Matthew v. Minister of National Revenue, [1997] 3 C.T.C. 2547, (sub nom. Matthew v. R.) 97 D.T.C. 1454

Rip T.C.J.:

1 Martha Matthew, a status Indian and at all relevant times an employee of the Department of Indian Affairs and Northern Development (“DIAND”), appeals from assessments of income tax for 1992 and 1993 on the basis that her income earned as an employee with DIAND in each year was personal property that was money appropriated by Parliament for the use and benefit of Indians or bands pursuant to paragraph 90(1)(a) of the Indian Act and is deemed to be situated on a reserve. The appellant says that since income with DIAND during 1992 and 1993 is personal property deemed to be situated on a reserve, the income is exempt from taxation pursuant to section 87 of the Indian Act.

2 Ms. Matthew was in the year in appeal — and is — a member of the North Thompson Indian Band (“Band”). She provided her services to DIAND both on and off reserves.[FN1: <p>Income earned as an employee of DIAND for days working on reserves was not included in the appellant's income for 1992 and is not subject to these appeals. The parties agree that the income earned for performing her DIAND duties on reserves for 58 days in 1993 should also be exempt from tax.</p>]

3 Up to March 1992 the appellant worked as an Alternative Funding Arrangement Implementation Officer. From March 1992 to mid-November 1992 she worked as a Regional Arrangement and Alternative Funding Specialist and from mid-November 1992 to the end of 1993 she was a Funding Service Officer in the Prince George District of DIAND. Her job responsibilities included providing information to First Nations regarding the Alternative Funding Program, preparing, negotiating, administering and assisting funding for Indian bands, Tribal Councils or First Nations[FN2: <p>All of the bands, Indians Councils or First Nations Groups are “Indians” or “bands” set out in section 90 of the<em>Indian Act</em>.</p>] in the British Columbia Region of DIAND, and, as a primary contact, advising and dealing with Indian bands, Tribal Councils or First Nations Groups on the range of federal funding arrangements or agreements concerning various programs and services provided by DIAND to such groups. Alternative Funding Arrangements and Comprehensive Funding Arrangements are agreements under which DIAND provides funds to First Nations for the delivery of programs and services for the use and benefit of Indians and bands.

4 People employed by DIAND to perform the same services as Ms. Matthew included both Indians and non-Indians.

5 Parliament appropriated moneys for fiscal years 1991-1992, 1992-1993 and 1993-1994 for use in the Indian and Inuit Affairs Programs under DIAND pursuant to various Appropriation Acts of Parliament and, in the appellant's view, these funds were used to pay her employment income from DIAND in 1992 and 1993.

6 Counsel for the appellant cautioned that the issue in these appeals is not concerned with situs of property as in Williams v. R., [1992] 1 S.C.R. 877, 92 D.T.C. 6320 (S.C.C.). Rather, counsel stated, the issue is whether the appellant's employment income from DIAND was “personal property that was ... moneys appropriated by Parliament for use and benefit of Indians or bands ...” within the meaning of subsection 90(1) of Indian Act.

7 Section 90 (1) of the Indian Act states that:

90 (1) For the purposes of sections 87 and 89, personal property that was

(a) purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for the use and benefit of Indians or bands, or

(b) given to Indians or to a band under a treaty or agreement between a band and Her Majesty,

shall be deemed always to be situated on a reserve.

90 (1) Pour l'application des articles 87 et 89, les biens meubles qui ont été:

a) soit achetés par Sa Majesté avec l'argent des Indiens ou des fonds votés par le Parlement à l'usage et au profit d'Indiens ou de bandes;

b) soit donnés aux Indiens ou à une bande en vertu d'un traité ou accord entre une bande et Sa Majesté,

sont toujours réputés situés sur une réserve.

8 Paragraph 81(1)(a) of the Income Tax Act exempts from income tax an amount that is declared to be exempt from income tax by any other enactment of Parliament. Subsection 87(1) of the Indian Act exempts from taxation

(b) the personal property of an Indian or band situated on a reserve

9 Subsection 87(2) of the Indian Act provides that no Indian is subject to taxation in respect of the ownership, occupation, possession or use of personal property situated on a reserve

...or is otherwise subject to taxation in respect of any such property.

10 The appellant says that if her income for 1992 and 1993 falls within the scope of “personal property” described in paragraph 90 (1)(a) of the Indian Act, the income, being personal property, would be deemed to be situated on a reserve.

11 I must determine whether the appellant's salary for DIAND is personal property contemplated by paragraph 90(1)(a). In Nowegijick v. R. (1983), 83 D.T.C. 5041 (S.C.C.), the Supreme Court of Canada held that wages were personal property exempt from taxation of an Indian if the personal property were situated on a reserve. In arriving at a decision I must consider the meaning of paragraph 90(1)(a) and, then, if I agree with appellant's counsel's interpretation, consider whether the appellant's salary was paid of moneys appropriated by Parliament for the use and benefit of Indians or bands.

