Docket: A-445-15
Citation: 2017 FCA 168
[ENGLISH TRANSLATION]
| CORAM:
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GAUTHIER J.A.
SCOTT J.A.
DE MONTIGNY J.A.
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| BETWEEN:
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| ÉDOUARD ROBERTSON
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| Appellant
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| and
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| HER MAJESTY THE QUEEN
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| Respondent
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REASONS FOR JUDGMENT
DE MONTIGNY J.A.
[1]
Mr. Robertson (the appellant), an Indian within the meaning of the Indian Act, R.S.C. 1985, c. I-5 (the IA), has operated a business that manufactures and sells items made of fur under the name “René Robertson fourrures EDA”
since at least 1996. Before the Tax Court of Canada, he unsuccessfully challenged an assessment by the Quebec Minister of Revenue, acting as an agent for the Minister of National Revenue (on behalf of Her Majesty the Queen, the respondent, represented by the Attorney General of Canada); that assessment resulted from the appellant’s failure to collect and remit the goods and services tax (GST) established by Part IX of the Excise Tax Act, R.S.C. 1985, c. E-15 (the ETA), for the June 1, 1996, to May 31, 2002, period (the impugned period). He is now appealing that decision before this Court, on the basis of a number of constitutional arguments all of which were rejected by the Tax Court of Canada.
I.
Background
[2]
The appellant is a member of the Mashteuiatsh Montagnais Band of Lac Saint-Jean. Like his father before him and other ancestors over four generations, he operates a business that manufactures and sells furs on the Mashteuiatsh Reserve. After purchasing the business from his father in 1996 (except for the portion purchasing and selling raw fur, which he did not acquire until 2001), his sales grew continually, from $400,000 in 1996 to $1,264,223.60 in the 2001–2002 fiscal year. The number of employees reflected the growth in sales, rising from 4 to about 20 during the same period. Most of the company’s customers (about 80%) are non-Indigenous.
[3]
The evidence reveals that the company is fairly diverse. As noted in paragraph 59 of the trial judge’s reasons, the appellant sells hats, mittens, boots, moccasins, handicrafts and new, used and remodelled fur coats, mounted animals, and pelts; he also sells wholesale and cleans, repairs and stores fur coats. In 2000–2001, the appellant even started selling fleece sweaters and cotton turtlenecks (Testimony of Mr. Robertson dated May 27, 2014, Appeal Book, Vol. 13, Tab A, at pp. 247–251).
[4]
The evidence also reveals that most of the appellant’s company’s sales during the impugned period stem from a contract with Kanuk, under which the appellant’s company produced the fur band that is ultimately attached to the hoods of Kanuk coats (Testimony of Mr. Robertson dated May 27, 2014, Appeal Book, Vol. 13, Tab A at pp. 221–226; Testimony of Mr. Robertson dated May 28, 2014, Appeal Book, Vol. 13, Tab B at pp. 10–12). Mr. Robertson’s company used wild coyote pelts, 90% of which came from Canada, and silver fox pelts. The main supplier of the pelts was Roberge Fourrures, a non-Indigenous company located in Montréal. The appellant also purchased dressed furs from Roberge Fourrures, as well as from Finish and Norwegian suppliers, and had pelts tanned by Vaudry, another non-Indigenous company.
[5]
The manufacture and remodelling of the fur coats was also done by a Montréal company, Fourrures Micheline Inc. (Micheline Inc.), in which Mr. Robertson acquired 49% of the shares in 1998.
[6]
The appellant bought raw furs from his father, who purchased them from trappers. Those furs were then sold to Micheline Inc. and other non-Indigenous manufacturers, who made coats from them. According to the evidence, furs purchased by the appellant from Indigenous trappers represented 10% of his volume of fur pelts. Of that 10%, only half originated from trapping activities carried out by the Montagnais. The percentage of annual sales associated with the sale of articles made of fur from Montagnais trappers in Lac Saint-Jean thus represented a very small percentage of the total sales of the appellant’s company (between 0.50% and 0.78% for the impugned period; see, among other things, the financial statements of “René Robertson Fourrures EDA”
, Appeal Book, Vol. 7, Tab C, Exhibit I-1, Tab 24 at pp. 1, 10, 14 and 19, and Tab 25 at p. 18; Testimony of Mr. Robertson dated May 28, 2014, Appeal Book, Vol. 13, Tab B at pp. 12–13).
[7]
In March 2000, Revenu Québec first asked the appellant to audit his books and records to determine if he owed uncollected amounts of GST. At that time, tripartite negotiations were under way between the governments of Canada and Quebec and the Conseil tribal Mamuitun mak Nutakuan (including the Essipit, Mashteuiatsh and Nutakuan First Nations) to determine the council’s economic and political powers. Those negotiations led to an agreement in principle that was ratified by the parties in 2004 and provided for the drafting and eventual conclusion of a treaty within the meaning of sections 25 and 35 of the Constitution Act, 1982, being Schedule B to the Canada Act, 1982 (U.K.), 1982, c. 11 (Constitution Act, 1982). Among other things, the agreement includes a chapter on taxation, and a mechanism for the direct taxation of Indigenous members by their respective legislative assemblies.
