Date: 20021129
Docket: T-785-01
Neutral citation: 2002 FCT 1246
Ottawa, Ontario, this 29th day of November, 2002
PRESENT: THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE
BETWEEN:
PIKANGIKUM FIRST NATION
AS REPRESENTED BY CHIEF AND COUNCIL
Applicant
- and -
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
AS REPRESENTED BY THE MINISTER OF INDIAN AND NORTHERN AFFAIRS
Respondent
REASONS FOR ORDER AND ORDER
O'KEEFE J.
[1] This is an application for judicial review of the decision of the Minister of Indian Affairs and Northern Development requiring the applicant to enter into a co-management agreement, failing which the Department of Indian Affairs and Northern Development ("DIAND") would withhold funding and deliver programs and services through an agent of the Minister. The decision was communicated to the applicant by letter dated May 1, 2001.
Order Sought
[2] The applicant seeks an order:
(a) quashing the decision of the Minister requiring Pikangikum First Nation ("Pikangikum") to enter into a co-management agreement, failing which DIAND would directly deliver programs and services through an agent of the Minister;
(b) requiring DIAND to release funds to the Pikangikum government to enable the Chief and Council to deliver programs and services from May 1, 2001 onward, identical to those covered by the now expired Comprehensive Funding Arrangement ("CFA"), 2000-2001, pending the development of a suitable notice and comment regime by DIAND, holding consultations with Pikangikum, and delivering proper reasons for its decision to Pikangikum, which justify a decision founded upon considerations within DIAND's statutory mandate;
(c) for pre- and post-judgment interest on any amounts due to Pikangikum under the expired (or interim) CFA;
(d) for Pikangikum's costs on a solicitor and client basis; and
(e) for such further and other relief as counsel may advise and this Honourable Court may permit.
Background
[3] The applicant, Pikangikum First Nation, is a large First Nation in Northwestern Ontario with approximately 2,000 members living on reserve. The applicant normally receives approximately $12 to 14 million annually from DIAND. The funding is used for community services, including band employee salaries, education services, supplies, operation and maintenance of community infrastructure, such as water and sewer, administration of welfare recipient benefits and the administration of the offices of Chief and Council.
[4] DIAND is established under the Department of Indian Affairs and Northern Development Act, R.S.C. 1985, c. I-6 ("DIAND Act"). It has a broad mandate to carry out the DIAND Act, the Indian Act, R.S.C. 1985, c. I-5 and related legislation and regulations.
[5] For a number of years, the Minister exercised his discretion to transfer public funds to Pikangikum in exchange for Pikangikum delivering DIAND programs and services to its members. The terms and conditions for this arrangement were contained in CFAs entered into between Pikangikum and the Minister.
[6] Pikangikum has experienced some accounting difficulties in the past. In 1996, the following deficits and surpluses were recorded in its accounts:
| Social Services
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$511,973 deficit
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| Operations and Maintenance
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$449,361 surplus
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| Band Management
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$833,773 deficit
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| Economic Development
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$200,948 deficit
|
| Operating
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$187,188 deficit
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[7] The auditor could not confirm the origin of the accumulated surpluses and deficits in 1996 or verify the amounts. The Pikangikum's Auditor's Reports for the years ending March 31, 1996 and March 31, 1997 state:
Our examination indicated serious deficiencies in internal control over accounting records. As a consequence, we were unable to satisfy ourselves that all revenue and expenditures of the First Nation has been recorded, nor were we able to satisfy ourselves that the recorded transactions were proper. As a result, we are unable to determine whether adjustments were required in respect of recorded or unrecorded assets, recorded or unrecorded liabilities and the components making up the statements of revenue, expenditure and surplus deficit and changes in financial position.
[8] During the 1996/1997 fiscal year, Pikangikum was required to enter into a co-management arrangement as a condition of receiving funding. A co-management agreement was signed with ININEW Financial Services Inc. on February 10, 1997.
[9] The auditor's denial of opinion for the years ending March 31, 1996 and March 31, 1997 was one of the reasons for the co-management arrangement.
[10] Since September 1999 until the present, Pikangikum has had and continues to have all capital projects funded by DIAND and co-managed by ININEW (which is now known as Aboriginal Strategies Inc. ("A.S.")).
[11] For the fiscal year 2000/2001, the Minister entered into a CFA with Pikangikum as the sole funding recipient. This was the only year since 1996 in which the Minister choose to exercise his discretion in this manner and not require Pikangikum to have a co-management partner.
[12] DIAND became concerned about Pikangikum's ability to properly administer projects and programs during the 2000/2001 fiscal year.
Water Treatment Problem in 2000
[13] Pikangikum's water treatment plant was constructed between 1995 and 1996. Pikangikum retained the services of IFNA Engineers ("IFNA") as the project manager of this construction. Pikangikum First Nation, along with three other First Nations, had an ownership interest in IFNA. Pikangikum had at least one representative on the IFNA Board of Directors. IFNA went out of business in the fall of 1998.
[14] New automatically controlled pumps that had been planned were never installed in the water treatment plant. The old pumps were left in place and require manual operation.
[15] The operators of the water treatment plant are employees of the Pikangikum First Nation Public Works Department and are aware that monitoring and manual operation of these pumps is required.
