Stoney First Nation v. Canada

Stoney First Nation v. Canada
Court (s) Database
Federal Court Decisions
Date
2013-09-25
Neutral citation
2013 FC 983
File numbers
T-2344-93
Decision Content
Date: 20130925
Docket: T-2344-93
Citation: 2013 FC 983
Toronto, Ontario, September 25, 2013
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
CHIEF JOHN EAR ACTING ON HIS OWN BEHALF AND ON BEHALF OF ALL THE OTHER MEMBERS OF THE BEARSPAW BAND OF THE STONEY BAND AND TRIBE AND ON BEHALF OF THE STONEY TRIBE AND ALL ITS MEMBERS
AND
CHIEF KEN SOLDIER ACTING ON HIS OWN BEHALF AND ON BEHALF OF ALL THE OTHER MEMBERS OF THE CHIKINI BAND OF THE STONEY BAND AND TRIBE AND ON BEHALF OF THE STONEY TRIBE
AND ALL ITS MEMBERS
AND
CHIEF ERNEST WESLEY ACTING ON HIS OWN BEHALF AND ON BEHALF OF ALL THE OTHER MEMBERS OF THE WESLEY BAND OF THE STONEY BAND AND TRIBE AND ON BEHALF OF THE STONEY TRIBE AND ALL ITS MEMBERS
AND
THE STONEY BAND AND TRIBE
Plaintiffs
(Applicants)
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA, PARLIAMENT BUILDINGS,
OTTAWA, ONTARIO
AND
THE HONOURABLE PAULINE BROWES, MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT,
PARLIAMENT BUILDINGS,
OTTAWA, ONTARIO
AND
THE HONOURABLE GILLES LOISELLE, MINISTER OF FINANCE,
PARLIAMENT BUILDINGS,
OTTAWA, ONTARIO
Defendants
(Respondents)
REASONS FOR ORDER AND ORDER
INTRODUCTION
[1] In its original form, this motion was for:
a. AN ORDER THAT the transfer of the present and future Wesley Share of Money from Her Majesty the Queen in Right of Canada (Canada) to the trustee appointed pursuant to the Wesley Trust Deed is authorized.
b. A FURTHER ORDER THAT the transfer of the present and future Chiniki and Bearspaw Shares of Money from Canada to the Nations’ respective trustees appointed pursuant to the Nations’ respective Trust Deeds is authorized subject to the approval by the respective Nation’s membership.
c. A FURTHER ORDER THAT upon receipt by the Minister of Aboriginal Affairs and Northern Development (Minister) of a resolution of the Chief and Council of the Wesley First Nation attaching:
i. the Wesley Trust Deed;
ii. the Release, or such other form of release as the Stoney Tribal Council and Canada may agree upon and this Court may approve by way of subsequent Order;
iii. the Referendum Regulations;
iv. the Referendum Results; and
v. the Order of this Court authorizing the transfer;
the Minister shall be authorized and ordered to transfer the Wesley Share of Money to the trustee appointed under the Wesley Trust Deed to be held for the use and benefit of the Wesley First Nation pursuant to the terms of the Wesley Trust Deed.
d. A FURTHER ORDER THAT upon receipt by the Minister of a resolution of the Chief and Council of the Chiniki First Nation attaching:
i. the Chiniki Trust Deed;
ii. the Release, or such other form of release as the Stoney Tribal Council and Canada may agree upon and this Court may approve by way of subsequent Order;
iii. the Chiniki Membership Approval; and
iv. the Order of this Court authorizing the transfer;
the Minister shall be authorized and ordered to transfer the Chiniki Share of Money to the trustee appointed under the Chiniki Trust Deed to be held for the use and benefit of Chiniki First Nation pursuant to the terms of the Chiniki Trust Deed.
e. A FURTHER ORDER THAT upon receipt by the Minister of a resolution of the Chief and Council of the Bearspaw First Nation attaching:
i. the Bearspaw Trust Deed;
ii. the Release, or such other form of release as the Stoney Tribal Council and the Crown may agree upon and this Court may approve by way of subsequent Order;
iii. the Bearspaw Membership Approval; and
iv. the Order of this Court authorizing the transfer;
the Minister shall be authorized and ordered to transfer the Bearspaw Share of Money to the trustee appointed under the Bearspaw Trust Deed to be held for the use and benefit of the Bearspaw First Nation pursuant to the terms of the Bearspaw Trust Deed.
