Beattie v. Canada, 2005 FC 715

Date: 20050518

Docket: T-2134-00

T-2203-00

T-2204-00

Citation: 2005 FC 715

BETWEEN:

                                                      BRUCE ALLAN BEATTIE

                                                                                                                        Plaintiff (Appellant)

                                                                        - and -

                                                    HER MAJESTY THE QUEEN

                                                                                                             Defendant (Respondent)

                                                        REASONS FOR ORDER

LEMIEUX J.

INTRODUCTION

[1]         These appeals by Bruce Allan Beattie are from three judgments dated May 6, 2004, by Prothonotary Lafrenière dismissing three actions falling within his jurisdiction under Rule 50(2) of the Federal Courts Rules, 1998 (the "Rules") since the amount claimed in each of them did not exceed $50,000 exclusive of interest and costs in which Mr. Beattie was the plaintiff. These appeals raise identical issues, were heard together and are dealt with in a single set of reasons.

[2]         Mr. Beattie sues Her Majesty the Queen in right of Canada ("HMQ" or the "federal Crown") as the assignee of persons claiming to be natural descendants of Indians who adhered to Treaty No. 6 between HMQ and the Plains and Wood Cree Indians and other tribes in 1876.

[3]         Mr. Beattie also sues HMQ as assignee of persons claiming to be heads of families and natural descendants of Indians who adhered to Treaty No. 11 between HMQ and aboriginal adherents at Fort Good Hope, N.W.T., on July 21, 1921.

[4]         Each assignor assigned to Mr. Beattie "absolutely, all unpaid arrears of per head yearly (annuity) payments, plus interest thereon, which are lawfully due and payable to me pursuant to the terms of the said Treaty [No. 6 or No. 11] up to the date of this assignment, and all causes of action related to such debt."

[5]         Typical in each claim in the three actions is an allegation that each assignor from a certain date [such as 1987 being the date of registration pursuant to the Indian Act] has received treaty annuity payments since that date but never received such annuities prior to that date of registration.

[6]         In its statement of defence, the federal Crown denied the assignors were entitled to treaty annuities for the periods claimed or, in the alternative, were entitled to interest on the arrears. The federal Crown also challenged the validity of the assignments pursuant to the provisions of the Financial Administration Act ("FAA").

[7]         Pursuant to an order made under Rule 107, Prothonotary Lafrenière had to determine two issues separately from other issues raised by the pleadings. Those two issues were:

(a)        the effect, if any, of the FAA on the validity of the assignments to Mr. Beattie;

(b)        whether interest is owing on any annuity arrears that may be found owing and, if so, what is the rate of interest, whether it is simple or compound interest and how it is to be calculated.

[8]         Prothonotary Lafrenière held the assignments were void under the FAA and no interest was payable on any arrears that might be owing to the assignors.

FACTS

[9]         It is common ground that Mr. Beattie is not a registered Indian but has family ties to Registered Indians.

[10]       Treaty No. 6 provides in part:

                And further, that Her Majesty's Commissioners shall, as soon as possible after the execution of this treaty, cause to be taken an accurate census of all the Indians inhabiting the tract above described, distributing them in families, and shall, in every year ensuing the date hereof, at some period in each year, to be duly notified to the Indians, and at a place or places to be appointed for that purpose within the territory ceded, pay to each Indian person the sum of $5 per head yearly. [emphasis mine]

Treaty No. 11 contains similar wording, as follows:

                AND in order to show the satisfaction of His Majesty with the behaviour and good conduct of His Indian subjects, and in extinguishment of all their past claims hereinabove mentioned, He hereby, through his Commissioner, agrees to give to each Chief a present of thirty-two dollars in cash, to each Headman, twenty-two dollars, and to every other Indian of whatever age of the families represented, at the time and place of payment, twelve dollars.

HIS MAJESTYalso agrees that during the coming year, and annually thereafter, He will cause to be paid to the said Indians in cash, at suitable places and dates, of which the said Indians shall be duly notified, to each Chief twenty-five dollars, to each Headman fifteen dollars, and to every other Indian of whatever age, five dollars, to be paid only to heads of families for the members thereof, it being provided for the purposes of this Treaty that each band having at least thirty members may have a Chief, and that, in addition to a Chief, each band may have councillors or headmen in the proportion of two to each two hundred members of the band. [emphasis mine]

[11]       The hearing of the bifurcated issues proceeded on the basis of an agreed statement of facts specific to each action, the affidavit evidence of Nicholas Mitchell and Michael McGinty, the documentary evidence contained in a Joint Book of Documents (the "Joint Book"), and the evidence from examinations for discovery of the plaintiff and the assignors. No witnesses were called at trial.

[12]       In his reasons, the Prothonotary reproduced the Agreed Statement of Facts in Court No. T-2203-00, said to be representative of the statements agreed to in the two other proceedings. That statement of facts reads:

                                          AGREED STATEMENT OF FACTS

1.              The assignors, Philip George Harris, Mary Martha Harris, Margaret Mary Napora, Kevin Kimberley Napora, and Shannon Trevor Napora, (the "Assignors") are children or grandchildren of original Treaty 11 adherents and are all currently registered as Indians pursuant to the Indian Act, R.S.C. 1985, c. I-5.

2.              The signing of Treaty 11 pre-dates the births of all the Assignors.

3.              The Plaintiff, Bruce Beattie, is not a Treaty 11 Indian, nor is he registered as an Indian under the Indian Act, but he is a family member to each of the Assignors through marriage.

4.              The Department of Indian Affairs and Northern Development ("DIAND") has recognized each of the Assignors as being entitled to receive annuities pursuant to Treaty No. 11 ("Annuities") since the dates of their respective applications for registration as status Indians under the Indian Act, but not prior to those dates.

5.              Treaty paylist records indicate when payment to any individual Indian entitled to receive treaty annuity was not made.

6.              The Plaintiff sent the Receiver General a Notice of Assignment of Crown Debt in respect to the assignment of the Assignor, Charles Edward Harris, in related Action No. T-2134-00. However, the assignment was not approved by the Receiver General.

7.              As a result of the Receiver General's response to the Notice of Assignment of Crown Debt of Charles Edward Harris, the Plaintiff has not sent the Receiver General any further Notices of Assignment of Crown Debt in respect to the assignments of the other Assignors.

8.              Treaty 11 does not contain express terms with respect to payment of interest on annuity arrears.

9.              The historical documents listed by the parties to the actions before the Court disclose no reference to discussions of interest on annuity arrears during negotiations leading to the signing of Treaty 11.

10.           Any cause of action herein in respect of any debts arising from breach of treaty obligations by the Crown to pay annuity arrears, and to pay interest thereon, arose in more than one province or outside a province. [emphasis mine]

[13]       The Prothonotary made no factual distinction between any of the individual assignors or between the two treaties. The parties on this appeal were content with that finding.

[14]       He drew from Mr. Mitchell's affidavit to describe the procedure for the payment of annuities under both treaties. The Prothonotary wrote the following at paragraph 16 of his reasons:

¶ 16       Second, both Treaty No. 6 and Treaty No. 11 promise annual payments by the Crown of $5.00 to each of the original adherents of the respective treaties and their natural descendants. In his affidavit, Mr. Mitchell sets out the procedure for payment of annuities:

1. Treaty annuity payments were provided by the Department of Indian Affairs on an annual basis, using funds voted by Parliament each year. The funds used to pay annuities were voted on the basis of Departmental Estimates.

