Miles v. Whitefish River First Nation, 2001 FCT 610

Date: 20010608

Docket: T-747-97

Neutral Citation: 2001 FCT 610

BETWEEN:

                                        ALLAN J. MILES

                                                                                               Plaintiff

                                               - and -

THE WHITEFISH RIVER FIRST NATION AND

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

AS REPRESENTED HEREIN BY THE MINISTER OF

INDIAN AFFAIRS AND NORTHERN DEVELOPMENT

                                                                                        Defendant

                       REASONS FOR ORDER AND ORDER

BLAIS J.

[1]    This is a motion by the defendant, Her Majesty the Queen, the applicant in the within motion, (the "applicant"), for an order setting aside or varying the Order of Associate Chief Justice Jerome, dated January 20, 1998, which prohibited the Crown from taking any further steps to terminate the lease, evict the plaintiff (the "respondent") or otherwise regain possession of the property.

RELEVANT FACTS

[2]    On February 2, 1978, the respondent's father, Norman Miles, entered into a lease with the applicant for the lease of Lot 105, Whitefish River Indian Reserve, for a period of twenty-one years (the "lease").

[3]    On March 21, 1991, an agreement was entered into with the applicant for an assignment of the lease to the applicant by means of an addendum to lease (the"addendum to lease").

[4]    On March 8, 1994, the Minister of Indian Affairs and Northern Development (the "Minister") sent a letter to the respondent advising him that the Whitefish River First Nation had assumed the delegated authority of the Minister to manage the lands on the Whitefish River Indian Reserve. The letter further stated that pursuant to this delegation, the respondent was required to remit his rental payments to the Whitefish River First Nation.

Order of Associate Chief Justice Jerome, dated January 20, 1998

[5]                By statement of claim filed April 16, 1997, the respondent commenced an action against the applicant and against the Whitefish River First Nation for, inter alia, an interim injunction prohibiting the applicant from taking any further steps to terminate the lease, evict the respondent or otherwise regain possession of the leased property and also relief from forfeiture for non-payment of rent.

[6]                In October 1997, the respondent discontinued the action against the Whitefish River First Nation.

[7]                By amended notice of motion, dated January 12, 1998, the applicant brought a motion to the Court for, inter alia, an order granting summary judgment and dismissing the statement of claim

[8]                By cross-motion dated January 12, 1998, the respondent also brought a motion to the Court for, inter alia, an interim injunction prohibiting the applicant from taking any further steps to terminate the lease, evict the respondent or otherwise regain possession of the leased property.

[9]                Both parties' motions were heard together by Jerome A.C.J. on January 20, 1998.

[10]            By order issued from the Bench, Jerome A.C.J. dismissed the applicant's motion for summary judgment. He also stayed the action pending final determination (including appeals) of action No. T-234-92 in the Federal Court.

[11]            Jerome A.C.J. also issued an interim injunction prohibiting the defendant from taking any further steps to terminate the lease, evict the respondent or otherwise regain possession of the property prior to trial or further order.

Expiration of lease

[12]            Pursuant to the provisions of the lease, the lease expired on March 31, 1998. The applicant did not renew or extend the term of the lease. Further, as stated in the letter dated December 20, 2000, from Chief Leona Nahwegahbow, the Whitefish River First Nation did not renew or extend the term of the lease.

[13]            The respondent notes however that under paragraph 30 of the lease, the lessee has the right to renew the lease upon giving to the lessor twelve months notice prior to the expiration of the term or prior to the expiration of any renewal period. The respondent stated in his affidavit sworn May 29, 2001 that he gave notice of his intention to renew the lease during the twelve month period prior to the expiration of the lease. In fact, the respondent sent a notice dated June 23, 1997, received the day after by the Whitefish River First Nation Band.

Breached of the Lease by the respondent subsequent to the order of Associate Chief Justice Jerome, dated January 20, 1998.

