Gladstone v. Blood Band of Indians, 2004 FC 856

Date: 20040616

Docket: T-923-95

Citation: 2004 FC 856

Winnipeg, Manitoba, Wednesday, the 16^th day of June 2004.

PRESENT:      The Honourable Madam Justice Dawson

BETWEEN:

JAMES L. F. GLADSTONE

Plaintiff

- and -

THE BLOOD TRIBE CHIEF AND COUNCIL

representing all members of the Blood Band of Indians

Defendants

                              REASONS FOR JUDGMENT AND JUDGMENT

DAWSON J.

[1]                James Gladstone is a member of the Blood Tribe. In this action he sues the Blood Tribe Chief and Council for breach of fiduciary, statutory and other non-specified duties.

1.          The Nature of the Dispute and the Positions of the Parties

[2]                The allegations contained in the statement of claim may be summarized as follows. Mr. Gladstone says that he "is the occupant of certain farm lands including 13:7:22 SW4" ("farm lands") located on the Blood reserve, as evidenced on the Blood Tribe Indian Land Registry. He asserts that on April 1, 1993 James Hofer entered into an agreement with the Blood Tribe administration by which Mr. Hofer agreed to enter upon and to farm Mr. Gladstone's lands for a fee to be paid by Mr. Hofer. In return for such fee Mr. Hofer would receive a permit allowing him to farm the farm lands. On or about the same day, Mr. Gladstone signed an administration agreement with the Blood Tribe Chief and Council. The terms of this agreement are not particularized in the claim other than a general allegation that when permits are signed a subsequent agreement between the Blood Tribe occupant and the Blood Tribe Council provides for the "Land Department" to administer the permit for a 5% fee. Mr. Gladstone says that at or about the same time he also obtained a loan from the Bank of Nova Scotia which was secured "by an assignment of the entire proceeds from the leased lands". Mr. Gladstone says that this assignment was approved by the defendants' "Land Department".

[3]                The statement of claim goes on to assert that:

8.              Subsequent to April 1, 1993, after the Permit, the Agreement and the Assignment were executed, an individual named Leslie Buckskin ("Buckskin") and other members of his family made a land claim involving some of the Plaintiff'[s] Farmland. The Land Committee of the Land Department, which was charged with reviewing and assessing such claims, improperly and erroneously purported to recognize certain rights in the Plaintiff's Farmland in Buckskin and his family. As a result, Buckskin and his family interfered with the quiet possession of Hofer and prevented him from farming the Plaintiff's Farmlands by uttering death threats to both Hofer and the Plaintiff and by wrongfully obstructing access to the land. Hofer has not, as a result, farmed the Plaintiff's Farmlands or made permit payments to the Land Department. The Land Department has not taken steps to require Hofer to farm the Plaintiff's Farmlands or to collect permit payments from him and has not made payments to the Bank under the Assignment.

9.              Subsequently, the Land Committee discovered they had wrongfully and erroneously recognized certain rights in Buckskin and his family to the Plaintiff's Farmlands. However, despite requests from the Plaintiff, the Defendant in its own right, the Band Administration, the Land Department, the Land Committee and the Blood Tribe Commission failed to take any, or alternatively any adequate steps to rectify this error or to restrain Buckskin from obstructing Hofer's ability to farm the Plaintiffs's Farmlands. No further steps have been taken to allow or to require Hofer to re-enter the Plaintiff's Farmlands and peaceably farm the lands. Additionally no further steps have been taken to collect rent from Hofer or to make payments to the Bank under the Assignment.

10.            As a result of the foregoing the Plaintiff says that the Defendants' have breached the aforesaid duties, fiduciary, statutory and otherwise, owed to them, some particulars of which include:

(a)            Erroneously granting certain rights to Buckskin in the Plaintiff's Farmlands;

(b)            Failing to remedy this error in a timely fashion or at all;

(c)            Failing to take reasonable steps to allow or require Hofer to re-enter the Plaintiff's Farmlands and peaceably farm the lands;

(d)            Failing to fulfill the terms of the Permit, the Agreement and the Assignment by not taking steps to ensure that the lands could be farmed, that the proceeds of rent from Hofer would be collected and that these proceeds were paid to the Bank; and

(e)            Such other matters as may be proved at trial.

[4]                Mr. Gladstone alleges that, in consequence, he suffered the following loss:

i)           Loss of income from what he refers to as the "Hofer Lease";

ii)          Loss arising from his obligation to pay interest on his loan from the Bank of Nova Scotia;

iii)          Loss of quiet enjoyment of his lands and the ability to lease the lands and to collect rent;

iv)         Loss of value of the lands caused by the failure to farm the lands;

v)          Loss of credit privileges associated with the lands;

vi)         Emotional distress resulting from death threats which the defendants did not properly deal with.

[5]                In response, the defendants in their pleading deny owing any fiduciary or other obligation to Mr. Gladstone, deny the existence of any agreement, permit or lease "between the parties herein, Hofer, the Queen in Right of Canada, or any combination thereof" and deny approving any assignment given to the Bank of Nova Scotia. The defendants say that the form of memorandum of agreement used by them in the administration of land permits provides that nothing in the agreement requires the Band to commence or prosecute legal proceedings for the enforcement of any of the terms of a permit, including the term respecting payment of rent.

[6]                The defendants also deny recognizing rights of Mr. Buckskin in Mr. Gladstone's farm lands as alleged, and deny any obligation to guarantee Mr. Gladstone's access to the lands. The defendants assert that it was up to Mr. Gladstone to:

i)           take action to protect his interest in the lands at issue;

ii)          seek legal recourse directly against Mr. Buckskin for any loss caused by Mr. Buckskin; and

iii)          seek a remedy against Mr. Hofer for any loss caused by Mr. Hofer's failure to re-enter the lands.

