Peace Hills Trust Co. v. Moccasin, 2005 FC 1364

Date: 20051005

Docket: T-1645-03

Citation: 2005 FC 1364

Ottawa, Ontario, October 5, 2005

Present:           The Honourable Madam Justice Heneghan                                    

BETWEEN:

                                                PEACE HILLS TRUST COMPANY

                                                                                                                                            Applicant

                                                                           and

                             BRIAN MOCCASIN, GARY GOPHER (sometimes known

                    as CARY GOPHER), JONES KATCHEECH, WALTER LEWIS and

                             DON NIGHT, being the Chief and Council of the Saulteaux

                  First Nation, and FIRST NATIONS MANAGEMENT SERVICES INC.

                                                                                                                                      Respondents

                                            REASONS FOR ORDER AND ORDER

I.           INTRODUCTION

[1]                The Peace Hills Trust Company (the "Applicant") seeks judicial review, pursuant to section 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7, as amended, of a decision of the Chief and Council of the Saulteaux First Nation (the "Band Council"), pursuant to a Band Council Resolution (the "impugned BCR") dated October 11, 2001. The BCR directed the Department of Indian and Northern Affairs Canada (the "INAC") and/or First Nations Management Services Inc. (the "Third Party Manager") to withhold payments concerning a certain indebtedness, in excess of $5.3 million, owed to the Applicant. The Applicant did not receive a copy of the BCR in question until May 2004.

[2]                In this application for judicial review, filed on September 8, 2003, the Applicant requests the following relief:

a.              a declaration that the Band Council's adoption of the impugned BCR, and its continuing failure to direct INAC or the Third Party Manager to make payments to the Applicant, are contrary to the law and discriminatory;

b.              an order quashing the impugned BCR;

c.              an order compelling the Third Party Manager and the Band Council to develop a remedial management plan and a debt reduction plan within a stated period of time;

d.              an order appointing a receiver of the Saulteaux First Nation in order to ensure that further surpluses are not squandered and other Band revenues are preserved; and

e.              costs of the application.

II.         BACKGROUND

i)           The Parties

[3]                The Applicant is a trust company incorporated pursuant to the Trust and Loan Companies Act, S.C. 1991, c. 45, with offices in Saskatchewan and Alberta. It is wholly owned by the Samson Cree Nation of Hobbema, Alberta, with the primary objective of serving the financial needs of Canada's First Nations.

[4]                Brian Moccasin, Gary Gopher (also known as "Cary" Gopher), Jones Katcheech, Walter Lewis, and Don Night constitute the Band Council of the Saulteaux First Nation, an Indian Band as defined pursuant to subsection 2(1) of the Indian Act, R.S.C. 1985, c. I-5, as amended. The Saulteaux First Nation resides near Cochin, Saskatchewan.

[5]                The Third Party Manager is incorporated pursuant to the laws of Manitoba, with a registered office in Kamsack, Saskatchewan and in 1999, pursuant to paragraph 4.3(c) of the Comprehensive Funding Arrangement (the "CFA") between the Saulteaux First Nation and the Minister of Indian Affairs and Northern Development (the "Minister"), was appointed the Third Party Manager of the Saulteaux First Nation . This appointment occurred in consequence of a default, on or about April 19, 1999, by the Saulteaux First Nation, under the terms of the CFA, paragraph 4.3(c) of which reads as follows:

4.3 Notwithstanding section 4.2, in the event the Council is in default under this Arrangement, the Minister may take one or more of the following actions as may reasonably be necessary, having regard to the nature and extent of the default:

. . .

(c) appoint, upon providing notice to the Council, a Third Party Manager;

ii)          History of the Dispute

[6]                One of the stated objectives for INAC intervention, through a co-management arrangement or a Third Party Management Agreement ("TPMA"), is to assist the Saulteaux First Nation in regaining control of its financial problems, including the development of a plan to address and resolve those problems and to re-establish financial control so that it can regain self-management for the delivery of essential programs and services under the CFA. Pursuant to this arrangement, INAC provides funding allocated to the Saulteaux First Nation for essential services and programs directly to the Third Party Manager. The Band Council is not party to the TPMA, and the appointment of the Third Party Manager is made by the Minister pursuant to the CFA.

[7]                On or about April 7, 1993, the Saulteaux First Nation entered into an agreement with the Government of Canada for funding which would enable it, among other things, to acquire additional lands, referred to as "shortfall acres" for the Reserve. The Agreement in question is the Saulteaux Treaty Land Entitlement Agreement. The purchase of the shortfall acres was compulsory and once acquired, funds transferred could be used for other Band purposes, including the purchase of additional discretionary acreage.

[8]                Funds were paid by the Crown were paid on an annual basis and pursuant to that agreement, the Saulteaux First Nation was required to appoint a financial institution that would act as a depository of the trust funds. Following the execution of the Saulteaux Treaty Land Entitlement Trust Agreement (the "Trust Agreement"), on or about April 7, 1993, the Bank of Nova Scotia was appointed as the "Institution" and acted in that role from April 1993 until August 1995. On August 25, 1995, the Applicant was named to replace the Bank of Nova Scotia as the Institution and acted in that role until May 10, 1999.

[9]                During this period, the Saulteaux First Nation, through its Band Council, submitted various loan requests to the Applicant for Band-related projects, developments and improvements, including the installation of natural gas, fencing the Reserve, costs of recreational facilities and on-Reserve housing. Between December 6, 1995 and January 22, 1999, a total of sixteen loans were made to the Saulteaux First Nation, totalling more than $5.3 million. In some instances, together with the promise to pay and acknowledgement of receipt of payment, authorizations to draw from specific funds, including the trust funds, were obtained. However, in each instance, according to the material filed, it was agreed between the Applicant and the Band Council that payment from these funds was contingent upon the purchase of shortfall acres having been made.

