Ottawa, Ontario, September 23, 2008
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
ERMINESKIN INDIAN BAND AND NATION
and
REASONS FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1] This judicial review concerns the power of the Minister of Indian Affairs and Northern Development (Minister) to withhold payment of funds payable under the Pigeon Lake Split (Split) on the basis that the Minister required further substantiation of the purposes for which the funds would be used.
[2] This proceeding has been complicated by continuing changes in circumstances where events have overtaken some of the factual background since the judicial review was first filed. What ultimately remained at issue was approximately $2.1 million withheld pending receipt of further information from the Ermineskin Band and Nation (Ermineskin Band).
[3] The Ermineskin Band has sought mandamus to compel the Minister to pay out, forthwith, the remaining amount of $2.1 million.
II. FACTS
[4] The Ermineskin Band is a nation of aboriginal peoples who reside in central Alberta and are parties to Treaty No. 6.
[5] In 1896 the Pigeon Lake Reserve (located south-west of Edmonton) was established, pursuant to Treaty No. 6, for four Indian Bands - the Sampson, Ermineskin, Bull and Montana Bands (Bands).
[6] Oil and gas reserves were discovered under the surface of the Pigeon Lake Reserve and, pursuant to the scheme under the Indian Act, the Ermineskin Band and the three other named bands surrendered their interests in the mineral and mining rights to the Crown so that these lands could be leased for the respective Bands’ benefit. The surrenders were executed in 1946 and, within a few years, commercial quantities of oil and gas were explored.
[7] Beginning in 1952, the Crown prepared and executed leases with oil and gas companies that would yield royalties for the four Bands. At all relevant times, the oil and gas resources were and are beneficially owned by the Bands. The royalty moneys were and are paid to and managed by the Crown on each Band’s behalf.
[8] In accordance with s. 62 of the Indian Act, all Indian moneys are either categorized as “capital moneys” (derived from the sale of surrendered lands or the sale of capital assets of a first nation) or “revenue moneys” (all Indian moneys which are not capital moneys derived from a variety of sources including interest earned on capital and revenue moneys). The two categories are managed differently and must be accounted for separately. The Crown maintains separate capital accounts and revenue accounts for Indian moneys held in the Consolidated Revenue Fund (CRF).
[9] There are separate capital accounts and revenue accounts for each of the four Bands as well as for the Pigeon Lake Reserve as a whole. These latter accounts are held for, and periodically allocated among, the Bands according to their respective populations – this is known as the Pigeon Lake Split.
[10] The management of capital moneys which include the royalties derived from the Pigeon Lake Reserve are governed by s. 64 of the Indian Act. These moneys are credited to the Pigeon Lake Capital Account and are then allocated periodically to the capital accounts of the four Bands according to the Split. Currently, the Ermineskin Band’s share of the Split, based upon population, is 27%.
[11] Moneys held in the capital accounts can be expended pursuant to s. 64 of the Indian Act. Section 64 (see attached Annex A) outlines a number of specific types of expenditures which, with the consent of the Indian band, the Minister may authorize to be paid. The provision has a further catch-all provision in s. 64(1)(k):
|
64. (1) With the consent of the council of a band, the Minister may authorize and direct the expenditure of capital moneys of the band
…
(k) for any other purpose that in the opinion of the Minister is for the benefit of the band. |
64. (1) Avec le consentement du conseil d’une bande, le ministre peut autoriser et prescrire la dépense de sommes d’argent au compte en capital de la bande :
…
k) pour toute autre fin qui, d’après le ministre, est à l’avantage de la bande. |
[12] While the governance of the Ermineskin Band’s revenue funds were in issue, the principal issue in this proceeding concerns the capital moneys of the Split. In 1964 the Canadian government passed Orders-in-Council under s. 69(1) of the Indian Act authorizing the Ermineskin Band to manage its own revenue moneys. It has done so since then to the present time. There is a procedure in place by which the revenue moneys are turned over to the Band Council upon conditions. The legality of those conditions were in issue in this proceeding; however, all of the revenue moneys in issue have been paid out. As such, the principal issue in this proceeding relates to the capital moneys of the Split.
[13] There are two critical steps with respect to the use of the moneys related to the Split. As Justice MacKay outlined in Louis Bull Band v. Her Majesty the Queen (3 September 1999), Ottawa T-2953-93 (F.C.T.D.), firstly the Crown must calculate the amount of the Split and the respective shares and secondly pay those amounts into the capital accounts of the respective Bands.
