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Citation: 2006TCC290
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Date: 20060524
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Docket: 1999-2648(IT)G, 1999-2650(IT)G
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1999-2651(IT)G, 2000-37(IT)G and 2000-4883(IT)G
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BETWEEN:
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LORRAINE GAUTHIER (GISBORN), HENRY WETELAINEN,
MICHAEL McGUIRE, DAWN McKAY and
ONTARIO METIS ABORIGINAL ASSOCIATION,
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Appellants,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Miller J.
[1] The Respondent
brings motions to have portions of the Appellants' pleadings struck out
pursuant to section 53 or paragraph 58(1)(b) of the Tax Court of
Canada Rules (General Procedure) (the Rules). Four of the Appellants
are Metis, and the fifth is a non-profit organization incorporated to represent
the interests of aboriginal people. The issues, as framed by the Appellants, in
their pleadings are:
(i) Whether
the income attributed to the Appellants is exempt from taxation pursuant to the
Indian Act R.S.C. 1985 c. I-5 and section 15 of the Canadian Charter
of Rights and Freedoms (the Charter);
(ii) Whether
the assessment in issue, or any of the legislative provisions upon which they
are based, (including paragraph 81(1)(a) of the Income Tax Act (Canada), subsection 2(1) and
section 87 of the Indian Act) violates section 15 of the Charter
and, if they do, whether the violation is demonstrably justified under section
1 of the Charter;
(iii) Whether
the Appellants have an inherent immunity from taxation as an aboriginal right
deriving from the aboriginal right to self‑government which is
constitutionally entrenched and protected under section 35 of the Constitution
Act, 1982.
It is the third issue, and all
matters pled in connection with that issue, that the Respondent seeks to have
struck, on the basis it runs afoul of both section 53 and paragraph 58(1)(b)
of the Rules. Attached as Appendix A
are those parts of the pleadings in issue.
[2] There are a couple
of preliminary issues to deal with before addressing the substance of the
Motions to strike. First, the Appellants contend that the Minister is simply
too late to bring these Motions. Without going into the procedural history, the
response to this position is found in Justice Bowie's Order of June 23,
2005 wherein he ordered that:
The Respondent’s right to bring any application
pursuant to the Tax Court of Canada Rules (General Procedure) in respect
of the Amended Amended Notice of Appeal is not prejudiced by the terms of this
order.
Subsequently there was an Order
of Justice Lamarre of this Court dated December 21, 2005, ordering that:
The respondent
shall file her motion to strike pursuant to paragraph 58(1)(b) of the Rules
on or before February 10, 2006;
The
respondent shall serve on the appellant and file with the Registry of the Court
a factum pursuant to section 62 of the Rules on or before March 10,
2006;
The
appellants shall serve their factums on the respondent and file them with the
Registry of the Court on or before April 21, 2006;
[3] Where judges of this Court specifically leave the
door open for this very sort of motion, it would only be in exceptional
circumstances where another judge would slam the door shut. I have not been
satisfied there are any exceptional circumstances. The Appellants have even
acknowledged that there has been no delay or untoward practice by the
Respondent. The Respondent is not too late to bring these Motions.
[4] Second, the Appellants argue, based on the case of Enterac
Property Corp. v. Canada
that it is not open to the Respondent to rely on paragraph 58(1)(b)
of the Rules to strike only portions of the pleadings. Justice Bell
made a clear ruling in this regard in the Enterac case. The Federal
Court of Appeal, on appeal, stated:
… We are also of the view that Rule
58 does not apply.
The Appellants argue that the statement of the Federal
Court of Appeal is ambiguous, and that it is still open to me to rely upon
subsection 58(1)(b) of the Rules to strike a portion of a
pleading that represents an identifiable distinct issue (see in this regard the
Montgomery v. Scholl-Plough Canada Inc.
decision). I disagree. I adopt Justice Bell's analysis. Given my understanding
of the similarity of the tests for the application of these rules this is not a
crucial point. The Respondent is limited to relying on section 53 of the Rules,
which states:
53 The Court
may strike out or expunge all or part of a pleading or other document, with or
without leave to amend, on the ground that the pleading or other document,
(a) may
prejudice or delay the fair hearing of the action,
(b) is
scandalous, frivolous or vexatious, or
(c) is an
abuse of the process of the Court.