[10]            In the result, the Saulteaux First Nation did purchase all of the shortfall acres required, the date of acquisition being June 23, 1999. On that date, a Shortfall Acquisition Certificate was issued by INAC. The Applicant had been replaced by the First Nations Bank of Canada as the Institution under the Trust Agreement on May 10, 1999 and at that time, investments were transferred by the Applicant to First Nations Bank of Canada.

[11]            In compliance with the Band Council's obligations under the relevant loan agreements, irrevocable BCRs were adopted in respect of each of the loans, directing INAC to deposit all monies payable by it to the account of the Saulteaux First Nation maintained with the Applicant. The BCRs stated that they were to be binding upon INAC and a number of the BCRs also stated that they were to be binding upon any Third Party Manager subsequently appointed by INAC. The purpose of these BCRs was to ensure that money flowed into the account maintained by the Applicant, from which the payments that were due and payable by the Saulteaux First Nation on these loans was to be deducted.

[12]            In addition to the Trust Agreement established pursuant to the Saulteaux Treaty Land Entitlement Agreement, the Band entered into a number of CFAs with the Minister, on behalf of the federal government, by which it has agreed to deliver programs and services funded by the federal government to Band members. INAC determines the manner in which, or the mechanism by which, programs and services are to be provided with the public funds appropriated by Parliament and provided to INAC for these purposes. INAC determines and establishes the particular programs and services to be provided, generally referred to as essential programs and services which include health, housing, education and welfare.

[13]            The structure of the CFAs, and INAC's policies concerning them, are developed in accordance with sections 32 and 34 of the Financial Administration Act, R.S.C. 1985, c. F-11. A CFA specifically provides that a certain amount of funding will be provided to the Band for an annual period and if the CFA is terminated or if there is a surplus, certain portions of the eligible surplus funds remaining are to be reimbursed to the responsible Minister. Pursuant to these CFAs, the Band is required to adhere to a number of conditions with respect to spending the funds and the delivery of essential programs and services.

[14]            As noted above, in or about March 1999, the Saulteaux First Nation was placed under third party management for having defaulted on its obligations under the relevant CFA. The Third Party Manager was appointed effective April 1, 1999 and TPMAs between the Minister and the Third Party Manager, have been made on an annual basis since that time. Before 1999 the Saulteaux First Nation had been placed under co-management, as required by the Minister pursuant to paragraph 4.3(b) of the CFA, for being in default by virtue of having a cumulative deficit in excess of eight percent of the Band's total annual revenues. This co-management arrangement was terminated in 1999 upon the appointment of the Third Party Manager pursuant to paragraph 4.3(c) of the CFA.

[15]            Under third party management, INAC provides programs and services through that Third Party Manager whose role is limited to the administration of those programs and services to members of the Band. INAC has adopted a policy (the "Intervention Policy") relating to its intervention with respect to federally-funded programs and services. The Intervention Policy is found in Part 5 of the Financial Policies and Procedures Manual published by INAC.

[16]            While not binding in and of itself, the Intervention Policy is reflected to a large degree in the terms of the TPMAs and the CFAs and, for most practical purposes, is binding on the parties to such agreements. Further, article 5.1(b) of the TPMA with respect to the Saulteaux First Nation for the period April 1, 2003 to March 31, 2004 provides that the Minister assumes the obligation "at the Manager's request, [to] provide any publicly available fiscal management policies, information or guidelines produced by the Minister which are relevant to the funding provided for in this Agreement."

[17]            Relevant passages from the current Intervention Policy provide as follows:

5.0 Definitions

...

5.6 Remedial Management Plan: a plan, developed by the Council and approved by the Minister, which reflects decisions and measures which are necessary to remedy or respond to a default under a Funding Arrangement.

...

5.8 Third Party Manager: a third party appointed by the Minister to administer the Council's funding and obligations under its Funding Arrangement, in whole or in part.

6.0 Policy Statement

6.1 The Council is responsible for the delivery of programs and services under the Funding Arrangement and all reasonable efforts should be made to sustain the Council's responsibility for doing so.

6.2 The terms and conditions of the Funding Arrangement set out situations which constitute a default and remedies that may be taken by the Minister. The Minister's Intervention, in the form of an appointment of a Third Party Manager ("TPM"), is taken in order to protect public funds, delivery of one or all Essential Services or maintain Ministerial accountability.

6.3 The appointment of a TPM is considered high level Intervention and a temporary situation while the Council addresses/remedies the difficulty/default which gave rise to a default under the Funding Arrangement or executes a Funding Arrangement [for those situations when a TPM is appointed because no Funding Arrangement has been signed by the Council.] Monitoring of the TPM level of Intervention should be done in accordance with the process set out in the Intervention Policy.

6.4 This Policy is about the appointment of a TPM which represents the highest form of Intervention in a Council's affairs. The Policy is designed to establish consistency in regional operations and to facilitate an ongoing process of monitoring and improving upon its effectiveness. An important part of this level of Intervention is working with the Council, through the TPM, in an orderly fashion to enhance the Council's capacity to the point where a lesser, or no form of outside Intervention is required. Third party management provides a framework for remedial management measures and for expert assistance that will enhance the Council's capacity to resume delivery of programs and services.

The Minister commits to this objective and will work, through the TPM, with the Council, the community itself and outside parties such as financial institutions, where required, to enable a transfer of responsibility back to the Council. Furthermore, the Minister commits to the principles of transparency of operations and disclosure of information. It is through working together in a respectful relationship that will enable third party management Intervention to succeed in restoring stability in the delivery of programs and services.