[16] A significant flood at the water treatment plant occurred in early October 2000. This resulted in Pikangikum declaring a state of emergency, as the community had no safe drinking water. The pumps had been left unmonitored at the time of the flood.
[17] There have been numerous additional smaller floods in the water treatment plant.
Fuel Spill at School in 2000
[18] The Pikangikum School was closed from March 2000 to January 2001 as a result of a fuel spill. The automatic shut-off valve of the fuel tank had not been operating for some time prior to the spill. It was the responsibility of the janitorial staff of the school to shut off the valve. The valve was left open, which resulted in the spill. The janitorial staff were employed by the Pikangikum Public Works Department. The applicant claims the spill was related to a design flaw that can be attributed to DIAND.
Hydro Grid Project
[19] Tender documents for the Pikangikum Hydro Grid Project anticipated that the project would be completed by the fall of 2000. Pikangikum retained Moncrief Construction as the general contractor for the project. Disputes arose between Pikangikum and Moncrief and the last work done on this project was in February 2000.
Sewer
[20] In 1993, the Phase 2 Water & Sewer Servicing Project was identified as an important project for the community. Pikangikum again retained IFNA to manage this project. IFNA is out of business and construction on this project never started. Pikangikum now takes the position that IFNA did not properly pursue the project.
Feasibility study
[21] Pikangikum retained IFNA to complete a feasibility study for a new school. The study produced no usable result, yet IFNA was paid for its service.
CFA
[22] Pikangikum and DIAND entered into a CFA commencing on April 1, 2000 and expiring on March 31, 2001. This was the first CFA since 1996 that did not require a co-managing partner.
[23] On November 17, 2000, Arun Dignhe, Associate Regional Director General, DIAND Ontario Region, notified Pikangikum in writing of DIAND's intention to appoint a third party manager under the terms of the CFA. The letter stated:
This letter will serve as notice that under Clause 4.0 of CFA number 2000/2001-208 "Default and Remedial Management" "the Council shall be in default of this Arrangement in the event (4.1.4) "the health, safety or welfare of community members is being compromised". The department's intent is to through the tendering process, appoint a Third Party Manager, specifically a National Chartered Accounting Firm, who will be responsible for ensuring that essential services including health and safety, programs/services are provided to the First Nation membership.
The decision to appoint a Third Party Manager has been made for the following reasons:
a) the department's concern with the First Nation's ability to effectively manage the existing community infrastructure facilities (i.e. Water treatment plant, community school)
b) the concern that the First Nation has the technical capacity to manage the major capital projects currently underway and those that are planned for future years. (i.e. Hydro grid project, Phase 2 servicing project).
The Pikangikum First Nation has been coping with a very high number of suicides over the past number of months. The repercussions of this are no doubt felt all through the community. The Third Party Manager can assist the First Nation by relieving the Council and the community of the responsibilities relating to the management of programs and services including capital and infrastructure. This will allow the community the opportunity to resolve the social challenges facing Pikangikum.
This will confirm the meeting with Joseph Yong, Jon-Paul Blais and Roger Saltel with the Chief and Council and representatives on Monday, November 20, 2000 to discuss Third Party Management as well as other issues you may want addressed. If you have any questions, please contact Mr. Joseph Young, Manager Funding Services . . .
[24] The meeting referred to in the letter took place in December 2000. At this meeting, the Minister informed Pikangikum that he would not proceed with the appointment of a third party manager, but would require that Pikangikum enter into a co-management arrangement, which is a less intrusive option.
[25] Subsequent to the December 2000 meeting, Pikangikum's Chief, Peter Quill, had discussions with Indian Affairs officials about co-management, as well as hiring a professional engineer to assist Pikangikum and providing financial support for training in the community.
[26] On January 11, 2001, Mr. Quill told Roger Saltel, DIAND Senior Funding Services Officer, over the telephone that Pikangikum was agreeable to entering into a co-management agreement for all DIAND programs and services.
[27] Mr. Quill wrote a letter to Mr. Saltel on January 16, 2001, on behalf of his council. The letter stated:
Further to our previous discussions, I am confirming that the Council of Pikangikum, after careful deliberations, have selected ININEW Project Management Ltd. (Ben Van Hook) to be the financial advisor for our First Nation and to act in a co-managerial capacity with respect to all financial matters.
. . .
I am also confirming that the co-management arrangement with ININEW is to be time-limited, effective February 1, 2001 through March 31, 2002. Three months prior to the conclusion of the co-management arrangement it is the expectation of the First Nation that we will sit down with both ININEW and INAC to review the results of this process and to determine whether a new arrangement should be negotiated or extended or whether the arrangement should end.
[28] As can be seen above, Pikangikum informed DIAND that they had selected ININEW Project Management Ltd. to be the financial advisor for the First Nation and to act in a co-management capacity with respect to all financial matters effective February 1, 2001 to March 31, 2002. Mr. Quill was authorized by his council to write this letter.
[29] Mr. Quill has not written to Mr. Saltel subsequent to January 16, 2001.
[30] Subsequently, the applicant did not agree to co-management (see paragraph 24 of Louie Quill affidavit, applicant's record, volume 1, page 91).
[31] Communications between DIAND officials and Pikangikum continued until May 7, 2001. Pikangikum refused to accept the terms and conditions of the proposed co-management arrangement. The CFA expired on March 31, 2001. While discussions continued between the parties, funding was advanced to the applicant for the month of April 2001 on a number of conditions, one of which included the signing of a CFA for the term of April 1 to 30, 2001.