2. Annuities were paid to Treaty Indians at pre-determined times and places, and these payments were recorded in Treaty paylists for each Band.

3. When the payment process had been completed each year, unused treaty annuity moneys were returned to the Receiver General. No annuity payments were retained for use in subsequent years.

4. The same procedure was repeated every fiscal year.

5. The annual Estimates prepared by the Department of Indian Affairs each year included moneys to pay arrears of annuities to Treaty Indians who had missed previous payments.

6. Arrears were paid from the annuity moneys for the same fiscal year in which the request for arrears was made.

7. No interest was paid on arrears of Treaty annuities. [emphasis mine]

THE PROTHONOTARY'S DECISION - [2004 FC 674]

(a)        The Validity of the Assignments

[15]       HMQ submitted to the Prothonotary three reasons why the assignments which Mr. Beattie took were invalid:

(a)        Section 67 of the FAA bars the assignment of Crown debts except in the situations described in section 68 of that Act. None of those exceptions, it is said by the federal Crown, apply to the assignment of arrears of treaty annuities due and owing. In particular, treaties are not contracts for the purposes of subsection 68(1) of the FAA.

(b)        treaty annuities cannot be assigned even if they fall within the exception set out in subsection 68(1) of the FAA since treaty rights are non-transferable due to their special status. This argument is linked to subsection 68(4) of the FAA which provides that an assignment is subject to "all conditions and restrictions in respect of the right of transfer that relate to the original Crown debt or that attach to or are contained in the original contract" which led the Prothonotary to consider the provisions of section 90 of the Indian Act;

(c)         the notice of assignment which Mr. Beattie provided did not comply with the Assignment of Crown Debt Regulations. The Prothonotary did not accept this argument and it is not an issue before me according to the federal Crown.

[16]       For ease of reference, I set out the definition of "public money" in section 2, sections 66, 67 and 68 of the FAA, as well as sections 87, 89 and 90 of the Indian Act:

(1)       The first ground of invalidity

[17]       The first ground of invalidity is the Prothonotary's finding that any Crown debt owing under a treaty does not fall within the exception under subsection 68(1) for the reason that a treaty is not a "contract" within the meaning of that subsection.

[18]       I reproduce, omitting the citations, the relevant paragraphs of his decision on this point:

¶ 32       The modern principle of statutory interpretation requires the words of an Act to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament...

¶ 33       In keeping with the modern principle, when the legislature makes a general rule and lists certain exceptions, the latter must be strictly construed. An exception should not be construed in such a manner that the broad purpose of the legislation is undermined....

¶ 34       Section 68 of the FAA exempts a "Crown debt due or becoming due under a contract" from the general prohibition against the assignability of Crown debts contained at s. 67. Since it is an exception to the general rule, it must be strictly construed, particularly given that the underlying purpose of this part of the FAA is to restrict the assignability of Crown debts.

¶ 35       Indian treaties have often been equated to contracts. However, the jurisprudence and authorities cited by the Plaintiff do not deal treaties within the context of the FAA. They are therefore of little assistance.

¶ 36       In fact, the Supreme Court of Canada has held that a treaty is not a commercial contract, and that contract principles do not apply to treaties....      

[19]       He then indicated that "Parliament appears to have intended to differentiate between treaties and contracts in the FAA" and referred to the definition of "public moneys" in section 2 of that Act where the words "treaty" and "contract" are used separately when, by contrast, section 68 of the FAA only includes the term "contract" and does not refer to "treaty".

[20]       He rejected the plaintiff's argument that "treaty" in subsection 2 should be restricted to treaties in the international sense, writing the following at paragraph 39:

¶ 39       Although the Plaintiff maintains that the word "treaty", as used in s. 2 of the FAA, should be restricted to treaties in the international sense, no authorities are cited in support of such a proposition. To the contrary, the use of the indefinite pronoun "any" to modify the terms "Act, trust, treaty, undertaking or contract", suggests that "treaty" should be given a broader, rather than limited, interpretation.

[21]       He then referred to the French version of section 68(1), which he said "also supports an interpretation which excludes treaties from the meaning of "contract"."

[22]       He focussed on the word "marché" in the French text, examined its ordinary dictionary meaning and concluded the following:

¶ 45       The term "marché" is therefore restricted to commercial transactions. This more restricted meaning is the meaning which is common to both the English term "contract" and the French term "marché". Since a treaty is far broader than a mere commercial transaction, Parliament evidently did not intend to include treaties in s. 68 of the FAA.

(2)       The second ground of invalidity

[23]       As to the second ground of invalidity, the Prothonotary's analysis centered on section 90 of the Indian Act. The reasoning to his conclusion on invalidity is as follows:

[49]          In Her Majesty the Queen v. Kakfwi, [1999] 99 DTC 5639, the Federal Court of Appeal held that the term "personal property" in s. 90 of the Indian Act includes money and debts: see also Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85 at paras. 95 and 96 Per La Forest J. and at para. 41 per Dickson C.J. On the plain reading of section 90, therefore, treaty annuities, and any claims to such annuities, are deemed to be situated on a reserve, and their assignment is prohibited without the consent of the Minister of Indian Affairs.

[50]          The Plaintiff submits that enforcement of a core treaty right, and any lawful action reasonably necessary to that end, including the assignment of a Crown debt, are activities which are reasonably incidental to a core treaty right, and are therefore protected from infringement to the same extent as the core treaty right. He claims that the assignments at issue show that assignment to the Plaintiff was the preferred means by each of the Indian assignors of exercising their incidental right to enforce payment of Crown debts of treaty annuity arrears. According to the Plaintiff, to the extent that provisions of the FAA infringe that incidental right, those provisions must be justified by the Defendant in accordance with s.35(1) of the Constitution Act, 1982.

[51]          I am not prepared to entertain a constitutional challenge in the absence of any proper or sufficient notice. In any event, I fail to see how the assignors' rights, which could be enforced individually, can be said to have been infringed by any provisions of the FAA.

[52]          On the evidence before me, it appears that, as a matter of general policy, the Crown does not consent to the assignment of annuities to third parties. Although there is evidence that payments were occasionally made to a person other than to the treaty Indian on the pay list, such arrangements were made solely with close relatives of the Indian person, a Chief, or an Indian agent in order to facilitate payment.

[53]          I conclude, therefore, that absent the Crown's consent, treaty annuities cannot be transferred. [emphasis mine]

(b)        The Interest Issue

[24]       For the purposes of these appeals, I need only summarize Prothonotary Lafrenière's reasoning on the issue of whether interest is payable on annuity arrears which is the only issue relating to interest argued before me. In his judgments, he had to deal with issues such as Crown immunity in respect of Crown liability to pay interest, the statutory provisions moving away from such immunity in the Supreme Court and Exchequer Court Acts, and then in section 36 of the Federal Courts Act and in the Crown Liability and Proceedings Act. He also dealt with, if interest was payable on arrears, whether that interest could be compounded.

[25]       The Prothonotary began his analysis of whether interest is payable on arrears in the payment of treaty annuities by referring to the common law and to the treaties in question. He stated:

¶ 59       At common law, the general rule is that interest is not payable on a debt or loan in the absence of express agreement or some course of dealing or custom to that effect.