12 Counsel for the appellant submitted that one must interpret paragraph 90(1)(a) of the Indian Act so that personal property includes two types of property, one that is purchased with Indian moneys, and the second which is in fact moneys that were appropriated by Parliament. According to the appellant's counsel the phrase “purchased by Her Majesty with” in paragraph (a) governs only “Indian moneys” and, therefore, one should read subsection 90(1) as if the phrase “personal property that was” were inserted immediately after “moneys or” in paragraph (a). Paragraph (a) would then read:

...purchased by Her Majesty with Indian moneys or personal property that was moneys appropriated by Parliament... (underlining added)

13 Appellant's counsel argued that one should not interpret the phrase “purchased by Her Majesty with” in paragraph 90(1)(a) as governing the whole of the remainder of the paragraph. In such an interpretation, one would read paragraph (a) as if the word “with” were inserted immediately after the words “moneys or” in that paragraph so that paragraph (a) would provide that:

...purchased by Her Majesty with Indian moneys or moneys with moneys appropriated by Parliament... (underlining added)

14 Counsel added that an absurdity, imprecision and ambiguity would result if paragraph 90(1)(a) of the Indian Act requires that all property be “purchased”. The phrase “Indian moneys” would be used twice and such an interpretation would lead to income taxation of a great deal of “Indian moneys” given to Indian bands, not under a treaty or agreement, but under obligations arising out of the Indian Act, the “special relationship” between the Crown and Aboriginal People or out of certain policies or objectives of the Crown which are directed for the benefit of Indians or bands. This cannot be the purpose and intent of the Indian Act. Counsel submitted that a great deal of Indian moneys would be taxable as it is located, but for paragraph 90(1)(a), off the reserve. Courts, counsel declared, should utilize a construction of interpreting a statute that will avoid the consequences of absurdity and anomaly: Driedger on the Construction of Statute's, 2nd edition, pp. 33-37.

15 Counsel for the appellant concluded that the more acceptable interpretation of paragraph 90(1)(a) of the Indian Act would be that the term personal property includes “moneys appropriated by Parliament...” He proposed that in the alternative, both interpretations are grammatically sound. Counsel referred to the following comment of Dickson J. (as he then was) in Nowegijick, supra, at p. 5044 in support of this proposition:

...treaties and statutes relating to Indians should be liberally construed and doubtful expressions resolved in favour of the Indian. If the statute contains language which can be reasonably be construed to confer tax exemption that construction, in my view, is to be favoured over a more technical construction which might be available to deny exemption.

16 Counsel therefore concluded than any ambiguity in paragraph 90(1)(a) should be interpreted as providing for two alternative tax exemptions; an Indian should be permitted to bring herself within an exemption under either of the two interpretations of paragraph 90(1)(a) for an exemption from income tax.

17 In the appellant's view, the combined effect of the broad interpretation of paragraph 90(1)(a) of the Indian Act proposed by her counsel and subsections 87(1) and (2) of that statute would provide an exemption of tax in respect of personal property that was moneys appropriated by Parliament for the use and benefit of Indians or bands as well as in respect of personal property that was purchased by the Crown with moneys so appropriated by Parliament.

18 Appellant's counsel submitted that the appellant's income from DIAND constitutes “personal property that was moneys appropriated by Parliament for the use and benefit of Indians...”, and such income is deemed by paragraph 90(1)(a) to be situated on a reserve. Subsection 87(2) of the Indian Act exempts the appellant's employment income from taxation. In addition, the appellant's employment's contract with DIAND and her services to DIAND constitute “personal property purchased by Her Majesty with moneys appropriated by Parliament” for the use and benefit of Indians: the contract and services are also deemed by paragraph 90(1)(a) to be situated on a reserve. Again, subsection 87(2) exempts the appellant from tax in respect of her contract for services with DIAND.

19 I do not agree with the appellant's interpretation of paragraph 90(1)(a) of the Indian Act. The meaning is clear and “personal property” refers to property that was purchased by the Crown with two sources of funds, Indian moneys and moneys appropriated by Parliament. Paragraph 90(1)(a) does not contemplate two types of personal property, one which is purchased and one which is money itself.

20 As early as 1978 the Federal Court rejected the appellant's interpretation of paragraph 90(1)(a): R. v. National Indian Brotherhood (1978), 78 D.T.C. 6488 (Fed. T.D.). At page 6490, Thurlow A.C.J. wrote:

In my opinion, it is not possible to regard the salaries here in question as “personal property that was purchased by Her Majesty” within the meaning of paragraph 90(1)(a) and I am unable to accept counsel's submission that the paragraph should be interpreted as if it read “personal property that was...moneys appropriated by Parliament” as I think that grammatically the word “purchased by Her Majesty with” govern the whole of the remainder of the paragraph. The provision therefore cannot apply.