[7]                Finally, the defendants deny the allegations of loss and say that Mr. Gladstone failed to mitigate his loss.

2.          The Legislative Framework

[8]                The allegations contained in the statement of claim and the evidence adduced at trial are better understood in the context of the existing legislative scheme contained in the Indian Act, R.S.C. 1985, c. I-5 ("Act").

[9]                Under the Act, the legal title to land set apart for the use and benefit of an Indian band is vested in Her Majesty. The use and benefit of reserve land accrues to the entire band. It is a collective right of the Band membership as a body and not a right of Band members individually. See: subsection 2(1) and section 18 of the Act; and Joe et al. v. Findlay et al. (1981), 122 D.L.R. (3d) 377 (B.C.C.A.).

[10]            In order for an Indian to be lawfully in possession of land located in a reserve, the Band Council must, with the approval of the Minister of Indian Affairs and Northern Development ("Minister"), have allotted land to the Indian. See: section 20 of the Act. If an Indian then wishes to enter into any form of agreement permitting a person other than a band member to occupy or use any land allotted to the Indian, the Minister must issue a permit in writing. If the permitted use or occupancy is to exceed one year in duration the band council must consent to the occupation or use. See: section 28 of the Act.

[11]            For ease of reference, the definition of "band" contained in subsection 2(1) of the Act and sections 20 and 28 of the Act are set out in Appendix A to these reasons.

3.          The Evidence at Trial

[12]            The parties filed an agreed statement of facts and a joint book of documents. No other evidence was adduced on Mr. Gladstone's behalf.

[13]            The defendants read into evidence certain questions asked and answers given on Mr. Gladstone's examination for discovery. This was allowed pursuant to Rule 288 of the Federal Court Rules, 1998, which permits a party to introduce as its own evidence at trial any part of its examination for discovery of an adverse party, whether or not the adverse party has testified. No other evidence was adduced by the defendants.

[14]            The agreed statement of facts is brief, and somewhat short on detail. In its entirety the agreed statement of facts is as follows:

1.              There are two actions respecting this matter. The first action is this matter in Federal Court (Docket T-923-95). The second action is a claim by the Bank of Nova Scotia in Court of Queen's Bench, Judicial District of Lethbridge/Macleod, against the Plaintiff, James L.F. Gladstone, who filed a third party action against the Defendants, the Blood Tribe Chief and Council.

2.              In the Queen's Bench Action, the bank alleges there is due and owing pursuant to four (4) promissory notes in the total principal amount of $46,500.00; the sum of $53,115.20 as [of] September 18, 1998 with a per diem rate of interest thereafter of $12.95. The bank has taken no steps to recover the amounts outstanding since November of 1999, and the Defendants and the Plaintiff believe the bank has abandoned its action.

3.              In the Statement of Defence, to the Queen's Bench Action, James L.F. Gladstone admits he obtained a loan from the bank but said that in payment of the loan he, by an Assignment dated May 5, 1993 assigned all his rights, title and interest to cash rent, and all other proceeds for many livestock, grain, crop share, acreage payments, oil or natural gas or any other money whatsoever payable through or by the Blood Tribe Administration with respect to lands located at Section 13-7-22 on the Blood Reserve.

4.              In the spring of 1993 a farming permit was issued by the Department of Indian Affairs to James Hofer pursuant to a MOU (Memorandum of Understanding) and assignment of cash rent proceeds given by the Plaintiff to the bank with notice of the Assignment acknowledged by the Defendants. The cash proceeds were $15,382.50 less a 5% administration fee retained by the Blood Tribe pursuant to the MOU. The cash rent was to be paid in three equal payments.

5.              On May 30, 1993 Jim Gladstone obtained a loan from the Bank of Nova Scotia in the amount of $30,500.00. The cash proceeds from the permit were assigned to the bank to secure that loan plus any outstanding loans that Mr. Gladstone had with the bank.

6.              Only one payment was made to the Blood Tribe who forwarded that amount to the bank after deducting the 5% administration fee for a total payment to the bank of $4,854.02. No further payments were made as James Hofer was denied access to the lands in late May 1993 by Leslie Buckskin who threatened Mr. Hofer's life with a gun. Mr. Hofer did not return to the lands and the lands have not been farmed since.

7.              As a result of the actions of Mr. Buckskin and his family, criminal charges were brought against them. It was a condition of the Buckskin's bail hearing in 1993 that they in no way interfere with the Plaintiffs [sic] peaceful enjoyment of these lands.

[15]            The 23 documents contained in the joint book of documents provide somewhat more detail. The documents may be described generally to be photocopies of:

1.          Mr. Hofer's application and agricultural temporary reserve use permit dated November 8, 1991. This application appears to relate to a permit issued for a term prior to the one at issue, but the parties proceeded on the basis that the same documentation would have existed for the permit term at issue. [Document 1]

2.          An agreement dated November 28, 1991 between Her Majesty The Queen and Mr. Hofer permitting Mr. Hofer to use the land specified (totalling 1,486.1 acres) on certain terms for the period from April 1, 1990 to March 31, 1993 ("permit agreement"). This agreement also relates to the permit application for a term prior to the one at issue, but the parties proceeded on the basis that the document evidenced the terms that would have applied to the permit term at issue. [Document 2]

3.          An assignment of cash rents dated March 18, 1992 from Mr. Gladstone to the Bank of Nova Scotia in respect of what appears to be a portion of the rent owing by Mr. Hofer in respect of the November 28, 1991 agreement. [Document 3]

4.          Registration records with the Indian Lands Registry with respect to the permit issued to Mr. Hofer for the April 1, 1990 to March 31, 1993 term. [Documents 4 and 5]