[32] On May 1, 2001, DIAND provided a CFA and Management Services Agreement to the applicant along with a letter from Ron Green, Director, Funding Services, Ontario Region, advising the applicant that if the offer of co-management was not acceptable to the applicant, DIAND was prepared to immediately commence the delivery of its programs and services directly. In the letter dated May 1, 2001, DIAND stated that it would not execute a CFA for the current year without a co-manager, and in default of co-management, the Department would "immediately commence the delivery of programs and services directly".
[33] Discussions between the parties continued until May 7, 2001, but no agreement was reached on the terms of reference of the co-management agreement.
[34] On May 10, 2001, Ron Green wrote to the applicant advising of DIAND's intention to commence delivery of programs and services to community members directly with the assistance of an agent.
[35] DIAND claims that it was and continues to be prepared to accept the selection of A.S. as co-manager. Representatives of the parties attempted unsuccessfully to agree upon the terms of the retainer of the co-manager. The applicant was informed that the Minister was not prepared to enter into a CFA without a co-management agreement in place. As there was no co-management agreement and no CFA in place, no funding was advanced to the applicant after the expiry of the last CFA on April 30, 2001.
[36] The applicant was given two options by DIAND. The first option was to flow funds to a water treatment bank account, which is co-signed by A.S., and to have A.S. pay for essential services until a co-management agreement could be worked out. The applicant rejected this option. The second option was for DIAND to make arrangements with the applicant's financial institution to provide the funding required for essential services. The applicant also rejected this option.
[37] Having failed to conclude an acceptable co-management agreement with Pikangikum, the Minister chose to deliver the DIAND programs and services directly to Pikangikum with the assistance of A.D. Morrison and Associates Ltd. ("A.D. Morrison"). Funding for DIAND programs and services has been transferred to A.D. Morrison.
[38] The applicant seeks judicial review of the Minister's decision requiring, as terms and conditions of Pikangikum's receipt of public funding for the 2001/2002 fiscal year, co-management of all DIAND funded programs and services.
Applicant's Submissions
[39] The applicant submits that one of DIAND's policy objectives is strengthening aboriginal governance and supporting aboriginal people in their efforts to create effective and accountable governments.
[40] The applicant submits that in 2000-2001, DIAND directly administered only about six per cent of funds, whereas eighty-five per cent of appropriated funds were transferred to First Nations so that First Nations could deliver almost all social and economic programs.
[41] The applicant submits that DIAND is accountable to Parliament for funds transferred through audits prepared by independent accredited auditors. Audits are also the principal tool through which First Nations are held accountable to DIAND. The applicant submits that DIAND must intervene in the least intrusive way possible when a First Nation experiences difficulties dealing with finances.
[42] The applicant submits that DIAND abused their discretion by using its financial and administrative power under the Indian and Inuit program to attempt to force Pikangikum to give up its civil right to bring this application.
[43] The applicant submits that direct service delivery by an agent of the Minister is highly unusual.
[44] The applicant submits that Pikangikum submitted their audit to DIAND showing a substantial surplus for the 1999-2000 fiscal year. The applicant submits that DIAND did not, as required under the terms of the CFA, provide the First Nation with general comments on the audit within 30 days of receipt or anytime thereafter.
[45] The applicant submits that the letter from DIAND, dated November 17, 2000, communicating a decision to appoint a third party manager did not specify why or in what respect the Department was concerned that Pikangikum could not adequately manage the community infrastructure or the major capital projects.
[46] The applicant submits that the fuel spill at the school originated from design flaws during the original construction by DIAND.
[47] The applicant submits that DIAND knew the water treatment plant was never completed and was vulnerable to accidental flooding. The applicant submits that the First Nation addressed this by retrofitting the water treatment plant with new equipment.
[48] The applicant submits that the First Nation already has a portion of the construction materials for the second phase of water and sewer installation, which is badly needed infrastructure in the community.
[49] The applicant submits that when it was no longer under co-management, Pikangikum undertook significant training of its employees in the area of financial administration, including accounting and record keeping.
[50] The applicant submits that at the December 7, 2000 meeting, DIAND did not tell the applicant the reasons for the decision that third party management was not necessary, but co-management would suffice.
[51] The applicant submits that DIAND never provided Pikangikum with written notice of this decision, nor the reasons for it.
[52] The applicant submits that Pikangikum has not agreed to co-management.
[53] The applicant submits that the decision has had the following impact:
1. The program and service infrastructure at Pikangikum First Nation is not operating normally;
2. The First Nation has been removed from any input into the development of its major capital infrastructure;
3. The First Nation does not have the funds to deliver departmental services;
4. The First Nation's local autonomy is impaired; and
5. The First Nation's progress towards self-reliance is stalled.
[54] The applicant submits that the process for making the decision is opaque and DIAND staff do not understand the nature of the decision that was made.
[55] The applicant submits that greater procedural protections are required when no appeal procedure is provided for and where the decision is important to the individuals affected.
[56] The applicant submits that Pikangikum had a legitimate expectation that it would have a new CFA entered into as DIAND has renewed CFAs from year to year.
[57] The applicant submits that appropriate reasons for the decision were not given.