[5] What then is the test for the application of section
53 of the Rules? I find that it is not dissimilar from the test in section
58 of the Rules, that a pleading will be struck if it is plain and
obvious it will not succeed. Unlike many other jurisdictions, the Rules
of the Tax Court have separate provisions for striking a pleading in its
entirety on the grounds of no reasonable cause of action (section 58 of
the Rules), and striking portions of a pleading on the grounds
enumerated in section 53 of the Rules above. The leading case in this
regard is the Supreme Court of Canada decision of Hunt v. Carey Canada Inc.,
where the test was enunciated as follows:
Thus, the test in Canada governing the
application of provisions like Rule 19(24)(a) of the British
Columbia Rules of Court is the same as the one that governs an
application under R.S.C. O. 18, r. 19: assuming that the facts as stated in the
statement of claim can be proved, is it "plain and obvious" that the
plaintiff's statement of claim discloses no reasonable cause of action? As
in England, if there is a chance that the plaintiff
might succeed, then the plaintiff should not be "driven from the judgment
seat". Neither the length and complexity of the issues, the novelty of the
cause of action, nor the potential for the defendant to present a strong
defence should prevent the plaintiff from proceeding with his or her
case. Only if the action is certain to fail because it contains a radical
defect ranking with the others listed in Rule 19(24) of the British Columbia Rules
of Court should the relevant portions of a plaintiff's statement of claim
be struck out under Rule 19(24)(a).
[6] Relying on grounds of scandalous, frivolous or
vexatious or an abuse of process has also been held to invoke a similar test.
For example in Pfizer Canada Inc. v. Apotex Inc.,
Justice Lemieux cites Creaghan Estate v. The Queen
with approval as follows:
Finally, in my view, a
statement of claim should not be ordered to be struck out on the ground that it
is vexatious, frivolous or an abuse of the process of the Court, for the sole
reason that in the opinion of the presiding judge, plaintiff's action should be
dismissed. In my opinion, a presiding judge should not make such an order
unless it be obvious that the plaintiff's action is so clearly futile that it
has not the slightest chance of succeeding, whoever the judge may be before
whom the case could be tried. It is only in such a situation
that the plaintiff should be deprived of the opportunity of having "his
day in Court". [emphasis added]
Justice Rouleau referred similarly to a frivolous or
vexatious pleading as one where it is so clearly futile it does not have the
slightest chance of success. The
jurisprudence is also clear that the power to strike must be exercised with
great care.
[7] A court can also strike out a pleading where it is so
deficient in material facts that it does not raise a ground of appeal, or where
the facts set out are irrelevant, or where the Respondent cannot know how to
answer.
[8] The Appellants referred me to Justice Rip's analysis
in Wai Yu Gee v. The Queen,
in which he quoted the principles of pleading as set forth in Holmsted
and Watson:
This is the rule of pleading: all of
the other pleading rules are essentially corollaries or qualifications to this
basic rule that the pleader must state the material facts relied upon for his
or her claim or defence. The rule involves four separate elements: (1) every
pleading must state facts, not mere conclusions of law; (2) it must state
material facts and not include facts which are immaterial; (3) it must state
facts and not the evidence by which they are to be proved; (4) it must state
facts concisely in a summary form.
Justice Rip proceeded to rely on such principles in
addressing whether the pleadings were so irrelevant and improper as to
prejudice or delay the fair hearing of the appeal. He then struck out portions
of the Reply to the Notice of Appeal but granted the Respondent 21 days to file
an Amended Reply. I distinguish this type of tidying up of inadequate
pleadings, from the full-out striking of a separate and distinct basis for
relief, as I am faced with in this application. I will, however, bear in mind
these fundamental principles set forth in Holmsted and Watson.
