Stoney Band v. Canada (Minister of Indian and Northern Affairs), docket T-307-96

     T-307-96

Between:

CHIEF HARVEY BAPTISTE, DAVE BEARSPAW, DARCY DIXON, REX DANIELS, JOHN LEFTHAND JR., CHIEF KEN SOLDIER, FRANK CRAWLER, BRUCE LABELLE, MARGERY TWOYOUNGMEN, CHIEF ERNEST WESLEY, IRBY CECIL, WATSON KAQUITTS, CHARLIE ABRAHAM suing on their own behalf and on behalf of all other members of the STONEY BAND, and CHIEF HARVEY BAPTISTE, DAVE BEARSPAW, DARCY DIXON, REX DANIELS JOHN LEFTHAND JR. suing on their own behalf and on behalf of all other members of the BEARSPAW BAND, and CHIEF KEN SOLDIER, FRANK CRAWLER, BRUCE LABELLE, MARGERY TWOYOUNGMEN suing on their own behalf and on behalf of all other members of the CHINIKI BAND, and CHIEF ERNEST WESLEY, IRBY CECIL, WATSON KAQUITTS, CHARLIE ABRAHAM suing on their own behalf and on behalf of all other members of the WESLEY BAND and the said STONEY BAND

     Plaintiffs

     - and -

HER MAJESTY THE QUEEN in Right of Canada as represented by the Minister of Indian and Northern Affairs and the Minister of the Environment

     Defendant

     REASONS FOR ORDER

JOHN A. HARGRAVE

PROTHONOTARY

     These reasons arise out of the Crown's motion to have this action stayed, pursuant to section 50.1 of the Federal Court Act, as it wishes to bring third party proceedings against parties over whom the Federal Court is alleged to lack jurisdiction. I have refused the stay, but before setting out the rationale behind this decision, some pertinent background notes are in order.

BACKGROUND

     The Plaintiffs represent themselves and the Chiniki, Wesley and Stoney Bands, whose reserves are in Alberta, including near Morley, west of Calgary: I will refer to the Bands collectively as the "Stoney Band" and similarly to the land as the "Stoney Reserve". On some of the Stoney Reserve there was merchantable timber. Five years ago the Crown commissioned an assessment of the timber on the Stoney Reserve and recommended an annual harvest of 640 truck loads.

     Illegal logging operations ensued so that, by February of 1995, the Plaintiffs estimated that over 25,000 truck loads of timber had been wrongfully removed from the Stoney Reserve. The allegations by the Plaintiffs against the Crown are many and include mismanagement of forested areas, breach of many and various duties, responsibilities and obligations, wrongfully using funds belonging to the Stoney Band for remedial measures and conflict of interest. In the result, the Plaintiffs claim, among other relief, $40,000,000.00 for conversion of their timber resources and $11,000,000.00 for clean-up and rehabilitation.

     Now it may be that the Stoney Band Council and various Band members were not without fault in all of this, including by granting permission to some of those who logged, but that is not an issue at this point. Rather, it is the part allegedly played in desecration of the Stoney Reserve by those who allowed or agreed to let loggers cut and remove timber, who cut, sold and purchased timber and who milled timber held by the Crown for the benefit of the Stoney Band. The Crown wishes to bring third party proceedings against these various persons and entities.

     The Crown, in order to avoid limitation problems, has, to 4 April 1997, filed 52 third party notices. I see no barrier, in this actual commencement of third party procedure, to an application for a stay under section 50.1 of the Act. Indeed, it is an excellent indication that the Crown has every intention of proceeding with the third party claims, a factor which was lacking in Fairford First Nation v. Canada (1996), 96 F.T.R. 172. Some of the third party notices are against Band members, other are against log brokers and yet others are against sawmill operators. The Crown feels that many of the third party claims are against individuals and concerns over whom the Federal Court, as a statutory court, has no jurisdiction. Indeed, it is well established that third party claims are not proper merely because they are incidental to or entwined with a main action that is within the jurisdiction of the Court, but must, when it comes to jurisdiction, be capable of standing on their own: see for example Wire Rope Industries of Canada (1966) Ltd v. B.C. Marine Shipbuilders Ltd. (1981), 1 S.C.R. 363.