[58] The applicant submits that the Minister abused his discretion by removing the ability of the Pikangikum to self govern. The applicant submits that DIAND abused their trust-like and fiduciary relationship with Pikangikum.
[59] The applicant submits that DIAND was required to inform Pikangikum of the process by which it intended to consider Pikangikum's comments.
[60] The applicant submits that Pikangikum received no written or oral notice of the reasons for which DIAND was requiring co-management.
[61] The applicant submits that the only reason DIAND made this decision was for DIAND to gain a foothold in Pikangikum's dealings with the Province of Ontario respecting a valuable sustainable forestry initiative. The applicant submits this is a clear abuse of discretion and an abuse of power.
[62] The applicant submits that simply quashing the DIAND decision, without more, would leave Pikangikum in chaos with an expired CFA and no funding. The applicant submits that simply quashing the decision would give DIAND a free hand to intrude deeply into Pikangikum's affairs.
[63] The applicant submits that the remedy must have ancillary or procedural features attached to it to make the remedy of quashing the impugned decision effective.
[64] The applicant submits that the most appropriate remedy is to require DIAND to provide funding to Pikangikum so that the Chief and Council can deliver interim programs and services identical to those covered by the now expired CFA, pending DIAND holding suitable notice and comment periods and holding consultations with Pikangikum.
Respondent's Submission
[65] The respondent submits that the Minister's authority to make these decisions rests solely on the Minister's general authority provided under paragraph 4.(a) of the DIAND Act. The respondent submits that it is a decision of pure policy and should not be reviewable by this Court. In the alternative, the respondent submits that the decision should only be disturbed if it is patently unreasonable.
[66] The respondent submits that DIAND delivers programs and services directly to band members residing on reserves, without delegating management functions or transferring funding for the programs in a variety of situations. These situations include:
(a) administration of membership rolls of many First Nations;
(b) administration of lands of almost all First Nations;
(c) administration of many estates of deceased band members;
(d) paying social assistance directly by DIAND to recipients for one First Nation in Ontario; and
(e) providing education directly and employing teachers for this purpose for some First Nations.
[67] The respondent submits that where practical, DIAND may enter into arrangements with First Nation councils for the transfer of public funds to the council in exchange for the council delivering DIAND's programs and services. The respondent submits that the use of First Nation councils or other agents for this purpose is merely one choice available to the Minister among many, including the choice of DIAND to deliver programs and services directly.
[68] The respondent submits that it is a matter of policy and discretion for the Minister to determine whether DIAND will deliver a particular program or service directly and, in the event it determines not to do so, the alternative manner in which a particular program or service will be delivered.
[69] The respondent submits that studies and reports prepared for and by Pikangikum from the time of the previous co-management up to and including April 2000 identified significant management and capacity weakness.
[70] The respondent submits there is no evidence that the training identified as required in these various reports has been completed. The respondent submits that Chief Quill's own evidence with respect to the Remedial Management Plan was that very little, if any, of the training identified had been completed.
[71] The respondent submits that the Constitution does not provide a right to receive and administer funding under aboriginal or treaty rights.
[72] The respondent submits that the facts support the Minister's decision. The respondent submits that the previous co-management agreements and management deficiencies noted in the Auditor's Reports for years ending in 1996 and 1997 that have not been rectified, are reasons contributing to the decision.
[73] The respondent submits that during the 2000 calendar year, Pikangikum experienced two significant situations which severely impacted the welfare of the members of the community, namely the school closing due to a fuel spill and the flooding of the water treatment plant. The respondent submits that both situations arose as a result of deficiencies in operation and maintenance.
[74] The respondent submits that having regard to these facts and the policy context, it cannot be said that this decision is not supported by reasons.
[75] The respondent submits that the impact of the Minister's decision to require co-management as a condition of providing funding for the DIAND programs and services would have been minimal, if any, on the people most effected by the decision, the members of the Pikangikum First Nation.
[76] The respondent submits that similarly the Minister's decision to provide funding to A.D. Morrison would have had little impact on the members if the applicant had chosen to co-operate with Mr. Morrison. The respondent submits that the Minister did not change the policy of providing and funding these programs and services, rather only altered the manner of delivery.
[77] The respondent submits that the doctrine of legitimate expectations does not apply in this case as there is no evidence to suggest that the Minister made a promise to enter into a CFA with Pikangikum for the 2001/2002 fiscal year without the requirement of a co-manager.
[78] The respondent submits that only Parliament can take money out of the Consolidated Revenue Fund and, as a result, the applicant's requested remedy ordering the release of funds to the Pikangikum government for the period May 1, 2001 onward is not available.
[79] Issues
1. Is the Minister's decision of the nature and type subject to judicial review?
2. If the decision is reviewable, what is the standard of review?
3. If the decision is reviewable, has the standard been met?
4. Did DIAND abuse their discretion?
5. Did DIAND fail to give appropriate reasons for the decision?
6. Is the remedy sought by Pikangikum available?
Relevant Statutory Provisions, Regulations and Rules
[80] The relevant sections of the DIAND Act, supra, state as follows:
| 2. (1) There is hereby established a department of the Government of Canada called the Department of Indian Affairs and Northern Development over which the Minister of Indian Affairs and Northern Development appointed by commission under the Great Seal shall preside.
(2) The Minister holds office during pleasure and has the management and direction of the Department.