¶ 60       The parties agree that neither Treaty 6 nor Treaty 11 provides for the payment of interest. In addition, the parties have agreed that the payment of interest was not discussed when Treaty 6 and Treaty 11 were negotiated. Based on the historical documents on the record, it appears that after the signing of Treaty 6 and Treaty 11, the Crown did not pay interest on annuity arrears, except in circumstances where annuities were placed in individual savings accounts at the behest of the annuity recipients.

[26]       He then considered Mr. Beattie's argument that interest was payable by virtue of subsection 61(2) of the Indian Act. Section 61 of the Indian Act reads:

[27]       The federal Crown countered by arguing that "annuity payments" are not "Indian moneys" as defined in section 2 of that Act since such moneys are not "collected, received or held by Her Majesty". According to the federal Crown, moneys used for the payment of treaty annuities come out of the Consolidated Revenue Fund ("CRF") and are payable pursuant to a separate and distinct provision of the Indian Act, namely section 72.

[28]       For convenience, I reproduce here the definition of Indian moneys in section 2 and section 72 of the Indian Act:

[29]       The Prothonotary concluded that section 72 applied - treaty annuities are "moneys that are payable to Indians or Indian bands under a treaty" and not under section 61 which relates to "Indian moneys".

[30]       He also referred to section 62 of the Indian Act as providing, regarding the meaning of the term "Indian moneys", and concluded at paragraph 67:

¶ 67       Treaty annuity moneys are clearly not moneys derived from the sale of surrendered lands. Section 62 provides that another type of Indian moneys are revenue moneys of a band. "Revenue moneys" is not defined in the Indian Act, but it is clear from the provisions in the Indian Act that these types of moneys are band moneys, and not moneys of individual Indians.

[31]       He referred to the Indian Bands Revenue Moneys Regulations and concluded at paragraph 69:

¶ 69       The Indian Bands Revenue Moneys Regulations, C.R.C. 1978, c. 953, as amended, address issues relating to the ability of certain bands to control, manage and expend their revenue moneys. It is clear from this context that treaty annuity moneys cannot be construed to be revenue moneys and, as a result, do not fall within the definition of "Indian moneys".

[32]       He then stated that section 90 of the Indian Act, previously reproduced, distinguishes between revenue moneys and Indian moneys and concluded at paragraphs 71 and 72:

¶ 71       The separate references to "Indian moneys" and personal property "given to Indians ...under a treaty" in s. 90 of the Indian Act suggests that Parliament did not intend the term "Indian moneys" to refer to treaty moneys. If it had so intended, there would be no reason for Parliament to separately refer in s. 90 to property given under a treaty.

¶ 72       As a result, there is no support for the proposition that annuity payments constitute "Indian moneys" pursuant to the Indian Act.

[33]       He dismissed an argument by Mr. Beattie that the federal Crown was obligated to pay interest as a fiduciary duty at paragraph 79 in the following terms:

¶ 79       In my view, even if the Assignors were entitled to receive annuities from their respective dates of birth, as the Plaintiff alleges, the Crown's failure to pay annuities because of the statutory definition of "Indian" does not amount to a breach of fiduciary duty. A determination by the Crown as to who is an "Indian" for treaty purposes is an administrative function which does not involve any exercise of discretion and, therefore, cannot give rise to fiduciary duties.

ISSUES

[34]       Mr. Beattie put the following questions in issue:

(1)       whether the Prothonotary erred in finding that, absent the Crown's consent, treaty annuity is not transferable by a treaty Indian and debts of annuity arrears are not assignable;

(2)       whether the Prothonotary erred by disregarding entirely the fundamental legal principle that statutory limitations which restrict the rights of Indians under treaties must be narrowly construed, and a generous and liberal interpretation of Indian rights is to be preferred over a narrow and technical one;

(3)       whether the Prothonotary erred in finding that treaty annuity arrears are not "Indian moneys" within the meaning of subsection 2(1) of the Indian Act; and

(4)       whether the Prothonotary erred by disregarding entirely the Court's paramount obligation to recognize and affirm existing treaty rights in accordance with the principles of treaty interpretation established to give effect to section 35 of the Constitution Act, 1982.

[35]       Mr. Beattie's position is that the Prothonotary erred in all respects. The federal Crown takes the opposite view and argues the Prothonotary made no errors at all.

[36]       Issue No. 4 raises a constitutional issue which was not argued before me, objection having been made by the federal Crown as that issue had not been argued before Prothonotary Lafrenière. I will issue a separate ruling on this point based on supplementary memoranda filed by each party.

ANALYSIS

(a)        Standard of Review

[37]       In Grenier v. Canada (Attorney General), 2004 FC 1435, Justice Blanchard considered the standard of review on an appeal from a judgment of Prothonotary Morneau in a simplified action under the Rules.

[38]       He was of the view the standard of review was not that set out in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425, but rather the standard established by the Supreme Court of Canada in Housen v. Nikolaisen, [2002] 2 S.C.R. 235, because on an appeal from a judgment in an action within a prothonotary's jurisdiction under the Rules, the Court was not reviewing a discretionary decision but one deciding the substantive merits of an action. I agree with his views and his analysis of the Housen standard.

[39]       Justice Blanchard expressed the Housen, supra, standard as follows:

¶ 15       The rule that emerges from Housen is that, on questions of law, appellate courts apply the standard of the correct decision. However, where questions of fact are concerned, a palpable and overriding error must be found in the trial judge's conclusions if an appellate court is to intervene. Finally, on mixed questions of fact and law, the rule for intervention must be adjusted to take all the facts of each case into account.

The standard of review on pure questions of law is one of correctness, and an appellate court is thus free to replace the opinion of the trial judge with its own ...

                The standard of review for findings of fact is such that they cannot be reversed unless the trial judge has made a "palpable and overriding error". (at 237)

[40]       His analysis concurs with Justice Blais' reasoning in Giroux v. Canada, 2001 FCT 531, sustained on appeal 2002 FCA 319.

(b)       The historical evidence

[41]       The historical evidence before Prothonotary Lafrenière was provided through the affidavit of Nicholas Mitchell, who holds a post-graduate degree in history and was a doctoral candidate in that field between 1994 and 2002. Since September 1999, he has been engaged with the Department of Indian Affairs as a researcher in order to assemble, analyse and report upon historical information relating to the numbered treaties of Canada and, in particular, in connection with the provisions and payments of treaty annuities and the practices and procedures undertaken by the Government of Canada relating to the payment of treaties. He was not cross-examined.

[42]       In addition to its body, Mr. Mitchell's affidavit contained three exhibits with Exhibit "C" consisting of two large binders of selected representative documents illustrating the usual practices concerned with the funding and payment of treaty annuities and their arrears.

[43]       At paragraphs 17 and 18 of his affidavit, he deposes with respect to both Treaty No. 6 and Treaty No. 11, that when those treaties were negotiated between the Treaty Commissioners and the assembled Indians, there was an intention on the part of the Treaty Commissioners to pay annuities and arrears of annuities to treaty Indians in the future but, however, there was no intention on their part to pay interest on arrears of annuities in the future.