f. A DECLARATION THAT the transfer of the Wesley, Chiniki and Bearspaw Shares of Money to the Nations’ respective trustees appointed under the Nations’ respect Trust Deeds is for the benefit of and in the best interests of the Stoney Nakoda Nations (SNNs) and the three constituent First Nations, the Wesley, Chiniki and Bearspaw First Nations, and that the Minister has the authority to authorize such transfers pursuant to section 64(1)(k) of the Indian Act, and a further declaration that it is proper and expedient for the Minister to effect the transfers, even if that section or any other provisions of the Indian Act are subsequently declared unconstitutional.
g. A FURTHER ORDER THAT the Wesley, Chiniki and Bearspaw Shares of Money be transferred to the three First Nations’ respective trustees in accordance with the respective arrangements between the Wesley, Chiniki and Bearspaw First Nations and Canada or, failing such arrangements, by further order of this Court, all in the form of the draft Order submitted herewith subject to such terms and conditions as the Court may deem appropriate.
[2] Since the motion was filed and, as a result of on-going discussions between the parties, the Applicants have amended their motion to seek the following relief from the Court:
1. AN ORDER THAT the transfer of the present and future Wesley Share of Money from Canada to the trustee appointed pursuant to the Wesley Trust Deed is authorized.
2. A FURTHER ORDER THAT the transfer of the present and future Chiniki and Bearspaw Shares of Money from Canada to the Nations’ respective trustees appointed pursuant to the Nations’ respective Trust Deeds is authorized subject to approval by the respective Nation’s membership.
3. A FURTHER ORDER THAT upon receipt by the Minister of a resolution of the Chief and Council of the Wesley First Nation attaching:
a. the Wesley Trust Deed;
b. the Release, or such other form of release as the Stoney Tribal Council and Canada may agree upon and this Court may approve by way of subsequent Order;
c. the Wesley Referendum Regulations;
d. the Referendum Results; and
e. a further Order of this Court authorizing transfer;
the Minister shall be authorized and ordered to transfer, no later than October 31, 2013, the Wesley Share of Money to RBC Trust, as custodian and interim trustee, to hold such funds until such time as such funds are settled upon the trustee appointed under the Wesley Trust Deed to be held for the use and benefit of the Wesley First Nation pursuant to the terms of the Wesley Trust Deed.
4. A FURTHER ORDER THAT upon receipt by the Minister of a resolution of the Chief and Council of the Chiniki First Nation attaching:
a. the Chiniki Trust Deed;
b. the Release, or such other form of release as the Stoney Tribal Council and Canada may agree upon and this Court may approve by way of subsequent Order;
c. the Chiniki Membership Approval; and
d. a further Order of this Court authorizing the transfer;
the Minister shall be authorized and ordered to transfer, no later than January 31, 2014, the Chiniki Share of Money to RBC Trust, as custodian and interim trustee, to hold such funds until such time as such funds are settled upon the trustee appointed under the Chiniki Trust Deed to be held for the use and benefit of Chiniki First Nation pursuant to the terms of the Chiniki Trust Deed.
5. A FURTHER ORDER THAT upon receipt by the Minister of a resolution of the Chief and Council of the Bearspaw First Nation attaching:
a. the Bearspaw Trust Deed;
b. the Release, or such other form of release as the Stoney Tribal Council and the Crown may agree upon and this Court may approve by way of subsequent Order;
c. the Bearspaw Membership Approval; and
d. a further Order of this Court authorizing the transfer;
the Minister shall be authorized and ordered to transfer, no later than January 31, 2014, the Bearspaw Share of Money to RBC Trust, as custodian and interim trustee, to hold such funds until such time as such funds are settled upon the trustee appointed under the Bearspaw Trust Deed to be held for the use and benefit of the Bearspaw First Nation pursuant to the terms of the Bearspaw Trust Deed.
6. A DECLARATION THAT the transfer of the Wesley, Chiniki and Bearspaw Shares of Money to the Nations’ respective trustees appointed under the Nations’ respective Trust Deeds is for the benefit of and in the best interests of the SNNs and the three constituent First Nations, the Wesley, Chiniki and Bearspaw First Nations, and that the Minister has the authority to authorize such transfers pursuant to paragraph 64(1)(k) of the Indian Act, and that it is proper expedient for the Minister to effect the transfers, even if that paragraph or any other provisions of the Indian Act are subsequently declared unconstitutional.