...

11.4 Plan Development

...

11.4.3 The TPM will develop a Debt reduction plan, which shall, at minimum, include:

(a)                    an aged listing of accounts receivable and accounts payable and a list of the Council's total Debt [...]

(b)                    a proposed repayment schedule of the Debt, including amounts owing, terms and payment obligations, sources of funds to be used for Debt reduction and terms and conditions of Debt compromise or renegotiation that the TPM recommends [...] Consideration must be given to the factors and circumstances surrounding the Debt in an effort to ensure that creditors are treated in a fair and equitable manner [...]

(c)                    proposed meetings with Council and it's [sic] creditors to facilitate discussions on repayment and renegotiation of Debt.

11.4.4 Where the Council does not have an effective Remedial Management Plan (RMP) in place or no RMP is in place, the TPM will develop a RMP, with the assistance of Council where possible. The RMP shall include all requirements set out in Sections 3.0 and 4.0 in Appendix A of the Intervention Policy and shall be designed to impose management, financial, administration, and personnel systems including training in these areas, upon the Council. This will provide a framework to assist the Council to re-establish capacity for the delivery of programs and services, and include recommended timing and content of reports to be provided by the TPM that will detail to the Minister the progress of the Council under the recommended RMP.

...

11.5 Liability Related to Debt Repayment            

11.5.1 The TPM must make it clear to creditors that neither the TPM or the Minister is responsible to pay Council's Debt and that payment of Debt does not obligate the Minister or the Crown to pay or accept responsibility for any current or future Debt of the Council.

The 2003-2004 TPMA further provides:

6.3 Management Plan, Debt Reduction Plan and Remedial Management Plan

6.3.1 The Manager shall review the Council's books and records, advise the financial institution where the main credit facility of the Council resides of the appointment of the TPM, and assess the management and financial systems of the Council and within thirty (30) days of the date of execution of this Agreement, or at such other date as the parties may agree upon in writing, but not to exceed sixty (60) days of the date of execution hereof, develop and provide to the Minister for the Minister's approval:

...

(b)            a debt reduction plan, which shall include:

(I)             an aged listing of accounts receivable and accounts payable and a list of total debt/liabilities of the Council's total consolidated operations [...]

...

(c)             a Remedial Management Plan for execution by the Council designed to assist the Council in developing management, financial, administrative and personnel systems, including training, to improve the Council's financial capacity and to reestablish the Council's capacity to deliver the programs and services, or, if the Council is subject to a Remedial Management Plan, an analysis of that Remedial Management Plan with recommendations for any changes that would, in the Manager's opinion, better implement the above objectives;

...

[18]            Following the appointment of the Third Party Manager, a number of meetings were held where the Applicant was advised that the overall situation of the Band was being reviewed, including an assessment of its finances, and that a meeting would be held in due course, to discuss proposals and alternatives. On May 31, 2000, the Applicant was advised by the Third Party Manager that the then Chief of the Saulteaux First Nation, Fred Gopher, had instructed him not to negotiate or make any payments in respect of the outstanding loan, pending receipt of a report from the financial investigator retained by the Band to review those transactions.

[19]            At a meeting held on November 23, 2000, solicitors for the Band Council advised the Applicant that the Saulteaux First Nation would no longer be making payments to the Applicant on the disputed loan until the conclusion of an action to be commenced by the Trustee. This discussion was confirmed by letter dated November 27, 2000, signed by the President and CEO of the Applicant. On May 15, 2001, the Trustees of the Saulteaux Treaty Land Entitlement Agreement commenced an action against the Applicant in the Saskatchewan Court of Queen's Bench claiming that the Applicant had breached its fiduciary obligations as a financial institution under the Trust Agreement by structuring the loan so that payments would be made from trust money.

[20]            In or about May 2000, the Third Party Manager was verbally instructed not to pay the Applicant any amount owing in respect of the outstanding loans. On May 24, 2001, the Third Party Manager advised the Applicant that it was the Band Council's position that it would await the outcome of the Trustees' action before making payment on the loans.

[21]            Later, on December 19, 2001, the Applicant commenced an action against the Saulteaux First Nation for judgment in the amount payable by the Band with respect to the outstanding loans. In response, the Band Council filed a statement of defence and counterclaim on February 1, 2002. Although the trial judge dismissed the Applicant's application for summary judgment, this decision was reversed by the Saskatchewan Court of Appeal by a decision delivered on February 17, 2005, and reported at (2005), 257 Sask. R. 115, ruling that summary judgment be entered in the amount sought, plus interest and costs. On April 18, 2005, the Saulteaux First Nation submitted an application for leave to appeal to the Supreme Court of Canada and on September 8, 2005, that application was dismissed (S.C.C. Bulletin, 2005, p. 1182; [2005] S.C.C.A. No. 171 (QL) ). The judgment of the Saskatchewan Court of Appeal stands.

[22]            By letter dated November 1, 2001, the Regional Director General of the Saskatchewan Region, INAC advised the Applicant as follows:

The Department and the Third Party Manager have received written direction from the Saulteaux First Nation in the form of a Band Council Resolution (BCR) which contains specific instructions to withhold loan payments to Peace Hills Trust pending conclusion of the legal action initiated by the Saulteaux First Nation Treaty Land Entitlement (TLE) Trust against Peace Hills Trust. As a result of this BCR, the Department is not in a position to direct our Third Party Manager to initiate and regularize a loan repayment plan with Peace Hills Trust since we would be acting without authority from the Saulteaux First Nation.