[8]
Given the status of the negotiations, the appellant did not respond to the first request for an audit of his records. Instead he invited Revenu Québec to contact his local political representatives directly for any questions regarding his tax obligations. After various dealings between the appellant, the Conseil des Montagnais and the tax authorities, Revenu Québec sent the appellant an initial draft assessment and a notice of assessment for GST and the Quebec sales tax (QST) on August 5, 2002. That assessment was for the June 1, 1993, to May 31, 2002, period.
[9]
Despite repeated requests from the Conseil des Montagnais to Quebec’s Minister of Revenue to suspend collection measures against the appellant pending signature and ratification of the tripartite agreement in principle, Revenu Québec’s collections division sent the appellant a final notice of payment for $1,591,519.64 in GST and QST on September 25, 2002, and, on January 31, 2003, sent the appellant’s financial institution an order to pay $783,191.34 (representing only what was owed in GST) under section 317 of the ETA. Revenu Québec argued that tax laws applied to everyone until the tripartite agreement was duly ratified (Letter dated October 2, 2002, from Francine Martel-Vaillancourt, Appeal Book, Vol. 7, Tab C, Exhibit I-1, Tab 13). Following the appellant’s refusal to comply with the order to pay, Revenu Québec relied on section 316 of the ETA to register with the Registry of the Federal Court a certificate having the same effect as a judgment against the appellant, ordering him to pay $783,734 to Revenu Québec for non‑payment of GST.
[10]
In April 2003, the appellant offered to cooperate with Revenu Québec for the first time. Following an audit of his books and records, Revenu Québec was able to revise the amounts owing and sent the appellant a new draft assessment and notice of assessment for the June 1, 1993, to May 31, 2002, period. The amount claimed was now $514,172.81, which corresponded to $334,438.97 in GST, $102,554.04 in penalties and $77,179.80 in interest. That notice replaced the one that had been sent to the appellant in August 2002. On May 29, 2003, the appellant filed a notice of objection to the reassessment in due and proper form.
[11]
In July 2003, a new order to pay was sent to the appellant’s financial institution. A few months later, Revenu Québec revoked the registration certificate issued under the Act respecting the Québec sales tax (R.S.Q., c. T-0.1), requiring him to immediately cease operation of his business. The appellant filed an application with the Superior Court of Quebec for an interlocutory injunction to obtain a stay of the notice of revocation of his registration certificate. The parties finally agreed to suspend the interlocutory proceeding pending a decision on the validity of the notices of assessment by the Tax Court of Canada. The appellant also obtained a GST registration number on October 22, 2003. As he had never applied for one in the past, Revenu Québec issued a registration number to the appellant, effective retroactively to 1993.
[12]
In January 2004, Revenu Québec replied to the appellant’s notice of objection and revised the company’s operating period in the appellant’s favour. Contrary to what had been assumed until then, Revenu Québec agreed to have the assessment period begin on June 1, 1996, rather than June 1, 1993. A reassessment was therefore issued in February 2004, for a total amount of $302,690.20, including penalties and interest. It was that notice of assessment that Mr. Robertson appealed before the Tax Court of Canada. That assessment applies only to sales to non-Indigenous people, and does not concern raw furs, as those sales were not made by the appellant’s company, but his father’s (Testimony of Céline Rathé dated May 29, 2014, Appeal Book, Vol. 13, Tab C, at pp. 65 and 141–142).
II.
The impugned decision
[13]
After nine days of hearings, the judge dismissed the appeal filed by the appellant. In a 40‑page decision, he rejected all the arguments put forth by the appellant against the validity of his February 2004 assessment, namely, (1) his Aboriginal rights; (2) the inconsistency between the ETA and the IA; (3) the discriminatory application of the ETA under section 15 of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982 (the Charter); (4) the lack of procedural fairness; and (5) the fact that the disputed assessment was time-barred and overestimated. The last argument was not pursued on appeal. I will briefly summarize the judge’s reasons in the following paragraphs.
[14]
First, the judge examined the testimonies of the expert witnesses called by both parties. Historian and anthropologist Claude Gélinas testified for the appellant on the basis of an expert report entitled “Les Montagnais du Lac Saint-Jean et leur tradition de commerce des fourrures”
[The Montagnais du Lac Saint-Jean and the traditional fur trade]. According to the judge’s summary, there has been a trading tradition among the Indigenous people in that area since prehistoric times. This practice took place in a context of complete political and narrative autonomy, and was part of a broad exchange network. The Indigenous peoples of the area traded with neighbouring groups in order to survive and improve their quality of life, most often in furs.
[15]
Historian Alain Beaulieu testified for the respondent. In his expert report entitled “Commerce, Structure politique et changements sociaux : le cas des Montagnais du Lac Saint-Jean, 1600–1950”
[Trade, political structure and social change: the case of the Montagnais du Lac-Saint-Jean, 1600–1950], which the judge cited at length in his reasons, Mr. Beaulieu explains the role the Montagnais du Lac Saint-Jean played in the fur trade. He confirms, to a certain extent, the trade engaged in by the Indigenous nations of northeastern North America before the arrival of the Europeans, but emphasized the fact that their trading activities were part of a subsistence economy, focused on satisfying the needs of the community and its families, rather than a market economy or the accumulation of surplus. Accumulation would have been unthinkable in a society like that of the Montagnais, where mobility was of primary importance. The expert also noted that their strategic position at the mouth of the Saguenay River allowed them to position themselves as necessary middlemen between the Indigenous peoples of the interior and European traders, but that that hegemony was progressively replaced over the 17th century with the implementation of a new trade monopoly created by the French government.
