.
[62] Short of accepting God’s
Lake, I am urged, in effect, to allow the appeals at least of the workers
who worked at BNH on the basis that their work connects their income to the Six
Nations reserve with which they all have significant and relevant ties.
[63] Appellants’ counsel
emphasized the importance of the evidence that the Appellants have all
maintained strong connections to their Native communities.
[64] Two of the
Appellants indicated that they found their positions at BNH through postings in
the local Six Nations newspaper and that they relied on NLS to find them
positions regardless of tax benefits. The Appellants who lived on or near the
reserve had substantial connections to Six Nations and were well aware of NLS’s
presence as an on-reserve employer that was able to find them jobs.
[65] Appellants’ counsel
argues that by choosing to work with NLS, the Appellants were Indians who made
a choice regarding where to situate their personal property which was to
situate it on the reserve. He noted that the Supreme Court of Canada in Williams
v. Canada
at paragraph 18 said that Indians are free to make that choice and when
they make a choice to keep property on the reserve then it is protected from
taxation.
[66] In suggesting that
the Appellants had made that choice, Appellants’ counsel relies on God’s
Lake.
[67] Appellants’ counsel
cites authorities for the proposition that the exemption in section 87 of the Indian
Act is vague and requires clarification. He notes that the Appellants have
self-assessed themselves in good faith and that the vagueness in the
application of the exemption from taxation and the wide variety of factual
circumstances have created a hardship. Mr. Henhawk, for instance, is looking at
12 years of taxation plus compounded interest. That understandings of how the
law applies and how it is administered have changed over time has compounded itself
into a significant problem for aboriginal peoples. Persons self-assessing with
the reasonable and honest understanding of their tax liability should not be
attended with the risk of financial ruin.
[68] Appellants’ counsel
also cites authorities emphasizing that taxpayers are entitled to arrange their
affairs for the sole purpose of achieving a favourable position. Appellants’
counsel points out that even as cases like Shilling were proceeding, the
Appellants and persons like them were unable to discern their position. Shilling,
for example, involved a case where the nature of the employment duties did not
benefit First Nations persons residing on a reserve. There was no hint in
Canada Revenue Agency correspondence to the litigants or potential litigants
that would indicate that there would be a problem if their work benefited
persons residing on a reserve.
[69] Appellants’ counsel
argues that in considering the nature of the employment, the surrounding
circumstances must be considered to determine what connection, if any, the
off-reserve employment has to the reserve as was done in Folster. The Shilling case is in stark contrast to Folster.
In Shilling, based on an Agreed Statement of Facts, the appellant could
not prove to the Court that what she was doing was specific to her own
community or to First Nations people residing on a reserve. It was found that
the surrounding circumstances led to the conclusion that the appellant’s
services were to benefit off-reserve Native people in Toronto. In Folster an off-reserve
hospital benefited patients who lived mostly on the reserve which was found to
be a sufficient connection to protect employment income earned there from
taxation. Recognizing that distinction between Folster and Shilling, workers at BNH would
have a sufficient connection to the reserve to have their employment income
protected under section 87 of the Indian Act since in the appeals at bar, the persons
benefiting from the social assistance efforts of the workers at BNH are persons
living on the Six Nations reserve but who cannot find housing there.
[70] Appellants’ counsel spoke of knowing the Horn and
Williams
decision well, having worked on it. He underlined distinctions between that
case and the appeals at bar. Mrs. Horn worked at a Friendship Centre that
offered services to aboriginal peoples in transit or who were living and
working in Ottawa. It is argued that unlike in Horn
and Williams the target market for BNH was aboriginals from the Six Nations
reserve who were only off the reserve on a temporary basis awaiting housing on
the reserve. The testimonies of the witnesses make it clear that there is a
housing shortage on Six Nations reserve. It takes ten years on a waiting list
to get a house on the Six Nations reserve. The waiting list at BNH is three to
five years. It is argued that a right to housing on one’s own reserve is an
essential aspect of life on a reserve. Only 2% of the tenants at BNH moved out
to live off-reserve.
