Canada: Aboriginal Law @ Gowlings - October 14, 2011

Waycobah First Nation v. Attorney General of Canada, 2011 FCA 191

By: Graham Ragan

Available at:

Federal Court Appeal upholds CRA decision to deny tax remission order to First Nation

This was an appeal from a decision of the Federal Court, dismissing the Waycobah First Nation's application to review the decision of the Canada Revenue Agency (CRA).  The Federal Court denied recommending remission of the First Nation's substantial tax debt.  Waycobah First Nation is a small impoverished community with significant infrastructure challenges.  The tax debt largely comprised the budget deficit and had impeded its ability to borrow funds cover infrastructure deficiencies. 

The substantial tax debt arose from the failure of the First Nation to collect harmonized sales tax (HST) from non-Aboriginal individuals who purchased gasoline and tobacco on reserve. This issue had originally proceeded through the courts with the First Nation losing at each level, including being denied leave to appeal by the Supreme Court of Canada in 2003. 

Following the court proceedings, the First Nation negotiated repayment of the outstanding amounts with CRA but was ultimately unable to comply.  While recognizing the extreme financial difficulties in its decision to not recommend remission, CRA also noted the non-compliance.  At the Federal Court, the First Nation's application was dismissed on the basis that it had not been demonstrated that CRA's decision was erroneous. 

The Court of Appeal dismissed the First Nation's appeal and upheld the lower court decision.   The Court held that the First Nation did not succeed in demonstrating CRA's exercise of discretion was unreasonable.  This was a difficult task as the discretion to grant a remission is broad, policy-based and is exercisable within a decision-making context that may result in the grant of extraordinary relief.  The Court was persuaded that CRA's decision was made in light of the particular facts and was not improperly predetermined by a rigid approach to policy guidelines without regard to the totality of the facts. Finally, the Court found that there was no breach of procedural fairness as the First Nation was afforded a reasonable opportunity to be heard by an independent decision maker who was informed by representations from the First Nation.

Dugan v. The Queen, 2011 TCC 269

By: Scott Robertson

Available at:

Employees of Native Housing organization exempt from taxation

This is an appeal of six separate tax appellants under the Income Tax Act. All are status Indians and former employees of a native employee leasing agency. The Court found that three of the appellants, working for Brantford Native Housing (BNH), a non profit organization located contiguous to the Reserve, were exempt from income taxation. In the application of the connecting factors test, the Court found that the work performed by the appellants at BNH provided significant and direct benefit to that community.

The services of BNH addressed the on-Reserve housing shortage. The work being performed off-Reserve was disconnected but not fatal as the proximity of BNH to the Reserve made it "contiguous" to the Reserve. The Court found that it was "almost axiomatic that a community that lacks housing, even temporary housing, will gravitate to the closest place outside the community that has facilities to help deal with the problem".

In addition to the benefits of the work being performed by the appellants for the Reserve, the Court also relied on the employers' location and the location of the debt being owed to the appellants as well as the fact that the Indians were resident on Reserve to find that their income was on Reserve for the purposes of s.87 of the Indian Act. An employee in similar circumstances but who did not live on Reserve was denied the exemption.

Roberts v. The Queen, 2011 TCC 205

By: Scott Robertson

Available at:

Motion for advanced costs for First Nation tax appeal denied

Three First Nation appellants from B.C. brought a motion for an advanced costs order in respect of their tax appeals on fishing income earned. The appellants were collectively seeking $350,000 in any event of the cause. The appellants had unsuccessfully sought funding from provincial legal aid authorities, the Department of Indian and Northern Affairs, the federal Court Challenges Program, their respective band councils and the Native Indian Brotherhood. The Court applied the Okanagan test to determine whether the necessary conditions were present for an award of interim costs. The Court determined that even if all three of the Okanagan preconditions were presumed to be met, the personal tax appeals involving the taxation of three individuals did not rise to the level of special, rare and exceptional circumstances which warrant the favourable exercise of the Court's discretion in the granting of an advanced costs order. The motion for an advanced costs award was dismissed.

Alberta (Aboriginal Affairs and Northern Development) v. Cunningham, 2011 SCC 37

By: Erin Runnalls

Supreme Court of Canada, July 21, 2011

Available at:

Supreme Court of Canada decision on the constitutionality of the exclusivity of Métis membership pursuant to the Métis Settlements Act

The Supreme Court of Canada held that sections 75 and 90 of the Métis Settlements Act, RSA 2000, c M-14 ("MSA"), providing that Métis settlement members who voluntarily register as Indians under the Indian Act, RSC 1985, c I-5 are automatically disqualified from being Métis settlement members, do not violate the equality rights guaranteed by section 15(1) of the Canadian Charter of Rights and Freedoms (the "Charter"), because the MSA is an ameliorative program pursuant to section 15(2) of the Charter.  Ameliorative programs permit the government to provide benefits to a specific, disadvantaged group without having to confer the same benefits to all.

The Supreme Court's decision in this case contains language that is strongly supportive of the recognition of the Métis as a unique and distinct people, and of the importance of Métis-specific legislation allowing the Métis a role in defining their own communities.

The Facts of the Case:

The case arose from a challenge brought by individuals whose membership in the Peavine Métis Settlement was terminated pursuant to section 90(1)(a) of the MSA, which calls for the removal of Métis settlement members who voluntarily register as Indians under the Indian Act.  Subject to certain exceptions, section 75 of the MSA prohibits individuals with Indian status from obtaining Métis settlement membership.  Their evidence was that they voluntarily registered as Indians under the Indian Act to obtain medical benefits available to status Indians, but not to Métis settlement members.

