Date: 20110323
Docket: T-2128-09
Citation: 2011
FC 361
Ottawa, Ontario, March 23,
2011
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
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WHITE BEAR FIRST NATIONS CHIEF AND
COUNCIL, on their own behalf and on behalf of all the members of the WHITE
BEAR FIRST NATIONS
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Applicant
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and
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THE MINISTER OF INDIAN AFFAIRS AND
NORTHERN DEVELOPMENT, on behalf of Her Majesty the Queen in Right of Canada
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Respondent
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and
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OCEAN MAN BAND CHIEF AND COUNCILLORS, on
their own behalf and on behalf of the members of the OCEAN MAN BAND OF
INDIANS
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Respondent
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REASONS FOR JUDGMENT AND
JUDGMENT
I. INTRODUCTION
[1]
The
matter under judicial review is the Minister of Indian and Northern Affairs
Canada’s (Minister) decision to withhold two-thirds of monies under dispute in
protracted litigation before this Court involving some of the parties to this
judicial review. The monies were transferred to a suspense account pending the
outcome of that litigation (the McArthur litigation).
II. BACKGROUND
[2]
The
McArthur litigation in the Federal Court involves the White Bear First
Nation (White Bear), the Ocean Man Band of Indians (Ocean Band), the Pheasant’s
Rump Nakota Band of Indians (Pheasant Rump) and the Minister. The claim relates
to the allegedly wrongful amalgamation of these three Bands, the beneficial
ownership of oil-rich lands and an accounting for and payment of past and
future profits and royalties from these lands.
[3]
The
McArthur litigation involves, amongst other matters, entitlement to some
$8 million of royalties held in White Bear’s account maintained by and with the
Minister.
[4]
The
Minister decided to preserve two-thirds of that amount ($5,333,334) (the Funds)
in a suspense account. The remaining one-third was available to White Bear.
White Bear wants all of the $8 million for itself in the McArthur
litigation.
[5]
The
problem raised in that action stems from a 1901 amalgamation of the three
Bands, the sale of the Ocean Man and Pheasant Rump’s reserve lands, the
purchase of the “Northern Boundary Lands” with the proceeds of the sale of
reserves, and the 1941 surrender of petroleum and natural gas rights. The
amalgamation of the three Bands was unwound in 1986. The division of assets
between the newly unamalgamated Bands is part of the McArthur
litigation.
[6]
In
the context of the McArthur litigation, Ocean Man requested the Crown to
preserve the past and future royalty proceeds from the Northern Boundary Lands
pending determination of entitlements in that litigation.
[7]
White
Bear was advised by the Minister on July 31, 2009 that he intended to place an
appropriate amount into an interest earning suspense account until the issue of
entitlement was determined. The Minister expressed concern for potential
liability on the part of the Crown and the Band for any payment of proceeds
arising from resource leased for the disputed Northern Boundary Lands. The
amount to be put into the account was two-thirds of $8 million which represented
interest and principal accrued in respect of royalties.
[8]
White
Bear was invited by the Minister to discuss the matter further. However, in the
absence of any response, the Funds were transferred from the White Bear capital
account to the suspense account.
[9]
Thereafter,
White Bear formally objected to the preservation of funds. White Bear was also
informed on November 19, 2009 that because of this transfer, there were no
funds available for a per capita distribution.
[10]
By
a letter, possibly signed November 9, 2009, the Minister invited the Chiefs of
the three Bands to discuss the matter further. White Bear’s response was to
commence this judicial review.
III. LEGAL
ANALYSIS
[11]
What
is at issue is the Minister’s decision, in the face of competing contentions
from the three Bands as to the right to the amount of $8 million, to place two-thirds
in a suspense account. This gave White Bear access to one-third of that amount
but no access to the Funds by either of the other two Bands.
A. Standard
of Review
[12]
The
first issue is whether the Minister had the authority to make the decision
under review. This is a true jurisdictional challenge and attracts the
correctness standard of review.
[13]
The
second issue is the merits of the Minister’s decision. This is subject to the
reasonableness standard of review (Ermineskin Tribe v Canada (Indian
Affairs and Northern Affairs), 2008 FC 741).