[23]            A copy of the BCR mentioned in that letter, that is the subject of this application, was provided to the Applicant in May 2004 and provides in its entirety, as follows:

WHEREAS, according to the March 31, 1999 Audited Financial Statements of Saulteaux First Nation, accounts receivable were $157,487 and accounts payable were $646,554 resulting in a net accounts payable of $489,067.

AND WHEREAS, according to the March 31, 2001 Audited Financial Statements of Saulteaux First Nation the accummulated [sic] operating surplus in INAC funded programs administered by the Third Party Manager is $548,586.

THEREFORE BE IT RESOLVED, that $489,067 of this accummulated [sic] surplus be applied to the outstanding accounts payable as of March 31, 1999 and the remaining $58,979 be deposited in a secure, interest bearing account to be held until the lawsuit with Peace Hills Trust is settled.

AND FURTHER BE IT RESOLVED, that payments from operating funds according to the following schedule be made to McDiarmid Lumber to retire the settlement of account as agreed upon:

March 31, 2000       =              $100,000

April, 2001              =               80,000

April, 2002              =               80,000

[24]            The Applicant has not participated in any meetings with the Third Party Manager or the Band Council for the development of a debt reduction plan or a remedial management plan. Since the beginning of third party management in 1999, no payments have been made by the Saulteaux First Nation on any of the outstanding loans, except in respect of one loan relating to housing on the Reserve for which payment is guaranteed by the Minister; the Band continues to make monthly payments in respect of that loan.

iii)         The Evidence

[25]            In support of this application for judicial review, the Applicant has filed the affidavit of Mr. David Boisvert, sworn on August 15, 2003. Mr. Boisvert is the Regional Manager for the Applicant, responsible for the North Saskatchewan region including the city of Saskatoon and a geographic area covering roughly the northern two-thirds of the province.

[26]            The Respondent Band Council has filed one affidavit sworn by Gary Gopher on October 31, 2003. Mr. Gopher is a member of the Band Council and has been authorized by Chief Brian Moccasin, in a letter dated October 27, 2003, to give evidence on behalf of the Band Council.

[27]            The Respondent Third Party Manager has filed the affidavit sworn by Peter Chartrand on October 30, 2003. Mr. Chartrand is the sole director and shareholder of First Nations Management Services Inc. and is effectively the Third Party Manager appointed by the Minister to deliver services to members of the Saulteaux First Nation.

[28]            Mr. Chartrand, Mr. Gopher and Mr. Boisvert were cross-examined on their affidavits and the transcripts of those cross-examinations are included in the Record. As well, further evidence consisting of responses to undertakings from the cross-examinations was filed.

[29]            Mr. Boisvert's evidence was directed to detailing the content of the various outstanding loans, the procedural history with respect to the appointment of the Third Party Manager and the nature of the dispute regarding non-payment of the outstanding debt owed by the Saulteaux First Nation to the Applicant. He testified that the total balance outstanding, as of the date of his affidavit, is $5,321,771.44 consisting of principal in the amount of $4,271,053.30 and $1,050,718.14 in outstanding interest. He further stated that since the date of issuance of the Saulteaux Shortfall Acquisition Certificate, payments of at least $4,424,738.44 have been made to the Trust and assuming that the 1999 payment was made in accordance with past practice, the total would have been $5,530,923.05.

[30]            Mr. Boisvert relied upon a copy of the financial statements of the Saulteaux First Nation and of Auski Land Corporation, a business incorporated under the laws of Saskatchewan and owned by the Band either directly or indirectly through the Trust. The financial statements were attached as an exhibit to his affidavit. In the financial statement relating to the period ending March 31, 2002, he noted that under the control of the Third Party Manager, the Band had produced surpluses in 2000, 2001 and 2002. Recently, there has been an increase in accounts receivable from the Band Council and band members. The financial statements also indicate that payments are being made to other creditors of the Saulteaux First Nation.

[31]            The Applicant takes the position that it never consented to the revocation of the prior BCRs and disputes the authority, power and jurisdiction of the Band Council to pass the challenged BCR or to otherwise take action which is clearly intended to divert monies available to the Saulteaux First Nation to other purposes that are inconsistent with the prior BCRs. As well, the Applicant challenges the Band Council's refusal to negotiate with the Third Party Manager and the Applicant, to develop a remedial management and debt reduction plan. Finally, it challenges the actions of the Band Council in completely disregarding its lawful and binding commitments relating to the repayment of loans entered into by their predecessors.

[32]            The Respondent Band Council takes the position that the legality of the loans and their effect on the financial status of the Saulteaux First Nation are disputed. In that regard, the Respondent Band Council relies on the affidavit of Mr. Gopher, including the exhibits to that affidavit. Mr. Gopher indicated that one concern was that a BCR requires a quorum of four in order to conduct business. Some of the irrevocable BCRs referred to above were executed only by a group of three councillors. Mr. Gopher provided a detailed account of the litigation outstanding with respect to the dispute between the parties, in particular the action brought by the Trustees against the Applicant, as well as the defence and counterclaim filed in response to the Applicant's motion for summary judgment. Mr. Gopher indicated that a number of criminal charges relating to fraud and breach of trust have been laid against the individuals who served on the Band Council during the time that the disputed loan transactions were made.

[33]            Mr. Gopher also states that the appointment of a Third Party Manager was due, in large part, to the fraudulent actions of former members of the Band Council and the disputed debt incurred by those members in favour of the Applicant. In response to the assertion of Mr. Boisvert that the Applicant should have been consulted with respect to the impugned BCR, Mr. Gopher notes that it is common for newly elected Band Councils to implement policy changes with respect to governance and business affairs. In his experience, no non-Band member has ever had direct participation in decisions made by the Band Council, including the execution of a BCR.