[16]
After noting some of the guiding principles of the ETA regarding GST, particularly the obligation for every person making a taxable supply to collect the tax payable by the recipient of the supply and to remit that amount to the Receiver General in accordance with subsections 221(1), 228(1) and 228(2) of the ETA, the judge examined the Aboriginal right to trade in fur claimed by the appellant. Applying the test established in the case law regarding the recognition of an Aboriginal right (particularly R. v. Van der Peet, [1996] 2 S.C.R. 507, 137 D.L.R. (4th) 289 [Van der Peet], and Lax Kw’alaams Indian Band v. Canada (Attorney General), 2011 SCC 56, [2011] 3 S.C.R. 535 [Lax Kw’alaams]) and relying on the evidence submitted, the judge had no difficulty concluding that the appellant had established a pre-contact practice, tradition or custom integral to the distinctive Aboriginal society. However, the judge rejected the appellant’s claims with respect to the reasonable degree of continuity between the claimed modern right and the Aboriginal practice. Instead he was of the opinion that the activities that were part of the appellant’s business were too different from those that were part of the fur trade practiced by the appellant’s ancestors. Here is what he had to say on this matter:
[103] . . . The appellant did not trap, which the Montagnais du Lac Saint-Jean had to practise to be engaged in the fur trade. The evidence also shows that the main item traded in as part of this trade by the appellant’s ancestors was raw furs, while the main items of the appellant’s fur trade are remodeled fur coats and coats manufactured from raw animal furs, 90% of which come from non-Aboriginal producers, including many foreign ones. According to the evidence, only 5% of the raw furs used by the appellant come from Montagnais trappers.
[104] On the basis of that information, I find that the claimed right to engage in the fur trade in the manner in which the appellant is doing so was not integral to pre-contact Montagnais society. The recognized Aboriginal right to engage in the fur trade must be limited to the sale of raw furs of trapped animals (as opposed to raw furs from farmed animals). It should be noted here that for the purposes of the impugned assessment, raw fur sales were considered to be non-taxable sales.
[17]
Regarding the appellant’s claim to an Aboriginal right to self-government, the judge noted that this claim also had to be assessed in light of the test set out in Van der Peet. In other words, to be an Aboriginal right, the activity must be an element of a practice, custom or tradition integral to the distinctive culture of the Montagnais. Applying that test, the judge determined that the exercise of governmental authority over the fur trade prior to contact was limited to the assignment of hunting territories to the various families, and did not involve an exclusive right to tax business transactions. In the judge’s opinion, recognizing that the Montagnais had an exclusive right to tax would violate Crown sovereignty.
[18]
In light of his conclusions that the Aboriginal rights claimed by the appellant did not exist, the judge was not required to determine whether the duty to collect GST and remit it to the Receiver General of Canada violated those rights. The judge nonetheless chose to add that the provisions of the ETA represented, at most, a “mere administrative inconvenience”
for the appellant (Reasons, at para. 116). Regarding the assessment issued to the appellant for GST amounts not collected, the judge refused to see it as a tax on his property situated on a reserve or a tax on the appellant in respect of that property, thus following well-established jurisprudence from this Court and several other provincial courts of appeal (see inter alia Obonsawin v. Canada, 2011 FCA 152, 423 N.R. 241; Pictou v. Canada, 2003 FCA 9, 299 N.R. 329; R. v. Johnson (1993), 120 N.S.R. (2d) 414, [1994] 1 C.N.L.R. 129 (C.A.); Chehalis Indian Band v. B.C. (1988), 53 D.L.R. (4th) 761, 31 B.C.L.R. (2d) 333 (C.A.)).
[19]
The appellant had also claimed that the ETA was inconsistent with the IA, in that the ETA made him an agent or fiduciary of the federal Crown, while he had limited legal capacity under the IA. The judge summarily rejected that argument, indicating that the appellant had been operating his business for about 10 years while fulfilling his obligations under the ETA.
[20]
The judge also did not retain the appellant’s argument, based on section 15 of the Charter, that he was treated unequally compared to non-Indian merchants since he could not obtain the credit needed to repay the GST amounts claimed. Indeed, section 89 of the IA prevents financial institutions from seizing the property of an Indian situated on a reserve, which is likely to limit access to credit or, at the very least, increase the cost of credit. The judge noted that that provision did not result in disadvantaging or prejudicing Indigenous people, but, rather, protected their assets. Therefore, this provision cannot be deemed to be discriminatory within the meaning of subsection 15(1) of the Charter. The judge also held that section 89 of the IA could not be applied to operations situated in the commercial mainstream, as the provision had not been designed to give Indigenous persons who choose to go into business a competitive advantage.