[9] With that background, I turn now to a review of the
pleadings. The substance of the Appellants' pleadings of protection of aboriginal
rights is found in the following paragraphs of the pleadings:
12(a) The right to
and exercise of self-government (which carries with it immunity from taxation)
was of central significance and integral to the distinctive historic Metis
community at Sault Ste. Marie and continues to be an integral part of the
contemporary Metis community at Sault Ste. Marie. It constitutes a right,
practice or tradition exercised by the Metis. It is integral t the distinctive
Metis community and has existed since prior to effective control of the area by
European settlers.
28. Whether
the Appellant has an inherent immunity from taxation as an aboriginal right
deriving from the aboriginal right to self-government which is constitutionally
entrenched and protected under section 35 of the Constitution Act, 1982.
30(c) Tax
immunity is part of the inherent right of self-government held by aboriginals
and recognized under section 35 of the Constitution Act, 1982.
[10] Section 35 of the Constitution Act, 1982 reads
as follows:
35(1) The
existing aboriginal and treaty rights of the aboriginal people of Canada are hereby recognized and
affirmed.
(2) In this Act,
"aboriginal peoples of Canada" includes the Indian, Inuit and Métis
peoples of Canada.
[11] Do the Appellants have any chance of succeeding on the
basis the Appellants have a right to self-government including immunity from
taxation, which right is protected by section 35 of the Constitution Act,
1982?
[12] The leading case on the determination of what
aboriginal rights are protected by section 35 of the Constitution Act, 1982
is Regina v. Van der Peet. The Appellants' counsel argued
that I should follow the more liberal approach of the dissenting judgment of
Justice L'Heureux-Dubé, rather than what he referred to as the Frozen Rights
approach of the majority. It would be improper for me to do so. The approach to
this issue is clearly addressed by the majority in Van der Peet, and it
is that approach which guides me in analyzing the viability of the Appellants'
case. Further, the majority's decision in Van der Peet was applied in
subsequent Supreme Court of Canada cases of R. v. Powley,
R. v. Pamajewon, Mitchell
v. M.N.R.
and Delgamuukw v. British Columbia.
[13] The Van der Peet case sets out a two-fold test
for evaluating the scope of aboriginal rights protected by section 35. First,
the Court must identify precisely the nature of the right claimed – the
"proper characterization of the right" stage. As succinctly put by
Justice Vertes in R. v. The Kátlodééche First Nation:
27 I agree that only a trial
will develop the evidence necessary to evaluate the claims made in an action.
But a plaintiff is still required to plead the necessary material facts to set
up the cause of action. And, in the context of a claim to a right of
self-government as an aspect of the aboriginal rights protected and affirmed by
s. 35, and with reference to the unconstitutionality of some statute, the
minimum requirements of a pleading should, as noted in Van der Peet and
other cases, specify (a) the nature of the right being claimed; (b) the actions
taken by the plaintiff that are done pursuant to that right; (c) the statute
that infringes that right and how it does so or threatens to do so; and (d) the
historical background to establish the right. Further, this should be done with
reference to a "live controversy" as between the parties so as to
provide a context for the action. In my opinion, the lack of this specificity
makes the Statement of Claim here deficient.
[14] Second, the Court must then determine whether the
claimant has demonstrated that the practices, customs or traditions were an essential
and significant part of the society's distinctive culture – the "integral
to a distinctive culture" test.
[15] The Supreme Court of Canada further stated that claims
to aboriginal rights cannot be determined on a general basis. The existence of
a right hinges on the practices, customs or traditions of the precise community
claiming the right, and the protection relates to the specific history of the
group claiming the right. As Chief Justice Lamer stated in Pamajewon:
27 The
appellants themselves would have this Court characterize their claim as to
"a broad right to manage the use of their reserve lands". To so
characterize the appellants' claim would be to cast the Court's inquiry at a
level of excessive generality. Aboriginal rights, including any asserted
right to self-government, must be looked at in light of the specific
circumstances of each case and, in particular, in light of the specific history
and culture of the aboriginal group claiming the right. The factors laid
out in Van der Peet, and applied, supra, allow the Court to consider the
appellants' claim at the appropriate level of specificity; the characterization
put forward by the appellants would not allow the Court to do so.