THE MOTION

     This brings us to the present motion, an application for a stay under section 50.1 of the Federal Court Act with directions as an alternative. I adjourned the latter pending a determination on the issue of the stay. Section 50.1 provides for a stay where the Crown wishes to third party entities over whom the Court has no jurisdiction; it further allows the party whose proceedings are stayed to recommence the proceedings in a Provincial Court; and finally, if those Provincial Court proceedings are recommenced within 100 days of the stay, their deemed commencement dates back to the beginning of the Federal Court action, thus avoiding any new limitation problems:

50.1 (1) The Court shall, on application of the Attorney General of Canada, stay proceedings in any cause or matter in respect of a claim against the Crown where the Crown desires to institute a counter-claim or third-party proceedings in respect of which the Court lacks jurisdiction.

(2) Where the Court stays proceedings under subsection (1), the party who instituted the proceedings may recommence those proceedings in a court constituted or established by or under a law of a province and otherwise having jurisdiction with respect to the subject-matter of the proceedings.

(3) Where proceedings are recommenced pursuant to subsection (2) within one hundred days after the proceedings are stayed in the Court, the claim against the Crown in the recommenced proceedings shall, for the purposes of any laws relating to prescription and the limitation of actions, be deemed to have been instituted on the day the proceedings in the Court were instituted.

The third parties over whom the Crown submits the Court has no jurisdiction are individual members of the Stoney Band, log-brokers and mill operators.

ANALYSIS

     A good starting point is [1977] 2 S.C.R. 654">McNamara Construction (Western) Limited v. The Queen, [1977] 2 S.C.R. 654 in which the Supreme Court noted that the Federal Court's jurisdiction, in actions by the Crown, extends only so far as supported by existing and applicable federal law. In the McNamara case the issue was whether the Court might entertain a claim by the Crown, in contract, against a construction company which had undertaken to build a young offenders unit. Chief Justice Laskin referred to the Court's then current decision in [1977] 2 S.C.R. 1054">Quebec North Shore Paper Company v. Canadian Pacific Limited, [1977] 2 S.C.R. 1054 and pointed out that it was not enough that the Parliament of Canada have legislative jurisdiction in respect of some matter which is the subject matter of Federal Court litigation, for example, in the McNamara case, in relation to public debt and property and the establishment of penitentiaries, sections 91(1A) and 91(28) of the British North America Act: such would not support a grant of jurisdiction to the Federal Court. Rather, the Federal Court's jurisdiction must be found in some existing federal law, statute, regulation or common law, for the English common law axiom that the Crown might sue in any Court did not have an unlimited application in the federal system in Canada (McNamara at pages 658 - 660). The Supreme Court rejected the idea that some sort of federal contractual law might support the action. The Court also rejected the concept that jurisdiction existed in Federal Court solely on the basis of what is now section 17(5)(a) of the Federal Court. In the result, the Crown's action was struck out.

     The next case that one must touch on is ITO - International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752 in which the Court summarized the Quebec North Shore Paper and McNamara cases and set out the essential requirements to support jurisdiction in the Federal Court:

1.      There must be a statutory grant of jurisdiction by the federal Parliament.

2.      There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.

3.      The law on which the case is based must be "a law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867. (page 766)

     Counsel for the Crown agrees that the requirement of a statutory grant has been met by reason of section 17(5)(a) of the Federal Court Act. However, the Crown submits that there is no existing body of federal law to nourish the statutory grant of jurisdiction. Counsel for the Plaintiffs, who wishes to get on with the present action, takes an opposing view on this point.