4. The powers, duties and functions of the Minister extend to and include all matters over which Parliament has jurisdiction, not by law assigned to any other department, board or agency of the Government of Canada, relating to
(a) Indian affairs;
(b) the Yukon Territory, the Northwest Territories and Nunavut and their resources and affairs; and
(c) Inuit affairs.
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2. (1) Est constitué le ministère des Affaires indiennes et du Nord canadien, placé sous l'autorité du ministre des Affaires indiennes et du Nord canadien. Celui-ci est nommé par commission sous le grand sceau.
(2) Le ministre occupe sa charge à titre amovible; il assure la direction et la gestion du ministère.
4. Les pouvoirs et fonctions du ministre s'étendent d'une façon générale à tous les domaines de compétence du Parlement non attribués de droit à d'autres ministères ou organismes fédéraux et liés:
a) aux affaires indiennes;
b) au Yukon, aux Territoires du Nord-Ouest et au Nunavut, ainsi qu'à leurs affaires et à leurs ressources naturelles;
c) aux affaires inuit.
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[81] The relevant sections of the Federal Court Act, R.S.C. 1985 c. F-7, state as follows:
| 18.1 (1) An application for judicial review may be made by the Attorney General of Canada or by anyone directly affected by the matter in respect of which relief is sought.
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18.1 (1) Une demande de contrôle judiciaire peut être présentée par le procureur général du Canada ou par quiconque est directement touché par l'objet de la demande.
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| (2) An application for judicial review in respect of a decision or order of a federal board, commission or other tribunal shall be made within thirty days after the time the decision or order was first communicated by the federal board, commission or other tribunal to the office of the Deputy Attorney General of Canada or to the party directly affected thereby, or within such further time as a judge of the Trial Division may, either before or after the expiration of those thirty days, fix or allow.
(3) On an application for judicial review, the Trial Division may
(a) order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing; or
(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.
(4) The Trial Division may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal
(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;
(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;
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(2) Les demandes de contrôle judiciaire sont à présenter dans les trente jours qui suivent la première communication, par l'office fédéral, de sa décision ou de son ordonnance au bureau du sous-procureur général du Canada ou à la partie concernée, ou dans le délai supplémentaire qu'un juge de la Section de première instance peut, avant ou après l'expiration de ces trente jours, fixer ou accorder.
(3) Sur présentation d'une demande de contrôle judiciaire, la Section de première instance peut:
a) ordonner à l'office fédéral en cause d'accomplir tout acte qu'il a illégalement omis ou refusé d'accomplir ou dont il a retardé l'exécution de manière déraisonnable;
b) déclarer nul ou illégal, ou annuler, ou infirmer et renvoyer pour jugement conformément aux instructions qu'elle estime appropriées, ou prohiber ou encore restreindre toute décision, ordonnance, procédure ou tout autre acte de l'office fédéral.
(4) Les mesures prévues au paragraphe (3) sont prises par la Section de première instance si elle est convaincue que l'office fédéral, selon le cas:
a) a agi sans compétence, outrepassé celle-ci ou refusé de l'exercer;
b) n'a pas observé un principe de justice naturelle ou d'équité procédurale ou toute autre procédure qu'il était légalement tenu de respecter;
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| (c) erred in law in making a decision or an order, whether or not the error appears on the face of the record;
(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;
(e) acted, or failed to act, by reason of fraud or perjured evidence; or
(f) acted in any other way that was contrary to law.
(5) Where the sole ground for relief established on an application for judicial review is a defect in form or a technical irregularity, the Trial Division may
(a) refuse the relief if it finds that no substantial wrong or miscarriage of justice has occurred; and
(b) in the case of a defect in form or a technical irregularity in a decision or order, make an order validating the decision or order, to have effect from such time and on such terms as it considers appropriate.
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c) a rendu une décision ou une ordonnance entachée d'une erreur de droit, que celle-ci soit manifeste ou non au vu du dossier;
d) a rendu une décision ou une ordonnance fondée sur une conclusion de fait erronée, tirée de façon abusive ou arbitraire ou sans tenir compte des éléments dont il dispose;
e) a agi ou omis d'agir en raison d'une fraude ou de faux témoignages;
f) a agi de toute autre façon contraire à la loi.
(5) La Section de première instance peut rejeter toute demande de contrôle judiciaire fondée uniquement sur un vice de forme si elle estime qu'en l'occurrence le vice n'entraîne aucun dommage important ni déni de justice et, le cas échéant, valider la décision ou l'ordonnance entachée du vice et donner effet à celle-ci selon les modalités de temps et autres qu'elle estime indiquées.
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[82] Subsection 70(4) of the Federal Court Rules, 1998, SOR/98-106 states:
| 70.(4) Unless otherwise ordered by the Court, a memorandum of fact and law, exclusive of appendices, shall not exceed 30 pages in length.
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70.(4) Sauf ordonnance contraire de la Cour, le mémoire ne peut contenir plus de 30 pages, abstraction faite des annexes.
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Analysis and Decision
[83] Issue 1
Is the Minister's decision of the nature and type subject to judicial review?
The respondent submits that the programs and services for which funding is sought and the decision as to the terms and conditions upon which Pikangikum would receive funding are matters of pure public policy that are not derived from statute or regulation and are not subject to judicial review.