7. A FURTHER ORDER THAT the Wesley, Chiniki and Bearspaw Shares of Money be transferred to the three constituent First Nations’ respective trustees in accordance with the respective arrangements between the Wesley, Chiniki and Bearspaw First Nations and the Canada or, failing such arrangements, by further order of this Court.
[3] The motion arises in the context of complex litigation between the parties that continues to work its way towards a trial, with case management by the Court. In the underlying action, the Applicants allege various breaches of trust or fiduciary duties by Canada. These alleged breaches relate to Canada’s management of mineral rights associated with the Applicants’ reserve lands, and in particular the management of oil and gas leases on those lands and the resulting royalties.
[4] Through the case management process, the parties are attempting to narrow the issues for an eventual trial, both through settlement and by bringing forward discreet issues for decision by the Court as appropriate. Here, the Applicants seek the transfer of current and future moneys representing the royalties from oil and gas leases on the Applicants’ reserve lands, and the interest earned on those royalties, which are held by Canada in trust for or for the benefit of the Stoney First Nation (Stoney or the Band). The Respondents say they have no objection in principle to such a transfer, but that certain preconditions must be met before the Minister can authorize the transfer under paragraph 64(1)(k) of the Indian Act, RSC, 1985, c I-5 (the Act). In addition, the parties disagree on whether there must be a single transfer of all of the funds held for the SNNs, or whether, as the Applicants contend, the Bearspaw, Chiniki and Wesley sub-groups of Stoney (who are not separately recognized bands under the Act) have a right to insist upon a transfer of their per capita share of the funds.
BACKGROUND
[5] Stoney is an Indian Band within the meaning of the Act, and is entitled to the benefit of Treaty No. 7, which was signed in 1877. It is made up of three distinct groups, Wesley, Chiniki and Bearspaw, which share the use and benefit of the Stoney Indian reserves. Each of Wesley, Chiniki and Bearspaw elects its own Chief and Council, but they are not recognized as separate bands under the Act. The parties agree that nothing in this application is intended to change that fact. Collectively, the elected representatives of Wesley, Chiniki and Bearspaw make up the Stoney Tribal Council, which is the governing body of Stoney, and has the status of a “council of the band” as defined in the Act.
[6] Wesley, Chiniki and Bearspaw are all seeking transfers of their per capita share of funds held for the benefit of Stoney by Canada (the Wesley Share, Chiniki Share, and Bearspaw Share, respectively) to an independent trust or trusts. Wesley conducted a referendum of its membership seeking approval for such a transfer, with the proposal receiving the support of 61% of eligible voters and 69% of those actually voting. The legitimacy of that referendum is questioned by the Respondents due to the use of per capita distributions (PCDs), as outlined below. Chiniki and Bearspaw have not yet conducted referenda, and have not yet decided whether they will do so. In their view, referenda are not required. Wesley is also further along in the process of drafting the trust deed required to facilitate the proposed transfer of the Wesley Share. As such, the requested orders contemplate a transfer of the Wesley Share immediately, and transfers of the Chiniki and Bearspaw Shares following approval by their respective memberships in a form to be determined by their Chiefs in Council.
[7] The funds that the Applicants seek to have transferred are derived from the royalties paid on oil and gas leases relating to the Applicants’ reserve lands. Royalties are collected by Canada and held in designated accounts under a statutory scheme set out in the Act and the Financial Administration Act, RSC 1985, c. F-11 (FAA). These moneys are required to be deposited in the Consolidated Revenue Fund (CRF), and interest accrues at a rate set from time to time by the Governor in Council.
[8] The statutory scheme distinguishes between capital and revenue amounts, with different rules applying to each. Royalties from oil and gas are treated as capital, since they are derived from a non-renewable resource. Interest earned on these amounts is treated as revenue. A First Nation can request transfers or expenditures of funds from a capital or revenue account held in their name in the CRF, but the rules are more stringent for expenditures from capital accounts. Under subsection 64(1) of the Act, the Minister, with the consent of the relevant band council, can “authorize and direct the expenditure of capital moneys of the band” for one of a series of listed purposes or, under sub-paragraph (k), “for any other purpose that in the opinion of the Minister is for the benefit of the band.” This is the provision at the centre of the current dispute.