[34]            Mr. Gopher further indicated that more than ninety percent (90%) of revenue monies received by the Saulteaux First Nation are provided to the Band by the federal government, and pursuant to section 89 and 90 of the Indian Act, supra, these funds are specifically protected from seizure by non-Indians. Agreements made with respect to these funds are void except as between members of a Band or between a Band and its members.

[35]            For its part, the Respondent Third Party Manager relies on the affidavit of Mr. Chartrand to outline the terms of the relevant TPMAs between the Minister and the Third Party Manager. Under those TPMAs, the funding was to be used for the purposes outlined in the CFAs, including general purposes such as environmental assessments and tendering, lands and trust services, education, social assistance, homecare, benefit plans, operation and maintenance of infrastructure assets and facilities, housing, and the payment of essential Band employees and the provision of administrative services.

[36]            Mr. Chartrand indicated that none of the monies provided to the Third Party Manager were ever owed to either the Band or to any other entity, including the Applicant. In short, the funding received from INAC for the purpose of delivering essential programs and services. At the end of each fiscal year, any available surplus can be applied to debts incurred by the Band. INAC plays a role in determining what debts, if any, are to be paid and those debts are typically program-related. He further testified that all of the Band's creditors have been paid, with the exception of the Applicant who is the only creditor with an alleged outstanding non-operational unpaid debt.

[37]            Mr. Chartrand further stated that when the Third Party Manager was appointed in 1999, a remedial management plan, suggested by INAC, was followed. He initially indicated that this plan was never been shown to the Applicant but on cross-examination, he qualified this statement, revealing that no formal remedial plan presently exists but rather, at the beginning of each fiscal year, INAC establishes targets for the management of the Band's finances and the Third Party Manager tries to meet these objectives. In the case of the Saulteaux First Nation, Mr. Chartrand said that the Band has not signed a CFA since his arrival. He further indicated that INAC has not given him instructions to develop a debt reduction plan or remedial management plan to date.

[38]            Furthermore, there is no contractual agreement between the Third Party Manager and INAC which binds him to any BCR that may be passed by the Band Council. His role is to deliver programs and create a surplus, when possible, to pay debt. He is responsible to the Government of Canada, not to the Saulteaux First Nation. In response to an undertaking request arising from his cross-examination, Mr. Chartrand advised that he never received a copy of the impugned BCR, or any other written direction to withhold loan payments to the Applicant. He said that he was verbally advised by the Band Council, on or about May-June 2001 to withhold such payments.

[39]            In another response to an undertaking, Mr. Chartrand advised that the cumulative surplus between April 1, 1999 and March 31, 2003 was $1,111,557.00. Of that amount, approximately $984,293.00 were spent to benefit the Saulteaux First Nation.

III.        ISSUES

[40]            The following issues were raised and addressed in this application for judicial review:

(1)         Whether the limitation for bringing an application for judicial review, pursuant to section 18.1 of the Federal Courts Act, supra applies and if so, should the Court should extend the time for bringing this application;

(2)         Whether the Band Council and the Third Party Manager are, respectively, "a federal board, commission, or other tribunal" subject to judicial review before this Court;

(3)         Whether the remedies of mandamus and the appointment of a receiver are available;

(4)         Whether the Applicant has standing to bring this application for judicial review; and

(5)         Whether INAC should have been a party.

IV.        DISCUSSION AND DISPOSITION

i)           The Limitation Period

[41]            Subsection 18.1(2) provides that an application for judicial review shall be made within thirty days after the decision of a federal board, commission or other tribunal "after the time the decision or order was first communicated" either to the Attorney General of Canada or to "the party directly affected thereby". The subsection further provides that this time may be extended, either before or after the expiry of the thirty days.

[42]            The Applicant relies on the decision in Atlantic Coast Scallop Fishermen's Assn. v. Canada (Minister of Fisheries and Oceans) (1995), 189 N.R. 220 (F.C.A.) to argue that subsection 18.1(2) requires a tribunal itself, by some positive action, to communicate its decision to those directly affected by it. It argues that since it did not receive a copy of the impugned BCR, the thirty-day limitation period did not begin before the date on which the application for

judicial review was filed.

[43]            There is no doubt that the Applicant did not receive a copy of the impugned BCR until May 2004. This application was issued on September 8, 2003. There is evidence, however, that the Applicant was advised of the substance of the Band's position concerning non-payment of the outstanding loans as early as May 31, 2000; see the affidavit of Peter Chartrand. Equally, there is no doubt that as of November 1, 2001, the Applicant received written advice from INAC that the Saulteaux First Nation had executed a BCR which specifically directed that payments of loans to the Applicant would be withheld pending the outcome of litigation undertaken by the Saulteaux First Nations (TLE) Trust against the Applicant.

[44]            In my opinion, this notification was sufficient to put the Applicant on notice that a decision had been made, affecting payment of the outstanding loans. The letter of November 1, 2001 originated from INAC, a clearly proximate if not ultimate source of funding for the Saulteaux First Nations.

[45]            The Applicant also argues that the Band Council took no positive steps to communicate its decision to withhold payments on the outstanding loans. Although the Applicant concedes that it was aware of the existence of the impugned BCR in November 2001, upon receipt of correspondence from INAC it did not receive a copy of that document until May 2004.

[46]            As well, the Applicant argues that in the application for judicial review it is seeking more than the review and setting aside of the impugned BCR.