Rental Arrears

[14]            According to the applicant, for the year 1998, the respondent only made a partial payment of his rent. He did not make any payment of rent for the year 1999 and 2000. The respondent is currently in arrears of rent in the sum of $4,984.00.

[15]            On or about May 17, 2000, the Department of Indian Affairs and Northern Development received a cheque from the respondent in the amount of $1,265.00, payable to Indian Affairs. On the same day, Ms. Diane Wills of the Department of Indian Affairs and Northern Development returned this cheque to the respondent and advised him that rental payments should be sent to the Whitefish River First Nation.

[16]            The respondent stated in his affidavit that he is not in arrears on his rental payments. The rent for the lot was fixed at $1,265.00 per year for the term commencing March 1998. The abutting lot "owners" pay the same rent. The applicant continued his practice of refusing to cash the respondent's rental cheques. These cheques were sufficient to cover the rental payments. The cheques were sent by registered mail.

[17]            The respondent suggests that those rental cheques, if cashed, would bring the respondent in good standing. As the rental cheques are now stale-dated, he is prepared to provide further rental cheques providing the Department of Indian Affairs and Northern Development indicates that the cheques will be cashed.

Bankruptcy

[18]            On May 22, 1998, the respondent made an assignment into bankruptcy and was discharged from bankruptcy on or about February 22, 1999.

[19]            According to the applicant, the respondent never advised the employees of the Department of Indian Affairs and Northern Development nor the Whitefish River First Nation of this bankruptcy matter.

[20]            The respondent however stated in his affidavit that the solicitor for the Department of Indian Affairs and Northern Development and the Whitefish River First Nation was aware of the bankruptcy. Before his discharge from bankruptcy, the respondent personally had a conversation with Mr. O'Neill, solicitor for the Whitefish River First Nation, at which time they discussed the respondent's bankruptcy. Furthermore, the respondent's solicitor advised the respondent that he had told Mr. O'Neill in telephone discussions that the respondent had filed for bankruptcy.

[21]            Morover, the Trustee in Bankruptcy, upon the filing of the bankruptcy, released his interest in the leased property and the building situated thereon. The bankruptcy has not affected the rights of the Whitefish River First Nation or the Department of Indian Affairs and Northern Development.

Termination of lease

[22]            Pursuant to subsection 21(e) of the lease, it is lawful for the Minister, without notice, to declare the term ended and the lease terminated, if the lessee (respondent) fails to pay the rent due thereunder.

[23]            Pursuant to subsections 21(a) and (b) of the lease, it is lawful for the Minister, without notice, to declare the term ended and the lease terminated, if the lessee (respondent) files a petition in bankruptcy or makes an assignment in bankruptcy.

[24]            By letter dated December 20, 2000, the Whitefish River First Nation requested that the lease be terminated and the respondent be evicted from Lot 105. The Minister agrees that the lease be terminated and that the respondent be evicted from Lot 105.

Action No. T-234-92

[25]            Jerome A.C.J.'s order dated January 20, 1998 prohibits the Minister from taking any steps to terminate the lease, prior to trial or further order. The order further provides that the within action be stayed pending the final determination (including appeals) of Federal Court action No. T-234-92.

[26]            On July 16, 1998, the Federal Court (Trial Division) rendered judgment in action No. T-234-92.

[27]            In that action No. T-234-92, Maurice St-Martin et al. v. Canada (Ministry of Indian Affairs and Northern Development), the plaintiffs, sixty-one lessees of individual lots situated on the Whitefish River reserve, were in the same situation as the respondent regarding the calculation of the rental payment for their lot. They brought an action for a determination of the annual rental of each demised tract of land for a seven year period commencing on April 1, 1991.