[21]
The judge did not accept the appellant’s claims that the duties of procedural fairness were breached. He instead attributed the delays in the processing of the notices of objection to the appellant’s conduct, while noting that the appellant could have exercised his rights to appeal before the Tax Court of Canada given the lack of a reply from the tax authorities for over 180 days (see ETA, s. 306). Regarding the limitation, the judge determined that the four-year period under subparagraph 298(1)(a)(i) of the ETA had not expired. He agreed with the respondent’s position that the limitation period had never begun because the appellant had not filed an income tax return. Finally, the judge noted that the penalties and interest set out in subsection 280(1) of the ETA automatically applied in cases in which tax returns are not filed, except in cases of due diligence. In this case, he stated that he was unable to conclude that the appellant had exercised due diligence. As mentioned previously, the arguments regarding the limitation and the overestimate of the impugned assessment were not made on appeal, and I will therefore not deal with them in these reasons.
III.
Issues
[22]
The parties agree on the issues, which I would rephrase as follows:
(a)
Did the judge err in determining that the fur trade as carried out by the appellant was not integral to pre-contact Montagnais society and that the Aboriginal right is only for the sale of raw furs of trapped animals?
(b)
Did the judge err in determining that the appellant did not establish an exclusive authority to tax business transactions involving furs?
(c)
Did the judge err in concluding that there was no inconsistency between the ETA and the IA resulting in the duty to collect and remit GST being inapplicable to the appellant?
(d)
Did the judge err in concluding that the application of the ETA does not violate section 15 of the Charter?
(e)
Did the judge err in concluding that the tax authorities did not breach the requirements of procedural fairness?
In light of my conclusion that the duty to collect and remit GST does not breach the appellant’s claimed right to trade in fur, the answer to the first question is not vital to the final issue. However, I feel that it must be addressed in order to clarify certain statements made by the trial judge.
IV.
Analysis
[23]
It is well-established that the existence, scope and nature of Aboriginal rights are questions of law that are reviewable against a standard of correctness (see R. v. Lefthand, 2007 ABCA 206 at para. 18, [2007] 10 W.W.R. 1 [Lefthand], citing Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235). The first two issues must therefore be reviewed on that standard, as does the issue of whether those rights were violated. The third and fourth questions are also legal in nature and call for the correctness standard. Finally, it is trite law that duties of procedural fairness are assessed on a standard of correctness (Mission Institution v. Khela, 2014 SCC 24, at para. 79, [2014] 1 S.C.R. 502; Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, at para. 43, [2009] 1 S.C.R. 339).
A.
Did the judge err in determining that the fur trade as carried out by the appellant was not integral to pre-contact Montagnais society and that the Aboriginal right is only for the sale of raw furs of trapped animals?
[24]
The appellant claims that the judge erred in concluding that the fur trade that he carries out was not integral to the society of the Montagnais du Lac Saint-Jean prior to contact with Europeans, although he initially acknowledged that those same Montagnais have an Aboriginal right to trade in fur. In limiting the exercise of that right to the sale of raw furs from trapped animals, the judge allegedly did not follow the instructions of the Supreme Court regarding the evolutive nature of Aboriginal rights. According to the appellant, what is being claimed is not the right to trap, but the right to trade in fur. The appellant adds (at para. 73 of his memorandum):
[translation]
Similarly, the appellant submits that there is an obvious rational link between the trade in raw furs practiced by his ancestors and the current sale of coats and other items made from raw furs. It is an example of the evolution of an Aboriginal right, according to the appellant.
[25]
In short, the appellant claims that the sale of items made from fur is a logical continuation of the traditional practice of the fur trade, and that how that right is exercised has changed to adapt to the community’s new socioeconomic reality and the scarcity of wildlife resources.
[26]
It is now trite law that to establish an Aboriginal right under subsection 35(1) of the Constitution Act, 1982, an Aboriginal applicant must prove that an activity is part of a practice, custom or tradition integral to the distinctive culture of the Aboriginal group in question (Van der Peet, at para. 46). In Van der Peet, and in Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, 153 D.L.R. (4th) 193, the Supreme Court identified certain factors to be considered in applying the integral part to a distinctive culture test. The Supreme Court summarized these in the following manner in Mitchell v. M.N.R., 2001 SCC 33, at para. 12, [2001] 1 S.C.R. 911 [Mitchell, 2001]:
. . . Stripped to essentials, an aboriginal claimant must prove a modern practice, tradition or custom that has a reasonable degree of continuity with the practices, traditions or customs that existed prior to contact. The practice, custom or tradition must have been “integral to the distinctive culture” of the aboriginal peoples, in the sense that it distinguished or characterized their traditional culture and lay at the core of the peoples’ identity. It must be a “defining feature” of the aboriginal society, such that the culture would be “fundamentally altered” without it. It must be a feature of “central significance” to the peoples’ culture, one that “truly made the society what it was” (Van der Peet, supra, at paras. 54-59 (emphasis in original)). This excludes practices, traditions and customs that are only marginal or incidental to the aboriginal society’s cultural identity, and emphasizes practices, traditions and customs that are vital to the life, culture and identity of the aboriginal society in question.