The Chambers Judge denied the respondents' request for a declaration that sections 75 and 90(1)(a) of the MSA breached sections 2(d), 7, and/or 15(1) of the Charter.  The Alberta Court of Appeal allowed the appeal, and granted a declaration of constitutional invalidity of sections 75 and 90 of the MSA on the basis of their violation of the equality rights guaranteed by section 15(1) of the Charter, and directed the Registrar to restore the respondents' names to the Peavine Métis Settlement membership list.

The Supreme Court's Ruling:

The Supreme Court dismissed the section 15 Charter claim on the basis that the MSA is an ameliorative program protected by section 15(2) of the Charter.  Ameliorative programs, by their nature, confer benefits on one group that are not conferred on others.  Section 15(2) of the Charter permits governments to assist one group without being paralyzed by the necessity to assist all.

The Supreme Court noted that section 35 of the Constitution Act, 1982 recognizes three unique and distinct groups of Aboriginal peoples — Indians, Métis and Inuit.  Further, the Supreme Court found the negotiations between the Alberta government and the Métis for the protection and enhancement of Métis culture and identity, distinct from Indian culture and identity, had resulted in the enactment of the MSA.  These negotiations were found by the Court to be an acknowledgement by the government that the Métis are a distinct rights-holding group.  The Court, therefore, found that consistent with the government and Métis' desire to preserve Métis culture and identity, the MSA limits the scope for status Indians to be recognized as members of settlement communities.

Section 15 of the Charter protects against discriminatory laws and government actions.  Its goal is to enhance substantive equality, and it does so in two ways.  First, section 15(1) is aimed at preventing discrimination on an enumerated or analogous ground.  Second, section 15(2) is aimed at permitting governments through ameliorative programs to improve the situation of members of disadvantaged groups that have suffered discrimination in the past, in order to enhance substantive equality.  The purpose of section 15(2) is to save ameliorative programs from the charge of "reverse discrimination".

The first step is to determine whether the law makes an adverse distinction against the claimant group on the basis of one of the grounds set out in section 15(1) or an analogous ground.  The Supreme Court assumed that the distinction between the Métis and status Indians in the MSA is a distinction on an enumerated or analogous ground on the basis of the Chambers Judge's determination.

The second step is to determine whether the distinction is saved by section 15(2).  Under this second step, the government must show, on the evidence, the following:

  1. That the program is a genuinely ameliorative program directed at improving the situation of a group that is in need of ameliorative assistance in order to enhance substantive equality;
  2. That there is a correlation between the program and the disadvantage suffered by the target group; and
  3. That rational means are being used to pursue the ameliorative goal.

If these conditions are met, section 15(2) protects all distinctions drawn on enumerated or analogous grounds that serve and are necessary to the ameliorative purpose, to the extent justified by the object of the ameliorative program.

In applying the second step, the Supreme Court held that the MSA is a genuinely ameliorative program.  Unlike many ameliorative programs, its object is not the direct conferral of benefits on individuals within a particular group, but the enhancement and preservation of the identity, culture and self-governance of the Métis through the establishment of a Métis land base.  Excluding Métis who are also status Indians from formal membership in Métis settlements serves these objects, the Court ruled.

The Supreme Court found that the record did not provide them with an adequate basis to assess the section 2(d) Charter claim, and found that the section 7 Charter claim failed because any impact on liberty was not shown at trial to be contrary to the principles of fundamental justice.

Spookw v. Gitxsan Treaty Society et al., 2011 BCSC 1001

By: Jaimie Lickers

Available at:

The plaintiffs in this action, which included six hereditary chiefs and four Gitxsan bands, commenced an action against the Gitxsan Treaty Society (the "GTS"), the Governments of Canada and British Columbia and the British Columbia Treaty Commission (the "Commission") in relation to the funding of treaty negotiation.  The Commission brought an application to dismiss the plaintiff's claim against it for failing to disclose a reasonable cause of action.

The Commission monitors and facilitates treaty negotiations in British Columbia and is responsible for the allocation of funds to First Nations involved in treaty negotiations.  The Commission must abide by certain statutory criteria in the allocation of funds including the criterion that any request for funds by a First Nation be supported by its constituents.  The plaintiffs named the Commission in their action on the basis that it had negligently approved and advanced funds to the GTS as representing various Gitxsan bands and individuals despite opposition to GTS' authority to do so.

The plaintiffs alleged that the Commission breached its duty of care to the plaintiffs to ensure that so called GTS negotiators had a mandate from the Gitxsan people to negotiate on their behalf.  While the Court found that there was sufficient foreseeable to harm to the plaintiffs in the event that the Commission acted negligently, it did not find that the relationship between the plaintiffs and the Commission was sufficiently close to meet the proximity requirement necessary to ground a duty of care.  Despite the fact that the Commission received direct complaints from individuals and hereditary chiefs about GTS' failure to represent Gitxsan interests, the Court held that the Commission is required to respect the self-governance of First Nations and that it does not have a duty to involve itself in the governance of a First Nation by acting to protect a minority interest within that First Nation.  The Court went on to state that the Commission "is intended to be an impartial and arms-length body that cannot be involved in the internal structure and processes of the Gitxsan Nation."

The Court also held that aside from failing to meet the proximity requirement, policy concerns prevented the imposition of a duty of care on the Commission.  Namely, the Court held that the imposition of such a duty of care would amount to indeterminate liability as there are 60 First Nations and 110 bands currently involved in the treaty process and that this process covers some 200,000 First Nations individuals.

As a result, the plaintiff's action against the Commission was dismissed and costs were awarded to the Commission.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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