[14]
The
Applicants have tried to assert breach of a duty to consult. If there were
merit to this submission, the existence and content of the duty is a question
of law as is the question of whether the consultation was reasonable. These
issues are dealt with under a correctness standard of review (Haida Nation v
British
Columbia (Minister of Forests), 2004 SCC 73).
B. Duty
to Consult
[15]
Dealing
with this last issue first, the decision at issue is simply to deposit funds in
trust pending litigation. There is no suggestion or identification of an
aboriginal or treaty right which is said to be infringed.
[16]
Even
if there was such a duty arising in the context of a step in litigation similar
to a payment into Court, the duty was met in the Minister’s efforts to consult
all three Bands who had an interest. As held in Mikisew Cree First Nation v Canada (Minister of
Canadian Heritage), 2005 SCC 69, the duty to consult imposes a
reciprocal onus on the First Nation to also consult in good faith. White Bear
failed to identify the necessary aboriginal interest or to exhibit any
reciprocal consultation stance.
[17]
Any
such interest or claim to such duty is at the lower end of the spectrum of
interests deserving of consultation. The Minister owed any such duty to all
three Bands and his decision to transfer Funds to a suspense account is
temporary in nature and analogous to the preservation of trust referenced in Haida,
paragraphs 44 and 77. There was no duty to consult and if there was, it was
met.
C. Ministerial
Authority
[18]
The
starting point for consideration of the Minister’s authority is that the Funds
at issue are in dispute in the McArthur litigation. The Minister has
control over these Funds and took a step similar to payment into Court to
preserve the Funds. As a litigant, a party would usually have the capacity to
take such a step unilaterally.
[19]
The
Minister has a further concurrent fiduciary duty to all three Bands arising
from the fiduciary relationship with the Crown. The Minister also has
responsibilities under the Financial Administration Act and the Indian
Act in dealing with public and Indian monies.
[20]
Ermineskin
Indian Band and Nation v Canada, 2009 SCC 9, establishes that Indian-owned
funds must be dealt with in accordance with the Financial Administration Act
and the Indian Act. These statutes give the Minister power to deal with
those monies. However, it does not resolve the question of how such funds, in
dispute as between competing claimants, are to be handled.
[21]
Nevertheless,
the Minister as trustee has the power to act as necessary to carry out his
fiduciary obligations. This is a critical source of his authority to handle the
Funds, supported by his responsibilities under the Financial Administration
Act and his authority under the Indian Act.
[22]
Therefore,
the Minister had the power to make the transfer to the suspense account. The
next issue is whether he should have done so.
D. Reasonableness
of Decision
[23]
The
Applicant’s basic position is that the decision is unreasonable because it owns
the Funds and that the Minister had the duty to handle the money for the Band’s
“use and benefit”.
[24]
Given
the position in which the Minister found himself wherein each Band was claiming
some or all of the $8 million, it is difficult to see what other reasonable
course of action could be taken. If there is any criticism of the Minister, it
is that the whole amount should have been put in the suspense account. However,
to reach that conclusion, the Court would be substituting its view of the
appropriate course of action for that of the Minister’s. There was no
explanation for the Minister not seeking an order permitting him to pay the
funds into Court although the security for the Bands is the same as the funds
in either case are part of Consolidated Revenue Fund.
[25]
The
exercise of discretion to preserve two-thirds of the $8 million was based on a
balancing of the interests of the three Bands. It balanced the interest of the
Applicant, by ensuring that it received some of the disputed monies, with those
of the other Bands, by ensuring that the remaining two-thirds were preserved
for future resolution.
[26]
There
are several potential outcomes of the McArthur litigation ranging from
White Bear receiving 100% to receiving nothing. A one-third split is at least
as reasonable as most other formulas other than the two extremes of all or
nothing.
[27]
The
Minister’s decision was a reasonable effort to ensure even handed treatment of
the relevant parties. The outcome and the manner by which it occurred were clear,
and within a range of acceptable outcomes.
[28]
Therefore,
the Minister’s decision is reasonable and ought not to be disturbed.
IV. CONCLUSION
[29]
For
all these reasons, this judicial review is denied with costs in favour of both Respondents.
JUDGMENT
THIS COURT’S JUDGMENT
is that
the application for judicial review is denied with
costs in favour of both Respondents.
“Michael
L. Phelan”
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