[14] The other procedure which is of importance is that in the normal course in respect of expenditures under s. 64(1)(k) of the Indian Act, any proposal for expenditure of capital moneys is usually initiated by a Band Council, submitted as a Band Council Resolution (BCR) to the Minister containing the particulars of the proposal. That request is considered by the Minister and if approved, the moneys are released to the Ermineskin Band or as the Ermineskin Band directs.
[15] In 2007 the Ermineskin Band Council enacted two BCRs to request the transfer of moneys in the amounts of $23,262,232.76 and $7,700,000.00 respectively to fund the Ermineskin Band’s 2007/2008 operating budget. Of these amounts, approximately $13,287,000.00 was withheld because of delays in submitting an auditor’s report. Of that amount withheld, approximately $5,313,000 was in respect of the capital account.
[16] This judicial review was commenced in September 2007 and sought “an order in the nature of mandamus directing the Minister of Indian Affairs and Northern Development to pay out the Revenue Fund including the Pigeon Lake Split on a per capita basis pursuant to the Federal Courts Act, sections 18.1 and 44, and the Federal Courts Rules, Rules 358-367, Indian Act, section 69 and the Indian Band Revenue Moneys Order, S.O.R./90-297 …”.
[17] The use of the term “Revenue Fund” was the source of no end of confusion.
[18] In the grounds for relief, the Plaintiff submitted, inter alia:
· that the Pigeon Lake Indian Reserve No. 138A was set aside on July 8, 1896 for the Indians of the Hobbema Agency;
· that Ermineskin are part of the Indians of the Hobbema Agency;
· that the Crown has distributed revenues from the Pigeon Lake Indian Reserve No. 138A on a per capita basis to, inter alia, the Ermineskin Cree Nation every year since 1954 generally in July or August of each year;
· that these oil and gas Revenues from the Pigeon Lake Indian Reserve No. 138A and the interest earned on the capital funds held by the Crown in trust for Ermineskin are held in the Revenue Fund which is held by Ermineskin pursuant to section 69 of the Indian Act, S.O.R./90-297;
· that Ermineskin uses the Revenue Fund to finance its governance of the Ermineskin Band;
· that Ermineskin has demanded on numerous occasions including September 24, 2007, that the Minister of Indian Affairs and Northern Development pay the Pigeon Lake Split and the Revenue Funds to Ermineskin and the Minister has not done so and has refused to do so.
[19] As referred to in paragraph 15 of these Reasons, a significant amount of money was withheld from transfer to the Ermineskin Band because the Ermineskin Band had not met a condition imposed by the Minister that a proper auditor’s report be submitted to the department. Over the course of the litigation, the Ermineskin Band ultimately submitted the audit report which resulted in the release of the bulk of the moneys which had initiated these proceedings.
[20] Of the $5,313,000 withheld in respect of capital moneys, approximately $4.7 million was attributed to the Split. The Minister, on March 26, 2008, released $2.6 million approximately 200 days later than what the Ermineskin Band claim is the normal course of distribution in July or August of each year. In addition to late payment, $2.1 million remains outstanding pending satisfaction of the Minister’s information requirements.
[21] In the Minister’s letter of March 26, 2008, releasing the $2.6 million, the Department noted as follows:
The Department still awaits information to support the following expenditures relating to the Property Management program:
Renovations $869,100
Fire Damaged Homes $560,000
New Homes – 0405 Shortfall $371,000
New Homes – 4 $258,308
Total $2,058,408
There is a further $100,000 in dispute in respect of a camp which was under provincial jurisdiction. These amounts constitute the approximate $2,100,000 held by the Minister and currently in dispute under this litigation.
[22] At the hearing of this matter, the Ermineskin Band placed considerable emphasis on the fact that the Split had traditionally been paid in the summer of each year; that the Ermineskin Band was in control of its monetary affairs; that the Minister has a public duty to pay these moneys, at the very least as a trustee of these moneys. In addition to the fact that the obligations in respect of the Split are pursuant to treaty obligations, the Ermineskin Band further claims that the Minister is estopped from altering the timing of payment of these moneys.