[9] In order to preserve some of the funds received from oil and gas revenues for future generations, Stoney and Canada entered into an Agreement in Principle establishing a Stoney Tribe Heritage Account (Heritage Fund) in October 1996. Thereafter, a portion of Stoney’s oil and gas royalties were deposited in the Heritage Fund. Stoney committed, subject to renegotiation, to refrain from spending these funds, and directed Canada to deposit them into the CRF and pay interest on them as described above until such time as either: a) Stoney invoked self-government rights over the moneys; or b) the Indian Act was amended to permit the investment of the moneys under the control of Stoney. The Heritage Fund also included both a capital and a revenue account, with the capital portion growing through new royalty contributions, and the revenue portion growing through interest payments by Canada.
[10] In 2010, in response to financial constraints resulting from a steep decline in oil and gas royalties, Stoney adopted a Financial Sustainability Plan that requested transfers from the revenue portion of the Heritage Fund over a three year period to support Stoney’s operating budgets, and a suspension of capital contributions to the Heritage Fund. Canada agreed to these requests.
[11] In February 2012, the Chief and Council of Wesley adopted a resolution asserting self-government rights with respect to the Wesley Share of Money, and directing Canada to transfer the Wesley Share of Money and a proportionate share of all future royalties to a secure trust to be established by Wesley. This was to be subject to ratification through a referendum of the membership of Wesley. In May 2012, the Stoney Tribal Council adopted a resolution consenting to and supporting the Wesley request for the transfer of the Wesley Share of Money.
[12] Canada responded to these resolutions by stating that it was prepared to explore a request for a transfer of Stoney’s capital moneys under paragraph 64(1)(k) of the Act, but it remained to be seen whether Wesley’s desires could be accommodated separately from those of Stoney as a whole. Canada also stated that it could not recognize the results of a referendum of the Wesley membership alone, since Wesley was not recognized as a band under the Act, and urged Wesley to postpone its planned referendum.
[13] In July 2012, Wesley held its referendum. In September 2012, the Stoney Tribal Council adopted another resolution directing Canada to transfer not only the Wesley Share of Money, but also the Chiniki and Bearspaw Shares of Money to one or more secure trust arrangements to be established, except that up to $45 million was to be transferred to Stoney directly pending approval of a revised budget for 2012-2013. This resolution also contemplated the current motion.
[14] In October 2012, Canada advised the Stoney Chief and Council that it could not accept the results of Wesley’s referendum, that it would only consider requests for the full release of all capital trust moneys held in the CRF, that it had remaining concerns regarding the draft Wesley Trust Deed, and that the request for a $45 million transfer did not explain the purpose of the expenditure or identify the account(s) from which it was to come. Without prejudice discussions regarding the terms of the anticipated transfers and the approval procedures have followed and have resolved many, though not all, of the concerns expressed by Canada.
STATUTORY PROVISIONS
[15] The following provisions of the Act are applicable in these proceedings:
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.
ARGUMENT
Applicants
[16] The Applicants argue that the three requested transfers are justified in that they are: (a) in the best interests of the SNNs individually and collectively, meeting the test set out in paragraph 64(1)(k) of the Act; and (b) an exercise of the inherent rights of self-government of each of the constituent SNNs, which are capable of handling their own moneys and have determined that the contemplated secure trust arrangements represent the best way of handling these funds in the long term.
[17] The Agreement in Principle establishing the Heritage Fund provided that Stoney would not have access to the funds “[u]ntil such time as the Stoney Band shall invoke inherent self-government rights” with respect to those funds. The Stoney Tribal Council Resolution of September 24, 2012 invoked inherent rights of self-government. The United Nations Declaration on the Rights of Indigenous Peoples (UN Declaration), formally endorsed by Canada in November 2010, affirms the Applicants’ rights (with limitations), to self-determination (Article 3), to participate in decision-making in matters that would affect their rights (Article 18), and to be secure in the enjoyment of their own means of subsistence and development, and engage freely in all their traditional and other economic activities (Article 20(1)): United Nations Declaration on the Rights of Indigenous Peoples, GA Res. 61/295, UN GAOR, 61st Sess, Supp No 49 Vol III, UN Doc A/61/49 (2007) [UN Declaration]. The UN Declaration reflects emerging international norms and “minimum standards” of state conduct with respect to the rights of indigenous peoples (Article 43).