[84] I am satisfied that the Minister's decision is a decision of a "federal board, commission or other tribunal" such that it falls within the purview of section 18.1 of the Federal Court Act, supra. Accordingly, this Court has jurisdiction to consider an application for judicial review of the decision.
[85] Issue 2
If the decision is reviewable, what is the standard of review?
The decision was made within the Minister's jurisdiction. There is no specific right of appeal for this type of decision. The decision takes into account a variety of policy considerations in determining the most appropriate way to provide DIAND services to the Pikangikum First Nation, as well as policy considerations involving the appropriate way to allocate public funds. Accordingly, the Minister's decision should be given considerable deference. I am of the view that the Minister's decision should only be disturbed if it is patently unreasonable.
[86] Issue 3
If the decision is reviewable, has the standard been met?
The CFAs entered into by the parties in the two years prior to 2000/2001 each contained a
co-management clause. The 2000/2001 CFA, however, did not contain such a clause. This was presumably due to the acceptable audits of the applicant.
[87] The 2000/2001 CFA contains the following clauses relating to co-management:
4.1.3 the Audit indicates that the Council has incurred a cumulative deficit equivalent to eight (8) % or more of the Council's total annual revenues; and
4.1.4 the health, safety or welfare of community members is being compromised.
4.2 In the event the Council is in default the parties will meet to review the situation.
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:
4.3.1 require the Council to develop and, with the approval of the Minister, implement a Remedial Management Plan, within thirty (30) days, or at such other time as the parties may agree upon and set out in writing, but not to exceed sixty (60) days;
4.3.2 require the Council to enter into a Co-Management Agreement;
4.3.3 appoint, upon providing notice to the Council, a Third Party Manager;
4.3.4 withhold any funds otherwise payable under this Agreement;
4.3.5 require the Council to take any other reasonable action necessary to remedy the default;
4.3.6 take such other reasonable action as Canada deems necessary to remedy the default; or
4.3.7 terminate this Agreement.
4.4 Where the Council defaults in its obligations under section 3.1 of Part G to make the Audit readily available to its First Nation members, the Minister may make the Audit of the Council available to the First Nation members.
[88] In addition, there is a document delivered by the respondent entitled, "Regional Directive Department of Indian Affairs and Northern Development, Ontario Region". This Directive deals with the appointment of co-managers and third party managers. It reads, in part, as follows:
1.0 PURPOSE
1.1 This directive outlines the policy, procedures and guidelines with respect to Co-Management or Third Party Management.
1.2 To ensure that the Co-Management or Third Party Management is managed on a consistent basis within the Ontario Region.
2.0 SCOPE
2.1 This directive provides the necessary parameters to be addressed once the decision that Co-Management or Third Party Management is necessary.
2.2 This policy should be read in conjunction with related directives that apply to the Ontario Region.
. . .
5.0 MANAGEMENT POLICY
5.1 The department maintains that the recipient should be responsible for the delivery of services as outlined in their funding arrangement. Every effort will be made to sustain the local autonomy and ensure essential services are provided without interruption.
5.2 The department is prepared and may have an obligation to intervene in the affairs of recipients when their leaders/administrators indicate an inability and/or an unwillingness to address a difficulty/default.
5.3 The level of department intervention will be based on the situation and to the recipient's capacity and willingness to address and remedy the difficulty/default. Refer to Section 6.0 - Intervention Level for further details.
. . .
6.0 INTERVENTION LEVELS
6.1 The department will request the recipient to appoint a Co-Manager in situations where the recipient is willing but lacks the capacity to address/remedy its difficulty/default.
6.2 The department will appoint a Third Party Manager when a recipient is unwilling and/or incapable to address/remedy its difficulty/default. The Third Party Manager will be accountable to the department but will also keep the recipient informed of actions being taken.
6.3 The willingness and/or capacity of the recipient can be determined through compliance to the terms and conditions of the funding arrangement, past track record of the recipient, by a meeting with the recipient's officials and/or by the recipient's acknowledgement of the difficulty/default.
7.0 CO-MANAGEMENT
7.1 The department is responsible to:
_ Hold discussions with the recipient to ensure mandatory/essential departmental services continue to be provided.
_ Provide official written notice, signed by the Regional Director General, to the recipient identifying the difficulty/default which has resulted in the implementation of a Co-Manager.
. . .
8.0 THIRD PARTY MANAGEMENT
8.1 The department is responsible to:
_ Ensure mandatory/essential services continue to be provided, and arrange alternative delivery until such time as Third Party Manager is appointed.
_ Provide the recipient with official written notice, signed by the Regional Director General, of the appointment of a Third Party Manager. The notice will include the following points. Refer to Appendix #4 - Letter to the Recipient for Appointment of Third Party Manager.
- the difficulty/default in relation to the default clauses contained in their funding arrangement
- indicate that any further funding under the existing funding arrangement will flow in trust to the Third Party Manager
- the appointment is not intended to take away the recipient's political authority, but to ensure mandatory/essential departmental services are continued.
[89] A perusal of the agreement (CFA) and the Regional Directive show:
1. DIAND has the authority to impose either co-management or third party management.
2. Co-management or third party management is to be managed on a consistent basis within the Ontario region.
3. Primarily, the recipient should be responsible for the delivery of the services outlined in the CFA unless there is an inability and/or unwillingness to address a difficulty or default.