5.          Various demand promissory notes executed by Mr. Gladstone in favour of the Bank of Nova Scotia. [Documents 6, 10 and 11]

6.          An assignment of cash rents from Mr. Gladstone to the Bank of Nova Scotia in respect of rents attributable to "Sec. 13-7-22" for the period described as "(UP TO DURATION OF CONTRACT: 1993 to 1997)" ("assignment"). The assignment recites the rent per crop year to be $15,328.50 and is dated May 5, 1993. It was agreed by Mr. Gladstone and counsel for the defendants orally that this assignment relates to the cash rent owing with respect to 557.4 acres of land. [Document 7]

7.          Mr. Gladstone's application for grain assignment dated May 5, 1993 in respect of 557.4 seeded acres described as "13-7-22". [Document 8]

8.          Minutes of the Blood Tribe's Program Operations Committee dated May 14, 1993 relating to the claim of the Buckskin family. [Document 9]

9.          Letter from the Blood Tribe Administration to Mr. Gladstone relating in part to the Buckskin claim. [Document 12]

10.        Handwritten notes of telephone conversations with Leslie Buckskin dated April 20, 1994 and April 22, 1994. The author of the notes is unspecified, and they relate generally to Mr. Buckskin's desire to negotiate a settlement of his claim. [Documents 13 and 14]

11.        A written report by Ed Heavy Shield dated May 12, 1994 with respect to a telephone interview of Mr. Gladstone. The notes relate to Mr. Gladstone's position with respect to the disputed lands. [Document 15]

12.        Mr. Gladstone's correspondence to the Blood Tribe Administrator dated October 2, 1994, January 31, 1995 and April 24, 1995. These documents consist generally of Mr. Gladstone's efforts to settle his dispute with the Tribe and a letter issued before suit. [Documents 16, 17 and 19]

13.        The response, dated April 19, 1995, of counsel for the Chief and Council to Mr. Gladstone's correspondence. [Document 18]

14.        Correspondence from the Bank of Nova Scotia to the Lands Department of the Blood Tribe dated July 31, 1995 stating that the Bank has not received "a single rental payment". [Document 20]

15.        Correspondence from the Lands Department to the Blood Tribe Police dated July 29, 1996 particularizing the land "listed under Jim Gladstone as the registered occupant". [Document 21]

16.        Map of leased lands and attached schedule. [Document 22]

17.        Blank agreement. Mr. Gladstone and counsel for the defendants agreed orally that this is a true copy of the form of agreement that Mr. Gladstone and the Council of the Band would have executed on or about May 5, 1993 ("agreement") [Document 23]. The actual copy of the executed agreement apparently can not be found. Mr. Gladstone and counsel for the defendants also agreed orally that:

i.           The land described in the agreement would be the land described in the permit issued to Mr. Hofer for the relevant term and would amount to almost 600 acres.

ii.           The rent specified would have been $15,328.50 to be paid upon the execution of the permit and yearly thereafter on April 1, for the term of 5 years.

[16]            The joint book of documents did not specify the nature and extent of the agreement with respect to the documents. Orally, Mr. Gladstone and counsel for the defendants advised that the parties agreed that:

1.          Each document was a true copy of the original.

2.          All letters were sent to their respective addresses and were received on or about their respective dates.

3.          All agreements were duly signed by the proper parties.

4.          The defendants do not agree to the truth of the contents of Mr. Gladstone's correspondence of October 2, 1994, January 31, 1995 and April 24, 1995 to the Blood Tribe Administrator.

5.          The parties accept the truth of the contents of the May 20, 1993 promissory note (agreed to relate to the permit at issue given to Mr. Hofer and the accompanying agreement between Mr. Gladstone and the Band Council dated on or about May 5, 1993) the Blood Tribe's Administrator's letter to Mr. Gladstone dated September 29, 1993, the notes of the April 20 and 22, 1994 phone conversations with Mr. Buckskin, and the report of Mr. Heavy Shields' telephone interview of Mr. Gladstone on May 12, 1994.

[17]            The questions and answers from Mr. Gladstone's examination for discovery read in by the defendants touched upon:

1.          The general procedure for the issuance of permits.

2.          The Buckskin claim and the investigation conducted by the Land's Committee of the Blood Tribe.

3.          The portion of the farm lands claimed by Mr. Buckskin (about one third) and the nature of his claim.

4.          The position taken by Mr. Gladstone with Mr. Hofer.

5.          The position of the Bank of Nova Scotia with respect to recovering payment of the monies it lent to Mr. Gladstone.

4.          Analysis

[18]            Having set out the nature of the dispute, the relevant legislative framework and the evidence adduced at trial, I turn to consider whether the claim asserted by the plaintiff has been established on the evidence.

(i)          The duties alleged

[19]            As noted above, the statement of claim alleges breach of fiduciary, statutory or other duties. In oral argument, greater particularity was brought to the nature of the duty asserted by Mr. Gladstone.

[20]            Mr. Gladstone submits that the duties he alleges arise from reading together the permit agreement between Mr. Hofer and Her Majesty The Queen, the agreement between Mr. Gladstone and the Band Council and the assignment from Mr. Gladstone to the Bank of Nova Scotia. In his words, if the three agreements are valid, "the Blood Tribe as the administrator of the permits and of the MOU [defined in these reasons as the "agreement"] and of the assignment are under legal liability to ensure that the permits are fulfilled to the terms of those - - of the requirements contained in those three (3) agreements".

[21]            All three agreements are agreed by the defendants to be valid, enforceable agreements.