21 However appellant's counsel submitted that Thurlow A.C.J.'s interpretation of paragraph 90(1)(a) is inconsistent with the interpretation laid down by the Supreme Court in Nowegijick, supra. The National Indian Brotherhood, supra was decided before Nowegijick and, counsel argued, should no longer be followed. In addition, counsel stated, the Federal Court's interpretation did not consider the definition of “Indian moneys” and the resulting absurdity in paragraph 90(1)(a).

22 Subsection 2(1) of the Indian Act states the term “Indian moneys”:

means all moneys collected, received or held by Her Majesty for the use and benefit of Indians or bands.

23 Paragraph 90(1)(a) does not repeat the term “Indian moneys” after the word “or” as claimed by appellant's counsel. The phrase “moneys appropriated by Parliament for the use and benefit of Indians...” is not a synonym for “Indian moneys”. The words “moneys appropriated...” are referred to in the provision to indicate that Parliament intended these words to have referred to amounts that are not “Indian moneys”; the words are referred to distinctly. Also, it does not follow that moneys appropriated by Parliament for use in programs administered by government agencies, even for the use and benefit of Indians, are necessarily “Indian moneys”. There is no practical purpose for the draftsmen to refer to the term “Indian moneys” and words “moneys appropriated...” in the same paragraph if Parliament had intended that they be used interchangeably.

24 There is a presumption against tautology. Professor Sullivan writes in Driedger, supra, 3rd edition, at p. 159 that:

It is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain. Every word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose.

25 Parliament refers to only two categories of personal property in subsection 90(1): First, personal property that is purchased. This property is described in paragraph (a) and that is purchased with either Indian moneys or moneys appropriated by Parliament. The second category of personal property is found in paragraph (b) and, is property that is given to Indians or to bands.

26 There is no doubt that the legislator could have expressed himself more clearly in paragraph 90(1)(b) of the Indian Act, for example, by using the word “with” before both “Indian moneys” (which he did) and “moneys appropriated...” (which he did not). Or, he could have written “purchased ... with Indian moneys or purchased with moneys appropriated...” However, the fact the provision is not as clear as it might be does not make it ambiguous.

27 Paragraph 90(1)(a) is not ambiguous, as is confirmed on a review of the punctuation of paragraph 90(1)(a) and on reading the French version of the provision.

28 There is a comma before the word “or” at the end of paragraph 90(1)(a); there is no comma before the word “or” that appears earlier in the paragraph. The presence or absence of punctuation, while not determinative in itself, can be an important interpretative aid, as stated by Professor Sullivan in Driedger, supra, (3rd edition) at page 276:

In some cases, the presence or absence of a particular mark of punctuation can be an important determinant of meaning... [It] is an integral part of the legislative text, to be taken into account in every case... Punctuation is most often invoked in cases of syntactic ambiguity, where the presence or absence of a comma or semi-colon favours one construction over the other.

29 The presence of a comma “opens the door to a disjunctive interpretation”: Canada v. Manitoba (1985), 85 D.T.C. 5588 (Fed. T.D.)(per Joyal J.).[FN3: <p>Note that although it was stated that the presence of a comma in the French text of paragraph 44(2)(<em>c</em>) of the<em>Excise Tax Act</em>which does not appear in the English text might be taken as an indication that a disjunctive effect was intended, it was decided that a conjunctive interpretation should prevail on the basis that the French text was meant to be faithful to the poorly drafted English text.</p>] The placement of a comma before the word “or” at the end of paragraph 90(1)(a) is clearly intended to create a disjunction between paragraphs 90(1)(a) and 90(1)(b). The corollary is that lack of a comma earlier in paragraph 90(1)(a) suggests a relation between those words,[FN4: <p>For example, in<em>Regina Shoppers Mall Ltd. v. R.</em>(1991), 91 D.T.C. 5101 (Fed. C.A.), MacGuigan J.A. stated at page 5104 in the context of subsection 152(8) of the<em>Income Tax Act</em>that:<blockquote><p>There is no comma between “valid and binding” and “notwithstanding any error, defect or omission therein”, which leads me to the conclusion that the “notwithstanding” phrase restricts the meaning of the preceeding words to the case (and in despite) of any error, defect or omission. In other words, the first clause of 152(8) is a curative provision allowing for validity despite errors, defects or omissions.</p></blockquote></p>] such that “purchased by Her Majesty” applies to the entire contents of that paragraph, just as “given to” applies to the entire contents of paragraph 90(1)(b). If Parliament had not intended for “purchased by” or “given to” to apply to the whole of their respective paragraphs, this intention could have been more clearly conveyed through the use of separate paragraphs. Also there is nothing in the French text of paragraph 90(1)(a), such as an inconsistent use of language or punctuation, to cast doubt on the interpretation of that paragraph.

