Docket: T-1435-12
Citation:
2014 FC 1173
Ottawa, Ontario, December 5, 2014
PRESENT: The Honourable Mr. Justice Campbell
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BETWEEN:
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BUFFALO POINT COTTAGERS
ASSOCIATION INC.
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Applicant
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and
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BUFFALO POINT FIRST NATION and
BUFFALO POINT DEVELOPMENT CORP.
LTD.
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Respondents
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and
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FIRST NATIONS TAX COMMISSION
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Intervener
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ORDER AND REASONS
I.
Determination Overview
[1]
The Reserve Lands of the Buffalo Point First
Nation are located in the southeast corner of the Province of Manitoba along the shores of the Lake of the Woods. It is the home of the First Nation’s
members, and is also the home of full-time and recreational non-Aboriginal
cottagers who reside on reserve lands available to the First Nation for lease
purposes. For many years, together, both shared a positive and productive
relationship.
[2]
The Buffalo Point First Nation, acting for legal
purposes via its wholly owned corporate entity, the Buffalo Point Development
Corp. LTD., is the lessor of the leased lands (both together referred to as “Buffalo Point” in these reasons), and the Applicant, as
an authorized representative of cottage owners, are lessees of the lands (“Cottagers”). The relationship between Buffalo Point and
the Cottagers was developed to meet a mutual need to establish a reliable
lessor and lessee financial agreement.
[3]
Based on good will and trust on both sides,
beginning in 1999, agreements were reached to share annual operating costs. The
latest agreement was reached in 2008 in which the Cottagers were responsible
for 55% of costs on the understanding that no future system of property tax
would be imposed (“2008 Agreement”). The 2008
Agreement established a process whereby the Cottagers would pay an annual fee
based on the cost of the routine services such as road maintenance, ploughing,
and recreational facility maintenance. Of importance to the present Application
is the fact that there was no school cost imposed because Buffalo Point did not
operate a school.
[4]
In 2005, the First Nations Fiscal and
Statistical Management Act, S.C. 2005, c.9 (“Act”), was passed which
made it possible for Buffalo Point to replace the agreed cost-sharing regime
with a statutory land tax regime, and it signalled an intention to do so. The First
Nations Tax Commission (Commission) administers the Act, and as early as
2010 the Cottagers began to consult with the Commission on what impact they
might expect to their leasehold rights from the implementation of a tax regime
by Buffalo Point. At that time the Cottagers advised the Commission’s staff
that, under the 2008 Agreement, an agreement had just been reached respecting
their annual fees to be paid for the ensuing two years and requested that their
concerns about the disruptive effect of the imposition of a tax be considered. The
Cottagers received assurances from the Commission’s staff that the transition
to a tax regime would be successful and that the Commission would work with
Buffalo Point to resolve any concerns.
[5]
Nevertheless, after a high degree of
consultation, on June 25, 2012, in a single decision the Commission approved
six Tax Laws proposed by Buffalo Point: Buffalo Point First Nation Property
Assessment Law, 2011; Buffalo Point First Nation Property Assessment
Amendment Law, 2012; Buffalo Point First Nation Property Taxation Law,
2011; Buffalo Point First Nation Property Taxation Amendment Law, 2012;
Buffalo Point First Nation Annual Rates Law, 2012; and Buffalo Point
First Nation Expenditure Law, 2012.
[6]
The forced change from the cost-sharing regime
to the land tax regime was not well accepted by the Cottagers because, in their
view, they have unjustly lost the financial control over their lease rates and
the financial stability that they enjoyed in the cost-sharing regime. As a
result, in an attempt to regain that control, the Cottagers have sought access
to justice by engaging two parallel avenues of legal redress.
[7]
The first avenue engaged is a Manitoba Court of
Queen’s Bench action in which the Cottagers seek to enforce an arbitration
clause in the 2008 Agreement. And the second is the present Application that
challenges the Commission’s decision-making implementing the tax regime with
respect to the Cottagers’ leased lands.
A.
