Docket: T-791-14
Citation:
2015 FC 200
Ottawa, Ontario, February 18, 2015
PRESENT: The
Honourable Mr. Justice Locke
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BETWEEN:
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THUNDERCHILD FIRST NATION
as represented by its duly elected
CHIEF AND COUNCIL
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Applicant
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and
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HER MAJESTY THE QUEEN IN RIGHT OF CANADA, AS REPRESENTED BY THE
MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT CANADA
(also known as THE MINISTER OF ABORIGINAL AFFAIRS AND NORTHER DEVELOPMENT CANADA)
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Respondents
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JUDGMENT AND REASONS
I.
Nature of the mater
[1]
This is an application for judicial review to
set aside the decision of the Minister of Indian Affairs and Northern
Development Canada (the Minister), as carried out by the Saskatchewan Regional
Director General of Indian Affairs and Northern Development also known as
Aboriginal Affairs and Northern Development Canada (AANDC), to place
Thunderchild First Nation (TFN) under third party management following its
refusal to sign an Aboriginal Recipient Funding Agreement (ARFA) for the
2014-2015 fiscal year.
II.
Context
[2]
Parliament annually releases funds to First
Nations to provide funding for several social programs, including: (i)
Post-Secondary Education Assistance, (ii) Social Services Programs, including
income support for basic needs; (iii) Assisted-Living Programs; (iv) Support
for First Nations Governance at the community level; and (v) Elementary and
Secondary Education for Indian children. The transfer and the administration of
these funds are normally governed by an ARFA between the relevant First Nation
and Her Majesty the Queen in Right of Canada, as represented by the Minister.
[3]
If a First Nation fails to comply with its ARFA,
AANDC may intervene to appoint a Third Party Funding Agreement Manager (TPFAM)
who (in place of the First Nation) will then receive the funds contemplated in
the ARFA and then administer the funds and deliver the services to the members
of the First Nation. An AANDC internal policy entitled Directive 210 – Third
Party Funding Agreement Management (Directive 210) provides as
follows at section 3.1:
3.1 Objective
To provide for
the timely and effective remedy of high risk Defaults, where the Recipient is
assessed by the Department as being unwilling and/or unable to rectify its
default situation and only when deemed by the Department to be necessary, by
engaging a Third Party Funding Agreement Manager to administer the terms and
conditions of the funding agreement signed by the Department – for a period of
time during which the Recipient works to remedy the underlying causes of the
Defaults and reassume administration of funding.
[4]
Directive 210
also includes the following passage at section 4.0 (entitled: “Context (Why this directive matters?)”):
The Directive sets out Third Party Funding
Agreement Management as an administrative response appropriate in the event of
high risk Defaults involving a First Nation, Tribal Council and Other
Aboriginal Recipient providing essential services; or the funding agreement
that would normally exist with these Recipients is not in place.
[Emphasis
added]
[5]
Accordingly, AANDC’s internal policy
contemplates a TPFAM when no funding agreement is in place, even in the absence
of default.
[6]
Directive 210
further provides as follows at section 8.1:
8.1 Requirement for Third Party Funding
Agreement Management
The requirement for Third Party Funding
Agreement Management is determined through the Default Assessment processes as
set out in the Directive on Default Prevention and Management. Third
Party Funding Agreement Management may be determined to be the most appropriate
Default Management Strategy in the following circumstances:
•high risk default: a Default Assessment
determines a Recipient's Overall Default Management Risk Rating is high;
•the Recipient is unwilling and/or unable to
rectify its default situation;
•the implementation of the Management Action
Plan, within the required timeframe, proves unsuccessful;
•extraordinary
circumstances dictate the need for a Third Party Funding Agreement Management.
III.
Facts
[7]
In 2011, the Minister and TFN entered into an
ARFA that was to remain in force until March 31, 2014.
[8]
On March 13, 2013, TFN signed an Amending
Agreement that amended the ARFA for the 2013-2014 fiscal year. The Applicant
asserts that it had concerns with the suggested amendments. Those concerns included:
(i) the absence of consultation; (ii) the fact that the agreement was affording
wider discretion to the Minister; (iii) insufficient funding; and (iv) the
requirement that the Council prepare a consolidated audit. The Applicant also
argues that the Amending Agreement was signed “under
protest and with a view to providing interim funding while [AANDC] and
Thunderchild worked through the impasse.”
[9]
In autumn 2013, AANDC announced certain changes
to the ARFA model agreements and on November 6, 2013, a letter was sent by
AANDC to invite the TFN leadership to a regional workshop/discussion regarding
the proposed changes. A number of other First Nations would also be invited to
this workshop.
