Date: 20080923
Docket: T-1763-07
Citation: 2008 FC 1065
Ottawa, Ontario, September 23, 2008
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
ERMINESKIN
INDIAN BAND AND NATION
Plaintiff
and
HER
MAJESTY THE QUEEN
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1]
This
judicial review concerns the power of the Minister of Indian Affairs and
Northern Development (Minister) to withhold payment of funds payable under the
Pigeon Lake Split (Split) on the basis that the Minister required further
substantiation of the purposes for which the funds would be used.
[2]
This
proceeding has been complicated by continuing changes in circumstances where
events have overtaken some of the factual background since the judicial review
was first filed. What ultimately remained at issue was approximately $2.1
million withheld pending receipt of further information from the Ermineskin
Band and Nation (Ermineskin Band).
[3]
The
Ermineskin Band has sought mandamus to compel the Minister to pay out,
forthwith, the remaining amount of $2.1 million.
II. FACTS
[4]
The
Ermineskin Band is a nation of aboriginal peoples who reside in central Alberta and are
parties to Treaty No. 6.
[5]
In
1896 the Pigeon Lake Reserve (located south-west of Edmonton) was
established, pursuant to Treaty No. 6, for four Indian Bands - the Sampson,
Ermineskin, Bull and Montana Bands (Bands).
[6]
Oil
and gas reserves were discovered under the surface of the Pigeon Lake Reserve
and, pursuant to the scheme under the Indian Act, the Ermineskin Band
and the three other named bands surrendered their interests in the mineral and
mining rights to the Crown so that these lands could be leased for the
respective Bands’ benefit. The surrenders were executed in 1946 and, within a
few years, commercial quantities of oil and gas were explored.
[7]
Beginning
in 1952, the Crown prepared and executed leases with oil and gas companies that
would yield royalties for the four Bands. At all relevant times, the oil and
gas resources were and are beneficially owned by the Bands. The royalty moneys
were and are paid to and managed by the Crown on each Band’s behalf.
[8]
In
accordance with s. 62 of the Indian Act, all Indian moneys are either categorized
as “capital moneys” (derived from the sale of surrendered lands or the sale of
capital assets of a first nation) or “revenue moneys” (all Indian moneys which
are not capital moneys derived from a variety of sources including interest
earned on capital and revenue moneys). The two categories are managed
differently and must be accounted for separately. The Crown maintains separate
capital accounts and revenue accounts for Indian moneys held in the
Consolidated Revenue Fund (CRF).
[9]
There
are separate capital accounts and revenue accounts for each of the four Bands as
well as for the Pigeon Lake Reserve as a whole. These latter accounts are held
for, and periodically allocated among, the Bands according to their respective
populations – this is known as the Pigeon Lake Split.
[10]
The
management of capital moneys which include the royalties derived from the
Pigeon Lake Reserve are governed by s. 64 of the Indian Act. These moneys
are credited to the Pigeon Lake Capital Account and are then allocated
periodically to the capital accounts of the four Bands according to the Split. Currently,
the Ermineskin Band’s share of the Split, based upon population,
is 27%.
[11]
Moneys
held in the capital accounts can be expended pursuant to s. 64 of the Indian
Act. Section 64 (see attached Annex A) outlines a number of specific types
of expenditures which, with the consent of the Indian band, the Minister may
authorize to be paid. The provision has a further catch-all provision in s.
64(1)(k):
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64. (1) With the consent of the council of
a band, the Minister may authorize and direct the expenditure of capital
moneys of the band
…
(k) for any other purpose that in the opinion of
the Minister is for the benefit of the band.
|
64. (1) Avec
le consentement du conseil d’une bande, le ministre peut autoriser et
prescrire la dépense de sommes d’argent au compte en capital de la bande :
…
k) pour
toute autre fin qui, d’après le ministre, est à l’avantage de la bande.
