Sam v. Canada (Minister of Indian Affairs and Northern Development), 2004 FC 1741

                                                                                                                      Date: 20041215

                                                                                                                 Docket: T-1492-04

                                                                                                          Citation: 2004 FC 1741

Ottawa, Ontario, this 15^th day of December, 2004

PRESENT: THE HONOURABLE MADAM JUSTICE SNIDER

BETWEEN:

                       CHIEF ROBERT SAM, COUNCILLOR NICK ALBANY,

      COUNCILLOR NORMAN GEORGE, COUNCILLOR FRANK E. GEORGE,

                             COUNCILLOR JOHN R. RICE on their own behalf

                           as COUNCIL OF THE SONGHEES INDIAN BAND

                              and on behalf of the SONGHEES INDIAN BAND

                                                                                                                               Applicants

                                                                   - and -

     THE MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT,

               THE SUPERINTENDENT FOR THE SONGHEES INDIAN BAND,

                                     SYLVIA ANN JOSEPH, ALICE LARGE,

            SONGHEES RETIREMENT PART LTD. and SLEGG LUMBER LTD.

                                                                                                                          Respondents

                                      REASONS FOR ORDER AND ORDER

SNIDER J.

[1]                Ms. Irene Cooper died April 26, 1996. At the time of her death, she held Certificates of Possession in respect of nine lots on the New Songhees Indian Reserve No. 1A (the "CP Lots"). In her will, Irene Cooper devised the interests in her CP Lots to her son (Harvey George), daughter (Charlotte Thompson) and grandson (William Gosse) (the "Devisees") who are not entitled to reside on the Songhees Band Indian Reserve or to hold the CP Lots. Pursuant to the scheme of s. 50 of the Indian Act, R.S.C. 1985 c. I-5 (attached as Appendix A), the interests in the CP Lots would be sold and the Devisees would be entitled to the proceeds from the sale of the CP Lots.

[2]         The Minister of Indian Affairs and Northern Development (the "Minister") and the Superintendent for the Songhees Indian Band (collectively, "Canada") took steps to sell the CP Lots. In spite of concerns expressed about the sale itself and the sale process, the Minister approved the sale, in a decision dated July 15, 2004, to Sylvia Joseph and Alice Large (the "Purchasers") who were the highest bidders. Total sale proceeds of $1,278,500.00 (the "Sale Proceeds") were received and Certificates of Possession issued to the Purchasers on July 15, 2004. Since that date, the Purchasers have been receiving the revenues generated by the CP Lots and one of the Devisees-Mr. Gosse-who had been living in a house on one of the properties moved off the reserve.

[3]         The Minister determined that the sale proceeds should not be paid out to the Devisees until the deadline for filing of a judicial review of the Minister's decision. On August 13, 2004, Chief Robert Sam, Councillor Nick Albany, Councillor Norman George, Councillor Frank E. George, Councillor John R. Rice on their own behalf as Councillors of the Songhees Indian Band and on behalf of the Songhees Indian Band (collectively, the "Songhees First Nation") filed an application for judicial review of the Minister's July 15, 2004 decision. The Respondents to this application are Canada, the Devisees and the Purchasers.

[4]         In this motion, Canada seeks an injunction to restrain the Devisees from demanding the Sale Proceeds which, on the face of s. 50 of the Indian Act, are payable to the Devisees by Canada. Canada seeks to hold the Sale Proceeds until the final resolution of the judicial review application. Canada is supported in this motion by the Applicants. The Devisees, as expected, oppose the motion. The Purchasers made no representations.

[5]         Of particular importance to this motion, Canada has agreed to pay the Sale Proceeds to the Devisees if they are not successful in this motion. Thus, while I am not being requested to so order, I have assumed, and all parties appear to have accepted, that the result of a dismissal of this interlocutory application would be payment of the Sale Proceeds to the Devisees prior to the disposition of the application for judicial review.

ISSUES

[6]         This motion raises the following issues:

1.         Is the appropriate test for granting injunctive relief of this nature the conjunctive tri-partite test set out in RJR-MacDonald Inc. v. Canada (Attorney General) [1994] 1 S.C.R. 311 at para. 35.

2.          If the response to the first question is affirmative, has Canada satisfied all three branches of the test by demonstrating that there is a serious issue for trial, that they will suffer irreparable harm in the absence of the requested relief, and that the balance of convenience favours Canada?