[10]
On November 15, 2013, Delbert P. Wapass, Chief
of TFN, informed the Minister that no representatives of TFN would be at the
workshop. In his letter, Chief Wapass stated:
Needless to say, I was very discouraged when
I was advised that information sessions were being organized by your Ministry’s
Saskatchewan regional office for even more amendments to the CFA [aka ARFA].
These sessions are scheduled to proceed despite the fact that we have not
discussed the amendments to the current CFA which we had signed under duress.
Such discussions can only be facilitated through the implementation of a Treaty
Nations and state of Canada bilateral process table.
Be advised,
that the Thunderchild First Nation will not be present at any of these
information sessions until such time that the current CFA amendments have been
dealt with.
[11]
On November 19, 2013, during the workshop, AANDC
staff provided background papers, sample agreements, working tools and other
resource materials to the participants. AANDC heard and took note of concerns
expressed about the changes to the ARFA model, and later prepared a document
that was sent to AANDC headquarters. This document notes the following
concerns, among others:
1.
First Nations must often supplement AANDC
programs with their own revenues in order to meet the needs of their community;
2.
AANDC’s proposed adjudication and approval
process is cumbersome and results in later approval of projects;
3.
Preparing consolidated audits is a significant
burden, and no additional funding is provided therefor, and;
4. First Nations want the consolidated audits to be useful and have
purpose, and would like to have an opportunity to provide input in determining
the areas on which they focus.
[12]
AANDC made three changes to the ARFA model
following the recommendations made by the First Nation leaders. These changes
were:
1.
In the “whereas clauses”
the reference to treaties was amended to highlight the historical fact that
treaties had been signed with Her Majesty the Queen in Right of Canada;
2.
In the “whereas clauses”
dealing with the fiduciary relationship, the term “First
Nations people” was used since this type of agreement is to be used for
First Nations (who prefer that term over “Indian Bands”
or “Recipients”); and
3. Sections 3.1 and 6.1 of the model agreement were revised so as to
clarify that they could not be used to add new reporting requirements or to
change the frequency of reporting requirements.
[13]
Ms. Anna Fontaine, the Regional Director General
of AANDC Saskatchewan, alleges in her affidavit that several other proposals
made by Saskatchewan First Nations “remain under active
consideration by AANDC.” The Applicant too acknowledges in its
Memorandum of Fact and Law that “consultation and
negotiation regarding funding agreements was, and continues to be, ongoing with
other Nations at this time.”
[14]
On December 15, 2013, AANDC posted on its
website the 2014-2015 standard ARFA agreement. On February 21, 2014, TFN was
directly provided with a 2014-2015 standard ARFA agreement and was asked by
AANDC to sign it.
[15]
On March 6, 2014, after meeting with the Elders
and Community Members at large, TFN Leadership passed a motion not to sign the
2014-2015 Funding Agreement. On March 7, 2014, TFN informed AANDC of its
decision.
[16]
On March 11, 2014, the representatives of TFN
met with the representatives of AANDC to address the impasse. Ms. Fontaine informed
TFN that AANDC would not be transferring funds to TFN without a signed ARFA.
Ms. Fontaine also mentioned that the funding of programs would have to continue
somehow, and that a TPFAM might have to be put in place if no agreement was
signed. Ms. Fontaine also mentioned that an expert resource could be appointed.
She alleges in her affidavit that by using the term “expert
resource” she was referring to a TPFAM. For its part, TFN representative
recall the “expert resource” suggestion as being
distinct from a TPFAM. TFN alleges that an expert resource was raised as a
possibility when TFN argued that a TPFAM would be inappropriate since TFN was
not in default of its funding agreement. The parties disagree as to whether TFN
was informed in advance that a TPFAM would be appointed should its representatives
refuse to sign the ARFA.
[17]
Ms Fontaine alleges that during this meeting,
the representatives of both parties explored the possibility of naming a
regional tribal council to serve as the vehicle for the delivery of the funds
or asking the Treaty 6 Education Council to step in to deliver some of the
programs to TFN’s people. However, these options were rejected by TFN.
[18]
Another option, this one proposed by TFN, was to
have its Chief Financial Officer, Sheila Sutherland, named as a co-manager or
an expert resource. That option was rejected by AANDC because it would not
overcome the need for a signed funding agreement.
[19]
On March 17, 2014, Chief Wapass was informed
that a TPFAM, selected through a tender process, would be appointed to deliver
programs and services to the people of TFN.