[44]       With respect to the payment of treaty annuities, Mr. Mitchell tells us that over the course of the summer months at pre-determined times and places, the Indian Agent distributed cash payments to treaty Indians. These payments were recorded in treaty paylists for each band. In the autumn of each year, once the Indian Agent had completed his payment of treaty annuities, the paylists, recapitulation sheets and estimates for the following year were sent to headquarters in Ottawa for inspection and audit. Unexpended annuity money was credited by each Indian Agent to the Receiver General. He informs us that treaty annuity money was accounted for separately from other Indian accounts and no treaty annuity money was available for treaty annuity payments in any subsequent year. No unauthorized use of annuity funds by Indian Agents was permitted.

[45]       Beginning at paragraph 39 of his affidavit, Mr. Mitchell describes the payment of arrears of treaty annuities in the following terms:

(a)       he informs us the financial system established by the Department of Indian Affairs to administer the payment of treaty annuities included sufficient resources to pay arrears of annuities in addition to the strict annual per capita requirements for treaty Indians;

(b)       at paragraph 40, he indicates arrears of annuities were paid out of the appropriated treaty annuity money designated for the fiscal year in which the request for arrears was made;

(c)        paragraph 42 of his affidavit deals with the methods of payment to treaty Indians who were absent on treaty pay days. It reads:

                42. The Department of Indian Affairs provided three methods of payment to Treaty Indians who were absent during the Treaty payments for a given year. Firstly, Treaty Indians were permitted to designate a family member, or trusted Band member, to accept annuity payments on their behalf, if written permission was provided by the annuitant ... . Secondly, Treaty Indians were permitted to make a request for annuity monies directly from the Indian Agent at a later date, and a Departmental cheque for arrears would be sent to them from Ottawa ... . Thirdly, Treaty Indians were permitted to wait until the next Treaty Day to claim their arrears in addition to their current Treaty payment ... . [emphasis mine]

[46]       Mr. Mitchell deposes the Department of Indian Affairs had not established procedure for the calculation, or payment, of interest on arrears of annuity payments but at paragraph 44, indicates, under certain circumstances, treaty annuities were held in trust by the Department and, in such cases, compound interest accrued on treaty annuities which were held in trust and this interest was set at rates which changed from time to time. Individual savings accounts for the benefit of Indian children in Residential Schools is an example.

[47]       As indicated, the parties filed a Joint Book of Documents (the "Joint Book") which essentially are extracts from the documents appended to Mr. Mitchell's appendix Exhibit "C". It is useful to extract certain elements from the Joint Book.

[48]       Tab 1 of the Joint Book contains a report dated Winnipeg, November 30, 1883, from Inspector McColl. The item in Mr. McColl's report of 1883, stated "Factor Bélanger [of the Hudson's Bay Company] informed me that 12 families representing 57 Annuitants were absent during the payments last August and that the usual authority had been given him by these parties for drawing their annuities, but that the Agent refused to recognize the orders presented for the Annuities of those absentees although made out in accordance with his own instructions, from a form presented by himself. This action of the Agent, Mr. Bélanger alleges was contrary to that adopted by him at Norway House and other places this year and different from that practised by him here in former years".

[49]       The Superintendent General of Indian Affairs in Ottawa approved the refusal by the Indian Agent to pay Factor Bélanger the annuities of the 12 families. In addition, the Superintendent General endorsed a recommendation which Inspector McColl made to the following effect:

... I would respectfully recommend that annuities of absentees be paid only on their orders to their nearest relations, Chiefs, Councillors or some other respectable members of their respective Bands but never to any trader as he can easily forge the names of absentees provided he had previously secured the tickets. [emphasis mine]

This tab indicates the recommendation became departmental policy.

[50]       Tab 2 is a letter from Mr. McColl dated June 26, 1884, addressed to the Superintendent General. Mr. McColl asked for the Superintendent General's endorsement of a copy of general and special instructions addressed to all Indian Agents concerning the making of payments of annuities. Item 6 of the instructions read:

In the event of any absentee of previous years, entitled to arrears, being present at the payments, or having duly authorized another Indian of the band by written order properly signed and witnessed of which the original should accompany your Pay-sheets, to draw his money, you will only pay him one installment of arrears, together with his annuity for the current year, but you will not recognize any orders of annuitants absent or otherwise presented to you for payment, by traders, their employees or any other parties, than those aforesaid referred to. [emphasis mine]

[51]       Tab 3 is a letter dated May 10, 1892, from Mr. McColl, now Inspector of Indian Agents for the Northwest Territories and Manitoba who writes:

I have to acknowledge the receipt of your letter inquiring whether any trader or dealer can legally make advances on the Annuity money of Indians, and in reply I beg to inform you that the Agent should without regard to orders written or verbal by whosoever given, or to any account presented pay each married Indian direct into his or her own hand his or her share of Annuity money and the shares of his or her consort and of their minor children if unmarried and living with them, and to each single Indian who is of age his or her share, and to no one else, and if any other course is followed it will be contrary to the rules of the Department and the Agent who contravenes the rule lays himself open to dismissal. [emphasis mine]

[52]       Tab 4 is a letter from the Indian Agent at Onion Lake dated July 30, 1900, to the Secretary of the Department of Indian Affairs in which he transmits a copy of the pay sheets for 1900 and provides some explanation with regard to the payment of three annuitants, namely Louis Amable No. 29 Chippewayan Band 124, John Catfish No. 34 Chippewayan Band 124 and Frying Pan No. 44 Band 121.

[53]       With respect to Louis Amable, the Indian Agent at Onion Lake writes:

This man and his family were absent hunting and his ticket was presented by his father Amable no. 24. I refused payment. However, after I considered the payments closed for the day, The Rev Father LeGoff ... represented to me that Louis Amable was very destitute, & was absent hunting to obtain some food and did not know that the payments were being made, he also begged of me to pay the man's father the son's money. I paid the money to Father LeGoff, took his receipt, which is enclosed, and saw him pay the money to Amable No. 24.

[54]       With respect to John Catfish, the Indian Agent writes that:

This man and his family were absent at Isle à la Crosse and sent, the enclosed affirmation that he wished his money paid to Mr. Thomas William Harris. The Indian's signature (or mark) is witnessed by the Rev. Father Pinard ... and Father LeGoff also asked me to pay Mr. Harris. I therefore agreed to do so and too Mr. Harris' receipt at foot of affirmation.

[55]       With respect to Frying Pan and others, the Indian Agent writes:

... each of these Indians were absent but before leaving left with me a request to pay their money to the Hudson's Bay Company here. I still hold these Indians money and in order to comply with memorandum No. 5 supplied with this year's paysheets I would now ask for authority to pay the money to the Hudson's Bay Company. I may inform you that I accepted these orders before the receipt of the paysheets, otherwise I would have asked for authority at an earlier date to pay the Hudson's Bay Company.

With reference to the declaration of Indian Agents I have signed it believing that I have not paid any money to any one other than a legal representative.

[56]       On September 6, 1900, the Indian Agent indicates he paid the money directly to the annuitants not having received authority to pay the money to the Hudson's Bay Company.

[57]       At Tab 5 is further correspondence between Ottawa and the Indian Agent at Onion Lake. The first letter is from Ottawa and is dated October 17, 1900, from the Assistant Secretary of the Department of Indian Affairs who writes "I beg to inform you that the Department cannot consent to pay the annuity money of Frying Pan No. 44, Band 121 to the Hudson's Bay Co. as there is nothing to show that value has been [???] for the amount. The Department does not approve of the acceptance of orders on annuity money of any kind [emphasis in original] by Agents [emphasis mine]". The correspondence discloses a receipt from John Catfish of $35.00 for annuity money paid to him when he came back to the reserve. The documents at this tab also indicate a receipt of $40.00 from Louis Amable, being the annuities paid in 1900.