[47]            Both the Respondent Band Council and the Respondent TPM argue that the application was commenced beyond the thirty-day limit. The Respondent Band Council submits that the Applicant has not met the recognized criteria for obtaining an extension of time, as set out in Canada (Attorney General) v. Hennelly (1999), 244 N.R. 399 (F.C.A.), that is a continuing intention to pursue the application, that the application has some merit, that no prejudice to the Respondent arises from the delay and that there is a reasonable explanation.

[48]            The Respondent Band Council argues that the Applicant has failed to show a continuing intention to pursue its application for judicial review nor has it provided a reasonable explanation for the delay. Further, it submits that the application lacks merit since the relationship between the parties is a commercial one and purely a matter of private law.

[49]            The Respondent Third Party Manager also takes the position that the application is untimely. It argues that the decision to withhold payment on the loans was communicated to the Applicant by INAC although it concedes that the decision in question was made by the Band Council who did not directly communicate with the Applicant. However, it submits that there is a sufficient nexus between INAC and the Band Council that made it irrelevant which of the two parties advised the Applicant of the contents of the impugned BCR.

[50]            Furthermore, the Respondent Third Party Manager argues that the Applicant has failed to justify its delay in bringing this application.

[51]            I agree with the overall submissions of the Respondents on the question of timeliness of this application. In Skycharter Ltd. v. Canada (Minister of Transport) (1997), 125 F.T.R. 307 (T.D.), the Court denied an applicant an extension of time when the applicant had not received a copy of a lease that it was challenging. The Court found that the applicant had thirty days from the time of learning about the lease and that waiting for full particulars is not a sufficiently good reason to grant an extension of the thirty-day time limit.

[52]            I am satisfied that the Applicant has commenced this application beyond the statutory time limit. The next question for consideration is whether the time should be extended. This requires consideration of the discretionary factors identified in Hennelly, supra at pages 399-400 as follows:

The proper test is whether the applicant has demonstrated

1. a continuing intention to pursue his or her application;

2. that the application has some merit;

3. that no prejudice to the respondent arises from the delay; and

4. that a reasonable explanation for the delay exists.

[53]            I am not satisfied that the Applicant has met the first, second or fourth criteria.

[54]            I am satisfied that as of at least November 2001, the Applicant was aware that the Respondent Band Council had undertaken a formal step concerning the nonpayment of loans to the Applicant. Having regard to the considerations discussed in Skycharter, supra, I am of the opinion that the written notification from INAC to the Applicant was enough to generate some action by the Applicant if it intended to pursue the remedy of judicial review.

[55]            However, more critically, I am not persuaded that this application has some merit. The pith and substance of the Applicant's application is to collect payment of its outstanding loans. It seeks the remedy of mandamus, compelling the appointment of a receiver and the implementation of a debt remedial management plan and a debt reduction plan, in order that arrangements be made for payment of monies to it.

[56]            The subject of the application is the impugned BCR. The purpose of the application is to collect a debt. In my opinion, this is really a matter of contract and debt, and not a proper subject for judicial review. There is little, if any, merit in this application.

[57]            Likewise, the Applicant has not satisfactorily shown that there is a reasonable explanation for its delay in bringing this application.

ii)          Availability of Judicial Review

[58]            The subject of the application for judicial review is the impugned BCR dated October 11, 2001. The BCR addresses the withholding of payment of certain loans advanced by the Applicant to the Respondent Band Council.

[59]            The jurisprudence of this Court has consistently recognized that an Indian band council exercising power conferred by the Indian Act, supra is a "federal board", within the meaning of section 2 of the Federal Courts Act, supra. In this regard, I refer to Frank v. Bottle, [1994] 2 C.N.L.R. 45 (1993), 65 F.T.R. 89 (T.D.); Bigstone v. Big Eagle, [1993] 1 C.N.L.R. 25 (1992), 52 F.T.R. 109 (T.D.); Jock v. Canada (Minister of Indian and Northern Affairs), [1991] 2 F.C. 355; and Gabriel v. Canatonquin, [1980] 2 F.C. 792.

[60]            A BCR can constitute a decision or order of a federal board, commission or other tribunal; see Medeiros v. Ginoogaming First Nation (2001), 213 F.T.R. 221 (T.D.). However, it does not follow that every BCR will lie within the jurisdiction of this Court for the purposes of judicial review pursuant to subsection 18.1(3) of the Federal Courts Act, supra which provides as follows:

[61]            The impugned BCR relates to a transaction between the Applicant and the Saulteaux First Nation , involving commercial loan agreements entered into in Saskatchewan. This transaction is a matter of private law and is independent of the public interest. I agree with the submissions of the Respondent Band Council that administrative law principles should not be applied to the resolution of what is, essentially, a matter of private commercial law and in this regard, refer to Socanav Inc. v. Northwest Territories (Commissioner) (1993), 16 Admin. L.R. (2d) 266 (N.W.T.S.C.).

[62]            In the circumstances prevailing here, I conclude that the impugned BCR is not amenable to judicial review since it is unrelated to the exercise of statutory authority pursuant to the Indian Act, supra or otherwise lies within statutory jurisdiction of the Court. It is a matter arising from contract and to the extent that the Applicant seeks a remedy, that remedy is not available by way of judicial review.

[63]            This application for judicial review also concerns the Third Party Manager. This application for judicial review is directed to that party, for the purpose of obtaining the discretionary remedy of mandamus. Three questions arise. Has the application been commenced in a timely manner? Is the Third Party Manager a "federal board, commission or other tribunal" within the meaning of section 2 of the Federal Courts Act, supra? Finally, should the remedy of mandamus be granted?