[71] Addressing the case of Horn and Williams,
Appellants’ counsel acknowledges some similarities with the instant appeals.
However, it was submitted that the pivotal finding in that case was that there
was no evidence of what percentage of the users of the facility were on or
off-reserve. The statistics that were available showed that only 38 of 100
women assisted at the shelter were Natives. In the instant appeals the evidence
is that up to 90% of the persons assisted were from the reserve.
[72] Appellants’ counsel also noted that there was another
test case in addition to Shilling and Horn and Williams that
never went to trial. In that unreported case, “Clark” received a Consent Judgment. The
Appellants’ counsel said that was because the Crown acknowledged that 80% of
the work done by the service agency was done on the reserve.
[73] As well as serving residents of the Six Nations reserve
who cannot find housing there, Appellants’ counsel argues that BNH is itself an
aboriginal non-profit organization since four of the five members of the Board
of Directors are aboriginal and two of those aboriginals came from the reserve.
[74] Appellants’ counsel also cites Nowegijick v. R. where the Supreme Court of Canada acknowledged that
statutes relating to Indians should be liberally construed and doubtful
expressions should be resolved in favour of the Indian. If the statute contains
language which can reasonably be construed to confer a tax exemption, that
construction is to be favoured over a more technical construction which might
be available to deny the exemption. Chief Justice Dickson of the Supreme Court
of Canada made similar remarks in Mitchell v. Peguis Indian Band.
[75] Appellants’ counsel seeks an application of the
connecting factors tests that respects a choice not to assimilate as suggested
in Haida Nation v. British Columbia (Minister of Forests).
[76] Applying a modern approach to the construction of the Indian
Act, the connecting factors should be applied in a manner that does not
seek assimilation but reconciliation without renunciation of First Nation identity.
Appellants’ counsel highlighted evidence that I had heard throughout the week
that the Appellants were proud of their heritage and adamant about maintaining
their Indian identity and the history and culture of their First Nation.
[77] Appellants’ counsel makes a strong argument that there
is an inherent danger of applying section 87 in a way that resurrects notions
of assimilation and enfranchisement. Not protecting property earned by engaging
in activities that are part of the commercial mainstream creates questions as
to whether certain activities can only be engaged in at the risk of the actor
being deemed to be assimilated into a non-aboriginal society. When does
engaging in a particular activity mean one thereby ceases to hold property qua
Indian and thus forego rights as an Indian? Does this contradict the principle
that Indians have a choice as where to locate their personal property? Appellants’
counsel cites Létourneau, J.A. in Bell v. Canada
at paragraph 36 where he stated that the nature of the employment and the
circumstances surrounding it are the considerations that best indicate where
the personal property in question is within the commercial mainstream. The
circumstances here suggest that activities are effectively limited to services
that are not mainstream.
[78] Appellants’ counsel also argued that NLS was a
substantive employer unlike the case in Bell. NLS was a bona fide on-reserve employer. Native people seek
employment through NLS signaling their intent to take positive steps to hold
their property on the reserve qua Indian.
[79] Focusing on the connecting factors that Appellants’
counsel argued that what should be given the most weight are the nature,
location and surrounding circumstances of the work to be performed by the
employee including the nature of any benefit that accrued to the reserve. That
together with the place where the employer is situated and the place of
residence of the employees will support a finding in this case that the
connecting factors point to an exemption under section 87 of the Indian Act for
the Appellants who worked with BNH.
[80] It is argued that the benefit that accrued to the
reserve went beyond the provision of temporary housing. The evidence is that
traditional teachings particular to the peoples of the Six Nations were offered
at BNH such as dance and music. Men’s circles and traditional feasts were
hosted by BNH. Counseling was offered. BNH was not a step-off point into urban
living, it provided housing in a culturally reserve-like environment to people
who otherwise would be house-surfing on the reserve.