The Content of the Cottagers’ Challenge
[8]
By the present Application the Cottagers directly
attack the Commission’s approval of the entire tax regime proposed by Buffalo
Point and which engages a detailed set of substantive and procedural issues
with respect to the Commission’s application of the Act. The present
Notice of Application provides a clear précis of the grounds advanced by the
Cottagers for setting aside the Commission’s decision:
a. BPFN [Buffalo Point First Nation] took the
necessary steps, beginning in 1976, to place itself in the position of lessor
of the Cottage Lots to the Cottagers, most of whom have since built cottages
and other improvements on the Cottage Lots.
b. The Cottagers were induced to enter into
their leases based in part on explicit representations made by either or both
of BPFN and BPDC [Buffalo Point Development Corp.] that the annual payments
would remain less than the property taxies in other jurisdictions because BPFN
does not operate a school or school system.
c. The Applicant negotiated a series of
agreements with BPFN and/or BPDC in respect of the annual payments which were
consistent with the representations of BPFN and BPDC.
d. The Impugned Laws approved by FNTC [First
Nations Tax Commission] purport to ignore and/or override the legal rights of
the Applicant and the Cottagers by denying them the benefit of the obligations
owed to them by BPFN and BPDC which rights and benefits were agreed to by all
parties following formal negotiations and for which valuable consideration was
given.
e. It was expressly represented by BPFN and/or
BPDC to the Applicant over a period of many years that no system of property
tax would be implemented by BPFN. Further, when BPFN began the process to
implement the Impugned Laws it explicitly and publicly stated to the Applicant
that no payments in relation to schools would be required of the Cottagers.
FNTC was well aware at the time of its decision to approve the Impugned Laws of
these statements.
f. Despite the assurances made BPFN submitted
to FNTC for its approval the Rates Law which set a mill rate of 30.97. This
rate is the same as the neighbouring jurisdiction of the Rural Municipality of
Piney, which rate is the sum total of two distinct categories of tax: first,
the mill rate set by the Rural Municipality of Piney which is 13.12 and which
taxes are levied to pay for services provided by the municipality; secondly,
the school tax mill rate levied by the local school board to pay for schools
and a school system which is 17.85. This results in a total combined mill rate
of 30.97.
g. FNTC approved the Rates Law despite its
awareness that BPFN had stated to the Applicant it would not include costs in
relation to schools and with the knowledge that the Applicant was relying on
that statement. FNTC did nothing to dispel that reliance.
h. FNTC approved the Rates Law with the
knowledge that BPFN does not operate a school system or even a school. By doing
so FNTC disregarded its own standards designed to ensure that the tax rate set
by a first nation is commensurate with that of comparable jurisdictions that
offer similar services. FNTC permitted BPFN to impose a tax rate that is not
reflective of the services that it provides the taxpayers.
i. Along with the Impugned Laws, BPFN submitted
to FNTC a proposed "Taxpayer Representation to Council Law, 2012"
which, had it been approved, would have given the Applicant and the Cottagers a
method of participation in the taxation regime. FNTC did not approve this law,
or any similar taxpayer representation law, in breach of its mandate to balance
the rights of BPFN, the Applicant and the Cottagers. The result is that the
Applicant and the Cottagers are denied the right to participate in the taxation
regime. Cottagers are the subject of taxation without any representation or
even participation.
j. FNTC failed to ensure that BPFN acted in
compliance with the requirements of the First Nations Fiscal and Statistical
Management Act (the "Act") and in particular Section 6 thereof, in
approving amendments to the Assessment Law and the Taxation Law. The Applicant
was unaware of these amendments until after they had been approved by FNTC.
k. The Impugned Laws purport to impose a tax on
improvements to the Cottage Lots. This was approved by FNTC despite the lack of
a legal basis for doing so. The Act does not grant authority for a tax on other
than an interest in land.
As can be seen in paragraph “d” of the
grounds, the Cottagers argue that, because the tax regime overrides the legal
rights of the Cottagers’ arising from the 2008 Agreement negotiated with
Buffalo Point, the Commission was required to, but failed to, take this reality
into consideration and to give it effect in deciding whether to approve the tax
regime.
[9]
In addition, the Cottagers advance fairness
arguments that misrepresentations and evidentiary mistakes made by Commission
staff in the course of implementing the tax regime require the decision under
review to be set aside.
[10]
As might be expected, the Cottagers’ main
concern about the implementation of the tax regime is the resulting increased
annual lease costs imposed. With respect to this concern, the primary focus of
the Application is on one specific aspect to the tax regime placed before the
Commission for approval: the approval of the Buffalo Point First Nation
Annual Rates Law, 2012 (“Rates Law”).
B.