[18] The Applicants expect that, over time, the return on these moneys through the proposed trust arrangements will exceed the statutory interest rate currently paid, which is sufficient in itself to justify the transfers. Canada’s failure to act prudently with respect to these funds is another reason the motion should be granted. All trust beneficiaries have the right to apply to the courts to have a trustee removed for serious breaches of duty: Donovan W.M. Waters, Q.C., Mark R. Gillen & Lionel D. Smit, eds., Waters’ law of Trusts in Canada, 3rd ed. (Toronto: Carswell, 2005) at 843 [Waters]; Letterstedt v Broers, (1883-84) LR 9 App Cas 371 at 387 (PC); Conroy v Stokes, [1952] 4 DLR 124, 1952 CarswellBC 51 (BCCA) at para 7. It is appropriate to remove a trustee where that trustee has failed to exercise its discretion in considering the factors relevant to its decision-making authority, such as the wishes and best interests of the beneficiaries or a class thereof: Re Smith, [1971] 2 OR 541, 1971 CarswellOnt 629 (ONCA).
[19] Canada has appropriated and then expended SNN moneys for its own use. It continues to borrow funds from its beneficiary and declines to borrow such funds from third-party lenders. While the Supreme Court of Canada has ruled that such borrowing is authorized under the FAA, and is thus lawful, this does not change the fact that Canada, the trustee, is borrowing from the beneficiary without the beneficiary’s consent, pursuant to legislation passed by Canada without the beneficiary’s consent: Ermineskin Indian Band & Nation v Canada, 2009 SCC 9 [Ermineskin]. Stoney, the beneficiary, is thus entitled to seek to terminate the trust relationship. Canada has also made transfers out of trust property over the objections of the SNN, and without lawful authority to do so, when it repaid purported overpayments of oil and gas royalties to energy companies.
[20] Canada has also refused to provide basic accounting information to allow Stoney to independently verify credits and debits to its account, as is normally required of a trustee. The royalties in question are payable to the Receiver General, and the Applicants have no ability to verify that the payments have been properly credited to their accounts in the CRF. The accounting mechanisms used are not statutory creations under the FAA, and are not auditable or readily transparent.
[21] Canada is also in a conflict of interest, and trustees can be removed on this basis without proof that they have actually acted to the detriment of the beneficiary: Waters, above, at 846-47. Canada receives a benefit from borrowing SNN moneys for its own use, thus avoiding the task of borrowing in the marketplace or the obligation to pay prevailing interest rates: see Gladstone v Canada (Attorney General) (2003), 233 DLR (4th) 629 (BCCA). Having been deprived of the ability to control their own moneys, the SNNs have experienced a corresponding deprivation: Semiahmoo Indian Band v Canada, [1998] 1 FC 3 (CA). Thus, Canada has been unjustly enriched. In addition, Canada’s attempts to direct the structuring of the proposed secure trusts may relate to the future taxability of income flowing into and out of those trusts. The incompatibility of the program delivery and trust fund management roles of the Department of Indian Affairs was observed in the Penner Report on Indian Self-Government: House of Commons, Special Committee on Indian Self-Government, Indian Self-Government in Canada: Report of the Special Committee (“Penner Report”), 1983 at 128.
[22] There is ample precedent for the orders requested in this motion. In particular, in the context of similar litigation (Court File T-2022-89, the “Samson Action”) between Canada and the Samson Cree Nation (Samson), this Court issued a series of orders effecting a very similar transfer. Justice Teitelbaum declared that such a transfer was in the best interests of Samson, and was therefore authorized under paragraph 64(1)(k) of the Act, subject to compliance by Samson with certain conditions set out in the order. Justice Teitelbaum also issued subsequent orders approving steps taken toward the implementation of his initial order, and finally issued an order approving the transfer. Following this precedent, in a similar action against Canada (Court File T-1254-92, the “Ermineskin Action”), Prothonotary Lafrenière issued a series of orders effecting a similar transfer to the Ermineskin Cree Nation (Ermineskin), based on similar conditions precedent. In issuing these orders, this Court has agreed either expressly or by implication that the transfers were in the best interests of the First Nations concerned. The Supreme Court of Canada held that such transfers are in keeping with the Crown’s fiduciary obligations and paragraph 64(1)(k) of the Act if the transfer is in the best interest of the First Nation: Ermineskin, above at paras 150-52.