[81] Appellants’ counsel also referred to the minimal
geographical distinctions in the area. It is a dynamic community with people
migrating back and forth without a break in family relationships. He referred
to the Corbiere v. Canada (Minister of Indian and Northern Affairs)
decision where dealing with voting rights the court drew attention to the
relevance of maintaining connections with the band of which persons were
members when they lived part from their reserve due to factors beyond their
control.
[82] Admitting to evidence that BNH offered a wider variety
of services such as transitional, as opposed to temporary, housing and that it
received funding to be applied to the benefit of a larger community than the
Six Nations reserve, Appellants’ counsel again spoke of it being a resurrection
of the discredited enfranchisement assimilation objectives of the Indian Act
if an Indian lost rights bestowed by that enactment simply by being employed
outside the confines of a reserve in an enterprise that could only survive
economically by being part of the wider community.
Respondent’s Submissions
[83] Reviewing the
history of what have become to be known as the Native Leasing Services appeals,
the Respondent recognizes that the business model of NLS (leasing status Indian
employees) was structured in a manner to obtain an exemption from taxation for
its leased employees by virtue of section 87 of the Indian Act. It is
acknowledged that prior to the April 16, 1992 decision of the Supreme Court of
Canada in Williams the employees of NLS were entitled to the exemption.
In Williams, the Court established the connecting factors analysis as
the proper test for establishing the situs of intangible personal
property for the purposes of the exemption under section 87 of the Indian
Act. The connecting factors test in Williams, was consistently
applied after that decision in a number of cases by the Federal Court of
Appeal.
Following the Williams decision, the first NLS case was disposed of by
the Federal Court of Appeal in June 2001.
Two more appeals regarding NLS employees proceeded to the Federal Court of
Appeal, namely Horn and Williams.
[84] A number of other
cases were heard before this Court, none of which were allowed. That is the NLS/OIEL structural model
of leasing the employment services of status Indians to enterprises operating
outside a reserve, was found not to be a helpful model under the connecting
factors test introduced by the decision in Williams.
[85] It is submitted that
since Williams, this Court and the Federal Court of Appeal have
consistently held that the connecting factors test is the appropriate test for
determining whether the personal property that is employment income is situated
on a reserve for the purposes of section 87 of the Indian Act.
[86] The Appellants rely
on the Supreme Court of Canada decision in God’s Lake which is said to provide that the appropriate test to determine where the
Appellants’ employment income is situated is, namely, the location of the debtor.
[87] The Respondent
argues that in God’s Lake the issue is whether the funds in the bank
account were exempt by section 89 of the Indian Act from seizure. While
it is true that the Court determined this issue by looking solely to the
location of the debtor, it is argued that that case was not an invitation to
revisit the well-established connecting factors test in the determination of
the location of property for taxation purposes.
[88] It is argued that
the Supreme Court of Canada in Williams rejected the notion that the
residence of the debtor determines the situs of intangible personal
property for the purposes of section 87 of the Indian Act. The
connecting factors test is set out in that case at paragraphs 37-38. The
approach to be taken was further described by Gonthier J. at paragraph 61 in
the following terms:
Determining the situs of intangible
personal property requires a court to evaluate various connecting factors which
tie the property to one location or another. In the context of the exemption from
taxation in the Indian Act, there are three important considerations: the
purpose of the exemption; the character of the property in question; and the
incidence of taxation upon that property. Given the purpose of the exemption,
the ultimate question is to what extent each factor is relevant in determining
whether to tax the particular kind of property in a particular manner would
erode the entitlement of an Indian qua Indian to personal property on the
reserve.
[89] While the
Respondent’s submissions provide much in the way of ammunition to support its
position that the proper test to apply is the connecting factors test, it is
not necessary to set out those well-founded submissions. There is no doubt that
the connecting factors test has been universally applied by this Court and the
Federal Court of Appeal since the pronouncement in Williams in the
context of section 87 of the Indian Act exemption. As well, the
Respondent argues that the Supreme Court of Canada and the Federal Court of
Appeal have cautioned against describing an overly broad purpose to sections 87
and 89 of the Indian Act and has consistently rejected the argument that
section 87 should be given an expansive scope.