4. The intervention level should only be as great as is required by the situation (see clause 6 of the Regional Directive).
[90] In a letter dated November 7, 2000, DIAND informed the applicant that a decision to appoint a third party manager had been made. The letter stated that the applicant was in default of clause 4.1.4 of the CFA ("the health, safety or welfare of community members is being compromised"). The letter went on to state that the reasons for appointing the third party manager were:
a) the department's concern with the First Nation's ability to effectively manage the existing community infrastructure facilities (i.e. Water treatment plant, community school).
b) the concern that the First Nation has the technical capacity to manage the major capital projects currently underway and those that are planned for future years (i.e. Hydro grid project, Phase 2 servicing project).
[91] On December 7, 2000, the Minister responsible for DIAND announced at a meeting in Winnipeg that co-management, instead of third party management, would be acceptable. DIAND did not tell the applicant the reasons for its decision to require co-management instead of third party management. DIAND did not give written or oral reasons for its decision to impose co-management with the exception of the reference to the Whitefeather Forest Project at a meeting on April 18, 2001.
[92] Over the ensuing months, no agreement could be reached between the parties. DIAND would not enter into a new CFA for 2001/2002 unless the applicant agreed to co-management. The applicant did not agree to co-management. Hence, no new CFA has been executed by the respondent.
[93] Against this factual background, what type of procedural fairness is the applicant entitled to? In Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, the Court outlined at paragraphs 23 through 27, several factors relevant to determining what is required by the common law, duty of procedural fairness, in a certain factual situation. These factors include:
1. The nature of the decision being made and the process followed in making it.
2. The nature of the statutory scheme. By way of example, greater procedural protections are available if no appeal is provided or when the decision is determinative of the issue and no further requests can be submitted.
3. The importance of the decision to individuals effected.
4. The legitimate expectations of the persons affected.
5. The determination should take into account and respect the choices of procedure made by the agency itself, particularly when the statute allows the decision maker to establish its own procedures or when the agency has an expertise in determining what procedures are appropriate in the particular case.
[94] The Regional Directive's purpose is stated to be that it "outlines the policy, procedures and guidelines with respect to Co-Management or Third Party Management" and to "ensure that the Co-Management or Third Party Management is managed on a consistent basis within the Ontario Region". This would indicate to me that the directive is meant to be followed in all cases so that consistency will result.
[95] There is no doubt that CFA permits the appointment of a co-manager or third party manager in the circumstances allowed by the contract.
[96] The DIAND have, however, further outlined in a directive, the manner in which the DIAND will intervene in the provision of services by the applicant. Paragraphs 5.2 and 5.3 of the Regional Directive state that the department will intervene in the affairs of recipients when their leaders/administrators indicate an inability or unwillingness to address a difficulty or default under the agreement. The level of intervention will depend on the situation and the recipients' capacity and willingness to address and remedy the difficulty/default.
[97] The Regional Directive also provides for the level of intervention in clause 6. For ease of reference, clause 6.1 and 6.2 are repeated:
6.0 INTERVENTION LEVELS
6.1 The department will request the recipient to appoint a Co-Manager in situations where the recipient is willing but lacks the capacity to address/remedy its difficulty/default.
6.2 The department will appoint a Third Party Manager when a recipient is unwilling and/or incapable to address/remedy its difficulty/default. The Third Party Manager will be accountable to the department but will also keep the recipient informed of actions being taken.
[98] It is apparent that the recipient will be requested to appoint a co-manager in situations where the recipient is willing, but lacks the capacity, to address/remedy its difficulty/default. It is my conclusion that in order to be willing to address/remedy the difficulty/default, the recipient must first know what the difficulty or default is. This contemplates some type of notice to the recipient.
[99] As well, the same reasoning is true for clause 6.2 where the department will appoint a third party manager if the recipient is unwilling and/or incapable to address/remedy the difficulty/default.
[100] The following factors outlined in Baker, supra are of assistance in determining what level of procedural fairness is required in the present situation.
3. The importance of the decision to the individuals effected.
The decision is very important to the applicant as it basically takes away the applicant's right to manage its affairs.
5. Respect for the choice of procedure made by the agency itself.
In this case, the respondent opted to put in operation a Regional Directive to outline the policy, procedures and guidelines with respect to co-management or third party management so that co-management and third party management could be managed on a consistent basis within the Ontario region. The Directive also states in clause 5.1 that the department "maintains that the recipient should be responsible for the delivery of services as outlined in their funding arrangement".
[101] After considering the evidence, the CFA and the Regional Directive, I am of the view that the putting in place of either a co-manager or a third party manager must be done on notice to the recipient of what the difficulty or default is so that the recipient can attempt to address the difficulty or default. I do not believe that writing a letter such as the letter of November 17, 2000, nor do I consider the announcement of the Minister on December 7, 2000, to be notice of the difficulty or default. These items announce the requirement of the appointment of a third party manager and a co-manager. Clause 5.2 of the Regional Directive under the heading "Management Policy" states that the department is prepared and may be obligated to intervene in the affairs of recipients when their leaders/administrators indicate an inability and/or an unwillingness to address the difficulty/default. Again, this would indicate that some notice of the difficulty/default would have to be given to the recipient so that the recipient could indicate their position on dealing with the difficulty/default.