[16] The
question of specificity was also dealt with by Justice Russell of the Federal
Court in Sawridge Band v. Canada as
follows:
288 These words suggest to me the following
conclusions:
(a) A
right to self-government that is advanced in very broad terms is "not
cognizable under s. 35(1)";
(b) If
self-government is asserted as a right under section 35(1), it "cannot be
framed in excessively general terms";
(c) If
self-government is asserted, the party advancing the claim will have to deal
with the many difficult conceptual issues attendant upon such a claim and this
cannot be done where the right is merely advanced in very broad terms.
[17] Also, in the Powley decision the Supreme Court
of Canada adapted the Van der Peet test to the Metis community. The
Supreme Court then went on to a ten-point analysis, similar to the analysis in
Van der Peet, commencing with the characterization of the right.
[18] Based on the Supreme Court of Canada's, and other
courts' approach to the analysis of aboriginal rights protected by section 35
of the Constitution Act, 1982 what, if any, chance do the Appellants
have in advancing their section 35 pleading on the basis of an inherent
right of self-government (which carries with it immunity from taxation)? I find
their position is not just weak – it is impossible.
[19] The Appellants' pleadings do not pass the first hurdle
of clearly characterizing a specific right related to specific practices,
customs or traditions. There is nothing but bald assertions in the pleadings –
no substantive support.
[20] For the Appellants' claim to succeed they must plead:
(i) the exact nature of the right claimed;
(ii) the actions taken by the party pursuant
to that right;
(iii) the infringing statute; and
(iv) the historical background to establish
the right.
[21] The Appellants refer to several paragraphs in the
pleadings as support for identifying the exact nature of the right. Yet, what
have the Appellants really pleaded in those paragraphs? For example, "tax
immunity is part of the inherent right of self-government held by aboriginals
and recognized under section 35 of the Constitution Act, 1982".
That is not a material fact, but a conclusion of law or, at best, mixed fact
and law. But it is a naked statement. Mr. Clow tried to dress it in argument by
suggesting some principles of international law perhaps supported this pleaded
conclusion. The other paragraphs relied upon are similar in asserting overly
broad unsupported conclusions. I can find no specific practices, customs or
traditions that have been pleaded with sufficient specificity so as to clearly
identify the right at issue. I do not find that adding the words "which
carries with it immunity from taxation" helps the Appellants narrow the
broad right of self-government to which they allude. Further, this may be
viewed as a form of negative right; that is, a right not to pay taxes to any
government, at any time. Or, perhaps it is a right incidental to the right of
self-government. The Supreme Court of Canada has been clear that incidental
rights do not qualify as aboriginal rights, contemplated by section 35 (see Van
der Peet). Also, in the Mitchell case, the Supreme Court of Canada
rejected the characterization of a right to bring goods across the U.S. border "without having to pay any duty or
taxes whatsoever to any Canadian government or authority". The Supreme
Court of Canada re-characterized the right as a right to bring goods across the
St. Lawrence
River for purposes of
trade. No suggestion was made at the Motions before me as to how to re-characterize
the right of immunity from taxation.
[22] The Appellants plead that the actions taken by them
pursuant to their aboriginal right is the filing of the Notice of Objection. A
solitary objection to income tax imposed by the Government of Canada falls far
short of establishing a custom, practice or tradition of "immunity from
taxation". The Appellants acknowledged in their pleading that "there
is continuity between the historic right and the contemporary right asserted
even though that right may not have always been asserted by way of claiming tax
immunity".
[23] Finally, what has been pleaded regarding the
historical background to establish the right? Interestingly, the Appellants
plead "in this case it is, in a sense, aboriginal ancestry itself which is
being relied upon to establish the right, as opposed to an action, tradition or
practice". It appears that the Appellants relied exclusively on the Powley
decision that an historic Metis community existed and a contemporary Metis community
still exists in and around Sault Ste. Marie. The Supreme Court also determined
that the said community had been established with sufficient continuity and
stability through evidence of shared customs, traditions and collective
identity as well as demographic evidence. But the Supreme Court of Canada went
on to state:
13 Our evaluation of the
respondents' claim takes place against this historical and cultural backdrop.