[22]            With respect to the permit agreement, Mr. Gladstone points to three provisions. First, clause 5 requires Mr. Hofer to pay the required fees without any deduction, abatement or set off to the Minister in care of the Blood Tribe Administration. Such payment is to be made in accordance with specified terms and conditions. Mr. Gladstone also relies upon clause 1 of the agreement to argue that the Blood Tribe is the Minister's representative with respect to the administration of the permit. Clause 1 states:

That the Senior Manager, Southern Alberta District, in the City of Calgary, in the Province of Alberta, or such other person at such other place as may be authorized by the Minister in writing in this behalf, shall be the Minister's representative with respect to the administration of this Permit.

[23]            To complete his reliance upon the permit agreement, Mr. Gladstone refers to clause 6 of the permit agreement which provides:

That if the Permittee is in default of any covenant as herein provided, Her Majesty at the Permittee's expense may perform all or any of the operations not performed, and any costs so incurred shall be added to and deemed to be part of the fee payable hereunder and shall be recoverable from the Permittee as debts due the Crown. In the event of such default, the Minister's representative shall have the right to deliver and sell the Permittee's crop at the then prevailing market price to off-set the costs so incurred and shall pay the balance, if any of the proceeds to such Permittee. If the said costs are greater than the net proceeds received by Her Majesty from the sale of the share of the Permittee, the Permittee shall pay the balance to Her Majesty upon demand.

[24]            Next, Mr. Gladstone refers to clause 3 of the agreement which provides for the payment of an administration fee to the Band. Specifically, clause 3 states:

The Band shall be and is hereby authorized to receive all rental payments, bonuses, penalties and other monies payable under the said Permit and upon receipt thereof the Band shall be entitled to retain Five (5 %) percent of the monies received as an administration fee.

[25]            Mr. Gladstone observes that the agreement does not expressly set out the obligations of the Band in return for the payment of this fee to it, and he says that the defendants "have to be doing something for the 5 percent". Thus, he argues that the Court has the discretion to imply as terms or conditions the obligations which attach to the Band by virtue of the payment of the administration fee to it. Mr. Gladstone says that one obligation to be implied is that the Band must itself enforce the permit agreement to ensure that the lands are farmed in compliance with the permit and to ensure that the permit fees are paid. Mr. Gladstone observes that if the Blood Tribe does not enforce the permit agreement no one else can because Mr. Gladstone is not privy to any contract with Mr. Hofer.

[26]            While Mr. Gladstone referred in oral argument to the assignment agreement generally, he did not in argument refer to any specific portion of the assignment.

[27]            Mr. Gladstone also argues that two other duties are owed by the Band to him arising out of two clauses in the agreement.

[28]            First Mr. Gladstone relies upon clause 8 of the agreement. Clause 8 is as follows:

8. a)          Nothing in this Agreement shall be construed as requiring the Band to commence or prosecute any legal proceedings for the enforcement of any term(s) of the Permit, including the terms respecting payment of rent, bonuses or penalties;

    b)         In the event that the Band does, at the request of the Indian Occupant, commence or prosecute any legal proceedings for the enforcement of any term(s) of the Permit, then the Indian Occupant agrees that he will indemnify and save harmless the Band in respect of any costs incurred by the Band in the commencement or prosecution of such legal proceedings including legal fees on a client-solicitor basis, taxable court costs, Sheriff's costs, and necessary disbursements and the Indian Occupant agrees to pay such sums on demand by the Band.

[29]            On the basis of this clause Mr. Gladstone argues that the Band owed a duty to tell Mr. Gladstone that it was not prepared to enforce the permit agreement or to require the Crown to do so.

[30]            Second, Mr. Gladstone relies upon clause 9 of the agreement. Clause 9 provides:

It is understood and agreed that any dispute between the Indian Occupant and the Band arising out of this Agreement which cannot be resolved to the mutual satisfaction of both parties shall be referred to a Committee of Arbitrators whose decision shall be final and binding upon both the Indian Occupant and the Band. The Committee of Arbitrators shall consist of three members, one appointed by the Indian Occupant and one appointed by the Band, and the third member who shall be the Chairman of the Committee to be appointed by the other two appointees.

[31]            Mr. Gladstone argues that the Band was obliged by this term to refer its dispute with him to a committee of arbitration.

[32]            It is the position of the defendants that their only duty under the agreement with Mr. Gladstone is to receive and then forward rent monies to him, less the 5% administration fee.

(ii)         Is there an implied duty upon the Band to enforce the permit agreement as Mr. Gladstone alleges?

[33]            No party cited any authority as to when it is appropriate for a court to imply terms of a contract. The general principles are, I believe, succinctly set out in G.H.L. Fridman, The Law of Contract in Canada, 4^th ed. (Scarborough, Carswell, 1999) at pages 500-516. At pages 501-502 Professor Fridman writes:

While, as already seen, the courts are not anxious to go beyond the letter of the written word, where the contract is expressed in writing, unless there is some strong justification, such as patent, internal ambiguity in the language employed by the parties, nonetheless, there are circumstances in which it is clear law that, at the invitation of one of the parties in the course of litigation, a court is entitled to conclude that everything that was agreed between the parties is not contained in the written document or documents that make up the contract, and that it is possible and justifiable to import or imply into the contract some additional term or terms in order to establish the nature and scope of the contractual obligations binding the respective parties. Naturally, this is not something which the courts will do easily or cavalierly. There has to be strong evidence to support the conclusion that the implication of a term is permissible in the circumstances. It would seem that there are three main instances when this may be done: (i) when it is reasonably necessary, having regard to the surrounding circumstances, and in particular the previous course of dealing between the parties, if any; (ii) when there is an operative trade or business usage or custom that may be said to govern the relationship of the parties; and (iii) when some statute of its own motion implies a term into the kind of contract that is in question. [underlining added]

[34]            Turning to the application of these principles to the evidence before the Court, no argument was made that any term should be implied pursuant to statute. No evidence was adduced of any operative trade or business usage or custom. No evidence was given as to any previous course of dealings that would lead to the implication of terms. Therefore, what is left to consider is whether the duty to enforce the permit agreement is reasonably necessary and should be implied in order to make the agreement between Mr. Gladstone and the Band have real meaning and effect.