[90] The Respondent
relies as well on Monias v. Canada at paragraph 29 which
provides:
Thus,
Gonthier J.'s statement in Williams, supra, at page 887, that the
purpose of the situs test in section 87 is to determine whether the
Indian holds the property in question "as part of the entitlement of an
Indian qua Indian on the reserve" would seem more apposite to
reserve lands than to personal property, such as employment income, which is
owned by Indians individually.
[91] The Respondent
relies on the authorities that find that the fact that a person works
off-reserve is a factor that tends to connect that person’s employment income
elsewhere than on the reserve.
In Folster, the off-reserve employment was accepted as giving
rise to on-reserve employment income on the basis that the work, at a hospital,
had historically been performed on the reserve at an on-reserve hospital. That
historical connection was relevant to finding that employment located at a
hospital adjacent to the reserve was personal property that was sufficiently
connected to the reserve to be entitled to protection under section 87. In that
case, the hospital was providing health care services primarily to reserve
residents. That case, and others that allowed off-reserve employment income to
be exempt from taxation under section 87, stood in stark contrast to the
circumstances of the Appellants in the case at bar who like Shilling and Horn
and Williams and other previous NLS employees provided their services
off-reserve without any factors pointing to the type of connection to a reserve
that would invoke section 87 of the Indian Act.
[92] With respect to the
nature of the work, the Respondent argues that merely because the nature of the
employment is to provide not-for-profit social services to Indians does not
connect that employment to a particular Indian reserve.
[93] As to the location
of the employer and the benefit to the reserve, the Respondent argues that the
Federal Court of Appeal has consistently held that the location of the work, the
nature of the work and the circumstances surrounding the employment are
generally to be given greater weight than the location of the employer and the
benefit to the reserve. The Respondent argues that this aspect of the current
appeals has been discussed in Shilling and in Horn and Williams and
that the location of the administrative offices of NLS on Six Nations reserve
was not a connecting factor to be accorded much, if any weight. In any event,
there was not sufficient evidence to establish what benefit there was to the
reserve.
[94] The Respondent
relies on the case of Akiwenzie v. Canada. The Federal Court of Appeal at
paragraph 10 clearly stated that even if employment duties were beneficial to
reserves that it still had nothing to do with the preservation of an Indian’s
personal property qua Indian on such reserves.
[95] It is argued that
even if an employee’s work may help to maintain and enhance the quality of life
on the reserve for Indians living there, that does not necessarily connect the employee’s
entitlement to, or use of, the employment income to the reserves as a physical
location.
The erosion of the entitlement of an Indian qua Indian on a reserve has
to be determined by reference to the person whose income is involved and not by
reference to different reserves that are benefiting directly or indirectly from
the services of that person.
[96] The Respondent also
relies on a variety of authorities including Shilling that residence on
a reserve is not necessarily an important factor connecting intangible property
to a reserve when the location and nature of the employment locate the income
off-reserve.
[97] The Respondent also
argues that the authorities support the view that the employment off-reserve is
an indication that the aboriginal is acquiring employment income in a
commercial mainstream.
[98] Applying the
connecting factors test to the subject appeals, the Respondent says that in all
cases the Appellants’ work does not significantly connect their employment
income to their reserve or any other reserve. Their duties were no different
than those of many non-Native taxpaying employees who performed similar work
duties throughout the province of Ontario. The circumstances surrounding the
Appellants’ work do not assist them. Like the taxpayer in Shilling and
other cases, the specific facts relating to each Appellant fail to demonstrate
that the work was “intimately connected to the life of the reserve”.
[99] The location of NLS
on the Six Nations reserve has been repeatedly denied as a significant
connecting factor in the context of leased employees. Any benefit that the Six
Nations reserve may have enjoyed from the location of NLS’s administrative
offices on the Six Nations reserve have to be regarded as minimal.