[58]       Tab 6 of the Joint Book is a memorandum for Agents' guidance dated July 1911, issued by the Department of Indians Affairs. Items 5 and 6 read:

5. No money should be paid to merchants or other persons who are not Indians, except by special permission of the Department.

6. No money should be paid to any Indian other than the one entitled, unless upon presentation of a written order, which should be attached to the pay-list. [emphasis mine]

[59]       Tab 7 is an instruction issued on October 25, 1913, by the Deputy Superintendent General of Indian Affairs. Paragraphs 51, 52, 53, 57 and 59 read:

51. Only Indians whose names appear on the pay-sheets and who are entitled thereto according to treaty and the Indian Act, are paid annuity or interest moneys.

52. Payment should be made to the head of a family, or to his or her proper representative.

53. No money should be paid to any Indian other than the one entitled thereto except upon presentation of a written order, which should be attached to the pay-list.

                                                                      . . .

57. When payments of arrears are made, the years for which payments are made should be mentioned in the pay-list.

                                                                      . . .

59. Indian Agents are prohibited from intervening to collect debts due by Indians, and are not on any account to accept orders on moneys due to Indians. Agents should inform merchants and others who would be likely to have any transaction with Indians that the Department will not recognize such orders and will not be responsible for their payment. Collectors are not to be permitted to be present at the pay table or in the pay-room, when payments are being made. [emphasis mine]

[60]       Tab 13 of the Joint Book are instructions to Indian Agents dated September 1, 1933, issued by the Deputy Superintendent General of Indian Affairs. Its clauses 49, 50, 51 and 57 are in similar terms to the 1913 instructions.

[61]       The final reference I make to the historical record is from tab 73 of Exhibit "C" to Mr. Mitchell's affidavit. It is a photocopy of an order made by Dentah dated August 6, 1917, at Nelson, B.C., and simply reads:

The Indian Agent Fort Simpson

Please pay to Toni Headman my annuity for 1917. The number of my family are 1917, one man, one woman, one boy, witnessed Ed Heron.

(c)       Discussion

(i)         General principles of treaty interpretation

[62]      Mr. Beattie's main argument on these appeals is that the Prothonotary erred in law by failing to apply the special rules of treaty interpretation when construing the FAA. Justice Cory in R. v. Sundown, [1999] 1 S.C.R. 393, at 406, outlined what those special rules were:

¶ 24       The principles of interpretation to be followed in considering treaties signed with the First Nations are summarized in R. v. Badger, [1996] 1 S.C.R. 771. It was put in this way at para. 41:

First, it must be remembered that a treaty represents an exchange of solemn promises between the Crown and the various Indian nations. It is an agreement whose nature is sacred. . . . Second, the honour of the Crown is always at stake in its dealing with Indian people. Interpretations of treaties and statutory provisions which have an impact upon treaty or aboriginal rights must be approached in a manner which maintains the integrity of the Crown. It is always assumed that the Crown intends to fulfil its promises. No appearance of "sharp dealing" will be sanctioned. . . . Third, any ambiguities or doubtful expressions in the wording of the treaty or document must be resolved in favour of the Indians. A corollary to this principle is that any limitations which restrict the rights of Indians under treaties must be narrowly construed. . . . Fourth, the onus of proving that a treaty or aboriginal right has been extinguished lies upon the Crown. There must be "strict proof of the fact of extinguishment" and evidence of a clear and plain intention on the part of the government to extinguish treaty rights. [Citations omitted.]

Treaties may appear to be no more than contracts. Yet they are far more. They are a solemn exchange of promises made by the Crown and various First Nations. They often formed the basis for peace and the expansion of European settlement. In many if not most treaty negotiations, members of the First Nations could not read or write English and relied completely on the oral promises made by the Canadian negotiators. There is a sound historical basis for interpreting treaties in the manner summarized in Badger. Anything else would amount to be a denial of fair dealing and justice between the parties.

[63]       I also cite an extract from Justice La Forest's decision in Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, a case which involved the interpretation of paragraph 90(1)(b) of the Indian Act:

¶ 117       While the textual and historical arguments to be made for limiting the meaning of "Her Majesty" in s. 90(1)(b) to the federal Crown appear to me to be irrefragable, I recognize that it is necessary to ask whether the canons of construction generic to the interpretation of statutes relating to Indians change this result. These canons are, of course, those set out by the Chief Justice in Nowegijick, supra, at p. 36.

¶ 118       I note at the outset that I do not take issue with the principle that treaties and statutes relating to Indians should be liberally construed and doubtful expressions resolved in favour of the Indians. In the case of treaties, this principle finds its justification in the fact that the Crown enjoyed a superior bargaining position when negotiating treaties with native peoples. From the perspective of the Indians, treaties were drawn up in a foreign language, and incorporated references to legal concepts of a [page143] system of law with which Indians were unfamiliar. In the interpretation of these documents it is, therefore, only just that the courts attempt to construe various provisions as the Indians may be taken to have understood them.

¶ 119       But as I view the matter, somewhat different considerations must apply in the case of statutes relating to Indians. Whereas a treaty is the product of bargaining between two contracting parties, statutes relating to Indians are an expression of the will of Parliament. Given this fact, I do not find it particularly helpful to engage in speculation as to how Indians may be taken to understand a given provision. Rather, I think the approach must be to read the Act concerned with a view to elucidating what it was that Parliament wished to effect in enacting the particular section in question. This approach is not a jettisoning of the liberal interpretative method. As already stated, it is clear that in the interpretation of any statutory enactment dealing with Indians, and particularly the Indian Act, it is appropriate to interpret in a broad manner provisions that are aimed at maintaining Indian rights, and to interpret narrowly provisions aimed at limiting or abrogating them. Thus if legislation bears on treaty promises, the courts will always strain against adopting an interpretation that has the effect of negating commitments undertaken by the Crown; see United States v. Powers, 305 U.S. 527 (1939), at p. 533.

¶ 120       At the same time, I do not accept that this salutary rule that statutory ambiguities must be resolved in favour of the Indians implies automatic acceptance of a given construction simply because it may be expected that the Indians would favour it over any other competing interpretation. It is also necessary to reconcile any given interpretation with the policies the Act seeks to promote.

¶ 121       It is consideration of this factor that leads me to reject the interpretation the trial judge would give to s. 90(1)(b). The provincial Crowns bear no responsibility to provide for the welfare and protection of native peoples, and I am not prepared to accept that Parliament, in enacting s. 90(1)(b), [page144] intended that the privileges of ss. 87 and 89 exempt Indian bands from taxation and civil process in respect of all personal property that they may acquire pursuant to all agreements with that level of government, regardless of where that property is located. This interpretation is simply too broad. As I have attempted to show, it would take in any agreement relating to purely commercial dealings Indian bands might conclude with the provincial Crowns when competing in the economic mainstream of society. To my mind, such an interpretation takes one beyond the liberal and the generous and subverts the very character of the commitments that the Crown has historically undertaken vis-à-vis the protection of native property. I have already stated that I find no evidence in the historical record that the Crown has ever taken upon itself the obligation of protecting the property of natives without regard to the fact whether the "paramount location" of that property can be said to be reserve lands, or whether the property concerned enures to Indians as an incident of their status.