[35]            In this regard, Professor Fridman notes that what is necessary for a given contract to be effective must depend upon the particular facts. Attention is to "be paid to the express terms of the contract in order to see whether the suggested implication is necessary and fits in with what has clearly been agreed upon". To similar effect, J. Beatson, Anson's Law of Contract, 28^th ed. (Toronto, University Press, 2002) notes at pages 147 and 148 that "the term to be implied must not be inconsistent with the express terms of the contract".

[36]            In the present case, the relevant evidence before the Court from which the intention of the parties may be inferred are the terms contained in the agreement.

[37]            Particularly relevant, in my view, is clause 8 of the agreement which is repeated here for convenience:

8. a)          Nothing in this Agreement shall be construed as requiring the Band to commence or prosecute any legal proceedings for the enforcement of any term(s) of the Permit, including the terms respecting payment of rent, bonuses or penalties;

    b)         In the event that the Band does, at the request of the Indian Occupant, commence or prosecute any legal proceedings for the enforcement of any term(s) of the Permit, then the Indian Occupant agrees that he will indemnify and save harmless the Band in respect of any costs incurred by the Band in the commencement or prosecution of such legal proceedings including legal fees on a client-solicitor basis, taxable court costs, Sheriff's costs, and necessary disbursements and the Indian Occupant agrees to pay such sums on demand by the Band. [underlining added]

[38]            From this clause I conclude that a legal obligation on the part of the Band to take steps on its own motion to legally enforce payment of the rent or to enforce the obligation to conduct farming obligations cannot be implied. Such an implied obligation would conflict with the parties' express agreement that the Band was not required to commence or prosecute legal proceedings to enforce the permit agreement. The parties appear to have contemplated in clause 8b) that, at the least, Mr. Gladstone was required to request that the Band commence or prosecute legal proceedings. This interpretation is consistent with clause 7 of the agreement which again requires that the Indian occupant must precipitate action by the Band. Clause 7 is as follows:

7. a)          It is understood and agreed that a Permit having been issued in respect of the said lands such Permit may only be cancelled for serious breaches of the terms of the said Permit;

    b)         Where the Indian Occupant believes that the terms of the Permit have been seriously breached and is desirous of the Permit being cancelled, the Indian Occupant shall submit to the Band a Request for Cancellation specifying therein the alleged breaches of the Permit;

    c)          Where the Band receives a Request for Cancellation from the Indian Occupant it shall investigate and determine whether the terms of the Permit have been seriously breached. If the Band determines that the Permit has been seriously breached, the Band may in its sole discretion allow the Permittee a reasonable opportunity to remedy the breaches or if the Band does not allow the Permittee the opportunity to remedy the breaches then the Band shall recommend to the Minister that the Permit be cancelled in respect of the said lands. If the Band determines that no serious breaches of the Permit have occurred, it shall not, subject to subparagraph (d), recommend to the Minister that the Permit be cancelled in respect of the said lands;

    d)         The Band may, in any case where it deems it appropriate, request that the Minister cancel the Permit in respect of the said lands. [underlining added]

[39]            If a request was made by Mr. Gladstone that the Band commence or prosecute legal proceedings, I conclude that it would then be necessary to imply a term that, once asked, the Band must in good faith take reasonable action. This could include taking reasonable steps to enforce the permit agreement, or taking reasonable steps to require the Crown to enforce the permit agreement, or advising Mr. Gladstone that while the Band was not prepared to enforce the permit agreement it authorized Mr. Gladstone to take steps to enforce the permit agreement. Such an implied term would be a reasonable and necessary requirement in view of the absence of privity of contract between Mr. Gladstone and Mr. Hofer. This lack of privity results from the manner in which land on an Indian reserve is held.

[40]            Before leaving the issue of the existence of an implied duty upon the Band to enforce the permit agreement, for completeness I will deal with Mr. Gladstone's assertion that the Band is the administrator of the permits.

[41]            The allegation is set out in paragraph 3 of the statement of claim as follows:

The legal title of lands on the Blood Reserve, including farm lands, are vested in The Queen In Right of Canada and are held by them as fiduciaries for the Blood Band of Indians on the Blood Reserve. Farm Lands are held for the benefit of specific members of the Blood Indian Reserve who are designated as occupants. Occupants of these farm lands may direct that the farm lands held on their behalf be leased to others. These leases are made in the form of permits. The Blood Tribe administration acts as agent for The Queen In Right of Canada with respect to these permits.

[42]            The defendants deny that they act as agent for the Queen In Right of Canada with respect to permits.

[43]            I have read and re-read a number of times the transcript of the brief oral arguments made by the parties at trial and it is not clear to me that Mr. Gladstone's argument particularly turns on whether the Band administers the permits in that the nub of his argument is that the agreement in clause 8b) contemplates that the Band may commence or prosecute proceedings to enforce the terms of the permit and it is obliged to do so by virtue of the administration fee it charges. This argument is based upon construction of the relevant agreements and does not depend upon whether the Band administers the permits. However for completeness, the argument should be dealt with.

[44]            In oral argument Mr. Gladstone pointed to two things that in his submission show that the Band administers the permits. The first indication is clause 1 of the permit agreement, the second is the Band Council Resolution attached to the permit agreement by which the Band consents to the Minister accepting the permit application.