[23] The facts before the Court in the present motion are on all fours with those before the Court in the Samson and Ermineskin Actions. Specifically: the source of the funds was oil and gas revenues collected by Canada; Samson and Ermineskin commenced similar actions against Canada and sought similar transfers into one or more secure trusts; and the plaintiffs in each case sought the apportionment of royalty moneys on a per capita basis, and agreed to have the transfers approved by their respective memberships in advance. The Applicants stand in an identical position to that of Samson and Ermineskin, and are entitled to the same outcome.
[24] With respect to the proposed per capita division of the capital funds in the present motion, the Applicants argue that this is just as valid as a single transfer, and is more in keeping with the wishes of Stoney. It is no different from what has occurred with respect to the Pigeon Lake Indian reserve, which is shared by four different First Nations bands. As a result of the orders in the Samson and Ermineskin Actions, a per capita share of capital dollars was and continues to be transferred to the SCN and ECN for deposit into independent secure trusts managed for their benefit, while the per capita shares of the Louis Bull Band and the Montana Band continue to be deposited into the CRF to the credit of those bands respectively.
[25] The Court has endorsed per capita distributions even where the sub-groups are not recognized as Indian bands under the Act. For example, the Court authorized payment to a sub-group of the Saddle Lake Indian band in October 2012.
[26] In addition, Canada already recognizes the separate character of the three SNNs for annual budgeting and other administrative purposes. Under the terms governing the Heritage Fund, Canada agreed that funds paid from the CRF would be split amongst the three SNNs, and that delays by one would not affect funding for the others. Both annual budgets submitted to the Minister and expenditures from the CRF approved by the Minister under section 64 of the Act have been explicitly based upon a division among the three SNNs involved in this motion. The only difference here is that the funds will be placed in a trust for long term use, rather than being spent within one year through the approved annual budget.
[27] A single referendum of all Stoney members is not the most appropriate form of member approval, if such approval is required at all. Rather, only through three separate referenda will Canada have an accurate indication of how the members of each of the three SNNs wish their royalty moneys to be handled and protected. It has been the practice of the SNNs to handle governance and administrative matters on a joint but separately elected basis. Their Chiefs and Councils are elected separately, in different years, and for differing electoral terms of two, three, or four years, making a single referendum impractical.
[28] Canada has been inconsistent in its demands with respect to authorizing referenda. In a court proceeding where a land designation referendum was challenged on the basis that separate referenda were not held for each of the SNNs, the government declined to support the validity of the single referendum, thus implicitly supporting the view that there should have been three separate referenda: Mini Thni Land Management Ltd and Poul Mark, as agents for the Stoney Nakoda First Nations (also know as the Stoney Indian Band) v Eliza Holloway, Winnie Francis, Alice Twoyoungman, Jane Doe, John Doe and Unnamed Persons, Alberta Court of Queen’s Bench #0501-12034.
[29] Referenda are not mandatory for Ministerial approval under section 64 of the Act. Moreover, Canada has made transfers from the capital funds held for Stoney on previous occasions without authorizing referenda. It did so pursuant to the Stoney’s Financial Sustainability Plan in 2010 and thereafter. It also did so when it retrieved funds from the capital account to repay a purported “overpayment” of royalties to an energy company, without an authorizing resolution of the Stoney Band Council and over that Council’s objections.
[30] The purpose of referenda in the current context is to assist and protect the Minister. As such, Canada has provided hundreds of thousands of dollars in funding to Samson and Ermineskin and other First Nations to cover the costs of referenda and the drafting of trust deeds. It has arbitrarily and capriciously refused such funding to Stoney or the three constituent SNNs involved in this motion. Should further referenda be agreed to or ordered by the Court, the Applicants reserve their right to seek ancillary relief in the form of compensation for the costs of holding them.