The Legislative Purpose and Resulting Scheme of
the Act
[11]
The context engaged by the Cottagers’ challenge is
one of fundamental change explained in the Preamble to the Act quoted in
APPENDIX A to these reasons, and in a submission by Counsel for the
Commission appearing on behalf of the Commission as Intervener in the present
Application adapted as follows:
1. This application is brought by taxpayers on
reserve lands who are challenging decisions to approve a First Nation's real
property taxation laws. As the decision-maker, this Intervener will not address
the merits of the decisions under review but will explain the legislative
scheme at issue and the role of the tribunal in that scheme, and will address
the appropriate standard of review.
2. Taxation is an inherently governmental
power. First Nation governments exercise this inherent power. Property tax
systems based on assessment of property value are implemented by taxing
jurisdictions (First Nations and local governments) to raise revenues needed to
provide services for communities and community members. Adequate revenues are
essential for the operation of government, the delivery of services, and the
development of infrastructure.
3. Federal legislation recognizes and enables
First Nations' taxation powers. Section 83 of the Indian Act, R.S.C.,
1985, c. 1-5 and more comprehensively, the First Nations Fiscal and
Statistical Management Act, S.C. 2005, c. 9 ("FSMA" or the
"Act"), create a framework under which First Nations exercise their
existing jurisdiction.
4. First Nation governments are not exactly the
same as local governments - their powers have different sources. While local
governments possess only those powers that provincial legislatures delegate to
them, First Nations' rights of self-government invoke rights and
responsibilities that predate and are not dependent on federal legislation.
5. Courts have consistently recognized the
importance of taxation powers to First Nations' self-governance [and] acknowledged
that taxation powers are one of the most important bylaw powers Bands need to
defray their costs as the governments of their land.
6. Parliament's intention in enabling First
Nation taxation jurisdiction was to further the aims of self-government.
7. The First Nation government holds law-making
authority; and it is the Council of the First Nation that makes and passes laws
relating to property taxation. The approval of a property taxation law by the
First Nations Tax Commission ("FNTC" or "Commission") gives
the First Nation's law legal force. It is only after the Commission's approval
that the law comes into force.
8. The FNTC is an independent statutory body
that plays a unique role in the world of First Nation property taxation -'it is
charged with a number of responsibilities, including building capacity of First
Nation governments, facilitating dispute resolution, replacing the Minister of
Indian Affairs ("Minister") in the approval of First Nations' laws,
promoting credible taxation systems that are transparent and attract investment
on reserve lands, reviewing complaints about First Nations' laws, and making
remedial orders where appropriate.
9. The FNTC must approve a law submitted to it
by the Council of a First Nation that complies with all statutory and
regulatory requirements. The assessment of whether a First Nation's law meets
these requirements is a question of mixed fact and law, and is an evaluation
that falls squarely within the FNTC's core function and expertise. Accordingly,
the FNTC submits that the Court should apply a standard of reasonableness to
its review of the FNTC's law approval-decisions at issue in this application.
[…]
58. The FSMA assigns to the Commission the
authority to approve and thereby bring into force First Nations' local revenue
laws. This authority includes approval of amendments to First Nations' laws and
the repeal of their laws. The Commission has the jurisdiction to make
determinations respecting compliance with the Act, standards and regulations.
This kind of determination falls squarely within the Commission's specialized
expertise.
59. At the time that the FNTC was created, its
predecessor […] had nearly 20 years' experience with First Nations' real
property taxation policy and law-making. That body of knowledge and experience,
in conjunction with the knowledge and experience required of each appointed
commissioner, gives the FNTC institutional and experiential expertise in
matters pertaining to First Nations' real property taxation.
60. The standards established by the Commission
under subsection 35(1) of the FSMA form an integral part of the regulatory framework
and are reflective of both the commissioners' expertise and the Commission's
jurisdiction. Determining whether local revenue laws submitted by First Nations
comply with the standards, both in form and content, is one of the assessments
the Commission must make in carrying out its law review and approval function.
61. The standards are established by the
Commission to further the objectives of the Act, including to ensure the
integrity of the First Nations' property taxation system and to assist First Nations
in achieving economic growth through the generation of stable local revenues.
These standards are made pursuant to express legislative authority and are to
guide First Nation law makers to make laws consistent with the requirements and
the objectives of the Act. As the standards established by the Commission are
regulatory requirements to a law having legal force they are distinguishable
from guidelines or policies such as for example Information Circulars issued
under the Income Tax Act.
62. It is submitted that the substantive
provisions contained in the standards evidence the specialized expertise of the
Commission in real property taxation matters and in meeting its core functions
under the FSMA. These provisions embody the FSMA's objectives consistent with a
property tax regime that is transparent, provides certainty to taxpayers, and
is harmonized with the relevant provincial property tax and assessment regime.