[45]            The evidence, however, fails to establish that the Band is the Minister's representative with respect to the administration of the permit at issue.

[46]            Clause 1 of the permit agreement, set out above at paragraph 22, contemplates that the Minister will authorize in writing the appointment of a representative with respect to the administration of the permit. No evidence was adduced of such authorization, written or otherwise.

[47]            The Band Council Resolution Mr. Gladstone relies upon specifically references subsection 28(2) of the Act which requires the council of a band to provide its consent if the Minister permits use of reserve lands for a period in excess of one year. The fact the Band gave its consent to the permit in writing does not by itself make the Band the Minister's representative.

(iii)        The breaches of the duty alleged

[48]            The alleged breaches of duty particularized in the statement of claim are set out above in paragraph 3 of these reasons. Each alleged breach is now considered in turn.

(a)         Erroneously granting certain rights to Mr. Buckskin in Mr. Gladstone's lands

[49]            I find that the evidence does not establish any duty owed by the Band was breached by erroneously granting Mr. Buckskin rights in Mr. Gladstone's lands.

[50]            The evidence before the Court touching on this issue is as follows:

i.           The May 14, 1993 minutes of the Program Operations Committee record that the Buckskins had no documents to back up their claim and that the Committee was referring the matter to Council;

ii.           By letter dated September 29, 1993, the Blood Tribe Administration wrote as follows to Mr. Gladstone:

c. Buckskin Claim:                We understand you are the other party to a land dispute with the Buckskins. This matter is obviously on the list of the over 200 some land disputes Council has to deal with and will be dealt with accordingly as it comes up on the list.

We can advise that if the Permittee of the lands in question is on Cash Rent then he had better pay, regardless if he seeded his crops or not. If Mr. Hofer refuses to pay or could not complete his seeding, as the Permit is with the Crown, then the Crown and not the Tribe is liable. The Crown should be the person you are pursuing this with. The Tribe will not make payment to your band in the event Mr. Hofer does not pay pursuant to his Permit. [underlining added]

iii.          The following testimony for Mr. Gladstone's discovery was read into evidence:

A.             [...]

And so as a result of that - and then from then on you've read the correspondence. You know, it went to lands committee. Lands committee did an investigation and the lands committee said that Buckskin had absolutely no claims on those lands whatsoever, none, 'cause it had already been decided once before. They reviewed it again, and again they - the lands department made a declaration or a ruling that they had no claims on there.

[...]

Q.             And the nature of his dispute, at least the stated nature of his dispute was that he had an historical claim based on an old relative of his?

A.             Yes.

Q.             Was most probably due to the fact you let him run his cattle there?

A.             Probably.

Q.             Okay.

A.             Out of the generosity of my heart.

Q.             Give a guy a break, that's what happens. The lands department consistently upheld your claim to the lands?

A.             Consistently. [underlining added]

[51]            On the basis of Mr. Gladstone's admission on discovery that "the lands committee said that [Mr.] Buckskin had absolutely no claims on those lands whatsoever" and that the lands department "consistently" upheld Mr. Gladstone's claim to the land, I find that Mr. Gladstone has failed to prove that the defendants erroneously granted rights to Mr. Buckskin in Mr. Gladstone's lands.

[52]            While Mr. Gladstone did not expressly refer to it, I am mindful that his letter of October 2, 1994 to the Band, does purport to say that in 1993 the Buckskins left a meeting of the Band Lands Committee with the understanding that they were given certain lands. However, the parties' agreement with respect to the agreed documents was that the truth of the contents of the October 2, 1994 letter was not admitted. Therefore, the Court is left with Mr. Gladstone's own admission under oath at his discovery.

(b)         Failing to remedy the error in a timely fashion or at all

[53]            Mr. Gladstone failed to establish that the defendants erroneously granted rights to Mr. Buckskin. Therefore there is no evidentiary basis on which to find that such an error was not properly remedied.

(c)         Failing to take reasonable steps to allow or require Mr. Hofer to re-enter Mr. Gladstone's lands

[54]            Mr. Gladstone did not suggest or lead evidence as to what steps the Band should have taken to allow or require Mr. Hofer to re-enter the farm lands.

[55]            It is an agreed fact that Mr. Hofer was denied access to Mr. Gladstone's lands in late May 1993 by Mr. Buckskin who threatened Mr. Hofer's life with a gun. It is also agreed that thereafter Mr. Hofer did not return to the land. This was notwithstanding the imposition of a bail condition upon Mr. Buckskin that he not interfere with peaceful enjoyment of the farm lands.

[56]            The notes of the April 1994 interviews with Leslie Buckskin and the report of the May 1994 interview with Mr. Gladstone establish that in the spring of 1994 both Mr. Buckskin and Mr. Gladstone expressed willingness to negotiate over the lands through the lands department. (The truth of the contents of these notes and report was agreed.) The note of the April 20, 1994 interview with Mr. Buckskin ends by observing that a band representative is to advise Mr. Buckskin of Mr. Gladstone's bank loan and enquire if Mr. Buckskin "would let Farmer work this land to recover some Bank Commitments". Subsequently, the May 12^th report of Mr. Gladstone's interview records that if the Bank takes action against him he "will have no alternative but to take action against the Band on losses incurred by this dispute".

[57]            There is no evidence before the Court of Mr. Gladstone making any request that the Band take any step to enforce the permit agreement. The first evidence of any complaint by Mr. Gladstone is his letter of October 2, 1994 which is in substance a request for damages.