[27]
The judge correctly identified the applicable principles by drawing on Van der Peet and Mitchell, 2001. Relying on the evidence submitted by the two experts called by the parties, he first concluded that there was a practice, tradition or custom of trading in fur that was integral to the distinctive society of the Montagnais prior to contact. The appellant is not challenging this finding of fact, and this Court must obviously show deference in this regard. It certainly would have been preferable for such an issue to be examined as part of a civil action for declaratory relief instead of the more limited context of an appeal from an assessment made under the authority of the ETA so that more substantial evidence could have been filed, not only on the exact nature of the practice, tradition or custom in question, but also on the issue of whether that practice was integral to the distinctive society of the Montagnais pre-contact. However, I do not see a need to elaborate further on these issues for this case.
[28]
Still, the following clarification seems useful. Although the judge seemed to characterize the right in question as the right to trade in fur, it seems to me that the practice or custom established by the evidence has more to do with bartering or exchanging than trade as such. Professor Gélinas himself notes in his expert report that the Indigenous peoples of Lac Saint-Jean traded to support themselves rather than for profit, and the judge echoed that finding in paragraph 96 of his reasons. It is from that perspective that the appellant’s continuity argument must be dealt with.
[29]
According to Mr. Robertson, the error committed by the judge was not to have recognized that the sale of coats and other items made from raw fur is simply a continuation of the trade in raw furs carried out by his ancestors. There is no doubt, as acknowledged by the Supreme Court in Lax Kw’alaams, that an Aboriginal right is not frozen in time and that both its subject matter and the method of its exercise are subject to evolution, depending on the facts (at para. 49). Furthermore, as noted by Binnie J., writing for the Court in the same case, the right must have evolved; an entirely different right cannot have been created (Lax Kw’alaams, at paras. 51 and 59).
[30]
Based on those principles, the judge found that the fur trade in the manner in which the appellant was engaging in it differed too much from the activities practiced by his ancestors (which he defined as trapping and the sale of raw furs) to constitute a continuation or an evolution. Although I am not strictly required to express an opinion on this matter, I will nonetheless allow myself to make the following remarks.
[31]
I begin by noting that the judge did not explicitly address the issue of whether a large-scale trade in fur for profit could be considered an evolution of the pre-contact bartering in or exchanging of furs practiced by the Montagnais to acquire luxury goods or for livelihood, support and sustenance purposes. Relying on Van der Peet and R. v. Sappier; R. v. Gray, 2006 SCC 54, [2006] 2 S.C.R. 686, the Attorney General submitted that, from a quantitative standpoint, there can be no correlation between occasional exchanges for livelihood, support and sustenance purposes and the very large-scale commercial sale of goods. I note, however, that in both cases, the claimed Aboriginal right (the right to sell fish and the right to harvest wood for domestic use) had no commercial dimension (other than incidentally in the first case). Conversely, in the matter at bar, the judge recognized that the fur trade was of fundamental importance to the Montagnais and was practiced on an ongoing basis.
[32]
That said, it is true that the appellant’s contemporary activities do not involve any trapping, exchanging or selling of raw furs, and less than one percent of his annual sales are based on the sale of items made from furs purchased from Montagnais trappers. In that context, can it truly be said that the appellant’s business is a continuation of the traditional practice of those same Montagnais? The question of whether a practice or custom based on the bartering in and exchanging of a natural resource can constitute the basis of a modern right to the large-scale trade in that same resource remains, and the parties have not cited any precedent in that regard. It does not seem appropriate to express an opinion on this matter for the purposes of this case.
[33]
On the other hand, limiting the Aboriginal right to trade in fur to the selling of raw furs from trapped animals (as opposed to raw furs from farmed animals) seems unduly narrow. In the same way that the Aboriginal source of fishing rights does not require rights holders to fish from dugout canoes, to quote Binnie J. in Lax Kw’alaams, it seems far from clear that the Montagnais would be limited to trapping (as opposed to other, more modern hunting methods) or not be able to practice farming if they intend to claim their Aboriginal right to trade in fur. The judge’s reasons in this regard are poorly developed and, without more substantial submissions by the parties, it is hard for this Court to pursue an issue that is essentially factual in nature.
[34]
In any event, even assuming that the Montagnais du Lac Saint-Jean can claim an Aboriginal right to trade in fur, the appellant did not establish how the ETA duty to collect and remit GST violates that right. Relying on R. v. Sparrow, [1990] 1 S.C.R. 1075, 70 D.L.R. (4th) 385 [Sparrow], and Lefthand, the judge found that the ETA did not stop the Montagnais du Lac Saint-Jean from trading in fur and represented a “mere administrative inconvenience”
for the appellant (Reasons, at para. 116). The appellant presented no argument before this Court against this conclusion.
[35]
Yet, the onus of proving a prima facie infringement of an Aboriginal right lies on the individual challenging the application of certain legislation. In Sparrow (at p. 1112), the Supreme Court set out three questions for determining whether there has been a prima facie infringement of an Aboriginal right:
To determine whether the . . . rights have been interfered with such as to constitute a prima facie infringement of s. 35(1), certain questions must be asked. First, is the limitation unreasonable? Second, does the regulation impose undue hardship? Third, does the regulation deny to the holders of the right their preferred means of exercising that right? The onus of proving a prima facie infringement lies on the individual or group challenging the legislation.
[36]
It is only where a statute or regulation meets the threshold of a prima facie infringement that the Crown must justify the legislation. The decision in Lefthand also clarified that the regulation of a traditional practice or the imposition of conditions on the exercise of that practice is not, in itself, a prima facie infringement.