     If there is jurisdiction, one might expect it to come by way of the analysis set out in Roberts v. Canada (1989), 57 D.L.R. (4th) 197 (S.C.C.) and Montana Band v. Canada, [1991] 2 F.C. 273 (T.D.).

    

     In the Roberts case the Supreme Court applied the three-part test summarized in the Miida Electronics case. The Court found a fresh statutory head of jurisdiction in what is now section 17(4) of the Federal Court Act, in a claim against the Crown which is analogous, in the present instance, to the application of section 17(5)(a) as the statutory grant of jurisdiction. The Court commented on the overlap between the second and third elements in the test for jurisdiction. It determined that the second requirement, existing federal law, was met by federal law relating to Indians and to Indian interests in reserve lands, but that the third element, that the case be based on a law of Canada, could be troublesome if it were not federal legislation, "... but so called ,federal common law- or if federal law is not exclusively applicable to the issue in dispute" (page 203). In the Roberts case the Supreme Court concluded that there were relevant provisions in the Indian Act setting aside the Reserve in question for the use and occupancy of one or the other of the two Indian Bands who claimed the land and that the common law of Aboriginal title underlay the fiduciary obligations of the Crown to both bands.

     In the Montana Band case Mr. Justice Strayer (as he then was) dealt with a third party issue in the context of a claim by the Montana Band to Reserve Land which had devolved to the Sampson and Irminskin Bands. The Crown filed third party notices against the Chief and Councillors of each of these two Bands, suing them personally and on behalf of the members of their Bands. The third parties challenged the jurisdiction of the Court, in the context of the test set out in the Miida Electronics case. As in the present instance, the Court found that there was jurisdiction, under the first part of the test, by reason of section 17(5)(a) of the Federal Court Act. Mr. Justice Strayer referred to the Court's recognition in the Roberts case (supra) that the second and third elements in the Miida Electronics case might overlap and be dealt with together. It appeared to him that there were both federal statute law and federal common law to dispose of the case, namely federal common law relating to Aboriginal title, underlying the Crown's obligations to the Indian Bands and the Indian Act.

     The important thing to recognize about the Roberts and the Montana Band decisions is that both involved the use and occupation of a Reserve and alleged trespass by another Indian Band or Bands, which fell neatly to be decided by the application of the Indian Act and the law relating to Aboriginal title. However, as Mr. Justice Strayer pointed out in the Montana Band case, if issues of property and civil rights arose, it was sufficient that the Federal Court's jurisdiction arose essentially out of a claim created by federal law (page 284). In the present instance, there is more than just a trespass to a Reserve. The causes of action include conversion, conspiracy and negligence. While there is reliance upon the Indian Act and the Indian Timber Regulations, there is also reliance upon provincial legislation. That the third party claims rely in part on provincial law and provincial legislation, is not necessarily a bar to jurisdiction, but to be otherwise the claim must be in pith and substance within the Court's jurisdiction and validly founded on federal law: see for example Karl Mueller Construction Limited v. Canada (1993), 59 F.T.R. 161 at 165 and Miida Electronics (supra) at 781.

     A part of the Plaintiffs' submission is that the Crown's third party notices refer in a great number of places to the Indian Act and to the Indian Timber Regulations including pleas as to trespass pursuant to various sections of the Indian Act, the passing of title to timber under the Indian Act and the cutting and removal of timber contrary to section 93(a) of the Indian Act and to various sections of the Indian Timber Regulations. However, it is not as simple, in testing for an existing body of federal law, as merely counting so many references to federal legislation and so many to provincial law and legislation.