ANALYSIS

[1]         All parties acknowledge that this is an unusual motion in that it is an attempt by one respondent (Canada) to obtain injunctive relief against another respondent (the Devisees). Canada has framed its request as follows:

1.         That the Devisee be enjoined from making any further demands, or taking any further action for payment of any of the Sale Proceeds such that the Sale Proceeds can continue to be retained by the Minister in an interest-bearing suspense account pending the final disposition of this judicial review proceeding, including any appeals.

2.         In the alternative, that the Sale Proceeds be paid into Court pursuant to Rule 149 of the Federal Court Rules, pending the final disposition of this judicial review proceeding, including any appeals.

[2]         Canada and the Songhees First Nation submit that the granting of such an order would be a form of interim relief contemplated by section 18.2 of the Federal Court Act. They further submit that the usual test for injunctive relief should be considered. The Devisees did not object to this characterization of the motion. Given the broad discretion of s. 18.2 and the agreement of parties, I will proceed on the basis that this is a motion in the nature of a request for injunctive relief.

Issue #1: Test for Interlocutory Relief

[3]         Assuming that this motion should be characterized as a request for a form of injunctive relief pending final determination of the judicial review, on what basis should I determine the matter? Canada and the Songhees First Nation argue that the circumstances of this case require a flexible approach as applied by Justice McLachlin (as she then was) in the majority decision of the British Columbia Court of Appeal in British Columbia v. Wale (1986), 9 B.C.L.R. (2d) 333 (aff'd [1991] 1 S.C.R. 62). However, I believe that the Supreme Court of Canada, in RJR-MacDonald, supra which post-dates the Wale decision and which has been consistently applied by this Court, set out the test to be applied. On an application for injunctive relief, I am to apply the conjunctive tri-partite test. Briefly stated, I must be satisfied that there is a serious issue to be tried, that Canada would suffer irreparable harm if the motion is denied and that the balance of convenience favours the granting of the requested relief. Each of these elements is to be determined separately, and if all three prongs are cumulatively satisfied, the motion will be allowed.

Issue #2: Has Canada met the tri-partite test for the granting of injunctive relief?

Serious Issue

[4]         The parties agree that, for purposes of this motion, there is a serious issue to be tried. The application for judicial review appears to raise many issues, some of which are as follows:

1.         Was approval of the Band Council of the Songhees First Nation required as a pre-condition for the sale of the CP Lots?

2.         Did Irene Cooper hold only a life interest in the CP Lots and, therefore, did she have any interest in the CP Lots to devise to the Devisees?

3.         Are each of the Purchasers eligible to acquire their interests in the CP Lots?

In my view, these issues are neither frivolous nor vexatious.

[5]         The threshold is not high on this aspect of the test. As noted by the Supreme Court of Canada in RJR-MacDonald,supra at para. 50:

                        Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. A prolonged examination of the merits is generally neither necessary nor desirable.

[6]         Having accepted that the application raises serious issues, the potential outcome of the application for judicial review may be relevant to both the issues of irreparable harm and balance of convenience. Although full records have not yet been filed in the application, it is apparent that the Songhees First Nation will be arguing that the interest of Irene Cooper in the CP Lots was not valid and that, therefore, there was no interest to devise to the Devisees. If successful in that regard, the ultimate result will be that the Devisees will not be entitled to any proceeds whatsoever. Not only would they not receive the Sale Proceeds that are the subject of this motion, they would receive nothing from a further sale, if any, of the Lots in question.

Irreparable Harm

[7]         There was considerable discussion during the arguing of this motion as to what constitutes irreparable harm for purposes of the test for injunctive relief. In my view, the test is set out in RJR-MacDonald, supra, at para. 58, as follows:

                        At this stage the only issue to be decided is whether a refusal to grant relief could so adversely affect the applicants' own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. . . . The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).

[8]         The Devisees submit that the evidence of irreparable harm must be clear and not speculative and must support a finding that the applicant will suffer irreparable harm and not merely that irreparable harm is likely (Centre Ice Ltd. v. National Hockey League [1994] F.C.J. No. 68 (F.C.A.), at p. 34; Verint Technology Inc v. Minister of Public Works and Government Services, [2003] F.C.J. No. 214, at para. 18). While I do not disagree that the irreparable harm must be clear and not speculative, a test that would require that the harm be a certainty would be, in my view, too high a standard.