63. While the FNTC has the authority under the
FSMA to review and approve laws, the FNTC does not itself have the authority to
make a law, or compel a First Nation to make a law. The FNTC assumes
jurisdiction to review and approve First Nations' local revenue laws only when
a First Nation opts into the FSMA's legislative scheme, is added to the FSMA
Schedule, and then submits a local revenue to the FNTC for review and approval.
64. Subsection 31(3) of the FSMA directs that
where there is compliance with the legislative framework the Commission
"shall approve" the law. This reinforces the Act's support for First
Nations' taxation jurisdiction. The Commission does not have the authority to
withhold approval for any reason if the law submitted complies with all
statutory requirements. Any consideration other than the provisions of the Act,
the regulations, and the standards would be extraneous and outside of the
Commission's law approval function. The Commission is available to assist in
building understanding between taxpayers and First Nation governments as it
relates to property taxation on reserve lands, but is not able to refuse law
approval in circumstances where that understanding may still be lacking.
65. Although the Commission must consider any
representations it receives pursuant to paragraph 7(b) of the FSMA, the Act
does not specify that the Commission must adopt any particular process for
receiving these representations. For example, Parliament did not see fit to
require the Commission, as part of its law review and approval process, to hold
a hearing to receive taxpayer representations. Parliament's choice is
procedurally sound as the Commission's task is to assess whether the law
complies and if it does, to approve the law. By way of contrast, in the context
of a review pursuant to section 33 of the FSMA (where the issue is whether a
First Nation has failed to comply with the FSMA or its regulations, or whether
a First Nation has improperly or unfairly applied its law) regulations
establish the procedures, including for the hearing by the Commission of such a
complaint.
66. Where there is an application to exempt
proposed amendments to a law from the statutory requirements, the Commission
has the authority to exempt a proposed amendment from the notice requirements
of subsection 6(1) and information requirements of subsection 8(1) of the Act
"if the Commission considers that the amendment is not significant"
(subsections 6(2) and 8(2)). The Act does not define what types of amendments
would be "significant" and this determination too has been assigned
to the Commission and falls within the Commission's distinctive sphere of
knowledge. To this end, the Commission's Law Approval Procedures establish the
process and identify criteria for such exemptions (see Law Approval Procedures,
sections 7 and 8).
(Memorandum of Fact and Law of the Intervener
First Nations Tax Commission)
[12]
Specifically, the present Application
engages three important features of the Act: s. 29; s. 31; and s.35(1)
and (2), which are quoted in APPENDIX B.
C.
The Cottagers’ Expectations
[13]
With respect to the Tax Laws proposed for
approval by Buffalo Point, the Commission’s purpose was to ensure that its
standards were met and, if so, to pass the Tax Laws presented pursuant to s.
31(3) of the Act. The provision makes it clear that the Commission has
real authority over the approval process by setting the standards that must be
met. However, pursuant to s. 31(2), the Commission is required to consider
objections to compliance with the standards, but if the standards are met, the
Commission has no authority to accommodate those objections.
[14]
Diametrically opposed to the purposes of the
Commission, in the process of consultation leading to the Commission’s
decision, the Cottagers presented a very different and incompatible purpose: to
ensure that Buffalo Point’s Tax Laws would not be approved, or if approved,
they would meet their expectations. Indeed, the Cottagers’ purpose in launching
the present Application to set aside the Commission’s decision is based on the
same purpose.
[15]
Arising from the exposed conflict of purpose, in
my opinion, the present Application is based on unreasonable expectations with
respect to the Commission’s conduct in approving Buffalo Point’s Tax Laws.
D.
Outcome
[16]
In approving the land tax regime, the Commission
interpreted the Act as its home statute. As a result, I find that the
standard of review of the Commission’s substantive decision-making is
reasonableness (see: Canadian Artists’ Representation v. National
Gallery of Canada, 2014 SCC 42, para. 13).
[17]
For the reasons that follow, I find that the
Commission’s substantive decision-making meets this standard, and there is no
breach of the duty of fairness owed to the Cottagers. Therefore, the present
Application must be dismissed.
II.
Issues Determined
A.
The Commission’s Consideration of the 2008
Agreement
[18]
There is ample evidence on the record, as
addressed in the analysis that follows, that the Commission’s staff knew of the
Cottagers’ concerns about moving from the agreement regime to the tax regime and
worked hard to fulfill the reconciliation and dispute resolution purposes for
both the Cottagers and Buffalo Point under ss. 29 (b) and (c) of the Act
through a constant three-way dialogue.