     In her material the Defendant provided copies of three generic third party notices similar to those filed. While they are addressed to three different types of third parties, Stoney Band members, log brokers and sawmill operators, the notices are all parallel and contain essentially the same provisions, which may be summarized as follows:

1. Wrongful cutting, harvesting, selling and removal of timber from the Stoney Reserve, without a ministerial permit, contrary to section 93(a)(ii) of the Indian Act and sections 5 and 30 of the Indian Timber Regulations and engaging in these activities without the permission of the Minister as required by section 93 of the Indian Act and, one would expect, sections 5 and 9 of the Indian Timber Regulations;

2. Trespass to timber and to the Stoney Reserve pursuant to sections 20, 30 and 93 of the Indian Act and by so doing interfering with the Crown's obligations to the Stoney Band and to the Crown's title in the timber;

3. An inability of Band members to transfer title and of log brokers and sawmills to acquire title to the timber pursuant to sections 28(1) and 32 of the Indian Act;

4. Environmental damage caused by reason of breaches of the Indian Act, that is by cutting and removing timber;

5. Conversion of timber from the Stoney Reserve, to which the Crown has legal title;

6. Conspiracy to engage in the foregoing activities without a permit from the Minister, thereby injuring the Crown;

7. Cutting, harvesting, selling and removal of timber without a permit and thereby breaching a duty of care owed to the Crown;

8. Negligent interference with the Crown's obligation to hold timber for the use and benefit of the Stoney Band; and

9. Contributory negligence involving provincial legislation, the Indian Act and regulations thereunder.

     There are three general areas, in this catalogue of causes of action, which give me some jurisdictional concern in the context of the need for a body of federal law, for the law on which the case is based must be a law of Canada. They are first, the conversion of the Crown's timber, second, the breach of duty of care to the Minister and the parallel interference with the Crown's obligation to hold timber for the use and benefit of the Stoney Band and third, reliance on provincial contributory negligence legislation.

     The mere fact that the alleged wrongful logging, selling and milling of timber are all closely connected with an Indian Reserve and at least in part with the underpinning of the Indian Act and the Indian Timber Regulations, is not necessarily enough, for there are tortious claims against third parties and, as such, even taking into account federal aboriginal law, are emanations of provincial law. However, as I have already pointed out, reliance on provincial law and legislation is not necessarily fatal so long as the claim is in pith and substance within the Court's jurisdiction and validly founded on federal law: Mueller Construction (supra) at 165 and Miida Electronics (supra) at 781.

     The Federal Court of Appeal, in Oag v. Outerbridge and Howland (1987), 73 N.R. 149 dealt with this sort of a problem. The Court found, not withstanding that the plaintiff had brought his action in tort for damages against the chairman of the Parole Board, there was, while not specific statutory provisions on point, a detailed statutory framework which satisfied the test that there must be an existing body of federal law essential for the disposition of the case and which nourished the statutory grant of jurisdiction. In the present instance, many of the Crown's allegations against the third parties are firmly grounded in the Indian Act and in the Indian Timber Regulations. However, as I have said, there are several areas in the third party claims that give some concern, those of conversion, breach of duty of care toward and interference with the Crown's obligations to the Stoney Band and reliance on provincial legislation, to which I now turn.

     Conversion is a tort committed by someone who deals with a chattel that does not belong to him or her in a manner inconsistent with the rights of the lawful owner, thereby depriving the owner of use and possession. In the present context of conversion of timber (and indeed in that of trespass to the Stoney Reserve in order to get at the timber to convert it), the Crown will have to rely on the provisions of the Indian Act and the Indian Timber Regulations, which, among other things, provide for the holding of reserve land by the Crown for the use and benefit of Indian Bands, deal with trespass and removal of timber from a reserve, and set out a scheme of licensing of timber cutting rights. Reliance on the provincial tort law governing conversion is not fatal given the existing fairly detailed statutory framework.

     Turning next to the allegation that there was negligent interference with the Crown's obligation to hold the timber for the use and benefit of the Stoney Band, the duty of the Crown is some form of fiduciary duty. Underlying this duty are both the Indian Act and, as the Supreme Court of Canada pointed out in the Roberts case (supra), the common law of Aboriginal title (see Roberts at page 210). These elements satisfy the second and third portions of the Miida Electronics test. That there are also elements of negligence in this particular plea are of no great consequence for as pointed out in Karl Mueller (supra) and in Miida Electronics (supra) the Federal Court may apply provincial law in determining a claim validly founded on federal law.