The overarching interpretive principle for our legal analysis is a purposive
reading of s. 35. The inclusion of the Métis in s. 35 is based on a commitment
to recognizing the Métis and enhancing their survival as distinctive
communities. The purpose and the promise of s. 35 is to protect practices that
were historically important features of these distinctive communities and that
persist in the present day as integral elements of their Métis culture.
[24] The Supreme Court of Canada recognized that this
continuity requires a certain margin of flexibility to ensure aboriginal
practices can evolve. The Appellants' pleadings, however, do not illustrate any
historical practice grounding the right, nor any continuity. There is nothing
upon which any flexibility can be exercised. Simply relying on Powley as
confirming the existence of a Metis community is insufficient to prove any
broad right of self-government, let alone any more exact identifiable right.
[25] The Appellants argue that the door has been left open
by the Supreme Court of Canada to claim self-government is a protected section
35 aboriginal right, especially where there is a live issue, such as the
payment of taxes. I do not read the Supreme Court of Canada cases as opening
the door quite as wide as the Appellants believe. Self-government must still
pass the Van der Peet tests – practices, customs or traditions need be
proven to establish what really constitutes the right of self-government. There
can be no structure without a foundation. In this case the Appellants have pled
the right without adequately identifying it. It is not therefore surprising
that the pleadings fall short of establishing the foundation - the practices,
customs or traditions to support the right. I conclude the Appellants'
pleadings on this issue are so defective as to be futile. I grant the
Respondent's motions and strike the paragraphs requested.
[26] Is this an appropriate case to allow the Appellants'
leave to amend? Had the Appellants' counsel given me any concrete idea as to
how to amend the pleadings to address the concerns I have just expressed, I may
have considered leave to amend. But he did not. I was given nothing to help
identify a specific right arising from practices, customs or traditions, which
could possibly be considered an aboriginal right protected by subsection 35(1)
of the Constitution Act, 1982. In these circumstances, granting leave to
amend, I believe, would serve no useful purpose.
[27] I allow the Respondent's motions with one set of costs.
Signed at Ottawa,
Canada, this 24th day of May, 2006.
Miller
J.
APPENDIX "A"
STATEMENT OF FACTS
9. The Appellant is
genealogically descended from the historic Metis community at Sault Ste. Marie,
Ontario and has been accepted by the Sault Ste.
Marie Metis community as a member of that community.
10. There was an
historic Métis community at Sault Ste. Marie that began to evolve in the mid
17th century. The Sault Ste. Marie community was largely under Metis control
from the late 17th century to the mid-nineteenth century. The Metis community
at Sault Ste. Marie was visually, culturally and ethnically distinct. It came
under effective control by European settlers just prior to 1850.
11. (a) The Sault
Ste. Marie Metis community is not confined to the town-site proper and
encompasses the surrounding environs. There is an existing Metis community at
Sault Ste. Marie that is in continuity with the historic one.
(b) The
Sault Ste. Marie community is part of the Metis Nation, a historic and existing
collective of Metis people who lived, and to a large extent whose descendants
still live, in the Metis homeland consisting of the woodland areas of North
Central North America, including Northern Ontario and specifically Sault Ste.
Marie and the surrounding area including Batchewana, Goulais Bay, Garden River,
Bruce Mines, Desbarates, Bar River, St. Joseph's Island, Sugar Island, as well
as into what is now Northern Michigan and Searchmont.
12 (a) The
right to and exercise of self-government (which carries with it immunity from
taxation) was of central significance and integral to the distinctive historic
Metis community at Sault Ste. Marie and continues to be an integral part of the
contemporary Metis community at Sault Ste. Marie. It constitutes a right,
practice or tradition exercised by the Metis. It is integral to the distinctive
Metis community and has existed since prior to effective control of the area by
European settlers.
(b) The
Canadian government recognizes the inherent right of aboriginals to
self-government as an existing right within section 35 of the Constitution
Act, 1982, in the Charlottetown Accord and its Inherent Rights Policy.
13. The Income
Tax Act (Canada) is an infringement of the Appellant's inherent
right of self-government, which is neither minimal nor justified. Although not
all Metis have exercised this right at all times, it has not ceased to exist.