[31] The concerns raised by the Respondents regarding PCDs in connection with the Wesley referendum are without merit. Such payments are simply designed to ensure maximum turnout of eligible voters. PCDs have been used in referenda approving previous settlements of claims against Canada without Canada’s objection. In another vote relating to one of these settlements, Band members were told that an additional PCD would be made if a transfer to a new trust was approved, but this proposition was rejected. This is good evidence that Stoney members are quite capable of making informed decisions with or without the promise of cash payments, particularly when such payments are made from their own beneficially-owned funds. The referendum regulations were approved by the Wesley Chief and Council at a duly convened meeting, and the referendum was carried out in accordance with those regulations. Thus, the membership of Wesley has approved the proposed transfer.
Respondents
[32] The Respondents raise both procedural and substantive objections to the proposed orders. At the same time, they maintain that Canada has no objection in principle to a transfer of the funds in question to a secure outside trust and, in fact, would like to achieve an arrangement similar to those reached with Samson and Ermineskin. While arguing that the procedural issues raised are determinative against the motion, the Respondents express a desire to have the Court provide direction on the substantive issues as well, and specifically the steps needed to effect a transfer.
[33] The Respondents say the motion is procedurally flawed because it seeks, in effect, an order of mandamus to compel the Minister to exercise his discretion in a particular way: to approve the transfer of a part of Stoney’s capital moneys to a trust for the benefit of a part of Stoney. There are two problems with this: first, a mandamus order is available only in a judicial review application under section 18 of the Federal Courts Act, RSC 1985, c. F-7 (FCA), as outlined in subsection 18(3) of that Act, and that is not the form in which the Applicants have brought this motion; and second, even if this were a judicial review application, mandamus is not available to require a Crown official to exercise a statutory discretion in a particular manner: Apotex Inc. v Canada (Attorney General), [1994] 1 FC 742 at para 55, aff’d [1994] 3 SCR 1100 [Apotex]. While both parties may desire and take comfort from Court approval of transfers under paragraph 64(1)(k), the Act obliges the Minister, and not the Court, to form an opinion that the arrangements are for the benefit of the Band. This is a discretionary decision that involves the balancing of many different factors, including the financial goals, level of risk and other characteristics of the proposed trust, the financial circumstances and track record of the Band, whether the arrangements reflect the informed wishes of the Band membership, and any potential governance issues. As long as the Minister exercises his discretion reasonably, a refusal to authorize disbursements of capital funds under section 64 of the Act is not amenable to a mandamus order: Ermineskin Indian Band and Nation v Canada, 2008 FC 1065 at para 37.
[34] Substantively, the Respondents say there is no merit in the Applicants’ position. The conditions established by Canada for any transfer to a private trust are reasonable ones, and Stoney should be encouraged to meet them. The Applicants’ proposals are flawed, and the Applicants have failed to demonstrate the support of the Band membership, or even commit to doing so in the future. As such, neither the Minister nor the Court can be satisfied that the arrangements are in the best interests of the Band. The Minister is not prepared to make the proposed transfers until these concerns are resolved.
[35] As the Supreme Court of Canada stated in Ermineskin, Canada cannot simply transfer the funds. Under paragraph 64(1)(k) of the Act, and in accordance with its fiduciary obligations, Canada must be satisfied that any transfer is in the best interests of the Band. The Supreme Court found that for Canada to have agreed to the transfers to Samson prior to Justice Teitelbaum’s order in 2005 would have been imprudent because circumstances prevented Canada from assuring itself that transferring the funds would be in the best interests of the band: Ermineskin, above, at paras 152, 169-70.
[36] Furthermore, the Court in the Samson case did not order the Minister to make the transfer. Rather, it laid out several conditions that needed to be satisfied by Samson before the transfer could occur, and noted Crown counsel’s confirmation that the Minister would authorize the transfer upon compliance with the conditions established. Subsequent steps to fulfill those conditions were approved by the Court with no objection from Canada. A similar process occurred in the Ermineskin case.
[37] Contrary to what the Applicants claim, the circumstances here bear no resemblance to the Samson and Ermineskin cases. In each of those cases, there was a single transfer of the band’s entire capital account to a trust for the benefit of the entire band. Important details were negotiated between Canada and Samson and Ermineskin and then submitted to the Court for approval, such as the trust deed and investment policy, the identities of the trustees, the release of Canada from liability, and the referendum procedures and information package. All of this occurred before the referenda took place, and the Minister was able to confirm to the Court that upon a referendum demonstrating band membership approval, he would exercise his discretion to approve the transfers.