     The third troublesome plea is that of contributory negligence and the reference to the "Contributory Negligence Act", which I take to be the Alberta legislation. In Algoma Central & Hudson Bay Railway Company v. Manitoba Pool Elevators Ltd., [1964] Ex.R. 505 and in Fraser River Harbour Commission v. The "Hiro Maru", [1974] 1 F.C. 490, marine cases, but not incidents involving collision, the Ontario and the British Columbia Negligence Act were held not to apply. However, in neither instance was [1960] S.C.R. 315">Gartland Steamship Company v. The Queen, [1960] S.C.R. 315 referred to. In the Gartland case, the "W.E. Fitzgerald" collided with and destroyed a bridge at the entrance to the port of Hamilton. On appeal from the Exchequer Court the Supreme Court apportioned fault. Being a collision with a shore structure, Mr. Justice Judson, writing for the majority, pointed out that the negligence provisions of the Canada Shipping Act had no application and as a result:

"The choice is between no recovery at all and a recovery under the Ontario Negligence Act. This is a common law action for damages within s. 29(d) of the Exchequer Court Act, R.S.C. 1952, c. 98, and in my opinion the Crown, as plaintiff, is entitled to the advantage of the Ontario Act: T.T.C. v. The King, supra."

(p. 327)

and see also [1949] S.C.R. 510">Toronto Transportation Commission v. The King, [1949] S.C.R. 510 at 515 and 521, a case on appeal from the Exchequer Court in which the Federal Crown was allowed the benefit of the Ontario Negligence Act as a Crown prerogative. In the present instance, the third party claim over by the Crown must be looked upon as if it were an action standing by itself, with the Crown as Plaintiff, able to rely upon the provincial contributory negligence legislation and thus coming within the jurisdiction of the Court.

     Counsel for the Crown submits that if this claim continues in the Federal Court some of the third parties may well be barred from bringing claims over against fourth parties. However, the jurisdictional boundaries of the Federal Court do not always result in fairness: moreover, that there may be fourth party claims is speculative at this point.

CONCLUSION

     The third party claims, brought pursuant to Rule 17(5)(a), are well-grounded in federal legislation, being in essence claims founded on the Indian Act and the Indian Timber Regulations. The claims rely substantially on Federal Aboriginal common law. As such, they satisfy the requirements set out in Miida Electronics, requirements that may blend in to one another, that there be an existing body of federal law essential to decide the case and that the law on which the case is based be a law of Canada.

     That provincial law may be needed to assist in the determination of the fairly detailed statutory and legal framework, provided by the Indian Act, the Indian Timber Regulations and Federal Aboriginal common law is proper for there is, as I have indicated, a valid foundation in federal Canadian law for the claims which are in pith and substance within the Court's jurisdiction.

     The Defendant's motion for a stay is dismissed. I have issued appropriate instructions as to counsel applying for third party directions. I thank counsel for their work and for their good presentation.

                             (Sgd.) "John A. Hargrave"

                                 Prothonotary

May 16, 1997

Vancouver, British Columbia

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

STYLE OF CAUSE:          CHIEF HARVEY BAPTISTE ET AL.

                     - and -

                     HER MAJESTY THE QUEEN

COURT NO.:              T-307-96

PLACE OF HEARING:          Edmonton, AB

DATE OF HEARING:          April 23, 1997

REASONS FOR ORDER OF JOHN A. HARGRAVE

dated May 16, 1997

APPEARANCES:

     Mr. Gerard Meagher, Q.C.                  for Plaintiffs

     Ms. Ursula Tauscher                      for Defendant

Mr. Patrick Hodgkinson

SOLICITORS OF RECORD:

     Walsh Wilkins                          for Plaintiffs

Calgary, AB

     George Thomson                          for Defendant

     Deputy Attorney General of Canada