[20]
On March 25, 2014, Mr. Robert Harvey, the
Associate Regional Director General of AANDC Saskatchewan, informed TFN that
Evan Schemenauer, CA Professional Corporation (ESPC) had been appointed as a
TPFAM for TFN.
[21]
On March 27, 2014, Chief Wapass sent a letter on
behalf of TFN expressing his disagreement with the appointment of a TPFAM.
[22]
TFN alleges that on April 1, 2014, ESPC was not
yet properly set up to deliver the programs and services as planned. Therefore,
TFN delivered cheques as well as the programs and services for a time. I
understand that ESPC later reimbursed TFN for these expenditures.
IV.
Decision
[23]
In the letter dated March 26, 2014 formally
informing TFN of the appointment of a TPFAM, AANDC mentioned that this decision
had been taken to ensure that AANDC programs and services continued to be
delivered to the people of TFN.
[24]
AANDC alleges that it considered the risk that
programs and services would not be delivered on April 1, 2014. Ms. Fontaine
alleges in her affidavit:
I made the
decision to appoint ESPC as TPFAM because the Band Council for the TFN had
absolutely and unequivocally refused to sign any of the standard available
ARFAs for the time frame running from April 1, 2014 onwards. This left no
mechanism by which the AANDC-funds programs and services could be administered
and delivered to the people of the TFN, except through government action.
Before making my decision, I considered whether the TFN had the financial
where-with-all to deliver the programs and services without benefit of AANDC
funding. Based on a review of the TFN consolidated audited financial statement
for 2012-2013, I determined that it was not an option. TFN did not have enough
“own-source” revenue to deliver the programs and services. I therefore reached
the conclusion that, unless a TPFAM was appointed, the health, safety or
welfare of the people of the TFN would be placed at risk of being compromised
from April 1, 2014 onwards.
V.
Issues
[25]
This matter raises the following issues:
1.
Did the Minister err in appointing a TPFAM?
2. Did the Minister fail to observe the principles of natural justice
or procedural fairness?
VI.
Analysis
A.
Standard of review
[26]
I agree with the Respondent that the decision to
appoint a TPFAM because the Applicant refused to sign the ARFA is to be
reviewed on a standard of reasonableness (Kehewin Cree Nation v Canada, 2011 FC 364, paras 16-18 (Kehewin); Tobique Indian Band v Canada, 2010 FC 67, at para 56 (Tobique)). Therefore, this Court will determine whether
the decision to appoint a TPFAM falls within the range of possible, acceptable
outcomes which are defensible in respect of the facts and law (Dunsmuir v New Brunswick, 2008 SCC 9, at para 47).
[27]
With respect to the issue of natural justice or
procedural fairness, the correctness standard applies (Kehewin, at para
15; Tobique, at para 66).
B.
Did the Minister err in appointing a TPFAM?
[28]
TFN argues that it was unreasonable to appoint a
TPFAM as it was not in default of the ARFA. It argues that “there was no legal or policy basis upon which to make the
determination that Thunderchild was in default.” In fact, the parties,
are agreed that TFN is not, and was not, in default. But default is not the
real issue since the impugned decision was not based on any finding of default.
[29]
I am mindful that the decision to appoint a
TPFAM is of great importance as it removes TFN’s right to govern its own
financial affairs (Tobique, at para 71). Also, as explained by Justice
Phelan in Attawapiskat First Nation v Canada, 2012 FC 948, at para 59,
an ARFA is “essentially an adhesion contract imposed
[…] as a condition of receiving funding.” However, decisions made by
AANDC with respect to “funding and the administration
of that funding are highly discretionary” (Tobique, at para 69).
[30]
Pursuant to paragraph 4.0 of Directive 210,
a TPFAM can be appointed when “the funding agreement
that would normally exist […] is not in place.” Moreover, in Kehewin,
the Minister decided not to enter into an ARFA with the applicant “because of continuing unremedied defaults” under the
proceeding agreement. In Kehewin, after an analysis of the specific
facts in that case, Justice Phelan ruled that Minister’s decision to appoint a
TPFAM was reasonable (Kehewin, at para 30). Therefore, a TPFAM can be
appointed in situations where no funding agreement has been signed. Though I
recognize that Directive 210 is an internal policy and not binding law,
I am nevertheless of the view that AANDC may appoint a TPFAM even in the
absence of any default, where such an appointment is necessary to ensure that
programs and services provided to members of a First Nation are not
interrupted.