[28]            Richard, A.C.J. (now Chief Justice), concluded that:

The fair market rent, for the period April 1, 1991 to March 31, 1998, is the estimated market value of each lot as calculated by Mr. Bell in his report (Exhibit P-8, Tab. 17) at pages 82 to 83 with a discount of 40% to arrive at the discounted market value, times the lending rate of 9.92% or such other rate as was in effect on March 31, 1991. If the calculation results in an overpayment of rent, then each lessee is entitled to a reimbursement of such an amount to be determined by counsel, together with pre-judgment interest in accordance with the provisions of the Ontario Courts of Justice Act. If there is any dispute over this calculation, the matter may be referred to me.

[29]            On August 13, 1998, action No. T-234-92 was appealed to the Federal Court of Appeal. The appeal (file A-465-98) was heard on April 4, 2001 but no judgment has been rendered as of this time.

ISSUE

Should the order of Jerome A.C.J. dated January 20, 1998 be varied or set aside?

ANALYSIS

[30]            Rule 399(2)(a) of the Federal Court Rules, 1998 provides:

[31]            In Canada (M.E.I.) v. Chung, [1993] 2 F.C. 42 (F.C.A.), the Federal Court of Appeal explained:

In order to have a judgment set aside under Rule 1733 an applicant must demonstrate that the matter was discovered subsequently and that he has acted with reasonable diligence (See Saywack v. Canada (Minister of Employment and Immigration), [1986] 3 F.C. 189 (C.A.); Rostamian v. Canada (Minister of Employment and Immigration) (1991), 14 Imm. L.R. (2d) 49 (F.C.A.)). Normally, in a Rule 1733 application, the Court will consider those two questions before deliberating on the merits of the application. It follows that there is no assurance that the Court will ever consider the merits of an application under Rule 1733 as the application may be dismissed before reaching that point.

[32]            The applicant submits that the respondent's failure to pay the rent owing under the lease and the respondent's assignment into bankruptcy are new matters which:

(i)        were discovered (and occurred) subsequent to the order of Jerome A.C.J., dated January 20, 1998;

(ii)       could not with reasonable diligence have been discovered sooner; and

(iii)      are of such a character that if they had been brought forward in the (earlier) motion, it would have altered the order of Jerome A.C.J. dated January 20, 1998.

[33]            I agree with the applicant that these facts are new matters that were discovered subsequent to the order of Jerome A.C.J. and that the applicant could not with reasonable diligence have discovered them sooner.

[34]            The question therefore is whether these new matters are sufficient to vary or set aside Jerome A.C.J.'s order dated January 20, 1998.

[35]            The applicant submits that where a contracting party has obtained an injunction and that party fails to perform his contractual obligations, the Court should dissolve the injunction that was granted.

[36]            The applicant further submits that the interlocutory injunction issued by Jerome A.C.J. was granted to maintain the "status quo" and also with an implied understanding that the respondent would continue to perform his obligations under the lease.

[37]            As for the respondent, he argues that he paid his rent but that his cheques were not accepted by the Department of Indian Affairs and Northern Development. If the rental cheques had been accepted, the rent would not be in arrears. Furthermore, the respondent states that the solicitor for the Department of Indian Affairs and Northern Development and the Whitefish River First Nation was aware of the bankruptcy.

[38]            In any event, the respondent argues that his bankruptcy had no impact on the validity of the lease since the Trustee in Bankruptcy has released his interest in the property and the tenant has not defaulted on his rental payments.

[39]            The applicant relies on the decision Chappell v. Times Newspapers Ltd., [1975] W.L.R. 482 (C.A.) where Lord Denning stated:

There is another point which seems to me decisive. These men are saying that the publishers are about to break the contract of employment. But it is plain that they are not ready and willing to perform their own side of it. It has been settled both at common law and in equity that, in a contract where each has to do his part concurrently with the other, then if one party seeks relief, he must be ready and willing to do his part in it. You will find the common law so stated in Smith's Leading Cases ed. (1929) vol. 2 p. 10: notes to Cutter v. Powell (1795) 6 Term Rep 320. You will find the equity stated in Measures Brothers Ltd. v. Measures [1910] 2 Ch. 248 where Sir H.H. Cozens-Hardy M.R. said, at p. 2:

"I prefer to base my judgment upon the ground that the plaintiffs, who are seeking equitable relief by way of injunction, cannot obtain such relief unless they allege and prove that they have performed their part of the bargain hitherto and are ready and able also to perform their part in the future."