[64]       Finally, on this point, I reproduce the relevant extract from Justice Dickson's, as he then was, reasons for judgment in [1983] 1 S.C.R. 29">Nowegijick v. The Queen, [1983] 1 S.C.R. 29. In that case, he was construing section 87 of the Indian Act in the context of a claim by Mr. [1983] 1 S.C.R. 29">Nowegijick for an exemption from income tax. He wrote the following:

       Indians are citizens and, in affairs of life not governed by treaties or the Indian Act, they are subject to all of the responsibilities, including payment of taxes, of other Canadian citizens.

       It is legal lore that, to be valid, exemptions to tax laws should be clearly expressed. It seems to me, however, that treaties and statutes relating to Indians should be liberally construed and doubtful expressions resolved in favour of the Indians. If the statute contains language which can reasonably be construed to confer tax exemption that construction, in my view, is to be favoured over a more technical construction which might be available to deny exemption. In Jones v. Meehan, 175 U.S. 1 (1899), it was held that Indian treaties "must ... be construed, not according to the technical meaning of [their] words ... but in the sense in which they would naturally be understood by the Indians".

(ii)        Assignment of arrears of treaty annuities -

An incidental or implied treaty right ?

[65]       In their written and oral submissions, both Mr. Beattie and counsel for the federal Crown raised the question whether the assignment of treaty annuities or their arrears was an incidental or implied treaty right.

[66]       Mr. Beattie argues throughout his memorandum of fact and law that if the proper cannons of interpretation had been followed, the Prothonotary would have found that transferability of treaty annuities to third parties was clearly implied by the terms of the two treaties and assignment of a debt of annuities was a reasonably incidental aspect of the core treaty right. That being the case, Mr. Beattie argues that any statutory provision such as the FAA which has the effect of limiting or otherwise infringing the rights of Indians must be narrowly construed and a generous and liberal interpretation of Indian rights is to be preferred over a narrow and technical one which he says was adopted by the Prothonotary.

[67]       Counsel for the federal Crown argues before a Court can apply section 35 of the Constitution Act which recognizes and affirms Aboriginal and treaty rights or can apply special rules of interpretation to statutory limitations on an alleged treaty right, it must first determine whether there is indeed a treaty right and in this case whether there is a right to assign treaty annuities.

[68]       The Supreme Court of Canada in Sundown, supra, and in R. v. Marshall, [1999] 3 S.C.R. 456, set out the approach which should be followed to determine whether a claimed right is reasonably incidental to a core treaty right.

[69]       In Sundown, supra, the relevant treaty provided Mr. Sundown could hunt for food on land which became the Meadow Lake Provincial Park. He built in the park a log cabin contrary to the Provincial Parks Regulations which prohibit the construction of a temporary or permanent building on park land without permission. Mr. Sundown testified he needed the cabin while hunting, both for shelter and as a place to smoke fish and meat and to skin pelts. Evidence was presented at trial of a long-standing band practice to conduct "expeditionary" hunts in the area now included within the park and in order to carry out these hunts, shelters were built at the hunting sites.

[70]       In Sundown, supra, Justice Cory adopted the test framed by then Chief Justice Dickson in Simon v. The Queen, [1985] 2 S.C.R. 387... "that the right to hunt to be effective must embody those activities reasonably incidental to the act of hunting itself, an example of which is travelling with the requisite hunting equipment to the hunting grounds".

[71]       Justice Cory wrote in Sundown, supra, the following:

¶ 28        How should the term "reasonably incidental" be defined and applied? In my view it should be approached in this manner. Would a reasonable person, fully apprised of the relevant manner of hunting or fishing, consider the activity in question reasonably related to the act of hunting or fishing? It may seem old fashioned to apply a reasonable person test but I believe it is both useful and appropriate.

                                                                      . . .

¶ 30       In order to determine what is reasonably incidental to a treaty right to hunt, the reasonable person must examine the historical and contemporary practice of that specific treaty right by the aboriginal group in question to see how the treaty right has been and continues to be exercised. That which is reasonably incidental is something which allows the claimant to exercise the right in the manner that his or her ancestors did, taking into account acceptable modern developments or unforeseen alterations in the right. The question is whether the activity asserted as being reasonably incidental is in fact incidental to an actually practised treaty right to hunt. The inquiry is largely a factual and historical one. Its focus is not upon the abstract question of whether a particular activity is "essential" in order for hunting to be possible but rather upon the concrete question of whether the activity was understood in the past and is understood today as significantly connected to hunting. Incidental activities are not only those which are essential, or integral, but include, more broadly, activities which are meaningfully related or linked.

[72]       In Marshall, supra, Mr. Marshall, a Mi'kmaq Indian was charged with selling eels without a licence, fishing without a licence and fishing during the closed season with illegal nets. The only issue at trial was whether he possessed a treaty right to catch and sell fish under the Treaties of 1760-61 that exempted him from compliance with the Regulations. During the negotiations leading to those treaties, the Aboriginal leaders asked for truckhouses "for furnishing them with necessaries, in Exchange for their Peltry", in gathering activities and trading for what in 1760 was termed necessaries. It was Mr. Marshall's position that the truckhouse provision not only incorporated the alleged right to trade but also the right to pursue traditional hunting, fishing and gathering activities in support of that trade.

[73]       According to Justice Binnie, the question was whether the underlying negotiations produced a broader agreement between the British and the Mi'kmaq that would protect Mr. Marshall's activities. Justice Binnie concluded the written text of the treaty was incomplete and it was necessary to ascertain the treaty terms not only by reference to the "fragmentary historical record, as interpreted by the expert historians, but also in light of the stated objectives of the British and the Mi'kmaq in 1760 and the political and economic context in which those objectives were reconciled".

[74]       At paragraph 43 of his reasons, he wrote the following concerning when the courts will imply a contractual term where it is necessary to ensure the efficacy of the contract, e.g. where it meets the "officious bystander test":

¶ 43      ... Here, if the ubiquitous officious bystander had said, "This talk about truckhouses is [page493] all very well, but if the Mi'kmaq are to make these promises, will they have the right to hunt and fish to catch something to trade at the truckhouses?", the answer would have to be, having regard to the honour of the Crown, "of course". If the law is prepared to supply the deficiencies of written contracts prepared by sophisticated parties and their legal advisors in order to produce a sensible result that accords with the intent of both parties, though unexpressed, the law cannot ask less of the honour and dignity of the Crown in its dealings with First Nations. The honour of the Crown was, in fact, specifically invoked by courts in the early 17th century to ensure that a Crown grant was effective to accomplish its intended purpose: The Case of The Churchwardens of St. Saviour in Southwark (1613), 10 Co. Rep. 66b, 77 E.R. 1025, at p. 67b and p. 1026, and Roger Earl of Rutland's Case (1608), 8 Co. Rep. 55a, 77 E.R. 555, at p. 56b and pp. 557-58.

[75]       Of Sundown, supra, and Simon, supra, Justice Binnie wrote the following:

¶ 44       . . . Similarly, in Sundown, supra, the Court found that the express right to hunt included the implied right [page494] to build shelters required to carry out the hunt. See also Simon, supra, where the Court recognized an implied right to carry a gun and ammunition on the way to exercise the right to hunt. These cases employed the concept of implied rights to support the meaningful exercise of express rights granted to the first nations in circumstances where no such implication might necessarily have been made absent the sui generis nature of the Crown's relationship to aboriginal people. While I do not believe that in ordinary commercial situations a right to trade implies any right of access to things to trade, I think the honour of the Crown requires nothing less in attempting to make sense of the result of these 1760 negotiations.