[100] The Respondent notes that many of the Appellants’
arguments such as applying a construction of section 87 that denies choices or
that harbors attitudes of enfranchisement is outdated and a step backward, have
been heard before and rejected. Previous cases decided against NLS employees
are sufficiently similar on the facts to the cases at bar, as to warrant their
dismissal.
[101] Respondent’s counsel also noted that in Akiwenzie
where the Federal Court Appeal effectively said doing good things for reserves
and the Indians who live there, do not create a right to protection from
taxation. There must be a link to a reserve as a physical location or economic
base. There is no erosion of an entitlement to enjoy property on a reserve
unless there is a link between the property and the reserve. The linkage should
also be to the reserve where the Indian is expected to hold property as per Mitchell.
Not taxing employment income in these cases would be conferring a general
economic advantage in a case where the tax sought to be imposed is not an
attempt to dispossess property held on the reserve. It is property held in the
course of making a living in the economic world outside of the reserve.
[102] The Respondent seeks
costs in respect of the present appeals.
Analysis
James Dugan and Wayne
Sault
[103] Mr. Dugan did not
reside on a reserve during the periods relevant to his appeals. Mr. Sault did
reside on a reserve during the periods relevant to his appeals. The employment
income of each of them during such periods which is the personal property in
respect of which they seek protection from taxation pursuant to section 87 of
the Indian Act, was paid for performing duties off-reserve for an
enterprise carrying on activities unrelated in any way to life on a reserve.
[104] Applying the
connecting factors tests to these appeals leaves no room at all for finding
that such personal property of Mr. Dugan and Mr. Sault is situated on a
reserve.
[105] In Mr. Dugan’s case,
the only connection that the property has to the reserve is that it arises
contractually from an arrangement under which it (the property, the employment
income) is payable and paid on the reserve by an employer whose activities are
largely centered on a reserve.
[106] This strategic
connection does provide some benefit to life on the reserve and under the situs
rule applied in God’s Lake there is authority to say that the
appropriate test to apply is the location of the debtor, namely, OIEL in this
case.
[107] However, the benefit
to life on the reserve that OIEL provides the Six Nations reserve has been
considered in other cases and it has not been accepted as being sufficiently
substantial or relevant as a connecting factor to be given much, if any, weight
in circumstances such as this. As well, such an indirect benefit, as laudable
as it might be in terms of adding to the industry on the reserve, does not
address the question of where the benefit of the income is enjoyed by the
Indian who seeks to protect it from taxation.
Where is the holder of such property expected to have and enjoy it? When the
Indian lives off-reserve as in the case of Mr. Dugan who works entirely
off-reserve in a mainstream off-reserve commercial operation, it is difficult
to imagine the evidence that might be required to establish that the income is
entitled to protection from diminution by taxation. In any event, no such
evidence exits in respect of this Appellant.
[108] That Mr. Sault lived
on the New Credit reserve which is located contiguous to the Six Nations
reserve adds a relevant connecting factor to his appeals. However, the weight
to be given it pales in relation to the weight of the other factors noted
above. He worked entirely off-reserve in a mainstream off-reserve commercial
operation which itself did nothing to benefit life on the reserve. While the
property in question is integral to Mr. Sault’s life on the reserve, the
activity that gives rise to it is not integral to community life on the
reserve. Both are potentially connecting factors but the authorities place more
emphasis on the bigger picture when considering the purpose of section 87 of
the Indian Act which is not to improve an Indian’s residential life on
its reserve where doing so effectively protects an activity that itself has no
connection to it.
[109] Accordingly, the
appeals of James Dugan and Wayne Sault are dismissed, without costs.
Tina Jamieson,
Lynden Hill and Douglas Henhawk
[110] These three Appellants
lived on the Six Nations reserve during the years to which their respective
appeals relate. They worked at BNH and commuted short distances daily.