[9]         As instructed by the Supreme Court of Canada in RJR-MacDonald, I will start by describing the situation that would arise "if the eventual decision on the merits does not accord with the result of the interlocutory application". That is, I will assume that:

(a)         the Songhees First Nation is successful in its attempt to reverse the sale and that the ultimate effect of their success is that the Devisees are not entitled to any proceeds; and,

(b)         the Sale Proceeds have gone to the Devisees as a result of my dismissing this motion.

[10]       In their submissions, Canada states that, if they are successful in the judicial review application, the Devisees will have suffered only "delay and inconvenience of having to wait the Sale Proceeds pending the ultimate determination of the Band's judicial review application". They further note that "Delay and inconvenience do not constitute irreparable harm" (Benoanie v. Canada, [1993] 2 C.N.L.R. 97 (F.C.T.D.), at para. 6). The fundamental flaw in this argument is that the Devisees do not have to show that granting the injunction will cause them irreparable harm. The burden, at this stage of the analysis, is squarely on Canada who must satisfy me that they will suffer irreparable harm and not on the Devisees who are called upon here to defend this motion for injunctive relief. As noted in RJR-MacDonald, supra, at para. 57, "harm which might be suffered by the respondent . . . is more appropriately dealt with in the third part of the test." Thus, for purposes of determining whether the harm alleged is "irreparable", the harm to the Devisees is not relevant.

[11]       What is relevant in this analysis? Turning once again to RJR-MacDonald, supra, a relevant consideration is the ability to collect damages. As stated by Lord Diplock in American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All ER 504 (H.L.), at p. 510:

If damages ... would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage [emphasis added].

[12]       The relevant considerations before me that address the ability of Canada to recover the Sale Proceeds are as follows:

            ·            The affidavits of the Devisees demonstrate that they have few financial resources. William Gosse claims that he is a labourer and a part-time Corporal with no assets; Charlotte Thompson claims that she has no assets except a trailer; and Harvey George claims that he rents a house, and has only minimal assets. Before me, the Devisees admit that, if they receive the Sale Proceeds, some of the proceeds will be dissipated.

·            The litigation in this judicial review and related matters will be lengthy. Therefore, it follows from the first point that the total amount of the proceeds available for recovery by Canada will continue to diminish over time as the Devisees continue to spend them.

            ·            There is no evidence before me that the Devisees hold any assets which could act as security for recovery of the funds.

            ·            The Songhees First Nation submitted that, pursuant to s. 89(1) of the Indian Act (attached in Appendix A), "the real and personal property of an Indian . . . situated on a reserve is not subject to charge, pledge, mortgage or attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a Band". The Devisees are all Indians within the meaning of the Indian Act. The protection provided by this provision has been endorsed by courts (Syrett v. Sewell, [1997] 1 C.N.L.R. 207 (Ont. Court of Justice); Burns v. Financial Bailiff Services Ltd., [2000] S.J. No. 794, (Sask. Q.B.)) and would prevent enforcement of damages awarded to Canada. In light of this statutory protection, I conclude that it would be logical and almost a certainty that the Devisees would ensure that the Sale Proceeds would be located on a reserve (such as in a financial institution located on a reserve).

[13]       Canada submits that "it is doubtful that Canada will be able to recover the Sale Proceeds from the Devisees in the event that the Band ultimately succeeds in its judicial review application". Given the above facts, I agree. I should comment that, in coming to this conclusion, I am in no way opining that the Devisees will act in bad faith to "hide" the assets or take other calculated steps to avoid repayment. This conclusion is simply a finding that Canada will not be able to collect the entire Sale Proceeds from the Devisees if they need to be recovered.

[14]      The Devisees point out that it is only under one of the scenarios that they would not be entitled to any funds; the Songhees First Nation may only be successful to the point of having the sale process declared improper and forcing a re-tendering of the CP Lots. In that event, there would be proceeds of a subsequent sale due to the Devisees which could offset any amounts from the original Sale Proceeds still owing by the Devisees. In effect, they argue that the CP Lots are security for recovery of the amounts owing to Canada by the Devisees.