[23] The Minister had a number of preliminary objections to the nature of this litigation, in part because of the confusing circumstances with respect to what was at issue. As stated earlier, some of that confusion related to the term “revenue fund” used in the Notice of Motion. The Minister understood “revenue fund” to equate to “revenue account”. It was the Minister’s position that all amounts under the “revenue account” had been paid out. Therefore, it was the Minister’s position that this litigation was largely moot, both because the amounts had been paid out of the revenue account and because the impediment to previous payments, e.g. the audit, had been satisfied.
[24] The Court has some sympathy with the Minister’s position – the facts and positions at issue were often opaque. However, there was a genuine dispute regarding the $2.1 million withheld. The circumstances of the withholding were entirely within the knowledge and control of the Minister. I therefore reject the submission that it would be unfair to the Minister to consider the merits of the withholding of the remaining amounts.
[25] The parties have had this case under case management. They have also been afforded the opportunity to clarify positions, and to amend and update materials and submissions.
[26] The Court is not prepared to address the issues of the demand for an audit, that matter has been complied with and therefore is not a live issue. The only remaining issue for the Court to address is whether the Minister is empowered to withhold the capital moneys on the grounds of the failure to comply with the department’s information requests.
[27] The Court notes that the requirement for an audit is contained in s. 8 of the Indian Bands Revenue Moneys Regulations, C.R.C., c. 953, enacted pursuant to s. 69(2) of the Indian Act. It would not be helpful to conclude on the consequences of failure to provide an audit report or providing an audit report at a later date than required as such a consideration may turn largely on the facts of a particular circumstance. It is an issue best left for another day.
III. ANALYSIS
[28] The issue before this Court is whether the Minister has the discretion to withhold release of portions of the Split, and if so, has that discretion been exercised properly.
[29] As the issue before the Court engages the Minister’s actions, it is necessary to consider the standard of review. I adopt Justice Dawson’s rationale in Ermineskin Tribe v. Canada (Indian Affairs and Northern Affairs), 2008 FC 741. While Justice Dawson’s decision related to Ministerial discretion to administer a publicly-funded program, and in this present proceeding the Minister’s discretion relates to the use of funds for homes (s. 64(1)(j)) and for other purposes (s. 64(1)(k)), I see no material difference in respect of either the power or the scope of the discretion to be exercised. For the same reasons as in the earlier decision, the Minister’s actions are subject to a standard of reasonableness.
[30] The starting point of this case is that the Ermineskin Band is seeking mandamus. The standard of review only becomes relevant to the discretionary aspect of the principles governing mandamus.
[31] On the issue of mandamus, the Court of Appeal in Apotex v. Canada (A.G.), [1994] 1 F.C. 742 (F.C.A.), held that the principles applicable to mandamus are:
1. There must be a public duty to act.
2. The duty must be owed to the applicant.
3. There is a clear right to performance of the duty, in particular:
(a) the applicant has satisfied all conditions precedent giving rise to the duty;
(b) there is (i) a prior demand for performance of the duty; (ii) a reasonable time to comply with the demand unless refused outright; and (iii) a subsequent refusal which can either be expressed or implied, e.g. unreasonable delay;
4. Where the duty sought to be enforced is discretionary, the following rules apply:
(a) in exercising a discretion, the decision-maker must not act in a manner which can be characterized as “unfair”, “oppressive” or demonstrate “flagrant impropriety” or “bad faith”;
(b) mandamus is unavailable if the decision-maker’s discretion is characterized as being “unqualified”, “absolute”, “permissive” or “unfettered”;
(c) in the exercise of a “fettered” discretion, the decision-maker must act upon “relevant”, as opposed to “irrelevant”, considerations;
(d) mandamus is unavailable to compel the exercise of a “fettered discretion” in a particular way; and
(e) mandamus is only available when the decision-maker’s discretion is “spent”; i.e. the applicant has a vested right to the performance of the duty.
(emphasis added by Court)
[32] The Federal Court of Appeal in Ermineskin Indian Band and Nation v. Canada, [2007] 3 F.C.R. 245 (F.C.A.), has set out the statutory scheme for the management of royalties received by the Crown commencing at paragraph 63 of the judgment. The Court notes the Minister’s obligation is to ensure that moneys released (in this instance from the capital account) are expended on behalf of the Ermineskin Band and in accordance with the Indian Act.