[58]            The final evidence that touches on this allegation are the questions and answers read in from Mr. Gladstone's discovery. In addition to the admission that the Lands Department consistently upheld his claim to the land, the following questions and answers were read in:

Q.             You can answer this yes or no. You didn't tell Hofer to go farm the proportion, the three quarters? You didn't tell him that? Yes or no?

A.             I told him to go see the lands department so that he would farm those lands. That's what I told him.

Q.             You're a lawyer?

A.             Mm-hmm.

Q.             It was your understanding at the time that he had an agreement, an enforceable agreement that would give him access to the lands?

A.             Yes, he had a permit to go on those lands.

Q.             Did you tell him anything like you've got an interest in the lands, you can go to court and get an order?

A.             He was not interested in getting into any hassles with the tribe - -

Q.             No, I asked you what you said. You didn't ever say, you've got an interest in the land. You go to court and get your own order. That's your business. You're the tenant. You didn't say anything like that?

A.             No, I believe that I did. I believe that I had told him that he - - that he should be able to go get an order from the court in order to farm those lands. I believe I told him that, yes.

Q.             Okay, good.

A.             Yes. [underlining added]

[59]            The evidence therefore establishes that the Lands Department had some involvement in attempting to settle the dispute between Messrs Gladstone and Buckskin and that it consistently upheld Mr. Gladstone's claim to the land. There is no evidence that the Band failed to take steps requested by Mr. Gladstone to allow or require Mr. Hofer to re-enter the lands or that the Band failed to allow Mr. Hofer to re-enter the lands. Mr. Gladstone thinks that he told Mr. Hofer that Mr. Hofer should be able to obtain a court order to enforce his rights. By its letter of September 29, 1993 the Band advised Mr. Gladstone that he should pursue any non-payment of rent with the Crown.

[60]            This evidence falls short, in my view, of establishing breach of any duty owed by the Band to allow or require Mr. Hofer to re-enter the lands.

[61]            In oral argument, Mr. Gladstone pointed to the minutes of the Program Operations Committee of Friday, May 14, 1993 which noted that the Buckskins would be branding cattle on May 15, 1993, that on the next day they would be moving the cattle "to the site" and that they would "start fencing the are shortly thereafter". Mr. Gladstone says that the Board's representatives never did anything in these "Council minutes to tell the Buckskins not to occupy those lands or do anything on those lands, until such time as the matter was dealt with by Council".

[62]            There is no evidence as to whether the Buckskins either moved cattle to Mr. Gladstone's farm lands or did fence some of Mr. Gladstone's farm lands. The May 14, 1993 minute upon which he relies records that it was suggested that Ed Heavy Shield go and check the land, and that the committee was referring the matter to Council.

[63]            I find that the content of the May 14, 1993 minute is insufficient evidence to establish that the defendants failed to take reasonable steps to allow Mr. Hofer to re-enter Mr. Gladstone's farm lands.

(d)         Failing to fulfill the terms of the permit agreement, agreement and assignment by not taking steps to ensure the land would be farmed, that the rent would be collected and that the net proceeds would be paid to the Bank

[64]            As noted above, the agreement between Mr. Gladstone and the Band expressly provides that the agreement is not to "be construed as requiring the Band to commence or prosecute any legal proceedings for the enforcement of any term(s) of the permit, including the terms respecting payment of rent, bonuses or penalties". I have concluded that no duty may be implied which is contrary to this express provision. While I did conclude that a duty to act might be implied where a request was made by Mr. Gladstone to the Band, the evidence fails to establish that such a request was made.

[65]            As noted above, while not pleaded in the statement of claim, in oral argument Mr. Gladstone particularized two further alleged breaches of duties said to be owed to him by the Band. The Band made no objection to this and I will therefore consider whether there is evidence which establishes breaches of these duties.

(e)         Failing to advise Mr. Gladstone that the Band would not enforce the permit agreement so as to allow Mr. Gladstone to take action

[66]            Implicit in this allegation is that Mr. Gladstone was not aware of the lack of activity of the Band and so he could not take steps to enforce the permit agreement. However, there was no evidence to establish that Mr. Gladstone was unaware of what was happening or that he was thwarted in his efforts to enforce the permit agreement.

[67]            Mr. Gladstone's evidence on discovery that he believed that he told Mr. Hofer that Mr. Hofer should be able to get an order to enforce his rights is inconsistent with any inference that Mr. Gladstone was not aware of the activities of the Band or that he was thwarted in his own efforts to enforce the permit agreement. The Band's letter of September 29, 1993 advising Mr. Gladstone that he should pursue non-payment of rent with the Crown is also inconsistent with the inference that Mr. Gladstone was not aware that the Band was not enforcing the permit agreement.

(f)          Failing to refer the dispute between the Band and Mr. Gladstone to a committee of arbitration

[68]            The agreement between Mr. Gladstone and the Band does provide that any dispute arising out of it which can not be resolved to the mutual satisfaction of the parties "shall be referred to a committee of arbitrators". The committee of arbitrators is to consist of three members, one appointed by the Band, one appointed by Mr. Gladstone and a third member to chair the committee to be appointed by the other two arbitrators.

[69]            The correspondence exchanged by the parties before the institution of this action contains no request by either party that the matter be referred to arbitration. Mr. Gladstone's correspondence of October 2, 1994 and January 31, 1995 threaten litigation if the matter can not be settled.

[70]            Neither the statement of claim nor the statement of defence filed in this proceeding raise any issue with respect to the Court's jurisdiction to hear this claim in the face of the arbitration provision.

[71]            Given that the proceeding was instituted by Mr. Gladstone in circumstances where there is no evidence that he requested arbitration, I am unable to conclude that he has established a breach of duty on the part of the Band in defending this lawsuit and in not referring the dispute to a committee of arbitration.

