Date: 20110324
Docket: T-677-10
Citation: 2011 FC 364
Ottawa, Ontario, March 24, 2011
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
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KEHEWIN CREE NATION AND
THE CHIEF AND TRIBAL COUNCIL OF
KEHEWIN CREE NATION
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Applicants
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and
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HER MAJESTY THE QUEEN IN RIGHT OF CANADA, THE ATTORNEY GENERAL OF CANADA, THE
MINISTER OF THE DEPARTMENT OF INDIAN AND NORTHERN AFFAIRS CANADA
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Respondents
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REASONS FOR JUDGMENT AND
JUDGMENT
I. INTRODUCTION
[1]
The
Applicants seek judicial review of the Minister of Indian and Northern Affairs’
(Minister) decision to appoint a third party manager due to the default by
Kehewin Cree Nation (Band) under its Comprehensive Funding Arrangement (CFA).
The
Application for Judicial Review was approximately six days late. There was no
serious opposition to an extension of time, nor should there have been. An
order was issued from the bench extending the time to bring this judicial
review.
II. BACKGROUND
[2]
Parliament
annually appropriates public funds for the purposes of the provision of a
variety of programs and services to First Nations including education services,
supplies, operations and maintenance of community infrastructures (such as
water and sewage), administration of welfare benefits and administration of
band offices.
[3]
These
funds from the Consolidated Review Fund are provided to the Minister as a
matter of policy pursuant to various policies and directions. These funds may
be provided to Indian bands by the Minister for the delivery of services and
programs in accordance with separate comprehensive funding arrangements entered
into between the respective band and the Minister.
[4]
The
Band had a CFA with the Minister under which the Minister provided over $7
million on condition that the Band provided certain services, completed capital
projects, complied with delivery reporting and met accountability requirements.
[5]
The
CFA provided that failure to meet the CFA terms and conditions, the existence
of an adverse audit opinion, the occurrence of operating deficits of over 8%
and the compromising of the health, safety or welfare of Band
members/recipients were all events of default.
[6]
In
the event of default, the Minister was required to meet or communicate with the
Band to review the situation.
[7]
Notwithstanding
these requirements on the Minister, the Minister could, amongst other remedies,
appoint, upon providing notice to the Band Council, a Third Party Manager.
[8]
The
Minister alleges that during the currency of the CFA, the Applicants had
breached the CFA by:
·
failing
to provide required reports and financial statements;
·
failing
to provide a deficit recovery plan;
·
failing
to use monies for the intended purpose (for example, the failure to repair a
water treatment plant);
·
undertaking
renovation projects which caused Central Mortgage and Housing Corporation to
invoke a guarantee of payment made by the Minister;
·
accumulating
a cumulative operating deficit of 29.25%;
·
failing
to pay key suppliers and meet material obligations (for example, gas and power
suppliers, employee pension funds, fire and protection costs, employee and
teachers’ salaries);
·
being
unable to contract for sewage removal services.
[9]
Throughout
the term of the CFA meetings were held and correspondence exchanged between the
Minister and the Applicants about the Applicants’ defaults and impending
Ministerial intervention due to the continuing default.
[10]
The
Minister’s officials decided on March 3, 2010 not to enter into a CFA for the
2010-2011 fiscal year because of continuing unremedied defaults. The next day
the Applicants were so informed and advised that an alternate service provider
would provide the necessary programs and services. The Applicants were also
informed that the Minister was “exploring options”.
[11]
By
March 9, 2010, the Minister had appointed the AAC Aboriginal Corporation (AAC)
as the Third Party Manager but did not inform the Applicants of the appointment
of the Third Party Manager until a meeting with the Applicants on March 19,
2010; the appointment was further confirmed in a letter to the Applicants on
March 24, 2010.
[12]
The
parties debated whether the time to judicially review the decision, to appoint
a third party manager for the 2010-2011 fiscal year, commenced March 19, 2010
when the appointment was announced or April 1, 2010 when the appointment became
effective.
[13]
The
real issue in this litigation is a) whether the Minister had an obligation to
give advance notice/consult, and if so, was the obligation met and b) was the
decision reasonable.
[14]
Applicants’
counsel quite candidly and appropriately said that it was his burden to
convince the Court that the Court’s decision in Tobique Indian Band v Canada,
2010 FC 67, was either in error or distinguishable or ought not to be followed.
For the brief
reasons to follow, the Applicants were unable to overcome Justice Beaudry’s
decision in Tobique, above.
III. LEGAL
ANALYSIS
A. Standard
of Review
[15]
The
issue of notice/duty to consult is a legal one to which the correctness
standard applies. In Tobique, above, Justice Beaudry, in dealing with
whether the procedural protection of adequate notice had been breached,
concluded that correctness is the standard of review (I concur):
66 Although,
neither party has made submissions on the standard of review on this issue, I
wish to note that this aspect of the decision must be held to a standard of
correctness. The Applicant alleges that the Respondent breached procedural
fairness by failing to give advance notice of the decision. This Court has
repeatedly found that the standard or review for breaches of procedural
fairness is correctness and that will be the standard applicable to this issue
(Nunavut Wildlife Management Board v. Canada (Minister of Fisheries and Oceans),
2009 FC 16, [2009] 1 C.N.L.R. 256 at paragraph 61).
[16]
On
the issue of the decision to appoint a third party manager, Justice Beaudry
adopted the reasonableness standard following Dawson J’s (as she then was)
rationale in Ermineskin Tribe v Canada (Indian Affairs and Northern Affairs),
2008 FC 741. Justice Dawson’s decision also recognized that deference is to be
accorded the Minister’s decision.