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[12]
While
the governance of the Ermineskin Band’s revenue funds were in issue, the
principal issue in this proceeding concerns the capital moneys of the Split. In 1964 the
Canadian government passed Orders-in-Council under s. 69(1) of the Indian Act
authorizing the Ermineskin Band to manage its own revenue moneys. It has done
so since then to the present time. There is a procedure in place by which the
revenue moneys are turned over to the Band Council upon conditions. The
legality of those conditions were in issue in this proceeding; however, all of
the revenue moneys in issue have been paid out. As such, the principal issue in
this proceeding relates to the capital moneys of the Split.
[13]
There
are two critical steps with respect to the use of the moneys related to the Split. As Justice
MacKay outlined in Louis Bull Band v. Her Majesty the Queen (3 September
1999), Ottawa T-2953-93 (F.C.T.D.), firstly the Crown must calculate the amount
of the Split and the
respective shares and secondly pay those amounts into the capital accounts of the
respective Bands.
[14]
The
other procedure which is of importance is that in the normal course in respect
of expenditures under s. 64(1)(k) of the Indian Act, any proposal
for expenditure of capital moneys is usually initiated by a Band Council,
submitted as a Band Council Resolution (BCR) to the Minister containing the
particulars of the proposal. That request is considered by the Minister and if
approved, the moneys are released to the Ermineskin Band or as the Ermineskin Band
directs.
[15]
In
2007 the Ermineskin Band Council enacted two BCRs to request the transfer of
moneys in the amounts of $23,262,232.76 and $7,700,000.00 respectively to fund
the Ermineskin Band’s 2007/2008 operating budget. Of these amounts,
approximately $13,287,000.00 was withheld because of delays in submitting an
auditor’s report. Of that amount withheld, approximately $5,313,000 was in
respect of the capital account.
[16]
This
judicial review was commenced in September 2007 and sought “an order in the
nature of mandamus directing the Minister of Indian Affairs and Northern
Development to pay out the Revenue Fund including the Pigeon Lake Split on a
per capita basis pursuant to the Federal Courts Act, sections 18.1 and
44, and the Federal Courts Rules, Rules 358-367, Indian Act,
section 69 and the Indian Band Revenue Moneys Order, S.O.R./90-297 …”.
[17]
The
use of the term “Revenue Fund” was the source of no end of confusion.
[18]
In
the grounds for relief, the Plaintiff submitted, inter alia:
·
that
the Pigeon Lake Indian Reserve No. 138A was set aside on July 8, 1896 for the
Indians of the Hobbema Agency;
·
that
Ermineskin are part of the Indians of the Hobbema Agency;
·
that
the Crown has distributed revenues from the Pigeon Lake Indian Reserve No. 138A
on a per capita basis to, inter alia, the Ermineskin Cree Nation every
year since 1954 generally in July or August of each year;
·
that
these oil and gas Revenues from the Pigeon Lake Indian Reserve No. 138A and the
interest earned on the capital funds held by the Crown in trust for Ermineskin
are held in the Revenue Fund which is held by Ermineskin pursuant to section 69
of the Indian Act, S.O.R./90-297;
·
that
Ermineskin uses the Revenue Fund to finance its governance of the Ermineskin
Band;
·
that
Ermineskin has demanded on numerous occasions including September 24, 2007,
that the Minister of Indian Affairs and Northern Development pay the Pigeon Lake
Split and the Revenue Funds to Ermineskin and the Minister has not done so and
has refused to do so.
[19]
As
referred to in paragraph 15 of these Reasons, a significant amount of money was
withheld from transfer to the Ermineskin Band because the Ermineskin Band had
not met a condition imposed by the Minister that a proper auditor’s report be
submitted to the department. Over the course of the litigation, the Ermineskin Band
ultimately submitted the audit report which resulted in the release of the bulk
of the moneys which had initiated these proceedings.