30 In cases where the text of a provision in one language is ambiguous, the courts have often turned to the corresponding text in the other language for clarification. As Professor Sullivan writes in Driedger, supra, (3rd edition) at page 222:

Although the two versions of bilingual legislation are rarely identical, for practical purposes they often say much the same thing...Generally, however, the courts derive some advantage from a correspondence of meaning between the two language versions. In such cases, the “other” version is invoked as confirmation of the interpretation derived by the court from reading its own language version.

31 In the case at bar, any difference between the English and French texts of paragraph 90(1)(a), whether in terms of punctuation or language, might be of assistance in determining the correct interpretation of this paragraph.[FN5: <p>It should be noted, however, that this in itself does not necessarily suffice to conclude that the English text means anything other than its ordinary meaning. See<em>The Queen in Right of Canada v. The Government of Manitoba, supra</em>, at page 5592.</p>] For example, had there been a comma prior to the words “ou des fonds votés”, it might have served to confirm the appellant's interpretation; rather, there is only a minor difference in punctuation, as the French text contains a semi-colon at the end of the paragraph rather than a comma.

32 There is, however, a significant difference in the language of the two texts, one which does not support the appellant's view. At first glance, the language of the French version is similarly imprecise, as it does not state “achetés...avec l'argent des Indiens ou avec des fonds votés...” or “achetés...avec l'argent des Indiens or achetés avec des fonds votés...” Nonetheless, the use of the word “soit” is significant, since it clarifies the French text and since it has no counterpart in the English text. Although both “soit” and “ou” are disjunctive particles used to express an alternative, it was a deliberate choice by the legislator to use these distinct terms to indicate a disjunction.

33 The word “soit” is an adverb which modifies the word “achetés”, just as it modifies the word “donnés” in paragraph 90(1)(b). The appearance of this adverb at the beginning of the paragraph clarifies its meaning, signalling that the verb “achetés” applies to either alternative. Thus, the verb “achetés”, or “purchased”, applies to the whole of paragraph 90(1)(a).

34 In my view, therefore, Thurlow A.C.J.'s interpretation of paragraph 90(1)(a) of the Indian Act is not inconsistent with the principles laid down in Nowegijick. A careful reading of paragraph 90(1)(a) suggests no ambiguity. One must have regard to substance and the plain and ordinary meaning of the language used, rather than the forensic dialectas: Nowegijick, supra, p. 5046. Paragraph 90(1)(a) does not contain language that, combined with section 87, can reasonably be construed to confer a tax exemption to the appellant on the facts before me.

35 In my view, the income earned off the reserve by Ms. Matthew from her employment with DIAND is not personal property contemplated by paragraph 90(1)(a) of the Indian Act to be deemed always to be situated on a reserve. The cases of The NationalIndian Brotherhood, supra, Horn v. Minister of National Revenue.,(1989), 89 D.T.C. 147 (T.C.C.), and Boissoneau v. Minister of National Revenue (IT)(T.C.C.) apply to the appeals at bar.

36 In the circumstances I need not determine whether the appellant's income was paid to her out of moneys appropriated by Parliament for the use and benefit of Indians or bands: the word “purchase” is the prerequisite to invoking paragraph 90(1)(a), and there has been no such “purchase”. It is unnecessary to address the appellant's arguments regarding appropriations.[FN6: <p>At time of trial the Federal Court of Appeal had reserved judgment in the appeal of<em>Clarke v. Minister of National Revenue</em>[now reported(1997), 212 N.R. 342 (Fed. C.A.)] from a judgment of the Federal Court Trial Division (<em>Clarke v. Minister of National Revenue</em>(1994), 94 D.T.C. 6658 (Fed. T.D.). Counsel requested that they be given ten days from the date of judgment of the Court of Appeal to make written representations. Respondent's counsel had understood that section 90 of the<em>Act</em>had been pleaded and argued before the Court of Appeal. She subsequently informed me that section 90 was not referred to in the pleading in the Court of Appeal but was “raised only in oral argument and not at great length”. The reasons of Linden A.J. in<em>Folster</em>are with respect only to section 87 of the<em>Act</em>.</p><p>In the meantime counsel for both parties had submitted written arguments. I have reviewed their submissions. The reasons of the Federal Court of Appeal in<em>Folster</em>do not assist either party.</p>]

37 The appeal for the 1992 taxation year will be dismissed. As agreed between the parties, the appeal for the 1993 taxation year will be allowed and referred back to the Minister of National Revenue to reassess Ms. Matthew on the basis that the income earned by her during the 58 days she worked on reserves during the year are exempt from tax.

38 The Respondent shall be entitled to her costs.