[15]       The flaw in this argument is that it requires me to speculate on the outcome of the application for judicial review by assuming that there will be a "pot of proceeds" to satisfy all claims. All parties to this motion have acknowledged that there is a serious issue to be tried. It is appropriate, in my view, for purposes of this motion, to assess irreparable harm on the basis that the Songhees First Nation will ultimately obtain the remedy it seeks. Under that scenario, there would be no proceeds to set off against a debt of the Devisees to Canada. Thus, the situtation, at this time and until the disposition of the judicial review, is that the claim advanced by the Devisees to the Sale Proceeds is uncertain.

[16]       Further, there is no evidence before me as to the value of the CP Lots or whether there would be any other interested buyers in a subsequent process. This makes the argument of the Devisees very speculative, even if I accept their potential conclusion to the judicial review.

[17]       In conclusion on this point, I am satisfied that damages are not an alternative for the reason that there is considerable and real doubt that any award in damages against the Devisees would be recoverable. This constitutes irreparable harm.

Balance of Convenience

[18]       The third test to be applied in an application for interlocutory relief is the balance of convenience, which has been described as "a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits" (Manitoba (Attorney General) v. Metropolitan Stores, [1987] 1 S.C.R. 110, at para. 35). The Supreme Court in RJR-MacDonald, supra, at para. 60, noted that the factors which must be considered in assessing the "balance of inconvenience" are numerous and will vary in each individual case. The Supreme Court then cited Lord Diplock's caution in American Cyanamid, supra, at p. 511 that:

He added, at p. 511, that "there may be many other special factors to be taken into consideration in the particular circumstances of individual cases."

[19]       To properly assess the balance, I must determine what factors are at play in this motion. It appears that some or all of the following may have relevance:

            ·     actions of Canada and the Devisees

·      the harm to each of the Devisees and Canada

·      the public interest

·      the strength of the underlying application

[20]       Considering first the actions of Canada, I note that Canada took the decision to conclude the purchase end of the sale prior to the expiry of the deadline for judicial review. Could they have waited before issuing the Certificates of Possession? Could establishment of escrow conditions pending the expiry of the period been put in place to protect all parties? Had the Certificates of Possession not issued, a large part of the irreparable harm to Canada would have been preventable, since they would still be holding the Certificates of Possession. By proceeding to close the transaction with the Purchasers, Canada bears a share of the responsibility for the situation that they and the Purchasers now find themselves. Is it equitable, therefore, to now force the Devisees to suffer by enforcing a status quo? With nothing more or no explanation, it appears to me that these actions weigh against Canada.

[21]       However, the evidence before me does not indicate that Canada, in closing one side of the sale and not the other, was acting in bad faith. Canada submits that there were valid reasons related to their view of the enforcement of the Indian Act that resulted in the sequence of events. The interpretation of the provisions of s. 50 of the Indian Act and the balancing of competing interests in this complex matter are not simple matters. This, in my view, lessens the weight of this factor against Canada.

[22]       The actions of the Devisees must also be considered. [23]In addition to the facts already noted, there is another complexity related to the dispute among the parties to this proceeding. For some period of time after Irene Cooper died, periodic rental payments on the CP Lots were paid to the Devisees. The Songhees First Nation brought the issue of entitlement to the courts of British Columbia. On appeal, the British Columbia Court of Appeal, in a majority decision, ruled that neither the Songhees First Nation nor the Devisees were entitled to those proceeds (Songhees First Nation v. Canada (Attorney General), 2003 BCCA 187). The result of this decision is that the Devisees have received approximately $500,000 in rental income to which they are not entitled. In the record of this motion, I have seen no evidence that the Devisees are prepared to account for that money. This fact weighs in favour of Canada who would, if it had those monies, be in a somewhat better position to satisfy the outcome of losing the judicial review application. At the end of this complex litigation, this $500,000 will have to be accounted for. This, in my view, supports a decision at this stage that would avoid adding any further complexities to an already difficult factual situation.

[24]       The Devisees refer to the fact that Mr. Gosse left his residence on the reserve when the sale closed. This, in the Devisees' view, shows an imbalance of the equities. However, I note that Mr. Gosse, who is not a member of the Songhees First Nation, had no right to reside on the reserve after his grandmother, Irene Cooper, died in 1996. The fact that he was "evicted" in 2004 from a home where he had illegally resided for 8 years does not weigh in his favour.