[33] The Ermineskin Band claims that moneys from the Split are treated differently than capital and revenue account moneys. On the evidence in this case, I am not satisfied that the Ermineskin Band has made that case. Of equal importance is the fact that the Indian Act does not make such a distinction – moneys are accounted for either to the revenue or capital accounts. The evidence is that the Ermineskin Band’s Split moneys are credited to the capital account.
[34] For the Ermineskin Band to establish a basis for mandamus, it must meet the conditions in respect of the exercise of discretion. Given the obligations of the Minister to ensure that moneys are properly expended on behalf of the Ermineskin Band and in accordance with the Indian Act, there is nothing unfair, oppressive or in bad faith in requiring support for the proposed expenditures. The Ermineskin Band has not shown that anything demanded is unreasonable nor has the Ermineskin Band shown that it has a vested right in performance such that the Minister’s discretion is “spent”.
[35] The Ermineskin Band has argued that the pattern of paying out the Split to the Ermineskin Band in the summer of each year created estoppel against the Minister delaying payment. In this, the Ermineskin Band relies particularly on Ryan v. Moore, [2005] 2 S.C.R. 53, in establishing the three conditions of estoppel by convention.
[36] However, that decision applies in the context of relations between private parties not to situations governed by statute. Estoppel cannot operate to vitiate a statutory obligation on the Minister.
[37] The Ermineskin Band has not made out a case for an order of mandamus. Section 64(1) makes it clear that moneys from the Ermineskin Band’s account can only be disbursed with the consent of both the Ermineskin Band and the Minister. As long as the Minister exercises his discretion reasonably – and there is nothing to suggest unreasonableness in demanding substantiation for planned expenses – the Minister is authorized to withhold approval of disbursement. The Minister’s refusal to disburse is not amendable to mandamus. The moneys at issue are not unpaid Split moneys – those amounts have been paid to the capital account. The moneys that the Ermineskin Band seeks to obtain are already in this account. The Ermineskin Band really seeks to compel the Minister to authorize disbursement from the capital account.
[38] I need not find, as the Defendant has asked, that this mandamus application is an abuse of process because it is contrary to the position taken by the Ermineskin Band before the Supreme Court of Canada in Ermineskin Indian Band and Nations v. Canada, [2007] S.C.C.A. No. 86. Firstly, it is not clear that the positions are inconsistent. Secondly, it is not bad faith to take different or alternate positions, particularly in the face of uncertainty as to the law.
[39] For these reasons, this judicial review will be dismissed with costs.
JUDGMENT
THIS COURT ORDERS AND ADJUDGES that this application for judicial review is dismissed with costs.
ANNEX A
Financial Administration Act, R.S., 1985, c. F-11
|
42. (4) The following definitions apply in this section.
…
"recipient" means an individual, body corporate, partnership or unincorporated organization that has, in any five consecutive fiscal years, received a total of one million dollars or more under one or more funding agreements, but does not include
…
(c.1) a band, as defined in subsection 2(1) of the Indian Act, any member of the council or any agency of the band or an aboriginal body that is party to a self-government agreement given effect by an Act of Parliament or any of their agencies;
|
42. (4) Les définitions qui suivent s’appliquent au présent article.
…
«bénéficiaire » Personne physique ou morale, société de personnes ou organisme non doté de la personnalité morale qui a reçu, au total, au moins un million de dollars au cours de cinq exercices consécutifs au titre d’un ou de plusieurs accords de financement. Sont exclus de la présente définition :
…
c.1) les bandes, au sens du paragraphe 2(1) de la Loi sur les Indiens, tout membre du conseil ou tout organisme de la bande, et les organismes autochtones qui sont parties à un accord d’autonomie gouvernementale mis en vigueur par une loi fédérale, ainsi que leurs organismes;
|
Indian Act, R.S., 1985, c. I-5
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1763-07
STYLE OF CAUSE: ERMINESKIN INDIAN BAND AND NATION
and
HER MAJESTY THE QUEEN
PLACE OF HEARING: Calgary, Alberta
DATE OF HEARING: June 24, 2008
APPEARANCES:
|
Ms. Priscilla Kennedy
|
|
|
Ms. Sheila Read
|
SOLICITORS OF RECORD:
|
DAVIS LLP Barristers & Solicitors Edmonton, Alberta
|
|
|
MR. JOHN H. SIMS, Q.C. Deputy Attorney General of Canada Edmonton, Alberta |