[37]
In his reasons, the judge did not dwell at any great length on the issue of the alleged prima facie infringement by the ETA of the Aboriginal right claimed by the appellant, undoubtedly because the appellant did not even try to explain how the duty to collect and remit GST applicable to sales to non-Indians would significantly stop him from trading or exercising his right. In Lefthand, the Alberta Court of Appeal explained that the concept of prima facie infringement requires evidence of sufficiently significant interference:
[124] . . . The words “prima facie” infringement do not denote a level of incomplete or preliminary proof of the infringement (admittedly their more common meaning), but rather mean there has been actual proof on a balance of probabilities of a sufficiently material infringement “unless it can be justified” . . .
[38]
Given this burden of proof and the complete lack of any explanation from the appellant to demonstrate that the duty to collect and remit GST is unreasonable, imposes undue hardship or materially infringes his Aboriginal right to trade in fur (even in its broadest sense), I am of the opinion that there is no need to intervene. The judge did not err in fact or in law by concluding that the appellant’s Aboriginal right to trade in fur had not been infringed by the ETA.
B.
Did the judge err in determining that the appellant did not establish an exclusive authority to tax business transactions involving furs?
[39]
The appellant submits that the judge erred in concluding that the Montagnais’s Aboriginal right to self-government of the fur trade was limited to the assignment and management of hunting, fishing and trapping territories over which the Montagnais could exercise their jurisdiction. He alleges, as he did at trial, that the Montagnais du Lac Saint-Jean have a constitutional right to trade freely and openly, without being subject to any restrictions or regulations whatsoever. In short, what the appellant is claiming is the recognition for the Montagnais of an exclusive authority to tax business transactions involving furs, with both Indians and non-Indians.
[40]
It is clear from R. v. Pamajewon, [1996] 2 S.C.R. 821, 138 D.L.R. (4th) 204 [Pamajewon], that any claim of an Aboriginal right to self-government must be considered in light of the purposes underlying subsection 35(1) of the Constitution Act, 1982, and must, therefore, be considered against the test laid out in Van der Peet. Consequently, the appellant’s claim of self-government, and more specifically the claim of an exclusive right to impose duties on business transactions involving furs, would only be an Aboriginal right if it can be established that it is “an element of a practice, custom or tradition integral to the distinctive culture”
of the Montagnais du Lac Saint-Jean (Van der Peet at para. 46).
[41]
After citing the relevant passages from Pamajewon and examining the evidence submitted by the parties, the judge held that there was no evidence in the record to suggest that the fur trade was ever regulated by an Indigenous regulation during the period in question. The appellant has not convinced me that the judge erred in so concluding. The appellant cannot dispense with the demonstration required by Van der Peet by arguing that the Montagnais du Lac Saint-Jean were never subject to the British Crown or the governments of Canada or Quebec. First, an Aboriginal right must be based on evidence of an “activity”
and, second, that activity must be an element of a pre-contact practice, custom or tradition integral to the distinctive culture of the Indigenous group.
[42]
Moreover, there is a second obstacle to the appellant’s claim that the Montagnais have the exclusive authority to tax the sale of goods including fur: an Aboriginal right must be compatible with the sovereignty of the Crown. Indeed, we must not lose sight of the fact that the purpose of subsection 35(1) of the Constitution Act, 1982, is to reconcile the prior occupation of Canada by Indigenous societies with the assertion of Crown sovereignty, and not to disregard that sovereignty. Allowing the appellant’s claim would be inconsistent with the purpose intended by the framers of the Constitution and, in the absence of any agreement with the federal and provincial governments, would amount to creating an enclave or statute-free zone on Canadian territory in which only tax measures enacted by the Montagnais would apply.
[43]
Finally, it must be remembered that the duty imposed on the appellant to collect and remit taxes under the ETA does not contravene the tax exemption provided for in section 87 of the IA. The appellant is merely acting as a Crown agent and is not paying any taxes personally. His only duty is to remit to the Crown the taxes collected from his non-Indian clients. The assessment made against the appellant on the basis of the GST that he failed to collect from his non-Indian clients on the goods and services that he supplied to them also does not amount to a tax on his property situated on a reserve. The judge properly cited a considerable amount of case law in that respect at paragraph 119 of his reasons, and only one more recent decision to the same effect, from the Quebec Court of Appeal, should be added (see Rice c. Québec (Agence du revenu), 2016 QCCA 666, at para. 78, 267 A.C.W.S. (3d) 501).
[44]
In short, I am of the opinion that the appellant’s argument based on Aboriginal rights does not hold water, in that he was unable to establish the rights that he is claiming or the infringement arising from the duty to collect and remit to the Minister of National Revenue the GST his clients who do not benefit from the exemption under section 87 of the IA have to pay. Consequently, the judge did not err in fact or in law in so concluding.
C.
Did the judge err in concluding that there was no inconsistency between the ETA and the IA resulting in the duty to collect and remit GST being inapplicable to the appellant?