[20]
Of
the $5,313,000 withheld in respect of capital moneys, approximately $4.7
million was attributed to the Split. The Minister, on March 26, 2008, released
$2.6 million approximately 200 days later than what the Ermineskin Band claim
is the normal course of distribution in July or August of each year. In
addition to late payment, $2.1 million remains outstanding pending satisfaction
of the Minister’s information requirements.
[21]
In
the Minister’s letter of March 26, 2008, releasing the $2.6 million, the Department
noted as follows:
The Department still awaits information
to support the following expenditures relating to the Property Management
program:
Renovations $869,100
Fire Damaged Homes $560,000
New Homes – 0405 Shortfall $371,000
New Homes – 4 $258,308
Total $2,058,408
There is a
further $100,000 in dispute in respect of a camp which was under provincial
jurisdiction. These amounts constitute the approximate $2,100,000 held by the
Minister and currently in dispute under this litigation.
[22]
At
the hearing of this matter, the Ermineskin Band placed considerable emphasis on
the fact that the Split had traditionally been paid in the summer of each year;
that the Ermineskin Band was in control of its monetary affairs; that the
Minister has a public duty to pay these moneys, at the very least as a trustee
of these moneys. In addition to the fact that the obligations in respect of the
Split are pursuant
to treaty obligations, the Ermineskin Band further claims that the Minister is
estopped from altering the timing of payment of these moneys.
[23]
The
Minister had a number of preliminary objections to the nature of this
litigation, in part because of the confusing circumstances with respect to what
was at issue. As stated earlier, some of that confusion related to the term
“revenue fund” used in the Notice of Motion. The Minister understood “revenue
fund” to equate to “revenue account”. It was the Minister’s position that all
amounts under the “revenue account” had been paid out. Therefore, it was the
Minister’s position that this litigation was largely moot, both because the
amounts had been paid out of the revenue account and because the impediment to
previous payments, e.g. the audit, had been satisfied.
[24]
The
Court has some sympathy with the Minister’s position – the facts and positions
at issue were often opaque. However, there was a genuine dispute regarding the
$2.1 million withheld. The circumstances of the withholding were entirely
within the knowledge and control of the Minister. I therefore reject the
submission that it would be unfair to the Minister to consider the merits of
the withholding of the remaining amounts.
[25]
The
parties have had this case under case management. They have also been afforded
the opportunity to clarify positions, and to amend and update materials and
submissions.
[26]
The
Court is not prepared to address the issues of the demand for an audit, that
matter has been complied with and therefore is not a live issue. The only remaining
issue for the Court to address is whether the Minister is empowered to withhold
the capital moneys on the grounds of the failure to comply with the
department’s information requests.
[27]
The
Court notes that the requirement for an audit is contained in s. 8 of the Indian
Bands Revenue Moneys Regulations, C.R.C., c. 953, enacted pursuant to s.
69(2) of the Indian Act. It would not be helpful to conclude on the
consequences of failure to provide an audit report or providing an audit report
at a later date than required as such a consideration may turn largely on the facts
of a particular circumstance. It is an issue best left for another day.
III. ANALYSIS
[28]
The
issue before this Court is whether the Minister has the discretion to withhold
release of portions of the Split, and if so, has that discretion been
exercised properly.
[29]
As
the issue before the Court engages the Minister’s actions, it is necessary to
consider the standard of review. I adopt Justice Dawson’s rationale in Ermineskin
Tribe v. Canada (Indian Affairs and Northern Affairs), 2008 FC 741.
While Justice Dawson’s decision related to Ministerial discretion to administer
a publicly-funded program, and in this present proceeding the Minister’s
discretion relates to the use of funds for homes (s. 64(1)(j)) and for
other purposes (s. 64(1)(k)), I see no material difference in respect of
either the power or the scope of the discretion to be exercised. For the same
reasons as in the earlier decision, the Minister’s actions are subject to a
standard of reasonableness.
[30]
The
starting point of this case is that the Ermineskin Band is seeking mandamus.
The standard of review only becomes relevant to the discretionary aspect of the
principles governing mandamus.