56 Both
parties submit that the decision to implement third party management is held to
a standard of reasonableness. I agree with those submissions. In Pikangikum First Nation, it was held that the appropriate
standard of review was patent unreasonableness. In Dunsmuir,
the Supreme Court stated that existing jurisprudence can offer guidance in
establishing the standard of review (at paragraphs 57 and 62). Also, in Ermineskin Tribe, Justice Dawson considered the factors
set out in Dunsmuir and arrived at the conclusion
that reasonableness is the appropriate standard (at paragraphs 42 and 43). The
impugned decision in Ermineskin Tribe was that a
Band had defaulted under the funding agreement and I find that those same
factors would also apply here and point to reasonableness. Accordingly, the
Court will consider if the impugned decision here "falls within a range of
possible, acceptable outcomes which are defensible in respect of the facts and
law" (Dunsmuir at paragraph 47).
Tobique, above
[17]
Justice
Beaudry summed up the situation in Tobique, above, which is equally
applicable to this current case:
67 The
Applicant has submitted that there is a duty of advance notice in this case
where the DIAND decided to appoint a third party manager to the Tobique First
Nation. In making that claim, the Applicant relied entirely on the decision of
this Court in Pikangikum First Nation. However, I
note that the decision in that case was factually different - it was actually a
decision by DIAND requiring the First Nation to enter into a co-management
agreement failing which funding would be withheld and programs would be
delivered through an agent.
[18]
Therefore,
the standard of review on the Minister’s decision is reasonableness with
deference owed to the Minister.
B. Notice/Duty
to Consult
[19]
The
Applicants have argued that they were entitled to advance notice before a third
party manager was appointed. Whether the Court approaches the issue as one of
public law, applying the factors in Baker v Canada, [1999] 2
SCR 817, or as one of contract, the result is the same – no advance notice is
required.
[20]
As
a matter of public law, the policy under which funds were authorized did not
contemplate advance notice. Indeed the current policy, unlike that in the Tobique
case, does not set out procedural steps but merely requires “notification that
the decision has been made”. No issue of legitimate expectation of notice
arises from the policy or from the particular facts of this case.
[21]
The
general purpose of advance notice is to buttress the “right to be heard”. There
is no such right under Treasury Board policies. This is not a case where a
party has a right to make representations to influence a decision. The purpose
of notice in the present case is to convey information that a manager has
assumed certain responsibilities.
[22]
From
a contractual perspective, the notice provision of the CFA obligates the
Minister to inform a band of the decision to appoint a third party manager, not
to obtain the band’s position on such an appointment.
[23]
Closely
related to the issue of advance notice is the Applicants’ submission that there
was a duty to consult in advance. It was their position that there is a free
standing, overarching, duty to consult any time a band’s interests are
affected.
[24]
Reliance
on the Supreme Court decision in Beckman v Little Salmon/Carmacks First
Nation, 2010 SCC 53, is misplaced as it is based on treaty rights; no such
rights are involved in the present litigation.
[25]
Regard
must be had to the rights being affected before one concludes that there is a
duty to consult. As held in Elders Council of Mitchikanibikok Inik v Canada (Minister of
Indian Affairs and Northern Development), 2009 FC 374, there is
no link between the appointment of a third party manager and native
self-government. Justice Harrington summarized the situation, which is equally
applicable here.
40 … The
consequence of appointing the Third Party Manager was to temporarily remove
administrative responsibilities from the Band Council with respect to the
delivery of programs and services to the community. The aim of the appointment
was to protect public funds and to ensure that essential programs and services
were not disrupted, as disrupted they were in years past. Assets and
responsibilities falling outside the funding arrangements are not affected by
the nomination of a Third Party Manager and remain under the control of the
Band.
[26]
Even
if there was a duty to consult, it would be at the very low end of the
consultation spectrum because the strength of the claim to Aboriginal rights
asserted is weak and the potential adverse effect is temporary (Haida Nation
v British
Columbia (Minister of Forests), 2004 SCC 73 at para.
39).
[27]
Given
the nature of any such duty, it was met by the Minister. There is no issue that
the Band was not in default of the CFA and that programs and services were not
being provided, yet the Minister’s staff did meet with the Band officials, and
warned of the problems forthcoming. Other than giving the Applicants more time,
it is difficult to find what further utility would be served by consultation.
C. Reasonableness
of Decision
[28]
As
indicated above, there was no issue that the Board was in default of the CFA. The
nature of those defaults are described in paragraph 8. The Minister had to
remedy the default to CMHC and programs needed to be implemented and payments
had to be made. While the problems may not be attributed to the current Chief
and he may well be working hard to remedy the situation, it was reasonable for
the Minister to act in the way he did.
[29]
The
Minister owes duties under the CFA and to natives generally but he also owes a
duty to the public and in respect of public funds. The Minister’s decision is a
reasonable balancing of the various duties to which he is subject.
[30]
There
was nothing unreasonable in the Minister’s actions. What was done was
reasonably open to the Minister. It is not for the Court to “second guess” the
Minister’s reasonable conduct.
IV. CONCLUSION
[31]
Therefore,
this judicial review will be dismissed. Given the position of the Band, an
award of costs in favour of the Minister would be a fruitless gesture. No costs
will be awarded.
JUDGMENT
THIS COURT’S JUDGMENT
is that
the application for judicial review is dismissed
without costs.
“Michael
L. Phelan”
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