[111] The factors connecting
their employment income to their reserve overwhelmingly favour a finding that
their entitlement to it is personal property situate on their reserve entitled
to protection from taxation under section 87 of the Indian Act.
[112] The nature of their
work derives from the services offered by BNH. Based on the evidence I have
heard, I am satisfied that most of the persons given affordable housing by BNH,
at the relevant times, were from the Six Nations reserve and that most of them
moved back to the reserve once housing there was available. The Respondent’s
position that BNH’s mandate is to provide its services to the greater
population in need of affordable housing distracts from this reality and
carries no weight. Applying the connecting factors test requires looking at
what services the facility, in fact, provided and to whom. The reality in this
case is that BNH does, in fact, serve a function for the Six Nations reserve community.
It is of fundamental importance and provides a significant and direct benefit
to that community. The Respondent’s position that BNH offers its services to
support aboriginal peoples adjusting to urban life is based somewhat, if not
largely, on that being one of its formal objectives. However, given the
circumstances of housing shortages on the neighbouring reserve, that does not
reflect the bulk of the services provided by BNH. The services the Respondent
asserts as those provided by BNH have turned out to be somewhat incidental to
the services that circumstances have dictated that it provide. The
uncontradicted evidence I have heard, supports no other conclusion, in my view.
Objectives and a facility geared to implement those objectives take a back seat
to the actual services provided, as circumstances have dictated.
[113] It must be noted that these are not the first appeals
heard in respect of BNH workers. There are two others. Neither are reported but
both merit mention even though they were appeals under the Informal Procedure
with reasons give from the bench. The first, Clarkson v. The Queen, was decided by Justice
Bowie of this Court. Based on the evidence that he heard and accepted, he came
to a similar conclusion in respect of Ms. Clarkson, that I have, in respect of
these three Appellants.
[114] In that case a BNH
worker employed by NLS, who did not reside on a reserve, performed social
services including assisting young aboriginals, many of whom resided on the Six
Nations reserve, who ran afoul of the law. Justice Bowie observed that the
players in the justice system were off the reserve which required that the work
be performed off-reserve. He drew an analogy, albeit he admitted that it was
not a strong one, between the off-reserve location of the courthouse and the
hospital in Folster. Such circumstances minimized the location of the
work as a disconnecting factor. The weightier connecting factor was that she
was addressing problems that existed on the reserve. Her work provided a
considerable benefit to the reserve. Further, supporting his finding that Ms. Clarkson’s
employment income was protected by section 87 of the Indian Act, was his
finding that she spent considerable time on the Six Nations reserve with the
young offenders and their families. Perhaps this off-set the fact that she did
not live on the reserve. Balancing connecting factors is not a perfect exercise
– but the scale tipping in one direction or another, in some cases, seems
readily apparent. It did to Justice Bowie, as it does to me in respect of these
three Appellants.
[115] As well, Justice Bowie
referred to Justice Phelan’s trial court decision in Horn and Williams
where relying on the Federal Court of Appeal decision in Desnomie v. Canada, reference was made to the need to
consider the special circumstances surrounding the performance of the services.
While the services Justice Bowie considered were those that pertained to the
type of work done by the worker, as opposed to those performed by BNH,
recognition of the benefit to the reserve community was the relevant connecting
factor. Temporary low cost housing services for residents of a reserve who are
waiting for on-reserve housing, is surely a special circumstance that would
mitigate against any adverse impact of such housing being off-reserve. Such
mitigation places more weight on the benefit that the services provide to a
particular reserve community.
[116] The second unreported decision
dealing with an NLS employee working with BNH is Turcotte et al. v. The Queen (“Turcotte and Dubie”). In
that case, based on the evidence he heard and accepted, Justice Archambault
came to a different conclusion than I have as to the nature of BNH’s work. In
his case, Justice Archambault came to his conclusion based on Mr. Niro’s testimony.