[31]
On
the issue of mandamus, the Court of Appeal in Apotex v. Canada (A.G.),
[1994] 1 F.C. 742 (F.C.A.), held that the principles applicable to mandamus
are:
1. There
must be a public duty to act.
2. The
duty must be owed to the applicant.
3. There
is a clear right to performance of the duty, in particular:
(a) the
applicant has satisfied all conditions precedent giving rise to the duty;
(b) there
is (i) a prior demand for performance of the duty; (ii) a reasonable time to
comply with the demand unless refused outright; and (iii) a subsequent refusal
which can either be expressed or implied, e.g. unreasonable delay;
4. Where
the duty sought to be enforced is discretionary, the following rules apply:
(a) in
exercising a discretion, the decision-maker must not act in a manner which can
be characterized as “unfair”, “oppressive” or demonstrate “flagrant
impropriety” or “bad faith”;
(b) mandamus
is unavailable if the decision-maker’s discretion is characterized as being
“unqualified”, “absolute”, “permissive” or “unfettered”;
(c) in
the exercise of a “fettered” discretion, the decision-maker must act upon
“relevant”, as opposed to “irrelevant”, considerations;
(d) mandamus
is unavailable to compel the exercise of a “fettered discretion” in a
particular way; and
(e) mandamus
is only available when the decision-maker’s discretion is “spent”; i.e. the
applicant has a vested right to the performance of the duty.
(emphasis
added by Court)
[32]
The
Federal Court of Appeal in Ermineskin Indian Band and Nation v. Canada,
[2007] 3 F.C.R. 245 (F.C.A.), has set out the statutory scheme for the
management of royalties received by the Crown commencing at paragraph 63 of the
judgment. The Court notes the Minister’s obligation is to ensure that moneys
released (in this instance from the capital account) are expended on behalf of
the Ermineskin Band and in accordance with the Indian Act.
[33]
The
Ermineskin Band claims that moneys from the Split are treated
differently than capital and revenue account moneys. On the evidence in this
case, I am not satisfied that the Ermineskin Band has made that case. Of equal
importance is the fact that the Indian Act does not make such a
distinction – moneys are accounted for either to the revenue or capital
accounts. The evidence is that the Ermineskin Band’s Split moneys are
credited to the capital account.
[34]
For
the Ermineskin Band to establish a basis for mandamus, it must meet the
conditions in respect of the exercise of discretion. Given the obligations of
the Minister to ensure that moneys are properly expended on behalf of the
Ermineskin Band and in accordance with the Indian Act, there is nothing
unfair, oppressive or in bad faith in requiring support for the proposed
expenditures. The Ermineskin Band has not shown that anything demanded is unreasonable
nor has the Ermineskin Band shown that it has a vested right in performance
such that the Minister’s discretion is “spent”.
[35]
The
Ermineskin Band has argued that the pattern of paying out the Split to the Ermineskin
Band in the summer of each year created estoppel against the Minister delaying
payment. In this, the Ermineskin Band relies particularly on Ryan v. Moore,
[2005] 2 S.C.R. 53, in establishing the three conditions of estoppel by
convention.
[36]
However,
that decision applies in the context of relations between private parties not
to situations governed by statute. Estoppel cannot operate to vitiate a statutory
obligation on the Minister.
[37]
The
Ermineskin Band has not made out a case for an order of mandamus.
Section 64(1) makes it clear that moneys from the Ermineskin Band’s account can
only be disbursed with the consent of both the Ermineskin Band and the Minister.
As long as the Minister exercises his discretion reasonably – and there is
nothing to suggest unreasonableness in demanding substantiation for planned
expenses – the Minister is authorized to withhold approval of disbursement. The
Minister’s refusal to disburse is not amendable to mandamus. The moneys
at issue are not unpaid Split moneys – those amounts have been paid to
the capital account. The moneys that the Ermineskin Band seeks to obtain are
already in this account. The Ermineskin Band really seeks to compel the
Minister to authorize disbursement from the capital account.