(d)       Conclusions

(i)         Are the assignments valid ?

[76]       For the reasons that follow, I conclude the right to assign annuities or their arrears is not an incidental or implied treaty right and that the assignments asserted by Mr. Beattie are invalid as being contrary to subsection 68(4) of the FAA which incorporates the historical record relating to assignments of annuities or their arrears and the requirements of subsection 90(2) of the Indian Act.

[77]       I agree with the reasons advanced by counsel for the federal Crown there is no treaty right to assign annuities or their arrears.

[78]       Counsel for the federal Crown is correct in advancing that, in legal terms, an assignment is the transfer of rights or property (see, Dukelow and Nuse, The Dictionary of Canadian Law, 1st Ed., Carswell and Garner's Black's Law Dictionary, 7th Ed., the West Group). In the context of the appeals before me, an assignment of annuities or arrears of annuities means the transfer to a third person by a Treaty Indian covered by Treaties 6 and 11 of the right to receive the payment from the federal Crown of the annuities or arrears to which he or she may be entitled.

[79]       As argued by counsel for Canada, the question before the Court is the existence of a right to assign annuities before they are received; the question is not the right of a treaty Indian to transfer or spend the annuity once it is received. The federal Crown, in this proceeding, is not in any way challenging the ability of a treaty annuitant to spend their annuities after they receive them.

[80]       I agree with the observation made by counsel for the federal Crown that Mr. Beattie seems to equate incorrectly throughout his argument assignment of annuities before receipt and transfer or spending after receipt.

[81]       I also agree with counsel for the federal Crown that it is not at all clear that a generous interpretation of the treaty right to receive annuities would result in a finding that there is a right to assign annuities and that indeed, one could argue that a generous interpretation of the treaty right to receive annuities, in the sense it would protect the right, would be one that shields the right to receive annuities from loss through assignments to third parties.

[82]       As mentioned, the test for incidental or implied treaty rights was framed by Justice Cory in Sundown, supra, as the reasonable person test, i.e. would a reasonable person, fully apprised of the circumstances of the treaty holder, consider the activity [here the assignment of an annuity or its arrears before it is received] to be reasonably related to the treaty right which is the right to receive an annuity. The historical context and the intention of the parties at the time the treaty was signed are relevant factors to this determination.

[83]       In Marshall, supra, Mr. Justice Binnie framed the test for an implied treaty term where it is necessary to assure the efficacy of the contract, i.e., a term necessary to support the meaningful exercise of the express right granted in the treaty.

[84]       The historical record as disclosed by Mr. Mitchell in his affidavit, in my view, clearly demonstrates there were restrictions generally enforced (with one exception that of Mr. Catfish) in relation to the ability of treaty Indians to assign their annuities to third parties and the ability of third parties to collect annuities of treaty Indians.

[85]       Mr. Mitchell, at paragraph 42 of his affidavit, recognizes that the Department of Indian Affairs did permit individuals to collect annuities on behalf of absent treaty beneficiaries in some circumstances. I agree with the submission of counsel for the federal Crown that these instances were not instances of assignments where legal rights to receive annuities were transferred but instances where a mandate was given by an absentee annuitant to a Chief, a Band Councillor or other responsible Indian to collect the annuity on behalf of the absentee annuitant.

[86]       These restrictions indicate there was no intention to include the ability to assign annuities as an incidental right in the relevant treaties.

[87]       Another element is that at the time Treaties No. 6 and 11 were signed, Crown debts were treated as non-assignable (see, Bank of Nova Scotia v. The Queen (1961), 27 D.L.R. (2d) 120 (Exchequer Court) and Persons v. Canada, [1966] Ex. C.R. 538).

[88]       Another contextual circumstance supporting the non-existence of an incidental right to assign annuities or their arrears is the legislative context at the time those treaties were negotiated. The Indian Act of 1879 immunized from seizure for any debt, matter or cause whatsoever, presents given to Indians or property purchased by means of any annuities granted to Indians, a policy which was continued in all further revisions to the Indian Act.

[89]       Prothonotary Lafrenière grounded his finding Mr. Beattie's assignments were invalid under the FAA on two independent self-standing bases: first, the treaties were not a contract within the meaning of paragraph 68(1)(a) of the FAA and, second, annuities or their arrears fell within the provisions of subsection 68(4) of the FAA where an assignment made in accordance with the FAA is subject to all conditions and restrictions in respect of the right to transfer that relate to the original Crown debt.

[90]       It will be recalled that Prothonotary Lafrenière was of the view subsection 68(4) of the FAA required that consideration must be given to section 90 of the Indian Act which deals with personal property of Indians with paragraph 90(1)(b) providing that personal property that was "given to Indians or to a band under a treaty or agreement between a band and Her Majesty, shall be deemed always to be situated on a reserve" and subsection 90(2) providing that "every transaction purporting to pass title to any property that is by this section deemed to be situated on a reserve, or any interest in such property, is void unless the transaction is entered into with the consent of the Minister or is entered into between members of a band or between the band and a member thereof".

[91]       It will also be recalled that Prothonotary Lafrenière correctly, in my view, relied upon the Federal Court of Appeal's decision in Her Majesty the Queen v. Kakfwi (1999), 99 D.T.C. 5639, that the term "personal property" in section 90 of the Indian Act includes money.

[92]       I repeat Prothonotary Lafrenière's conclusions:

¶ 52       On the evidence before me, it appears that, as a matter of general policy, the Crown does not consent to the assignment of annuities to third parties. Although there is evidence that payments were occasionally made to a person other than to the treaty Indian on the pay list, such arrangements were made solely with close relatives of the Indian person, a Chief, or an Indian Agent in order to facilitate payment.

[93]       I do not accept Mr. Beattie's submission that the Prothonotary erred in his appreciation of the evidence leading to the factual findings he makes at paragraph 52 of his reasons. On the contrary, my review of that evidence indicates the Prothonotary properly assessed and did not misconstrue the evidence before him.

[94]       I also endorse his conclusion that, absent the Crown's consent, treaty annuities cannot be transferred. In this case, the one assignment put by Mr. Beattie to the Department of Indian Affairs was refused. He made no other attempt to seek the Crown's consent for the other assignments.

[95]       In closing on this issue, I return briefly, once again, to Mitchell, supra, and Justice La Forest's reasons because Mitchell was a paragraph 90(1)(b) Indian Act case.

[96]       The issue in Mitchell, supra, was the validity of a pre-judgment garnisheing order against settlement funds held by the Government of Manitoba in respect of the Peguis Band's claim for the return of taxes paid when Manitoba Hydro invalidly imposed a tax in respect of the sale of electricity on the band's reserve.

[97]       At page 136 of the reported decision, Justice La Forest saw the purpose of paragraph 90(1)(b) as "limited to preventing non-natives from hampering Indians from benefiting in full from the personal property promised Indians in treaties and ancillary agreements, is perfectly consistent with the tenor of the obligations that the Crown has always assumed vis-à-vis the protection of native property".