ISSUES TO BE DECIDED
28. Whether the
Appellant has an inherent immunity from taxation as an aboriginal right
deriving from the aboriginal right to self-government which is constitutionally
entrenched and protected under section 35 of the Constitution Act, 1982.
STATUTORY PROVISIONS
29. The Statutory provisions
relied upon are:
…
(iii) Constitution
Act, 1982, section 35.
…
(v) Constitution
Act, 1867, subsection 91(24).
(vi) Act for the
Protection of the Indians in Upper
Canada from Imposition, S.C. 1850, c.74, section 4.
(vii) Royal
Proclamation of 1763.
GROUNDS RELIED ON AND RELIEF
SOUGHT
30 (a) Metis who have not
lost, surrendered or had extinguished their aboriginal rights, possess an
"inherent" right of self-government, which carries with it a form of
sovereign immunity from taxation.
(b) The Canadian
government already recognizes the inherent right to self-government as an
existing aboriginal right within the meaning of section 35 of the Constitution
Act. Such recognition is based on the principle that aboriginals have a
right to govern themselves in relation to mattes which are internal to their
communities and integral to their culture, identities, traditions, languages
and institutions. Subsection 35(2) of the said Act states that "…
"aboriginal peoples of Canada" includes the Indian, Inuit and Metis people
of Canada".
(c) Tax immunity is
part of the inherent right of self-government held by aboriginals and
recognized under section 35 of the Constitution Act, 1982.
(d) Pursuant to this
aboriginal right the Appellant claims immunity from income tax and,
accordingly, the Income Tax Act (Canada) and the subject
assessments.
(e) In this case it
is, in a sense, aboriginal ancestry itself which is being relied upon to
establish the right, as opposed to an action, tradition or practice. The latter
are emphasized in the jurisprudence to date probably because many cases have
come before the courts on the issue of the aboriginal right to hunt and fish.
(f) The
"term" Metis in section 35 of the Constitution Act, 1982 does
not encompass all individuals with mixed Indian and European heritage; it
refers to distinctive peoples who, in addition to their mixed ancestry,
developed their own customs, and recognizable group identity separate from
their Indian and European ancestors. The Sault Ste. Marie Metis community, to
which the Appellant belongs, is a group of Metis with a distinctive collective
identity, living together in the geographical area described in paragraph 11(b)
and sharing a common way of life.
(g) In determining
whether the Appellant's section 35 rights as a Metis have been established
according to the jurisprudence, a "pre-control" test should be
applied (to identify the relevant time frame) establishing when Europeans
achieved political and legal control in the area in issue, focusing on the
period after a particular Metis community arose and before it came under the
control of European laws and customs. The pre-contact test applied in cases involving,
for example, First Nations peoples, has been adjusted by the courts to take
into account the post-contact ethnogenesis and evolution of the Metis. The
Supreme Court of Canada has already decided in the Powley case that the
Sault Ste. Marie Metis community came under European control in the
mid-nineteenth century and that an historic Metis community existed and a
contemporary Metis community still exists in and around Sault Ste. Marie. It
also decided in that case that the said community had been established with
sufficient continuity and stability through evidence of shared customs,
traditions and collective identity as well as demographic evidence.
(h) The Appellant,
though not directly involved in the Powley case, is a member of the same
contemporary Sault Ste. Marie Metis community and the Appellant's ancestors
were members of the same historical Metis community.
(i) The Appellant
self-identifies as a Metis and is accepted by the contemporary Sault Ste. Marie
Metis community as a Metis. The Appellant's ancestors were members of the
historic Sault Ste. Marie Metis community. The Appellant is therefore an
individual entitled to exercise Metis aboriginal rights, including the right to
self-government and immunity from taxation.
(j) The right claimed
was and is integral to the community's distinctive culture.
(k) There is continuity
between the historic right and the contemporary right asserted even though that
right may not have always been asserted (by way of claiming tax immunity).
(l) The right has not
been extinguished.
(m) The right is
infringed upon by the imposition of tax upon the Appellant by the Respondent.
(n) The infringement is
not justified nor is it minimal.
RELIEF SOUGHT
33. … on the basis that the
subject income assessed the Appellant is exempt from, immune from or otherwise
not subject to income tax; …
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