[19]
The Cottagers argue that, nevertheless, there is
no evidence on the record, apart from the contents of the decision itself, to
establish that the Commissioners themselves knew of their concerns and took
them into consideration in rendering the decisions under review. I reject this
argument for two reasons. First, the record is incomplete because the Cottagers
did not make a request under Rule 317 of the Federal Courts Rules,
SOR/98-106, for material relevant to the Application that was in the exclusive
possession of the Commission to support their argument with evidence rather
than speculation. And second, in my opinion, given that the Commission is a
specialized tribunal charged with very serious decision-making
responsibilities, a presumption exists that knowledge possessed by the
Commission’s staff is attributable to the Commissioners, unless evidence can be
found to rebut that presumption. There is no such evidence.
[20]
By virtue of the operation of s. 31(3) of the Act,
the Cottagers’ expectation as described above simply could not be met. The only
issue before the Commission for determination was whether the Tax Laws proposed
by Buffalo Point met the Commission’s standards. It is clear that the
Commission had no authority to place a condition on the approval, nor could it
deny the approval if the standards were met.
[21]
As a result, given the constraints imposed by
the Act, I find that the Commission’s consideration of the 2008
Agreement was reasonable. The Manitoba Court of Queen’s Bench has engaged the
issue of the legal impact of the 2008 Agreement on the tax regime imposed by
the Act, and, thus, the Cottagers can look to that Court to determine
the issue of primary concern to them.
B.
The Commission’s Consideration of Buffalo
Point’s Rates Law: Substance
[22]
Throughout the process leading to the imposition
of the tax regime, understandably, the Cottagers adamantly argued for the
imposition of a tax rate that would result in taxes comparable to those paid
under the cost sharing arrangement of the 2008 Agreement. Indeed, they held a
firm expectation that this result could be implemented and advanced this
proposition at every available opportunity. Proceeding on the expectation that
the tax rate selected would be that of the Rural Municipality of Piney (“RM Piney”), which is adjacent to the leased lands, but includes
a school tax, the Cottagers were consistent in their argument and expectation that,
because Buffalo Point does not provide a school service, an adjustment to the
RM Piney rate was required. During the process of consultation between the
Cottagers, Buffalo Point, and the Commission, the Commission staff and Buffalo
Point expressed support for this outcome.
[23]
However, this expectation could not be put into
effect by operation of the following process.
[24]
Pursuant to s. 35(1)(a) of the Act, the
Commission established the Standards for First Nation Tax Rates Laws, 2011
(Rates Law Standards). Section 5 of the Rates Law Standards makes a stipulation
for “Rate Setting in the First Taxation Year”.
Since the Cottagers were not subject to a former taxation authority, Buffalo
Point was required to apply the same tax rate as a “reference jurisdiction” defined as “the taxing jurisdiction that a First Nation specifies to the
Commission for the purpose of setting tax rates and comparing local service
standards”. Thus, the selection by Buffalo Point of RM Piney as the
reference jurisdiction did not allow for the adaptation of its mill rate, for
example, by excluding the school tax portion.
[25]
The result of Buffalo Point selecting RM Piney
as the reference jurisdiction and the Commission approving the Tax Rate Law is
that the RM Piney mill rate of 30.97 was applied to the Cottagers’ leased
lands. Given their “no school tax” expectation, the
Cottagers have taken strong objection to this result. However, I find that the
selection of the geographically adjacent RM Piney was reasonable and the
Commission’s approval of it was reasonable because, while the definition of “reference jurisdiction” requires a comparison
of local service standards in selecting the tax rate, there is no requirement
that a jurisdiction must be selected that provides the exact same services, if
that might even be possible.
[26]
From the outset, the Cottagers objected to the
tax regime because they will be required to pay much more on their leases than
the shared cost amount they were used to paying under the 2008 Agreement. As a
matter of uncontested fact, militating against the Cottagers’ consternation
about the increased costs they would be required to pay under the tax regime,
in the approved Rates Law, Buffalo Point made a strong effort to mitigate these
costs, much to the Cottagers’ benefit.
