Date: 20101108
Docket: A-392-09
Citation: 2010 FCA 300
CORAM: EVANS
J.A.
SHARLOW
J.A.
TRUDEL
J.A.
BETWEEN:
MARCEL PELLETIER
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
(Delivered
from the Bench at Winnipeg, Manitoba, on November 8, 2010)
EVANS J.A.
[1]
Marcel
Pelletier is a status Indian and a member of the Red Rock Indian Band. He
appeals to this Court from a decision of the Tax Court of Canada (2009 TCC
358), in which Justice Bowie dismissed Mr Pelletier’s appeals from reassessments
under the Income Tax Act, R.S.C. 1985 c. 1 (5th Supp.) (ITA)
for the taxation years 1999, 2000, 2001, and 2002.
[2]
The Judge
held that Mr Pelletier’s income from his logging business in those years was
not exempted from tax by paragraphs 81(1)(a) of the ITA and 87(1)(b)
of the Indian Act, R.S.C. 1985, c. I-5, because he had not established
that the income was “situated on a reserve”.
[3]
Having
reviewed the evidence, the Judge concluded on the basis of the factors
prescribed by the case law, particularly Southwind v. Canada (1998), 156
D.L.R. (4th) 87 (FCA) (Southwind), that the income was not sufficiently closely
connected with a reserve so that it was “personal property of an Indian
situated on a reserve” within the meaning of paragraph 87(1)(b) of the Indian
Act.
[4]
The Judge held
that the fact that the business activities and the customers of the business
were located off reserve indicated that the income from the business was not
situated on a reserve. In addition, he stated, the type of business and the
nature of the work indicated that the business was in the commercial mainstream.
[5]
Counsel
for Mr Pelletier argues that the Judge erred by not taking into account the
circumstances surrounding the nature of the employment and how the income was
earned. Counsel also submits that the Judge placed insufficient weight on the
fact that Mr Pelletier maintained a residence on the reserve, in addition to
his family’s residence off-reserve, and that the office of the business was
located on the reserve.
[6]
In
essence, counsel alleges that the Judge erred in his application to the facts
of the multi-factor test for determining the situs of employment or
business income for the purpose of paragraph 87(1)(b). This is a
question of mixed fact and law with which the Court will only interfere if
persuaded that the Judge made a palpable and overriding error in applying the
law to the facts, or made an error of law: Housen v. Nikolaisen, 2001
SCC 33, [2002] 2 S.C.R. 235 at para. 28.
[7]
In my opinion,
the Judge committed no such error. First, it is clear from the Judge’s
statement of the facts that he was fully alive to the totality of the evidence,
and the “surrounding circumstances” connecting the business to and benefiting
the reserve, which Mr Pelletier says that he ignored. The fact that the Judge did
not refer to the particular facts again when examining the Southwind
factors does not mean that he overlooked them in reaching his conclusion. The
Judge’s reasons are to be read as a whole.
[8]
Second, Mr
Pelletier alleges that the Judge attached too little weight to the fact that he
resided on the reserve during the winter months, and his business office is
on-reserve. However, this is an invitation to the Court to reweigh the evidence
before the trial judge. This an appellate court will not do, absent a palpable
and overriding error or an error of law, and we see no such errors here.
[9]
For these
reasons, the appeal will be dismissed with costs.
“John
M. Evans”
“I
agree.
Johanne Trudel, J.A.”
SHARLOW
J.A.
(Dissenting Reasons)
[10]
I
respectfully disagree with my colleagues that this appeal should be dismissed.
[11]
It is an
error of law, in applying the connecting factors test, to fail to give weight
to a relevant factor. In my view, in determining whether Mr. Pelletier’s
logging income was located on the Red Rock First Nation reserve, it was
relevant that the economic foundation of Mr. Pelletier’s income earning
capacity as a logger was an asset owned by the Red Rock first Nation. It is
also relevant that Mr. Pelletier was contractually entitled to exploit that
asset, subject to paying a fee to Red Rock First Nation and undertaking to
provide training and employment to its members.
[12]
The judge
clearly understood these aspects of the contractual relationship between Red
Rock First Nation and Mr. Pelletier’s logging business. However, as I read his
reasons, it is not clear whether he appreciated that these are connecting
factors that should weigh in favour of a conclusion that, for the purpose of
section 87 of the Indian Act, Mr. Pelletier’s logging income was
situated on the reserve. I do not say that these factors are necessarily
conclusive. However, they should have been expressly considered in the judge’s
determination and in my view they were not.
[13]
For these
reasons, I would remit this matter to the Tax Court for redetermination.
“K. Sharlow”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-392-09
APPEAL FROM AN ORDER OF THE TAX COURT OF
CANADA DATED JULY 3, 2009, DOCKET NO. 2005-2632(IT)G.
STYLE OF CAUSE: MARCEL
PELLETIER v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Winnipeg,
Manitoba
DATE OF HEARING: November 8, 2010
REASONS FOR JUDGMENT OF THE COURT BY: EVANS, SHARLOW, TRUDEL JJ.A.
DELIVERED FROM THE BENCH BY: Evans, J.A.
APPEARANCES:
|
Michael Harris
|
FOR THE APPELLANT
|
|
Brooke
Sittler
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
MACIVOR HARRIS RODDY
Winnipeg, Manitoba
|
FOR THE
APPELLANT
|
|
Myles J.
Kirvan, Q.C.
Deputy Attorney General of Canada
|
FOR THE
RESPONDENT
|
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