The principle was stated by Lord Radcliffe more recently in Australia Hardwoods Pty. Ltd. v. Commissioner for Railways [1961] 1 W.L.R. 425, 432-433:

"... where the agreement is one which involved continuing or future acts to be performed by the plaintiff, he must fail unless he can show that he is ready and willing on his part to carry out those obligations, which are, in fact, part of the consideration for the undertaking of the defendant that the plaintiff seeks to have enforced."

In this case it seems to me impossible for any of the plaintiffs to say that he is ready and willing to perform his part of the contract when on the statement of his union, the National Graphical Association (which he has never disavowed) he may be called upon, or other members of his union may be called upon, to take industrial action so as to bring great losses to their employers. Not being ready and willing to do their part, they cannot call on the employers to continue to employ them. They are seeking equity when they are not ready to do it themselves.

[40]            Thus, I have to examine whether the respondent did perform his part of the contract.

[41]            The respondent argues that he did pay his rent but that the applicant did not accept his cheques. The evidence shows that the respondent sent three cheques, dated April 20, 2001 for an amount of $1,267.00, April 1^st, 2000 for an amount of $1,265.00 and May 28, 1998 for an amount of $1,250.00 to the Department of Indian Affairs and Northern Development. The respondent was not able to locate copies of all his rental cheques. He explained that his vehicle was stolen in February 2000 and some of his records were never recovered.

[42]            The respondent argues that these rental cheques, if cashed, would bring him in good standing. He is also prepared to provide further rental cheques providing the Department of Indian Affairs and Northern Development indicates that the cheques will be cashed.

[43]            The applicant however is of the view that the rental payment is $2,078.00. This amount appears on the addendum to the lease dated March 21, 1991 between the applicant and the respondent. Therefore, the respondent's cheques would not be sufficient to cover the arrears even if the cheques were cashed.

[44]            The respondent failed to convince the Court that he had the intention of paying his rent.

[45]            If we refer to the lease itself, the amount due for each year is $2,078.00. Nevertheless, the respondent decided that the amount he had to pay was $1,265.00. He was wrong, he cannot decide himself of the amount that he has to pay. The amount was established in the addendum to lease signed by the respondent on March 21, 1991 and if he disagrees on the rental payment, the last paragraph on the preamble of the lease says:

The Lessee shall have the right, if he (they, it) disagrees with the Minister's determination of the rent to refer the question of rental to the Trial Division of the Federal Court of Canada at his own expense. In the event of such referral by the Lessee, he (they, it) shall pay and continue to pay the annual rental determined by the Minister PROVIDED that after determination by the Federal Court aforesaid any amount paid by the Lessee with respect to the seven year period in question shall be adjusted in accordance with such determination by way of rebate or additional payment.

[46]                     Also, the respondent was always late to send his cheques and even though he was clearly noticed since 1994 that he had to pay it to the Whitefish River First Nation, he never sent his cheques there, but always to the Department of Indian Affairs. When the cheques were returned to him, he never sent those cheques back to the Band. He was clearly advised for the last time in May, by a letter dated May 17, 2000, by Mrs. Wills to send his cheques to Ester Osche, the land manager for the Band.

[47]            In her affidavit sworn January 8, 2001, Mrs. Restoule indicates that on May 17, 2000, the Department of Indian Affairs and Northern Development received a cheque from the respondent in the amount of $1,265.00, payable to Indian Affairs. On the same day, Mrs. Diane Wills of the Department of Indian Affairs and Northern Development returned this cheque to the respondent and advised him that rental payments should be sent to the Whitefish River First Nation.