[27]
While the mill rate proposed by Buffalo Point and
approved by the Commission was that for RM Piney at 30.97, the Buffalo Point mitigation
arises from the actual tax that the Cottagers were required to pay in the first
year of the tax regime. By operation of s. 6 of the Rates Law Standards, the
amount paid in the first year is required to be the amount paid in the second
year and all subsequent years, and in the normal course, the tax bill cannot
increase in a given year by more than the annual rate of national inflation.
Thus, in the first year of 2012, because the Cottagers received a substantial
credit on their tax bill and only paid 48% of what would otherwise be required,
that credit resulted in an effective tax rate of 16.4 mills, and resulted in an
effective rate being paid in 2013 of 17 mills because of an increase in the
rate of inflation, and 18.4 for 2014.
[28]
The impact of this matter of fact is to
significantly reduce the weight that can be placed on the Cottagers’ argument
that significant prejudice to them arose from the imposition of the tax regime.
C.
The Commission’s Consideration of Buffalo
Point’s Rates Law: Process
[29]
In the present Application, the Cottagers argue
that the erroneous statements made by the Commission’s staff misled the
Cottagers, and, as a result, the decision under review should be set aside
because of a breach of the duty of fairness the Commission owed to the Cottagers
to give correct advice.
[30]
The following is a description of a sequence of
events which establishes two facts: there was extensive contact between the
Cottagers, Buffalo Point, and the Commission’s staff pursuant to, and compliant
with, the Commission’s purposes under s. 29 of the Act; and the
Commission’s staff and Buffalo Point made misleading representations. There is
no evidence on the record to establish that the representations were made in
anything but good faith.
[31]
In November 2010, Mr. Robert Beaudry, a
Commission staff member, expressed his opinion to Mr. Lee Delorme, the
President of the Applicant organization, that the 2008 Agreement would be
preserved in any future tax regime.
[32]
As of March 31, 2011, the Commission was
fully engaged with the Cottagers’ concern regarding the implementation of the
Rates Law, including the element of the school tax. On this date, Mr. Delorme met
with two Commission staff members, Mr. Beaudry and Mr. Jerome Pillon, who
explained that they had completed a tax assessment for Buffalo Point that found
over $700,000.00 could be generated if the proposed property tax included a
school tax. Mr. Delorme found this statement surprising because none of the
information provided by the Cottagers to the Commission said anything about the
services including a school. As a result, Mr. Delorme made it clear that the
Cottagers opposed any school tax component (Affidavit of Lee Delorme at
paragraph 21 [Delorme Affidavit]; Exhibit 14 to the Delorme Affidavit).
[33]
On June 9, 2011, the Cottagers received an
assurance from Mr. Beaudry and Mr. Pillon that there was no possibility of the
Commission including a school tax in their tax assessments. As a result of this
representation, amongst others, the Cottagers officially decided to support the
new tax regime (Delorme Affidavit at paras 24 – 25; Exhibit 16 to the Delorme
Affidavit).
[34]
The Commission then requested a meeting with the
Cottagers to explain the proposed taxation system. Representatives from Buffalo
Point and the Commission spoke at a town hall meeting attended by approximately
140 cottage owners on June 10, 2011, where the following statements were made
about the proposed taxation laws:
a. That they would impose mill rates comparable
to the adjacent [Rural Municipality] of Piney, and that the cottagers would
have no responsibility for school taxes whatsoever;
b. That under the new laws the rights of the
cottagers would be comparable, if not superior, to what was provided for in
their existing lease agreements,
c. That the proposed tax would apply in a
non-discriminatory fashion to all interests in Buffalo Point, including the
cottagers, all lands held by First Nations persons (again, said to be a first
in Canada), all vacant lots for sale, as well as any lots to be developed in
the future;
d. That the taxpayers would be protected with a
‘taxpayer representation law’ (‘TRL’), which was said to be mandatory when
implementing the proposed tax laws.
(Delorme Affidavit at para 26; Exhibit 17 to
the Delorme Affidavit).
At a further meeting between representatives
from the Cottagers and Buffalo Point on September 7, 2011, the Cottagers
were clearly told that the proposed laws would adopt RM Piney`s mill rate,
which was 12.4, exclusive of the school tax (Delorme Affidavit at para. 32;
Exhibit 21 to the Delorme Affidavit). And in an exchange between Mr. Pillon and
Counsel for the Cottagers on October 31, 2011, it was confirmed that Buffalo
Point was still taking the position that their proposed taxation laws would set
the mill rate comparable to that of RM Piney, exclusive of the school tax
(Delorme Affidavit at para. 37; Exhibit 25 to the Delorme Affidavit).