He concluded from that testimony that when Mr. Niro said that 90% of the people
served came from the Six Nations reserve he meant only their origin. Accounting
for constant back and forth migration, Justice Archambault found that BNH
offered an affordable housing alternative consistent with its objective to
provide same for “urban Natives” living in Brantford. I am relying on different evidence which I have
found quite compelling. As well, I would distinguish the Turcotte and Dubie
appeals on the basis that those appellants that worked with BNH did not appear
to be residing on the reserve. As my decision below in respect of Ms. McDonald
suggests, that can be a factor in BNH cases that outweighs other factors.
[117] In any event, as I
have said, I accept the testimony I have heard and conclude that BNH’s work,
dealing with temporary off-reserve housing caused by on-reserve housing
shortages, benefits the community of the very reserve of which these three
Appellants are a part. The work is integral to life on the reserve of which
these Appellants are a part. The work is linked to that reserve as a physical
location, a place to live. An analysis that seeks linkages that underscore
their significance in terms of satisfying the purpose of section 87 protection
from taxation, seeks these very findings. They are weighty factors.
[118] That the location of
the work is off-reserve, is a disconnecting factor but not a fatal one. The
reserve is essentially contiguous with Brantford. The primary work site is minutes
away from the reserve. It is almost axiomatic that a community that lacks
housing, even temporary housing, will gravitate to the closest place outside
the community that has facilities to help deal with the problem. Indeed, the
proximity of the BNH facilities to the reserve adds credibility to the function
it has played in serving the needs of the reserve community. In such
circumstances, to suggest that the location of the work severs the required
connection to it, would be to submit to an unacceptable catch 22.
[119] Turning to another
connecting factor, the employer is located on the Six Nations reserve. While
appreciating that the authorities have given little or no weight to this as a
relevant connecting factor given NLS’s intermediary role under which it acts
essentially only as the de jure (contractual or legal) “employer”, in
this case some weight might well be given to this arrangement as a connecting
factor.
As an enterprise operating on the very reserve of which these Appellants are a
part, it benefits their own community. Notwithstanding that its work extends to
aboriginal and non-aboriginal communities where it has no operating presence,
it does have a relevant presence, in this case, to the very reserve to
which these Appellants’ lives and work relates; work that I have said is
integral to life on the reserve of which these Appellants are a part; work that
is linked to that reserve as a physical location. These factors distinguish the
present case from other cases. The distinction does not mean that the location
of this employer would in any other case be a very relevant factor. In this
case, however, NLS’s intermediary role is a connecting factor – albeit, by
itself, a modest one.
[120] The location of the
personal property (the employer’s debt to the employees), as determined by the
location of the debt, is also a connecting factor in this case distinct from
the beneficial work of the on-reserve employer. Without meaning to invite
renewed reliance on God’s Lake, it is important to note that in Williams
Gonthier J. did not altogether reject the place where a debt may be enforced as
a connecting factor. At paragraph 32 he noted;
…. Therefore, the position that the residence of the debtor
exclusively determines the situs of benefits such as those paid in this case
must be closely reexamined in light of the purposes of the Indian Act. It may
be that the residence of the debtor remains an important factor, or even the
exclusive one. However, this conclusion cannot be directly drawn from an analysis
of how the conflict of laws deals with such an issue.
[121] In the case of the
three Appellants in the case at bar, the place the debt is payable is also the
place where they lived. The personal property is made available on the reserve
where these Appellants lived. That that has relevance as a connecting factor
was seemingly accepted by LaForest in Mitchell. There, at paragraph 90,
he felt it was helpful to refer to a British Columbia Court of Appeal decision
that said that the exemption from taxation applied to property of an Indian
received at the place where the holder of such property was expected to have
it, namely lands occupied as an Indian. In the case at bar, the subject
personal property is “on-reserve” property in more than a conflict of law
sense. It is received at the place where the holder who warrants protection
from taxation should be expected to have it – on the reserve occupied by him.