[64]            In response to the question of timeliness, the Applicant argues that the language of section 18.1 is broad and contemplates judicial review of matters other than a "decision or order". In this application, the Applicant is seeking more than setting aside of the impugned BCR, it wants an order for the appointment of a receiver and directions that the receiver monitor the development and implementation of remedial management and debt reduction plans. Relying on the decision in Krause v. Canada, [1999] 2 F.C. 476 (C.A.), the Applicant argues that when a "matter" other than a decision or order is being reviewed, the thirty-day limitation period does not apply.

[65]            It is not necessary to decide whether this application is subject to the thirty-day limitation period since I am satisfied that the Third Party Manager is not a "federal board, commission or other tribunal" for the purposes of this application for judicial review. It was appointed by INAC and is authorized to administer the INAC monies for the provision of essential programs and services on the Reserve. It manages INAC funds for the benefit of the Saulteaux First Nation and any excess funds are to be returned to INAC. While there is a discretion to use excess funds to assist the Band to repay its debts, among other things, it seems that such decisions are ultimately made by INAC, in consultation with the Band concerned.

[66]            The extent of the statutory duty owed by the Third Party Manager is to the Band which is subject to third party management, as well as to INAC and the public in general, having regard to the fact that INAC funds are public funds appropriated by Parliament. It appears that the Applicant is seeking an order compelling the Third Party Manager to develop remedial management and debt reduction plans for the purpose of obtaining repayment of the loans granted to the Saulteaux First Nation.

[67]            I note that article 11.5.1 of the Intervention Policy provides that the Third Party Manager is to make clear to creditors, such as the Applicant, that neither the Third Party Manager nor the Minister is responsible to pay or to accept responsibility for the debt of the Band Council. In my opinion, the purpose of remedial management and debt reduction plans is consistent with the fiduciary duty of the Crown towards the Saulteaux First Nation, the goal being to assist in re-establishing self-management of their financial affairs. The intention of such plans is not to benefit third party creditors, such as the Applicant.

[68]            Accordingly, I conclude that the Third Party Manager owes no duty of procedural fairness to the Applicant and that the exercise of his powers, granted pursuant to the CFA and the TPMA, are not reviewable on those grounds.

iii)         Available Remedies

[69]            First, there is the issue of the discretionary remedy of mandamus sought by the Applicant. The requirements for the grant of this remedy are set out in the decision in Apotex Inc. v. Canada, [1994] 1 F.C. 742, as follows:

(1) Mandamus - The Principles

Several principal requirements must be satisfied before mandamus will issue.

...

1.              There must be a public legal duty to act:

...

2.              The duty must be owed to the applicant:

...

3.              There is a clear right of performance of that duty, in particular:

a.              the applicant has satisfied all conditions precedent giving rise to the duty;

...

b.              there was (i) a prior demand for performance of the duty; (ii) a reasonable time to comply with the demand unless refused outright; and (iii) a subsequent refusal which can be either expressed or implied, e.g. unreasonable delay;

...

4.              Where the duty sought to be enforced is discretionary, the following rules apply:

a.              in exercising a discretion, the decision-maker must not act in a manner which can be characterized as "unfair", "oppressive" or demonstrate "flagrant impropriety" or "bad faith";

b.              mandamus is unavailable if the decision-maker's discretion is characterized as being "unqualified", "absolute", "permissive" or "unfettered";

c.              in the exercise of a "fettered" discretion, the decision-maker must act upon "relevant", as opposed to "irrelevant", considerations;

d.              mandamus is unavailable to compel the exercise of a "fettered discretion" in a particular way; and

e.              mandamus is only available when the decision-maker's discretion is "spent"; i.e., the applicant has a vested right to the performance of the duty.

...

5.              No other adequate remedy is available to the applicant:

...

6.              The order sought will be of some practical value or effect:

...

7.              The Court in the exercise of its discretion finds no equitable bar to the relief ought:

...

8.              On a "balance of convenience" an order in the nature of mandamus should (or should not) issue.

[Citations omitted]

[70]            In view of my conclusion that this application for judicial review is not well grounded and that the actions of the Third Party Manager are not reviewable, it follows that this remedy will be denied.

[71]            The Applicant also seeks the appointment of a Receiver. In my opinion, this remedy should also be denied since such appointment would effectively replace the Third Party Manager who has been appointed by INAC. The appointment of a Receiver would only allow the Applicant to do indirectly that which it cannot do directly, that is, arrange for access to monies to repay the outstanding loans.

iv)         Standing

[72]            The question of standing was raised in the hearing of this application by the Third Party Manager, but it was not directly addressed in the written submissions of the parties. Subsection 18.1(1) of the Federal Courts Act, supra provides that the Attorney General of Canada or "anyone directly affected by the matter in which relief is sought" may bring an application for judicial review. Subsection 18.1(1) is sufficiently broad to authorize the recognition of standing, regardless of whether the applicant is "directly affected", where the test for public interest standing is met; see Kwicksvtianeuk/Ah-Kwa-mish Tribes v. Canada (Minister of Fisheries) (2003), 227 F.T.R. 96 (T.D.).

[73]            The Attorney General of Canada has not brought this application for judicial review, so the question is whether the Applicant is "anyone directly affected" by the impugned BCR and if not, can it establish that it is entitled to public interest standing.

[74]            The impugned BCR only gives an account of the state of the Saulteaux First Nation's accounts according to the audited financial statements, provides for payment to the Band's creditor, McDiarmid Lumber, and authorizes the deposit of the sum of $58,979.00 in a secure account pending resolution of certain litigation with the Applicant. There is no mention of the revocation of existing BCRs or of instructions to the Third Party Manager or INAC to withhold monies that would have been paid to the Applicant.