[31]
In making its decision in this case, AANDC was
obliged to weigh not only the interest of the people of TFN but also the
importance of public funds and the urgency of the situation (Tobique, at
para 61). The purpose of the appointment of a TPFAM is to ensure that essential
programs and services are not disrupted and to protect public funds (Wawatie
v Canada (Indian Affairs and Northern Development), 2009 FC 374, at para 40
(Wawatie)). In the present case, AANDC reasonably considered that it
would have been inappropriate to transfer public funds to TFN in the absence of
a funding agreement. It was also reasonable for AANDC to conclude both that the
ARFA would not be signed before the beginning of the 2014-2015 fiscal year, and
that, in the absence of a signed ARFA, an alternative had to be found to
deliver essential programs and services to the people of TFN. TFN took a strong
position that they would not sign the ARFA as proposed. Moreover, AANDC
reviewed TFN’s consolidated audited financial statement for 2012-2013 and
concluded therefrom that TFN did not have the financial wherewithal to deliver
the programs and services without the benefit of AANDC funding.
[32]
TFN argued that it was able to fund the programs
and services in question and that it actually did so during a brief period
after the termination of the 2013-2014 ARFA but before the TPFAM was in place.
However, it seems clear that TFN’s ability to fund the programs and services
independent of AANDC funding was short term only. TFN does not dispute that it
would have required outside funding in order to maintain the programs and
services over the longer term.
[33]
AANDC considered other alternatives before
appointing a TPFAM to ensure that social services and programs would be
delivered to the people of TFN without interruption. As mentioned above, the
proposed alternatives included: (i) naming a regional tribal council to step in
and serve as the vehicle for the distribution of the funds; (ii) asking the
Treaty 6 Education Council to step in to deliver some of the programs to TFN’s
people; and (iii) appointing TFN’s CFO as a co-manager or expert resource. None
of these options was workable.
[34]
After having considered all the materials
submitted by the parties, it is my view that AANDC made significant efforts to
find an alternative solution and to come to an agreement with TFN for funding
its programs and services.
[35]
TFN argues that it does not lack the ability to
manage its own finances. I agree. However, the absence of an ARFA is
determinative here.
[36]
In my opinion, given the circumstances, the
decision to appoint a TPFAM to ensure the delivery of essential social programs
was reasonable and falls within the range of possible, acceptable outcomes.
C.
Did the Minister fail to observe the principles
of natural justice or procedural fairness?
[37]
I agree with the Applicant that in making its
decision, the Minister had an administrative duty to act fairly. As mentioned
in Simon v Canada (Attorney General), 2013 FC 1117, at para 144:
This Court agrees that the Applicants were
entitled to procedural fairness; however, in determining the extent of this
obligation, the five [Baker v Canada (Minister of Citizenship and Immigration),[1999]
2 SCR 817 [Baker]] factors must be weighed. It is appropriate to recall
these factors:
(1) the nature of the decision being made
and the process followed in making it;
(2) the nature of the relevant statutory
scheme;
(3) the importance of the decision to the
individuals affected;
(4) the legitimate expectations of the individual
challenging the decision;
(5) the
decision maker’s own choice of procedure.
[38]
Having the Baker factors in mind, I note
the Applicant’s submission that the Minister failed to observe the principles
of natural justice as it was “entirely reasonable for
TFN to expect that, prior to signing an ‘agreement’ on behalf of their
community regarding issues fundamental to the community’s well-being,
meaningful consultation and negotiation would occur.” Citing Haida
Nation v British Columbia (Minister of Forests), 2004 SCC 73, [2004] 3 SCR
511 and Taku River Tlingit First Nation v British Columbia (Project
Assessment Director), 2004 SCC 74, [2004] 3 S.C.R. 550, the Applicant argues that
the Minister failed in his duty to negotiate the ARFA in good faith.
[39]
There are at least two issues to keep in mind
with regard to this argument by the Applicant. First, the present application
is a judicial review of the Minister’s decision to appoint a TPFAM. It is not a
review of the process by which AANDC addressed the concerns of the First
Nations of Saskatchewan with respect to the ARFA for the 2014-2015 fiscal year.
Second, even if this were a review of the process by which AANDC
addressed Saskatchewan First Nations’ concerns, it remains that TFN opted not
to participate in that process.
[40]
I agree with the Respondent that TFN cannot
refuse to participate in the consultation process and then rely on that fact to
argue that it was not consulted in a meaningful and serious manner (Mikisew
Cree First Nation v Canada (Minister of Canadian Heritage), 2005 SCC 69, at
para 65). It would impose an impossible burden on AANDC if such argument could
be made on that basis. Though AANDC implemented only three recommendations made
by the First Nation leaders during the November 2013 workshops/discussions, and
though the modifications made were arguably minor ones compared to the concerns
expressed by the First Nations, these facts are insufficient to establish that AANDC
failed to engage in meaningful consultations with the First Nations of
Saskatchewan.