It is property on the reserve in that sense and in the sense that, in the
normal course of its utilization, it would enhance their lives, qua Indian
living on that reserve and would tend, as well, to benefit the community in
which these three Appellants lived. Money sourced from employment linked to
life on the reserve and paid on the reserve to a resident of the reserve tends
to normalize, if not sanitize, the otherwise tenuous connection offered by NLS.
[122] As I said then, I am
of the view that the factors connecting the employment income of Tina Jamieson,
Lynden Hill and Douglas Henhawk to their reserve overwhelmingly favour a
finding that their entitlement to it is personal property situate on their
reserve entitled to protection from taxation under section 87 of the Indian
Act.
[123] Accordingly, except as
otherwise provided herein in respect of the dismissal of Mr. Hill’s 2006
taxation year, their appeals are allowed, without costs.
Alana
McDonald
[124] Ms. McDonald did not
live on the Six Nations reserve at the times relevant to her appeals although
she was a member of a First Nation that comprised the Six Nations reserve. That
circumstance, her residence beyond the reserve, makes her case considerably
more difficult, in my view.
[125] Needless to say, I am
well aware that the authorities have not treated residence off-reserve as
necessarily being fatal to the application of section 87 of the Indian Act;
however, in this case, it is the on-reserve residence of the worker that tends
to bring the connecting factors together in a very compelling way.
[126] Without that link, we
only have an aboriginal person living and working off-reserve for an enterprise
that assists aboriginal persons coming from a reserve. Even where the
aboriginal person is a member of a Nation that is one of the Six Nations and
has family ties to that reserve, those ties may not be sufficient to parallel
the cases of Tina Jamieson, Lynden Hill and Douglas Henhawk.
[127] Alana McDonald lived
in Brantford. Her evidence as to her
background, family ties and life in general presented no compelling reason to
suggest that working for an organization that assisted life on the reserve
might be a sufficient connection to protect her income from taxation. If those
connections were as strong as those of Ms. Jamieson and the evidence was that
she lived next door to the reserve, as it appears she did in years subsequent
to those under appeal, a rigid border line may not have caused her to lose the
protection of section 87 of the Indian Act.
[128] That is, I acknowledge
that living on-reserve in the context of locating employment income in this
case should not be decided by a rigid border. If one is de facto living
on the reserve in every relevant way, then the required linkage of the
employment income to that reserve might be sufficiently present to warrant the
application of section 87 of the Indian Act. My decisions in Robertson
v. The Queen and Saunders v. The Queen are illustrative of that point since
the outcome of each of those appeals was the same even though one of them lived
next to the reserve as opposed to on it. That is, the work connection to the
reserve was not prejudiced by living on the outer edge of a reserve. Similarly,
one’s personal, living connection to a reserve may not be prejudiced by living
on the outer edge of a reserve.
[129] In any event, Ms.
McDonald has not demonstrated a sufficient connection to the reserve in the
years in question to warrant the same finding as made in respect of Ms.
Jamieson, a co-worker.
[130] As I said then, I am
of the view that residing off the Six Nations reserve is, in Ms. McDonald’s
case, essentially fatal to her appeals. Accordingly, her appeals are dismissed,
without costs.
[131] As a closing comment,
I note that I have chosen not to deal with the arguments of counsel for the
Appellants dealing with applications of section 87 that may touch on such
concepts as enfranchisement and an aboriginal’s right to make choices that
should not undermine a promise of protection against diminution of their
personal property. These arguments have been heard in previous NLS cases and
the response, with which I agree, is that such issues are for Parliament to
consider as may be necessary. That necessity may arise from the way the higher
courts are applying the connecting factors test but it is still only for
Parliament to acknowledge that such necessity exists. In any event, those
concerns touch largely on the commercial or economic mainstream factors that
have seemingly played a role in some of these cases. It is my view that such
factors have never been of paramount importance in any of the NLS cases and I
have given it virtually no weighty role in these Reasons considering the
decisive weight I have given to more relevant factors in the circumstances of
these appeals.
Signed
at Ottawa, Canada this 24th day
of May 2011.
"J.E. Hershfield"
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