[102] It should also be noted that the reasons given in the November 17, 2000 letter, for the imposition of third party management, are very general. For example, what are the problems at the water treatment plant and at the school? The case law states that it is not sufficient to state the recipient would know what the problems are. In this case, it is incumbent on the respondent to notify the recipient of the specific problems so that the problems may be addressed (see Gough v. Canada (National Parole Board), [1991] 2 F.C. 117 (T.D.) at 123).
[103] Mr. Green in his cross-examination at questions 513 to 516 (applicant's record, volume 2, tab 1, pages 57 to 58) explained the Regional Directive as follows:
Q. Mr. Green, I am showing you a document in Exhibit A right at the end, called, "Regional Directive". You've seen this document before?
A. I have.
Q. Would you explain to us what it is?
A. It's a document dealing with co-management and third party management.
Q. Tell us what it is in your office and what you do with it?
A. It's the current guiding directive with respect to the implementation or imposition of co-management and third party management.
Q. This would have been one of the documents that we spoke about earlier, that guides how you exercise your authority?
A. That's correct.
Q. You have to observe it?
A. I'm sorry?
Q. You have to observe it?
A. Yes. Yes.
Q. Now, one of the reasons to observe it, I suppose, is just as the document says, there has to be consistency, at 1.2, the co- and third party management has to be administered on a consistent basis throughout the region? That's something you strive for?
A. Yes.
Q. I am looking at paragraph 5.1. Could you just read that for us?
A. "The Department maintains that the recipient should be responsible for the delivery of services as outlined in their funding arrangement. Every effort will be made to sustain the local economy and ensure essential services are provided without interruption."
Q. Local autonomy is one of the governing policy imperatives in your region?
A. As discussed before, maximum service delivery by communities is important, yes.
[104] I am of the view that the respondent must follow the Regional Directive when deciding whether or not to require co-management. I am of the further opinion that the Regional Directive, when read as a whole, contemplates giving notice to the recipients of the difficulty/default, before imposing co-management, so as to allow for meaningful discussion of the difficulty/default. It was patently unreasonable not to follow the Regional Directive. The recipient was entitled to notice of the difficulty or default as part of the right to procedural fairness. I find that such notice was not given to the applicant in this case and, as such, a breach of the duty of procedural fairness occurred.
[105] Because of my finding on Issue 3, I do not propose to deal with Issues 4 and 5.
[106] Issue 6
Is the remedy sought by Pikangikum available?
I propose to deal separately with each requested remedy.
(a) A declaration that the First Nation is not in default of its obligations to INAC, that there are no legal or equitable grounds to withhold funding to the First Nation, that the actions of INAC are contrary to their own policies, and that the First Nation is entitled to enter into a comprehensive funding arrangement with INAC, as in previous years.
I am not prepared to grant this relief as much more information would have to be before the Court to make a decision with respect to the requested relief. In addition, the funding for the period in question is more likely already disbursed.
(b) An interlocutory injunction, pending the outcome of this proceeding, requiring INAC to provide current year funding to the First Nation in accordance with treaty and fiduciary obligations of the Crown, principles of equity and administrative fairness, the Comprehensive Funding Agreements ("CFA's") between the First Nation and INAC in previous years, and INAC policies.
I am not prepared to grant this relief as the current year funding has likely been provided by other means.
[107] The applicant has requested pre- and post-judgment interest. I am not prepared to grant interest as the funds have likely already been given by the agent of the Minister.
[108] The application for a judicial review is therefore allowed and the decision of the Minister to require co-management is declared invalid, due to a breach of the duty of procedural fairness.
[109] The applicant has requested costs on a solicitor and client basis. I do not see any reason in this case to make such an award. The applicant shall have its costs of this application.
ORDER
[110] IT IS ORDERED that the application for judicial review is allowed and the decision of the Minister to require co-management is invalid due to a breach of the duty of procedural fairness.
[111] IT IS FURTHER ORDERED that the applicant shall have its costs of the application.
"John A. O'Keefe"
J.F.C.C.
Ottawa, Ontario
November 29, 2002
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-785-01
STYLE OF CAUSE: PIKANGIKUM FIRST NATION
AS REPRESENTED BY CHIEF AND COUNCIL
- and -
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA AS REPRESENTED BY THE
MINISTER OF INDIAN AND
NORTHERN AFFAIRS
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: Monday, June 17, 2002
REASONS FOR ORDER AND ORDER OF O'KEEFE J.
DATED: Friday, November 29, 2002
APPEARANCES:
Joseph Magnet
FOR APPLICANT
Colleen Sveinson-Geary
Mary Ann S. Thompson
FOR RESPONDENT
SOLICITORS OF RECORD:
Joseph Eliot Magnet
Faculty of Law, University of Ottawa
Ottawa, Ontario
K1N 6N5
Keshen & Major
200 - 120 Second Street South
Kenora, Ontario
P9N 1E9
FOR APPLICANT
Department of Justice Canada
301 - 310 Broadway
Winnipeg, Manitoba
R3C 0S6
FOR RESPONDENT
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20021129
Docket: T-785-01
BETWEEN:
PIKANGIKUM FIRST NATION
AS REPRESENTED BY CHIEF AND COUNCIL
Applicant
- and -
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA AS REPRESENTED BY THE
MINISTER OF INDIAN AND NORTHERN AFFAIRS
Respondent
REASONS FOR ORDER AND ORDER
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