[38] Here, by contrast, the Applicants began with a request from only part of Stoney for part of the money. Canada’s input was only recently sought on the trust deeds, and there remain substantive concerns. Further, the Minister has no way of knowing whether the three proposals collectively have the support of the Band membership, because Wesley refuses to conduct a proper referendum and Chiniki and Bearspaw have not decided whether to conduct referenda at all. The Wesley referendum was conducted without arrangements acceptable to the Minister, despite Canada’s urging that it be postponed, and was tainted by a promise of PCD’s to Band members following a favourable vote. The practice of tying PCD’s to a particular outcome makes the result of that vote unreliable: neither the Minister nor the Court can be satisfied that the promise of an additional PCD did not improperly influence the outcome.
[39] Canada concedes that there is no requirement in paragraph 64(1)(k) for a referendum, but it is reasonable for the Minister, in satisfying himself that the transfer is “for the benefit of the band,” to want some assurance that it is supported by the Band membership. Such considerations take precedence over any alleged impracticality of a single Band referendum, which are not insurmountable in this case.
[40] While changes have been made to the Wesley Trust Deed that respond to many of the Crown’s concerns, some concerns remain – notably the absence of a finalized investment policy, the ability to later amend that policy without Band membership or Court approval, and questions about the adequacy of provisions for preservation of capital. In addition, the Wesley Trust Deed as it currently stands is not the same as that provided to Band members prior to the Wesley referendum.
[41] The Respondents reject the contention that Canada is setting up unreasonable roadblocks for ulterior purposes as being without merit and offensive. Canada’s concerns with the proposed transfers to sub-groups of Stoney are real, and not merely “roadblocks.” These concerns are both legal and practical in nature. The legal concern arises from the language of paragraph 64(1)(k) of the Act, which requires the Minister to be satisfied that a transfer is “for the benefit of the band.” There is a legitimate question as to whether this test can be satisfied by a transfer of only a portion of Stoney’s capital moneys to a trust for only part of the Band. The practical concern relates to the fluid membership of the three SNNs, with periodic movement from one group to another. Such movement would present no concern if the moneys were transferred to a single trust for the benefit of the entire Band, but might adversely affect some members’ interests if Stoney’s capital moneys have been permanently divided among three separate trusts on a per capita basis. For this reason, it is important at a minimum to be sure that the entire Band understands and supports the proposed arrangements. The refusal to undertake a proper referendum of the entire Band precludes that. As an alternative proposal, separate distribution arrangements could be built into a single trust to accommodate any wish for separate allocations.
[42] None of the circumstances cited by the Applicants as establishing a precedent for the division of band moneys on a per capita basis is analogous to the current situation. The provisions cited from the Heritage Fund Agreement in Principle have no relevance here, as they relate to small one-time distributions of funds from the revenue account, not the permanent disposition of the capital account. Similarly, Stoney’s annual budgets do not involve a permanent division of all of the Band’s accumulated capital, and the amounts involved are a small fraction of the nearly $200 million at stake here. The Pigeon Lake Reserve is shared by four separate bands, and not sub-groups of a single band. The Samson and Ermineskin transfers involved the entire capital account of each band, following a referendum of the entire band in each case. In the Saddle Lake case, the funds being distributed were not Indian moneys held by Canada in trust, but rather moneys paid by Canada as damages in settlement of claims against it. As such, these moneys were not subject to section 64 of the Act or other provisions governing the Minister’s discretion.
[43] With respect to the argument that Canada should be removed as trustee following common law and equitable principles, the Supreme Court of Canada has specifically rejected the view that Canada can be regarded as a common law trustee: Ermineskin, above, at para 49. Canada stands in a fiduciary relationship with the Band, with discretion to act in its best interests, but its fiduciary duties and discretion are validly limited by the legislation governing Canada’s handling of Indian moneys: Ermineskin, above, at paras 74-75.
[44] Furthermore, the Applicant’s allegations of breach of trust and fiduciary duty are without merit, and this is fatal to the claim for removal. The allegations that Canada benefits from the use of First Nations’ funds in the CRF, is unjustly enriched, or is in a