[35]
However, on May 8, 2012, in direct contradiction
to statements previously made, Mr. Pillon told Mr. Delorme that Buffalo Point could
impose a school tax. (Delorme Affidavit at para 48, Exhibit 35 to the Delorme
Affidavit). As mentioned, on June 25, 2011, the Commission approved six
taxation laws submitted by Buffalo Point, including the Rates Law, which
adopted a mill rate of 30.97.
[36]
Further, as a matter of process, as mentioned in
the grounds supporting the present Application, a Taxation Representation Law (“TRL”)
was expected, but was not put into effect. The Cottagers considered the TRL to
be vitally important because it would provide a measure of representation in
the operation of the tax regime.
[37]
The Cottagers were misinformed that a TRL is mandatory
under the Act. Section 5(1)(c) of the Act makes it clear that a
First Nation may make laws “respecting procedures
by which the interests of taxpayers may be represented to the council” Therefore,
there is no requirement in the Act that a First Nation must create
a TRL, but rather, the implementation of such a law is purely optional.
[38]
With respect to the misleading representations clearly
made in an effort to reconcile the Cottagers’ 2008 Agreement and mill rate
interests with Buffalo Point’s responsibilities, in my opinion, the Cottagers’
breach of a duty of fairness argument cannot succeed. While the Commission,
through its staff, failed to meet the duty owed to the Cottagers to give
correct advice, in my opinion, apart from very understandable deflated
expectations, there is no evidence that the Cottagers relied upon the representations
to their detriment. Therefore, because there is no detriment, I find there is
no available remedy.
D.
Commission Decision-Making Error
[39]
The June 25, 2012 decision under review was
delivered as what one might expect to occur in collaborative decision-making between
seven Commissioners on five Tax Laws resulting in a single decision. Each Tax
Law was advanced for approval, the material in support of passage was tabled, a
motion was made for approval, and on a recorded vote, the motion was passed
without a narrative explaining the reasons. With respect to each Tax Law, the
Commission’s obligation was to determine whether the relevant standard was met.
In my opinion, the passage of each Tax Law constitutes a finding that the
relevant standard was met, and, in accordance with s. 31(3) of the Act,
the required approval was given.
[40]
The Cottagers argue that this form of
decision-making is deficient because the decision does not include reasons, and
it is impossible to know what factors were considered in reaching a decision. It
appears that the Cottagers expected a form of decision that would normally be
delivered as a result of contested litigation. That is, on the basis of
conflicting evidence received, findings of fact would be made, the facts would
be considered against the law to be applied, and a reasoned decision would be
provided. In my opinion, this is an unreasonable expectation of the
decision-making pursuant to s. 31(3) of the Act. As stated, in applying
the provision, the only determination that is required to be made is whether a
given tax law complies with the Commission’s standards. Given the Commission’s
decision-making obligation required by law, and the procedures for approval established
by the Commission, in my opinion the Cottagers’ objections are misplaced.
[41]
The process in place, which was followed in the
present case, with respect to each law approved is as follows: following a
Commission staff member’s examination of documentation with respect to a
proposed Law, a “Technical Review Form” is completed in which an opinion is
expressed as to whether or not a proposed Law meets the requirements of the Act
and the Commission’s standards; and the Form is placed before the Commission
for consideration. If it is established to the Commission’s satisfaction that
the standards have been met, there is no impediment to the Commission giving
its approval.
[42]
The Cottagers argue that irregularities arose in
the course of this approval process, which affect the approvals given.
[43]
First, the Cottagers raise an issue about the
sequencing of the approval process. In the present case, the technical analysis
of Buffalo Point’s proposed Laws was conducted and signed off before the
Commissioners met to reach a decision. It is clear that the technical analysis
provided advice to the Commissioners, upon which they were entitled to act in
reaching a decision.
[44]
Second, with respect to both the Assessment and
Taxation Laws in the present case, the Technical Review found that they did not
meet the Commission’s standards. This required Buffalo Point to rectify the
problems found, and to resubmit the Laws for approval. The Amended Laws were
approved upon the Commission granting exemptions from the usual notice
provisions as it is empowered to do pursuant to s. 6(2) of the Act on a
finding that the amendments are not significant. In the result, the problems
were rectified and the Amended Laws were passed.