[38]
I
need not find, as the Defendant has asked, that this mandamus
application is an abuse of process because it is contrary to the position taken
by the Ermineskin Band before the Supreme Court of Canada in Ermineskin
Indian Band and Nations v. Canada, [2007] S.C.C.A. No. 86.
Firstly, it is not clear that the positions are inconsistent. Secondly, it is
not bad faith to take different or alternate positions, particularly in the face
of uncertainty as to the law.
[39]
For
these reasons, this judicial review will be dismissed with costs.
JUDGMENT
THIS COURT
ORDERS AND ADJUDGES that this
application for judicial review is dismissed with costs.
“Michael
L. Phelan”
ANNEX A
Financial Administration Act, R.S., 1985, c. F-11
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42. (4) The following definitions apply in
this section.
…
"recipient"
means an individual, body corporate, partnership or unincorporated
organization that has, in any five consecutive fiscal years, received a total
of one million dollars or more under one or more funding agreements, but does
not include
…
(c.1) a band, as defined in subsection 2(1) of the
Indian Act, any member of the council or any agency of the band or an
aboriginal body that is party to a self-government agreement given effect by
an Act of Parliament or any of their agencies;
|
42. (4) Les
définitions qui suivent s’appliquent au présent article.
…
«bénéficiaire
» Personne physique ou morale, société de personnes ou organisme non doté de
la personnalité morale qui a reçu, au total, au moins un million de dollars
au cours de cinq exercices consécutifs au titre d’un ou de plusieurs accords
de financement. Sont exclus de la présente définition :
…
c.1) les
bandes, au sens du paragraphe 2(1) de la Loi sur les Indiens, tout
membre du conseil ou tout organisme de la bande, et les organismes
autochtones qui sont parties à un accord d’autonomie gouvernementale mis en
vigueur par une loi fédérale, ainsi que leurs organismes;
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Indian Act, R.S., 1985, c. I-5
|
61. (1) Indian moneys shall be expended only for the benefit
of the Indians or bands for whose use and benefit in common the moneys are
received or held, and subject to this Act and to the terms of any treaty or
surrender, the Governor in Council may determine whether any purpose for
which Indian moneys are used or are to be used is for the use and benefit of
the band.
(2) Interest on Indian moneys held in the Consolidated Revenue Fund
shall be allowed at a rate to be fixed from time to time by the Governor in
Council.
|
61. (1)
L’argent des Indiens ne peut être dépensé qu’au bénéfice des Indiens ou des
bandes à l’usage et au profit communs desquels il est reçu ou détenu, et,
sous réserve des autres dispositions de la présente loi et des clauses de
tout traité ou cession, le gouverneur en conseil peut décider si les fins
auxquelles l’argent des Indiens est employé ou doit l’être, est à l’usage et
au profit de la bande.
(2) Les intérêts
sur l’argent des Indiens détenu au Trésor sont alloués au taux que fixe le
gouverneur en conseil.
|
|
64. (1) With the consent of the council of a band, the
Minister may authorize and direct the expenditure of capital moneys of the
band
(a) to distribute per capita to the members of the
band an amount not exceeding fifty per cent of the capital moneys of the band
derived from the sale of surrendered lands;
(b) to construct and maintain roads, bridges,
ditches and watercourses on reserves or on surrendered lands;
(c) to construct and maintain outer boundary
fences on reserves;
(d) to purchase land for use by the band as a
reserve or as an addition to a reserve;
(e) to purchase for the band the interest of a
member of the band in lands on a reserve;
(f) to purchase livestock and farm implements,
farm equipment or machinery for the band;
(g) to construct and maintain on or in connection
with a reserve such permanent improvements or works as in the opinion of the
Minister will be of permanent value to the band or will constitute a capital
investment;
(h) to make to members of the band, for the
purpose of promoting the welfare of the band, loans not exceeding one-half of
the total value of
(i) the chattels owned by the borrower, and
(ii) the land with respect to which he holds or is
eligible to receive a Certificate of Possession,
and may charge interest and take security therefor;
(i) to meet expenses necessarily incidental to the
management of lands on a reserve, surrendered lands and any band property;
(j) to construct houses for members of the band,
to make loans to members of the band for building purposes with or without
security and to provide for the guarantee of loans made to members of the
band for building purposes; and
(k) for any other purpose that in the opinion of
the Minister is for the benefit of the band.