[48]            Mrs. Ester Osche, in her affidavit sworn on May 30, 2001, indicates that she received a letter form Mrs. Wills in which she enclosed a cheque of Allan J. Miles which cheque was drawn on the Toronto-Dominion Bank branch in Espanola, Ontario. This cheque is made payable to Indian Affairs for $1,267.00 and is dated April 20, 2001.

[49]            Mrs. Osche states that upon receipt of the cheque, she contacted the said Toronto-Dominion Bank branch in Espanola and she received a note dated May 15, 2001 from the bank, indicating that there were insufficient funds in the said account of the respondent at his bank, to cover the cheque.

[50]            It is also clearly demonstrated by the documents that are before the Court that even though it has to be paid on April 1^st , the cheque was dated April 20^th and sent by registered mail on May 11.

[51]            I am also concerned with the fact that the cheques do not cover the whole amount asked from the lessor. However, this is probably explained by the fact that the respondent does not agree with the calculation of the rent.

[52]            Nevertheless, even if the respondent is not in agreement with the rental payment, he has to pay the rent and grieve later. I am concerned that he might think that he has the right to deduct the amount he believes is over what he should be paying.

[53]            I am of the view that the respondent did not comply with the terms of the lease. I am sympathetic to the respondent's situation and the fact that he might have a case against the applicant and that the applicant is not calculating the rental payment correctly. However, the addendum of the lease is clear and the respondent did sign it. Also, the respondent cannot decide unilaterally that the rental payment should be $1,267.00 when the addendum to the lease shows a different amount. If he wants to dispute the amount, he should do it through courts not on his own. The respondent however argues that relief from forfeiture can be granted pursuant to the common law and the law of equity where there has been a refusal on the part of the tenant to pay the rent.

[54]            The applicant also stated that the respondent did not respect the lease since he did not advise the employees of the Department of Indian Affairs and Northern Development nor the Whitefish River First Nation that he filed for bankruptcy. However, the respondent stated in his affidavit that he did advise the solicitor for the Whitefish River First Nation that he had filed for bankruptcy. The fact that he advised the solicitor is not relevant and does not constitute a waiver of the right of the applicant to terminate the lease in a case of bankruptcy.

[55]            I was also concerned to see in the respondent's statement of affairs completed when he filed for bankruptcy that his property on the Band's lands is estimated as $0 value while the respondent himself in his affidavit sworn on April 14, 1997 established the value of the cottage estimated and I quote:

The value of the cottage alone on my property has been estimated to be no less than $70,000.00. The value of the outbuildings is no less than $28,000.00.

[56]            If the estimated value of his property is established to $0 value in the respondent's statement of affairs, it could explain why the trustee decided, upon the filing of the bankruptcy, to release his interest in the leased property and the building situated thereon.

[57]            The trustee's decision could have been different if he had known that the estimated value was $70,000 and not $0.

[58]            It is interesting to note that those two documents were sworn by the same individual, one on April 14, 1997 and the other on May 21, 1998. It says a lot about the credibility of the respondent.

[59]            In my view, I have no obligations to revisit the reasons why Jerome ACJ made his decision in 1998.

[60]            Nevertheless, it is clear that the respondent relying on Justice Jerome's decision, decided not to fulfill his obligations pursuant to the lease.

[61]            I have no hesitation to conclude that the new matters raised by the applicant are sufficient to set aside Jerome ACJ's order dated January 20, 1998 and to decide in favour of the applicant Her Majesty the Queen.

[62]            THIS COURT DECLARES THAT:

The lease between the parties is terminated.

[63]            THIS COURT ALSO ORDERS THAT:

-          the order of Associate Chief Justice Jerome dated January 20, 1998, prohibiting the applicant Her Majesty the Queen from taking any further steps to terminate the lease, evict the plaintiff or otherwise regain possession of the property, is set aside;

-          with costs in favour of the applicant Her Majesty the Queen.

Pierre Blais                                        

Judge

OTTAWA, ONTARIO

June 8, 2001