[45]
The appellant submits that the ETA is inconsistent with the IA, not factually but legally. This argument is expressed most clearly in paragraph 118 of his memorandum:
[translation]
The statutory inconsistency arises from the fact that, under the ETA, Indigenous merchants are required to act as agents and fiduciaries of the federal Crown in the collection and remittance of taxes, while under the [Indian Act], they enjoy only limited legal capacity, equivalent to that of a minor or a ward of the state. (references omitted)
[46]
The judge was correct in rejecting that argument, and the appellant himself spent little time on it at the hearing. The concept of implicit inconsistency or conflict of intention is not supported by the Canadian case law, which requires an operational conflict between two legal texts to conclude that they cannot be applied concurrently. This narrow interpretation of the concept of conflict flows from the premise that the legislature does not intend to enact conflicting statutes:
[93] Courts presume that “the body of legislation enacted by a legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other”: R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at p. 325; R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867, at para. 30. This is sometimes expressed as a presumption of coherence, based on the common sense idea that the legislature does not intend to make contradictory enactments: Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at p. 38.This is why courts take a very restrictive approach to defining what constitutes a conflict: P.-A. Côté, in collaboration with S. Beaulac and M. Devinat, The Interpretation of Legislation in Canada (4th ed. 2011), at p. 375.
[94] What then is a conflict in this context? The provisions must be “so inconsistent with . . . or repugnant” to each other that they are “incapable of standing together” . . . . Application of one provision “must implicitly or explicitly preclude application of the other” . . .
Thibodeau v. Air Canada, 2014 SCC 67 at paras. 93 and 94, [2014] 3 S.C.R. 340.
[47]
It is clear that the two statutes at issue here are not inconsistent, at least following the logic of the excerpt cited above. The duty to act as an agent of the government and to collect and remit GST on sales to non-Indians does not violate the letter or even the spirit of the IA, and it is entirely possible to comply with both statutes at the same time.
[48]
Apart from the spirit in which the IA was passed, the only provision cited by the appellant in support of his argument that the two statutes are inconsistent is section 89 of the IA, under which an Indian cannot give his or her property as security or transfer the property, subject to certain conditions. Although that provision may illustrate the paternalistic approach of Parliament at the time the statute was enacted, it is not enough to establish the inconsistency of the two statutes.
[49]
As the judge rightfully noted, the IA does not impose any financial duties for merchants. Only if merchants fail to collect or remit GST do they become personally liable for the unremitted amounts. Far from being inconsistent with that duty, the sole purpose of section 89 is to protect Indian merchants who take out a loan to fulfill the duty arising from a notice of assessment made against them. Even supposing that that protection results in difficulties or additional costs in obtaining funding for merchants, of which there is no mention in the evidence in this case, it would not necessarily create a conflict between the two statutes within the strict meaning developed in the case law.
[50]
I therefore find that the judge was correct in concluding that there was no inconsistency between the ETA and the IA that would exempt the appellant from his duty to collect and remit the GST applicable to sales to non-Indians.
D.
Did the judge err in concluding that the application of the ETA does not violate section 15 of the Charter?
[51]
The appellant also claimed that he was discriminated against compared to non‑Indian merchants because section 89 of the IA makes it harder for him to access the credit he needs to remit the GST amounts he owes. That argument not only applies to the appellant, but also to all non-Indian merchants, in that the time limits imposed by the ETA are such that GST must often be remitted before the sale of the goods and services on which it is to be collected has been completed.
[52]
Once again, the judge was correct in rejecting this argument. On the one hand, as noted previously, the appellant did not file any evidence regarding his difficulties in obtaining funding. Indeed, in his testimony, Mr. Robertson stated that he had obtained funding for his business from a bank (see Testimony of Mr. Robertson dated May 27, 2014, Appeal Book, Vol. 13, Tab A, at p. 101). There is also no evidence in the record concerning the time limits for remitting GST to the Minister of National Revenue and the need for merchants to remit amounts that they have not yet collected.
[53]
More fundamentally, the appellant did not discharge his burden of demonstrating that the duty to collect and remit GST violated his rights to equality under section 15 of the Charter. There is certainly no doubt that section 89 of the IA creates a distinction between Indians and non-Indians. That said, not all distinctions are discriminatory. In Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, at p. 174, 56 D.L.R. (4th) 1 [Andrews], the Supreme Court defined discrimination as follows:
[A] distinction, whether intentional or not but based on grounds relating to personal characteristics of the individual or group, which has the effect of imposing burdens, obligations, or disadvantages on such individual or group not imposed upon others, or which withholds or limits access to opportunities, benefits, and advantages available to other members of society.
[54]
The decision in Andrews thus imposes a two-fold burden on people who claim to be victims of discrimination: they must first establish that the statute creates a distinction based on an enumerated or analogous ground, and then establish that that distinction creates a disadvantage by perpetuating prejudice or stereotyping (see, for example, Kahkewistahaw First Nation v. Taypotat, 2015 SCC 30, at paras. 27–34, [2015] 2 S.C.R. 548; Quebec (Attorney General) v. A, 2013 SCC 5, at paras. 324 and 418, [2013] 1 S.C.R. 61; Withler v. Canada (Attorney General), 2011 SCC 12, at paras. 30–31, [2011] 1 S.C.R. 396; Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, at para. 188, [2009] 1 S.C.R. 222 [Ermineskin]; R. v. Kapp, 2008 SCC 41, at para. 17, [2008] 2 S.C.R. 483).