[75]            In my opinion, the Applicant is only indirectly affected by the impugned BCR. At most, it had an eventual interest in the adoption of BCRs and the management of the Band's finances. There is no evidence to show that the Applicant is "directly affected" by the impugned BCR.

[76]            Is the Applicant "directly affected" by the Third Party Manager's failure to develop remedial management and debt reduction plans? In light of my earlier comments about the role of the Third Party Manager in relation to INAC, I see no basis to find that the Applicant is "directly affected" by the actions of the Third Party Manager.

[77]            Can the Applicant meet the test for public interest standing? In Canadian Council of Churches v. Canada (Minister of Employment and Immigration), [1992] 1 S.C.R. 236, the Supreme Court of Canada set out a tri-partite test for the award of public interest standing. The applicant must establish that there is a serious issue raised, that the applicant has a genuine interest in the matter, and there is no other reasonable and effective way to bring the matter before the Court.

[78]            In Kwicksutaineuk, supra, the Court noted that where a public interest applicant need not prove that the alleged illegality of an administrative decision or act has caused or will cause harm in order to establish the seriousness of the issue raised, the Court must consider the global strength of an applicant's claim in making that determination.

[79]            In Sierra Club of Canada v. Canada (Minister of Finance) (1998), 157 F.T.R. 123 (T.D.), the Court spoke about the existence of a serious issue in the following terms at paragraph 38:

It seems now to be settled law that the seriousness of the issues raised by a public interest applicant encompasses both the importance of the issues and the likelihood of their being resolved in favour of the applicant. Given the discretionary nature of public interest standing, and its concern to ensure that scarce public resources are not squandered and other litigants are not subjected to further delay, it seems appropriate that the merits of the claim should be taken into consideration [citations omitted].

[80]            I am not persuaded that there is a serious issue arising here, for the reasons discussed earlier. In effect, the Applicant is seeking enforcement of contractual obligations between itself and the Saulteaux First Nation. The legality of these loans has been determined by the Saskatchewan Court of Appeal and an application for leave to appeal that decision to the Supreme Court of Canada was recently dismissed.

[81]            I accept that the Applicant has a "genuine issue", that is recovery of monies loaned. However, there is another reasonable and effective way to pursue that interest by the commencement of an action in a court of competent jurisdiction.

[82]            In light of these conclusions, I am satisfied that the Applicant lacks standing, pursuant to subsection 18.1(1) of the Federal Courts Act, supra to bring this application for judicial review.

v)          Absence of INAC

[83]            There is a final issue that invites comment, that is the absence of INAC as a party to this application.

[84]            The Third Party Manager raised the point, as a preliminary matter, that INAC should have been a party since the relief sought by the Applicant directly impacts on the program funding provided by INAC to the Saulteaux First Nation through its employee, the Third Party Manager. The Third Party Manager referred to arguments potentially available to INAC concerning the availability of program monies to secure the debt owing to the Applicant.

[85]            The absence of INAC, as a party, is strange, in light of the fact that the performance of statutory duties was one of the issues raised in the application for judicial review.

V.         CONCLUSION

[86]            On the basis of the evidence submitted and the arguments advanced by the parties, this application for judicial review, seeking the remedies of mandamus and the appointment of a receiver, is dismissed. The Applicant is too late in seeking judicial review of the impugned BCR and in any event, lacks standing to challenge that decision. Further, in my opinion, the impugned BCR is not amenable to judicial review. Finally, the Applicant does not meet the legal test for obtaining an order of mandamus.

[87]            The application for judicial review is dismissed, with costs to the Respondents. The Respondents seek increased costs and in that regard, the parties shall submit brief submissions on costs. The Respondents shall serve and file their submissions on or before October 28, 2005 and the Applicant shall serve and file its submissions on or before November 10, 2005. Any reply from the Respondents is to be served and filed on or before November 17, 2005.

                                               ORDER

The application for judicial review is dismissed with costs to the Respondents, submissions to be filed in accordance with the Reasons.

                                                                                      "E. Heneghan"

                                                                                                   J.F.C.

                                     FEDERAL COURT

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                               T-1645-03

STYLE OF CAUSE: PEACE HILLS TRUST COMPANY

                                                                                              Applicant

- and -

BRIAN MOCCASIN, GARY GOPHER (sometimes known as CARY GOPHER), JONES KATCHEECH, WALTER LEWIS and DON NIGHT, being the Chief and Council of the Saulteaux First Nation, and FIRST NATIONS MANAGEMENT SERVICES INC.

                                                                                         Respondents

PLACE OF HEARING:         Saskatoon, Saskatchewan

DATE OF HEARING:           April 4, 2005

REASONS FOR ORDER

AND ORDER:                       The Honourable Madam Justice Heneghan

DATED:                                  October 5, 2005

APPEARANCES:      R. M. Van Beselaere

Peter Bergbusch

                                                                                  For the Applicant

Thomas Campbell

                                                         For the Respondent, First Nations

                                                                                  Management Inc.

John R. Beckman, Q.C.

George A. Green

                                                For the Respondents, Chief and Council

                                                                of the Saulteaux First Nation

                                                   - 2 -

SOLICITORS OF RECORD:

Balfour Moss

#700 - 2103 - 11^th Avenue

Regina, Saskatchewan S4P 4G1

                                                                                  For the Applicant

McKercher McKercher & Whitmore LLP

#200 - 374 - Third Avenue South

Saskatoon, Saskatchewan S7K 1M5

                                                For the Respondents, Chief and Council

                                                                       of Saulteaux First Nation

Rosowsky & Campbell

445 Second Street, Box 399

Kamsack, Saskatchewan S0A 1S0

                                                         For the Respondent, First Nations

                                                                                  Management Inc.