5.          Conclusion with respect to the duties and breach of duties alleged

[72]            For the reasons set out above, I do not imply any duty on the part of the defendants that conflicts with the express provision in the agreement that the Band is not required to commence or prosecute any legal proceedings for the enforcement of any terms of the permit agreement.

[73]            While a duty to act reasonably may well be implied where an Indian occupant requests that the Band commence or prosecute enforcement proceedings, there is no evidence of such a request. The evidence leads me to conclude that at all times Mr. Gladstone knew the status of matters and that he was content to negotiate with Mr. Buckskin while likely telling Mr. Hofer that he should be able to get an order from the Court that would permit Mr. Hofer to farm the lands. The Band's representatives consistently upheld Mr. Gladstone's entitlement to the farm lands.

[74]            On the scant evidentiary record before me Mr. Gladstone has failed to prove, on a balance of probabilities, any breach of any duty owed to him by the defendants.

[75]            The action will therefore be dismissed.

6.          Damages

[76]            In the event I am in error in my conclusion about liability, I have considered the damages established by Mr. Gladstone.

[77]            The damages he claims are set out at paragraph 4 above. There is no evidence to support the damages claimed under heads (ii) through (vi).

[78]            The defendants argue that Mr. Gladstone has suffered no damage because the Bank was entitled to have received all of the rental payments that were owing to him. In the words of counsel for the defendants, the plaintiff "has had the benefit of a bank loan he has not had to repay, yet is seeking payment from the defendants". That is referred to by counsel for the defendants as "double dipping". In making this argument the defendants rely on Mr. Gladstone's total indebtedness to the Bank in the amount of $46,500.00 which arises out of the assignment as well as other loan transactions not related to the Hofer agreement at issue in this action. The defendants then calculate the interest owing on those loans so that they say that over $79,000.00 is said to be owing to the Bank, which amount has been abandoned. This, it is said, offsets the rent monies which would have been otherwise payable to Mr. Gladstone.

[79]            I reject this argument. Mr. Gladstone voluntarily agreed to set off against his claim for damages the sum of $30,500.00 received from the Bank in respect of the Hofer permit agreement. No basis at law was cited by the Band which would justify reducing the monies Mr. Gladstone ought to have received pursuant to the permit agreement by other unrelated debt obligations he had to the Bank.

[80]            No party provided any calculation that dealt with the value of the benefit Mr. Gladstone obtained by receipt of the sum of $30,500.00 as a lump sum at the beginning of the term of the permit agreement, as compared to the value of receiving 15 payments from Mr. Hofer over the five-year term of the permit agreement.

[81]            The defendants also argued that there was "scant or little evidence as to what efforts the plaintiff made to mitigate any real or phantom damages". While Mr. Gladstone did not address this argument, the onus of proof is on the defendants to establish any failure to mitigate damages. See: [1976] 2 S.C.R. 324">Red Deer College v. Michaels, [1976] 2 S.C.R. 324; H. McGregor, McGregor on Damages. 17^th ed. (London, Sweet & Maxwell, 2003 at page 223).

[82]            Mr. Gladstone was entitled to receive payments from Mr. Hofer in the amount of $14,613.37 annually for a five-year term. This sum represents the gross annual payment of $15,328.50 reduced by the amount of the 5% administration fee to be paid to the Band. Over 5 years Mr. Gladstone would have been entitled to receive $73,066.83. In order to assess his loss, from this should be deducted the sum of $4,854.03 paid to him by the Band after the first rent payment was paid by Mr. Hofer, and the loan proceeds of $30,500.00 which Mr. Gladstone received pursuant to the assignment and which the parties believe he will not have to repay because the Bank is believed to have abandoned its action. Mr. Gladstone took the position in oral argument that the sum of $30,500.00 had to be deducted in order to avoid "double dipping" and this was not challenged by the Band. In view of the fact that the plaintiff took the position that the offset should be taken, I am prepared to accept that the sum of $30,5000.00 should be deducted from the net rent proceeds.

[83]            Therefore, I would have assessed damages in the total amount of $37,712.83.

7.          Costs

[84]            The defendants made no submission on costs in the event they were successful nor did Mr. Gladstone make submissions on costs in the event his claim was dismissed. The issue of costs is therefore reserved.

[85]            The defendants shall have two weeks from the date of receipt of these reasons to serve and file submissions in writing on costs. Thereafter, the plaintiff shall have two weeks to serve and file his responding submissions. The defendants shall then have one week to serve and file reply submissions.

JUDGMENT

[86]            THE COURT THEREFORE RENDERS JUDGMENT AS FOLLOWS:

1.          The action is dismissed.

2.          The issue of costs is reserved.

3.          Written submissions on costs shall be served and filed in accordance with the schedule set out in the reasons.

"Eleanor R. Dawson"

_______________________________________

Judge                                    

APPENDIX A

                                                       FEDERAL COURT

                      NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                               T-923-95

STYLE OF CAUSE: JAMES L.F. GLADSTONE v. THE BLOOD TRIBE

CHIEF AND COUNCIL representing all members of

Blood Band of Indians

PLACE OF HEARING:         Calgary, Alberta

DATE OF HEARING:           April 21, 2004

REASONS FOR JUDGMENT

AND JUDGMENT

DATED:                                  June 16, 2004

APPEARANCES:

Mr. James L.F. Gladstone                     FOR THE PLAINTIFF

Mr. William F. Quigley              FOR THE DEFENDANTS

SOLICITORS OF RECORD:

Mr. James L.F. Gladstone (On His Own Behalf)           

Tsuu Tina, Alberta                                 FOR THE PLAINTIFF

Walsh Wilkins Creighton, LLP

Calgary, Alberta                                    FOR THE DEFENDANTS