[25]       The potential harm to the Devisees should be taken into account at this stage (RJR-MacDonald, supra, at para. 57). The financial situation of the Devisees is unfortunate. While they may ultimately have a successful claim against Canada for these or other proceeds, in the meantime, they are no worse off without those proceeds than they were before. Due to the uncertainty of their rights to any proceeds from the ultimate disposition of the CP Lots, it may be more appropriate at this stage to maintain the status quo. As Justice McLachlin, in Wale, supra, at p. 346, stated:

... where the only effect of an injunction is to postpone the date upon which a person is able to embark on a course of action not previously open to him, it is a counsel of prudence to preserve the status quo.

[26]       The difficulties in recovering the Sale Proceeds, as discussed above, weighs in favour of Canada.

[27]       Finally, the public interest in this matter favours Canada. If the sale is overturned, any attempts by Canada to recover the Sale Proceeds from the Devisees will involve a time-consuming and administratively difficult process that is unlikely to succeed for the reasons above. It is in the public interest to preserve the Sale Proceeds to allow for an orderly disposition of funds once the judicial review and any appeal have been concluded. The Songhees First Nation submit that I should consider the strength of its application for judicial review in considering the balance of convenience (Wale, supra at p. 346). Given that an interlocutory injunction is not the appropriate forum to examine the merits of the underlying application, I am reluctant to include this factor in the analysis. As I advised parties during the hearing of this motion, I would only delve into this factor if all other considerations were evenly balanced. On the facts of this case, the factors almost all weigh in favour of Canada. There is no need to speculate on the outcome of the judicial review.

[28]       Whether the Sale Proceeds are given to the Devisees or held by Canada, one of the Respondents will suffer negative and unfortunate consequences. Having considered all of the circumstances, it is my view that the least damage occurs if the Sale Proceeds continue to be held by the Minister and are not distributed to the Devisees. Thus, I conclude that the balance of convenience favours holding the Sale Proceeds until the outcome of the judicial review is determined.

Conclusion

[29]       For these reasons, I would grant the motion and order that the Sale Proceeds continue to be held by the Minister pending the outcome of the application for judicial review and any appeals therefrom.

[30]       In my view, there is no necessity for Canada to either pay the Sale Proceeds into Court or to give an undertaking as to damages.

[31]       In my discretion, I decline to award costs on this motion.

                                                                 ORDER

THIS COURT ORDERS THAT:

1.    The Minister shall continue to hold the Sale Proceeds in an interest-bearing suspense account pending final disposition of the underlying judicial review, including any appeals;

2.    No costs of this motion are awarded.

          "Judith A. Snider"

Judge

                                                                                   APPENDIX 'A'

                                                       FEDERAL COURT

                      NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                    T-1492-04

STYLE OF CAUSE:                    CHIEF ROBERT SAM ET AL v. THE MINISTER OF

INDIAN AFFAIRS AND NORTHERN     DEVELOPMENT ET AL

PLACE OF HEARING:              Vancouver, British Columbia

DATE OF HEARING:                December 10, 2004

REASONS FOR ORDER

AND ORDER:                           The Honourable Madam Justice Snider

DATED:                                       December 15, 2004

APPEARANCES:

Mr. Rory B. Morahan                                              FOR APPLICANTS

Ms. Isabel Jackson and                                           FOR RESPONDENT, THE MINISTER

Mr. Patrick Walker                                                 OF INDIAN AFFAIRS AND

NORTHERN DEVELOPMENT

Mr. Michael J. Lomax                                             FOR RESPONDENT, THE ESTATE OF IRENE COOPER AND THE DEVISEES OF THE ESTATE OF IRENE COOPER

SOLICITORS OF RECORD:

Morahan & Aujla                                                    FOR APPLICANT

Victoria, British Columbia                                       

Morris Rosenberg                                                   FOR RESPONDENT, THE

Deputy Attorney General of Canada                        MINISTER OF INDIAN

AFFAIRS AND NORTHERN DEVELOPMENT

Milton, Johnson                                                       FOR RESPONDENT, THE ESTATE Victoria, BC                        OF IRENE COOPER AND THE DEVISEES OF THE ESTATE OF IRENE COOPER