[45]
Nevertheless, understandably, the process
leading to the approval of the Amended Laws caused delay, which caused a
disruption in the usual timing cycle of the issuance of the tax notices to the
Cottagers. The Cottagers argue that they were prejudiced as a result because
they were required to pay their taxes before they had a chance to challenge their
assessments. I find that this argument has no weight because there was never a
question that the Cottagers could challenge their assessments in any event.
[46]
In my opinion, neither of the expressed
concerns, considered individually or together, support a finding of reviewable
error.
[47]
In my opinion, the passage of each Tax Law
constitutes a finding that the relevant standard was met, and, as required by
s. 31(3) of the Act, the required approval was appropriately given.
Accordingly, I find that the Commission’s decision-making was reasonable.
E.
The Commission’s Consideration of the
Cottagers’ Final Representations
[48]
On May 14, 2012, Mr. Delorme received
notice that Buffalo Point had passed the Tax Laws on October 25, 2011 and that
they had been sent to the Commission for approval. As a result, Counsel for the
Cottagers sent a letter to the Commission, dated May 24, 2012, quoted in full
in APPENDIX C to these reasons, in which financial concerns were stated
with respect to the proposed laws. In particular, the school tax point was
raised, and two requests were made:
From the preliminary analysis of the proposed
property tax system, the net effect of the proposal appears to be a zero sum
game for [Buffalo Point]. […] Since the 2008 legal agreement compares favourably
with the RM tax rates and then all that is being accomplished is effectively to
lower the taxes on older and less valuable cottages and transferring a larger
tax burden to the newer and more expensive cottages resulting in a zero sum
gain. These above noted calculations are exclusive of a school tax component
because the [Commission] representatives have reassured the association that
there is no school tax component in the proposed property tax system being
considered for the Buffalo Point First Nation.
[…]
As a result of the above noted comments, on
behalf of our client we recommend the following actions for consideration.
1. The two year agreed to freeze on the annual
maintenance fee be respected and honoured for the 2012/2013 fiscal year.
2. The proposed property tax law and the
proposed property assessment law be held in abeyance pending a meeting, or
series of meetings, that would be administered by a professional facilitator or
mediator, so that there is a clear understanding of all of the positives and
negatives of a proposed property tax system as compared to the 2008 legal
agreement. This meeting, or series of meetings, should be inclusive of all
stakeholders, i.e. representatives from the BPCOA, the chief and council,
representatives from the First Nations residents and representatives from the
FNTC.
[Emphasis added]
[49]
There is no doubt that the Commission considered
the letter because it is contained in documentation supplied by the Commission
in the present Application (Certified Copy of Tribunal Record, p. 107b - 110).
In addition, the letter is specifically referred to in the decision under
review, and the recommendations advanced are specifically quoted. Nevertheless,
the Cottagers argue that a breach of fairness arose from the fact that in the decision,
the Commission did not provide a full narrative addressing the school tax issue
or the recommendations advanced for consideration.
[50]
In my opinion, given the mandatory nature of the
purpose and scheme of the Act as described above, I find that the
Commission’s duty of fairness to the Cottagers existed at the lower end of the
spectrum.
[51]
With respect to the school tax issue, the
decision cites Mr. Beaudry’s submission to the Commission that the Cottagers
received a 48% reduction in the tax burden imposed for the first year of
taxation, and that “this, in effect, meets the First Nation’s policy intention
to moderate the impact on taxpayers from the transition to real property
taxation from a fee for service regime” (Decision, p. 14). And with respect to
the recommendation, given the high level of consultation and engagement between
the Cottagers, Buffalo Point, and the Commission beginning well prior to the
decision-making phase by the Commission under the Act, I do not consider
it unreasonable or a breach of the duty of fairness for the Commission not to accede
to the Cottagers’ requests. At that point, all of the Cottagers’ arguments were
already submitted, and a mediation process could not have impacted on the
Commission’s statutory obligation to proceed to consider Buffalo Point’s Tax
Laws for approval.
III.
Conclusion
[52]
In summary, I find that the Cottagers’
expectations are inconsequential when considered against realistic and
reasonable expectations arising from the Act.
[53]
Specifically, with respect to the Cottagers’ concerns
about perceived loss of control following the imposition of the tax regime, under
the tax regime the Cottagers can look to the Commission to exercise its control
over Buffalo Point’s taxation conduct pursuant to s. 33(3) of the Act.
This provision allows the Commission to take mandatory action in the event that
a First Nation does not comply with its obligations under the Act. Into
the future, this is the Cottagers’ access to control.
[54]
In my opinion, the decision under review is reasonable
in all respects.
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