(2) The Minister may
make expenditures out of the capital moneys of a band in accordance with
by-laws made pursuant to paragraph 81(1)(p.3) for the purpose of
making payments to any person whose name was deleted from the Band List of
the band in an amount not exceeding one per capita share of the capital
moneys.
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64. (1) Avec
le consentement du conseil d’une bande, le ministre peut autoriser et
prescrire la dépense de sommes d’argent au compte en capital de la bande :
a) pour
distribuer per capita aux membres de la bande un montant maximal de
cinquante pour cent des sommes d’argent au compte en capital de la bande,
provenant de la vente de terres cédées;
b) pour
construire et entretenir des routes, ponts, fossés et cours d’eau dans des
réserves ou sur des terres cédées;
c) pour
construire et entretenir des clôtures de délimitation extérieure sur les
réserves;
d) pour
acheter des terrains que la bande emploiera comme réserve ou comme addition à
une réserve;
e) pour acheter
pour la bande les droits d’un membre de la bande sur des terrains sur une
réserve;
f) pour
acheter des animaux, des instruments ou de l’outillage de ferme ou des
machines pour la bande;
g) pour
établir et entretenir dans une réserve ou à l’égard d’une réserve les
améliorations ou ouvrages permanents qui, de l’avis du ministre, seront d’une
valeur permanente pour la bande ou constitueront un placement en capital;
h) pour
consentir aux membres de la bande, en vue de favoriser son bien-être, des prêts
n’excédant pas la moitié de la valeur globale des éléments suivants :
(i) les biens
meubles appartenant à l’emprunteur,
(ii) la terre
concernant laquelle il détient ou a le droit de recevoir un certificat de
possession,
et percevoir des
intérêts et recevoir des gages à cet égard;
i) pour
subvenir aux frais nécessairement accessoires à la gestion de terres situées
sur une réserve, de terres cédées et de tout bien appartenant à la bande;
j) pour
construire des maisons destinées aux membres de la bande, pour consentir des
prêts aux membres de la bande aux fins de construction, avec ou sans
garantie, et pour prévoir la garantie des prêts consentis aux membres de la
bande en vue de la construction;
k) pour
toute autre fin qui, d’après le ministre, est à l’avantage de la bande.
(2) Le ministre peut
effectuer des dépenses sur les sommes d’argent au compte de capital d’une
bande conformément aux règlements administratifs pris en vertu de l’alinéa
81(1)p.3) en vue de faire des paiements à toute personne dont le nom a
été retranché de la liste de la bande pour un montant ne dépassant pas une
part per capita de ces sommes.
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|
69. (1) The Governor in Council may by order permit a band to
control, manage and expend in whole or in part its revenue moneys and may
amend or revoke any such order.
(2) The Governor in Council may make regulations to give
effect to subsection (1) and may declare therein the extent to which this Act
and the Financial Administration Act shall not apply to a band to
which an order made under subsection (1) applies.
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69. (1) Le
gouverneur en conseil peut, par décret, permettre à une bande de contrôler,
administrer et dépenser la totalité ou une partie de l’argent de son compte
de revenu; il peut aussi modifier ou révoquer un tel décret.
(2) Le gouverneur
en conseil peut prendre des règlements pour donner effet au paragraphe (1) et
y déclarer dans quelle mesure la présente loi et la Loi sur la gestion des
finances publiques ne s’appliquent pas à une bande visée par un décret
pris sous le régime du paragraphe (1).
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