[98]       Justice La Forest also said this about subsection 90(2) of the Indian Act which, as noted, requires ministerial consent to any transaction purporting to past title to any property, including annuities:

¶ 115       My examination of s. 90(2) and (3) only reinforces me in my conclusion that to endorse the trial judge's interpretation of s. 90(1)(b) and to regard that section as being anything more than a protective measure having the specific and limited purpose of ensuring that non-natives do not dispossess Indians of the entitlements that flow to them by operation of their treaties and ancillary agreements, is to prefer an abstruse and strained reading of the section to a plain and ordinary interpretation fully supported by the historical record.

[99]       Finally, I conclude by finding Mr. Beattie has not satisfied me the right to assign a treaty annuity or its arrears is reasonably related to the right to receive that annuity or is necessary for its effective enjoyment. Nothing in the historical record supports Mr. Beattie on this point; on the contrary, that record contains ample indications to the contrary where prohibition from assignment to annuities or their arrears to third parties was necessary to safeguard that right. In addition, as Mr. Mitchell indicates, there were flexible arrangements in place as to how an absentee Indian could be paid his/her arrears.

[100]    I preferred the second of the Prothonotary's two reasons for finding Mr. Beattie's assignments void because it seemed to me the second ground is more principled in the sense it was more closely anchored to the historical record than the first ground was.

[101]    However, by choosing the second ground of invalidity retained by Prothonotary Lafrenière, I should not be taken to detract from his first ground which I also endorse, namely, that in the FAA, there are legitimate reasons to hold that Indian treaties are not contracts for purposes of subsection 68(1) of the FAA.

(ii)         Is interest payable on annuity arrears

[102]    For the purposes of this question, the Prothonotary assumed the assignors were entitled to receive annuities from their respective dates of birth rather than the date of their registration as Indians under the Indian Act.

[103]    From an evidentiary point of view, it was agreed by the parties as follows:

(1)       When the payment process had been completed each year, unused treaty annuity monies were returned to the Receiver General. No annuity payments were retained for use in subsequent years.

(2)       The annual estimates prepared by the Department of Indian Affairs each year included monies to pay arrears of annuities to treaty Indians who had missed previous payments.

(3)       Arrears were paid from the annuity monies for the same fiscal year in which the request for arrears was made.

(4)        No interest was paid on arrears of treaty annuities.

[104]    Mr. Mitchell's affidavit touches on the point. He deposed that his review of documents in relation to Treaty 6 and Treaty 11 disclosed no intention on the part of the Treaty Commissioners to pay arrears of annuities to treaty Indians in the future. At paragraph 43 of his affidavit, he states the Department of Indian Affairs had no established procedure for the calculation or payment of interest on arrears of annuity payments.

[105]    In his conclusions, he states from his examination of all relevant documents contained in Exhibit "A", that arrears of annuities were routinely paid out by the Department of Indian Affairs each year to entitled treaty Indians who had been absent during previous treaty days. This routine payment of arrears of treaty annuities at no time included the calculation, or payment, of interest. He further concluded the Department of Indian Affairs did not routinely hold treaty annuities, or arrears of treaty annuities, in trust for the benefit of all Indians.

[106]    I also note the affidavit of Michael McGinty, Senior Financial Advisor, Department of Indian Affairs and Northern Development, who states that treaty annuity payments paid pursuant to Treaties No. 6 and 11, are paid out of the CRF and are considered to be statutory in nature in that they are required to be paid out of the CRF pursuant to section 72 of the Indian Act.

[107]    There are three aspects to the Prothonotary's determination that treaty annuity arrears do not attract interest: (1) there is no statutory provision under the Indian Act providing for interest on annuity arrears; (2) the Crown has no fiduciary duty to invest or pay interest on annuity arrears; and (3) even if there was a basis for an award of interest as common law damages the doctrine of Crown immunity would bar the payment of interest prior to February 1, 1992, when section 31 of the federal Crown Liability and proceedings Act ("CLPA") was enacted to provide for prejudgment interest.

[108]    Mr. Beattie's argument before me is confined to the first aspect. He argues Prothonotary Lafrenière was wrong when he determined arrears of treaty annuity were not Indian moneys which, under section 61(2), attract the payment of interest.

[109]    Mr. Beattie did not challenge the other two aspects of the Prothonotary's ruling on interest.

[110]    In the formal judgments dated June 1, 2004, in each of the actions, the Prothonotary adjudged that "no interest is payable on any Treaty No. 6 [or No. 11] annuity arrears for which the Defendant, Her Majesty the Queen, may be found liable to the Plaintiff".

[111]    Counsel for the federal Crown asks this Court to vary the Prothonotary's judgment to provide interest for the period after February 1, 1992, as recognized by the Prothonotary himself in his decision at paragraph 88 which reads in part:

88       The effect of subsection 31(6) is to limit interest that may be awarded to periods after February 1, 1992, unless a contract or statute provides for the payment of interest prior to that date... .

[112]    In my view, there are two grounds for dismissing Mr. Beattie's position that treaty annuity arrears attract interest.

[113]    The first ground is anchored on subsection 68(4) of the FAA, on logic and on the historical evidence.

[114]    As noted, subsection 68(4) of the FAA provides that any assignment be subject to "all conditions and restrictions in respect of the right to transfer that relate to the original Crown debt".

[115]    Assuming that a treaty is a contract for the purposes of subsection 68(1) of the FAA, and is thus assignable, such assignment carries with it the benefits of the original Crown debt, the right to receive arrears. However, such assignment also carries with it the burdens of the original Crown debt. The historical evidence is uncontradicted that there was no intention on the part of the Treaty Commissioners that interest be paid on those arrears and there is agreement between the parties that interest on arrears has never been paid.

[116]    I conclude on this basis that arrears of treaty annuities are not entitled to interest prior to February 1, 1992.

[117]    The second ground for rejecting Mr. Beattie's submission on interest is the ground relied upon by Prothonotary Lafrenière. As a matter of statutory interpretation, supported by the affidavit of Mr. McGinty, that annuities are paid out under section 72 of the Indian Act and absence of proof the assignors' names were on the treaty paylists prior to their registration under the Indian Act suggests to me the Prothonotary's finding that section 61 of the Indian Act relied upon by Mr. Beattie does not apply but section 72 is correct.

[118]    For all of these reasons, this appeal is dismissed with costs but such dismissal is subject to a determination whether Mr. Beattie's Notice of Constitutional Question is proper and, if so, subject to the outcome of the constitutional challenge.

"François Lemieux"

                                                                                           J U D G E                  

OTTAWA, ONTARIO

MAY 18, 2005

                                     FEDERAL COURT

   NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKETS:              T-2134-00    T-2203-00    T-2204-00

STYLE OF CAUSE:                                     Bruce Allan Beattie v. Her Majesty the Queen

PLACE OF HEARING:                                Vancouver, B.C.

DATE OF HEARING:                                   February 8 and 9, 2005

REASONS FOR ORDER :                        Lemieux J.

DATED:                    May 18, 2005

APPEARANCES:

Bruce Allan Beattie                                        (on his own behalf)

FOR PLAINTIFF

Rosanne M. Kyle                                            FOR DEFENDANT

Karl Burdak

SOLICITORS OF RECORD:

Bruce Allan Beattie                                        (on his own behalf)

Vancouver, B.C.                                            FOR PLAINTIFF

John H. Sims, Q.C.                                        FOR DEFENDANT

Deputy Attorney General of Canada