[55]
In the case at bar, the appellant did not discharge his burden of establishing that the distinction under section 89 of the IA creates an arbitrary or discriminatory disadvantage for Indigenous people. Quite the contrary, this provision aims to protect them by shielding their real and personal property situated on a reserve from ordinary civil process. As recognized by the Supreme Court in Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, at p. 131, 71 D.L.R. (4th) 193:
In summary, the historical record makes it clear that ss. 87 and 89 of the Indian Act, the sections to which the deeming provision of s. 90 applies, constitute part of a legislative “package” which bears the impress of an obligation to native peoples which the Crown has recognized at least since the signing of the Royal Proclamation of 1763. From that time on, the Crown has always acknowledged that it is honour-bound to shield Indians from any efforts by non-natives to dispossess Indians of the property which they hold qua Indians, i.e., their land base and the chattels on that land base.
[56]
The judge therefore did not err in concluding that the application of section 89 of the IA did not result in disadvantaging the appellant or prejudicing him. The Supreme Court of Canada reached the same conclusion regarding sections 61 to 68 of the IA, which prevents the Crown from investing Indigenous people’s money. Indeed, in Ermineskin, it was felt that the distinction between Indians and non-Indians was not discriminatory in that the Crown may transfer funds that it holds to bands or their fiduciaries after being released from further responsibility. The same is true in the context of section 89, as Indian merchants may decide to waive the protection of that provision or avoid its application by incorporating their business (see, for example, Tribal Wi-Chi-Way-Win Capital Corp. v. Stevenson, 2009 MBCA 72, at para. 5, [2010] 1 W.W.R. 107; R. v. Bernard (1991), 118 N.B.R. (2d) 361, at para. 21, [1992] 3 C.N.L.R. 33) (B.R.); Reference re: Constitutional Questions Act, 1981 ABCA 316, at para. 54, 130 D.L.R. (3d) 636; Kinookimaw Beach Association v. Saskatchewan (1979), 6 W.W.R. 84, at p. 88, 102 D.L.R. (3d) 333 (Sask. C.A.); see also Jack Woodward, Native Law, loose leaf, Toronto: Thomson Reuters, 1989, at para. 11-2(i)).
E.
Did the judge err in concluding that the tax authorities did not breach the requirements of procedural fairness?
[57]
The appellant argues that the judge erred in concluding that the respondent and its agent did not breach procedural fairness in the way it processed his file. Essentially reiterating the position that he presented at trial, he submits that the rules of procedural fairness and the doctrine of the legitimate expectation of the citizen were violated because the respondent allegedly took an unreasonable time to respond to one of his notices of objection and allegedly did not provide a sufficiently detailed response. The appellant also seems to accuse the respondent of taking collection measures while he was still challenging the validity of the assessment.
[58]
Those arguments are completely devoid of merit. First, it is important to note that the only rights created by procedural fairness are participatory in nature (Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, at para. 28, 174 D.L.R. (4d) 193. The case law is clear and does not allow for the substantive remedy (that is, the reduction of penalties and interest) the appellant is claiming for the violation of such rights.
[59]
It is also well established that the Tax Court of Canada does not have the jurisdiction to vacate an assessment based on improper conduct by the Minister. The sole purpose of an appeal before the Tax Court of Canada is to examine the validity of the assessment itself, not the process that led to it being made, as reiterated by this Court in Main Rehabilitation Co. v. Canada, 2004 FCA 403, at paras. 6 to 8, 247 D.L.R. (4th) 597:
[6] In any event, it is also plain and obvious that the Tax Court does not have the jurisdiction to set aside an assessment on the basis of an abuse of process at common law or in breach of section 7 of the Charter.
[7] As the Tax Court Judge properly notes in her reasons, although the Tax Court has authority to stay proceedings that are an abuse of its own process . . ., Courts have consistently held that the actions of the CCRA cannot be taken into account in an appeal against assessments.
[8] This is because what is in issue in an appeal pursuant to section 169 is the validity of the assessment and not the process by which it is established . . . . Put another way, the question is not whether the CCRA officials exercised their powers properly, but whether the amounts assessed can be shown to be properly owing under the Act . . . (references omitted) (emphasis added)
[60]
Finally, I would add that it is quite inappropriate for the appellant to accuse the respondent of breaching procedural fairness. In his reasons, the judge noted that the appellant refused to provide the tax authorities with the documents that they required to audit his books and records for over two years. Moreover, it was only after Revenu Québec initiated collection measures that the appellant finally agreed to show his books. The judge also noted that the appellant was largely responsible for the delay in the processing of his notices of objection dated October 4, 2002, because he did not file them in the prescribed form and did not send them to the right directorate. These findings of fact are supported by the evidence, and the appellant did not satisfy me that the judge made a palpable and overriding error in his assessment of the case. Not to mention that the appellant could have filed an appeal before the Tax Court of Canada 180 days after the filing of his notice of assessment had he felt aggrieved by the time it took to process it (see ETA, s. 306).
V.
Conclusion
[61]
For all of these reasons, I believe that the appeal should be dismissed, with costs.
“Yves de Montigny”
“I concur.
Johanne Gauthier, J.A.”
“I concur.
A.F. Scott J.A.”
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