[41]
Further, AANDC continued discussions with TFN
about the ARFA after the November 2013 consultations. It posted the modified
standard ARFA on its website in December 2013, and then sent it directly to TFN
in February 2014. There were also several meetings and other discussions in
March 2014 regarding (i) the need to have a funding arrangement in place before
the end of the existing ARFA, and (ii) attempting to find an alternative
arrangement that the parties could agree on. I am satisfied that, during these
discussions, TFN was reasonably aware that management of programs and services
delivered to TFN members would be taken out of TFN’s hands if an agreement was
not reached. I am also satisfied that AANDC made reasonable efforts to get
TFN’s agreement on an ARFA, and that it did not fail to observe any principles
of natural justice or procedural fairness in so doing.
[42]
TFN argues that the ARFA should have been sent
to it earlier in order to allow a reasonable time for negotiation. Given the
parties’ respective positions at the time, as well as the passage of time since
then, I am satisfied that neither additional time for negotiation, nor longer
advance notice of the imposition of a TPFAM, would have resulted in the parties
reaching an agreement.
[43]
TFN also argues that the sort of collective
consultation that AANDC conducted in November 2013 with many First Nations
together was inadequate as meaningful consultation and that, to be meaningful,
consultation had to be one-on-one. In my view, AANDC was not obliged to conduct
separate consultations with each First Nation. In any case, my understanding is
that TFN’s main objection to AANDC’s November 2013 consultations was not that they
were collective, but rather that they introduced new modifications to the ARFA
for 2014-2015 when TFN’s concerns about 2013-2014 ARFA still had not been
satisfied.
[44]
TFN argues that “[t]he
Minister has failed to observe the principles of procedural fairness by failing
to follow the guidelines and procedures it is required to follow.” To
support this argument, TFN cites AANDC’s Default Prevention and Management
Policy 2013, and specifically relies on sections 4.2, 5.1 and 5.2.2
thereof. For the most part, these sections are not applicable to the present
case as TFN was not in default. To the extent that this policy document applies
to the present case, it is my view that, once efforts to reach a negotiated
agreement failed, and the March 31, 2014 termination of the prior ARFA was
approaching, the appointment of a TPFAM was a reasonable last resort (per
section 5.2.2). I am also satisfied that no less intrusive solution (per
section 4.2) was available.
[45]
TFN argues that the Minister failed to perform
his duty to consult and accommodate. To the extent that such a duty existed in
the present case, its scope was limited (Wawatie, at para 40; Kehewin,
at para 26). In the present case, I am of the opinion that the Respondent did
not fail to consult TFN. As mentioned by Justice Phelan in Kehewin, at
paras 19-20 and 25-26:
19. The Applicants have argued that they
were entitled to advance notice before a third party manager was appointed.
Whether the Court approaches the issue as one of public law, applying the
factors in Baker v Canada, 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, or
as one of contract, the result is the same – no advance notice is required.
20. As a matter of public law, the policy
under which funds were authorized did not contemplate advance notice. Indeed the
current policy, unlike that in the Tobique case, does not set out
procedural steps but merely requires “notification that the decision has been
made”. No issue of legitimate expectation of notice arises from the policy or
from the particular facts of this case.
[…]
25. Regard must be had to the rights
being affected before one concludes that there is a duty to consult. As
held in Elders Council of Mitchikanibikok Inik v Canada (Minister of Indian
Affairs and Northern Development), 2009 FC 374, there is no link between
the appointment of a third party manager and native self-government.
Justice Harrington summarized the situation, which is equally applicable here.
40. … The consequence of appointing
the Third Party Manager was to temporarily remove administrative
responsibilities from the Band Council with respect to the delivery of programs
and services to the community. The aim of the appointment was to protect public
funds and to ensure that essential programs and services were not disrupted, as
disrupted they were in years past. Assets and responsibilities falling outside
the funding arrangements are not affected by the nomination of a Third Party
Manager and remain under the control of the Band.
26. Even if there was a duty to consult,
it would be at the very low end of the consultation spectrum because the
strength of the claim to Aboriginal rights asserted is weak and the potential
adverse effect is temporary (Haida Nation v British Columbia (Minister
of Forests), 2004 SCC 73, at para. 39).
[Emphasis added]
[46]
Therefore, in my opinion, the Minister neither
failed to observe the principles of natural justice nor his duty to consult and
accommodate.
VII.
Conclusion
[47]
I am of the opinion that the application for
judicial review should be dismissed.
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