MUSQUEAM HOLDINGS LTD. MUSQUEAM PROPERTIES LTD.

Transcription

1 The following version is for informational purposes only, for the official version see: for Stated Cases see also: for PAAB Decisions SC 391A Cont. Musqueam Holdings et al v AA09 et al Quick Link to Stated Case #391A (BCCA) MUSQUEAM HOLDINGS LTD. MUSQUEAM PROPERTIES LTD. v. ASSESSOR OF AREA 09 VANCOUVER, ATTORNEY GENERAL OF CANADA CITY OF VANCOUVER, UNION OF BRITISH COLUMBIA MUNICIPALITIES Supreme Court of British Columbia (A973201) Vancouver Registry Before the HONOURABLE MR. JUSTICE HOLMES (in chambers) Vancouver, August 10, 11 and 12, 1998 Darrell W. Roberts, Q.C. for the Appellants John Savage for the Respondent, Assessor of Area 09 Vancouver John R. Haig, Q.C. for the Respondent, Attorney General of Canada Patsey Scheer for the Respondent, City of Vancouver Geoffrey Thiele for the Respondent, Union of B.C. Municipalities Michael Frey for the Intervenor, Attorney General for the Province of British Columbia Exemptions - Indians - Special Reserve The Musqueam Indian Band, through a corporation, purchased property in fee simple in the City of Vancouver and purported to designate such property as a "special reserve" pursuant to section 36 of the Indian Act. The Court of Revision found that the property was wrongly placed on the City of Vancouver assessment roll but that decision was reversed by the Assessment Appeal Board. At issue on appeal was how a "special reserve" is created and whether the same required some act by the Federal Crown. HELD: Appeal Dismissed. 1. The legislature is presumed not to intend absurd consequences. A reasonable interpretation of section 36 of the Indian Act is one which excludes the concept of a Band, by unilateral declaration, converting lands it acquires to the status of reserve lands. The creation of a special reserve requires an act of the Federal Crown; 2. The decision of Mr. Justice Trainor in Petro Canada Inc. v. Capot-Blanc (1992), 72 B.C.L.R. (2D) 28 is obiter dicta. The discussion about a special reserve appears not to have involved any argument as to the criteria for establishment of a special reserve, authorities on the

2 issue, the statutory context, or history of the creation of reserves. The Board was correct not to follow the decision; 3. The Band, in any event, does not have legal title to the lands. It has mortgaged the lands and thus has but a reversionary interest. The Band cannot therefore set the lands apart for the use and benefit of the Band; 4. The lands are properly on the assessment roll of the City of Vancouver. Reasons for Judgment November 12, 1998 This appeal is pursuant to Section 63(3) of the Assessment Act, R.S.B.C. 1996, Chapter 20, instigated by the Appellants Musqueam Holdings Ltd. and Musqueam Properties Ltd. requiring the Assessment Appeal Board [the "Board"] state a case for the opinion of the Supreme Court on a question of law. The Board heard an appeal from decisions of the 1995 and 1997 Courts of Revision ordering the properties in issue be deleted from the City of Vancouver Assessment Roll, and transferred to the Musqueam Indian Band Assessment Roll. In its decision of October 24, 1997, the Board ordered the properties be reinstated on the City of Vancouver 1995 and 1997 Rolls. 1. FACTS: The Appellants are British Columbia incorporated companies and the directors of each are Musqueam Indian Band members. The Band membership elect the directors every two years concurrent with Band Council elections. Musqueam Holdings Ltd.'s sole shareholder is not a Band member but holds the share in trust for the Band Council. The sole share of Musqueam Properties Ltd. is held in trust by a Band member for the use and benefit of the Band. Three properties, referred to as parcels A, B, and C, [the "Properties"] are the subject of this appeal. The Properties are located on the North Arm of the Fraser River, in the City of Vancouver, near Musqueam Indian Reserve #2. The Properties were purchased September 26, 1988 by Musqueam Holdings Ltd. and parcel C was transferred to Musqueam Holdings Ltd. on June 25, The property was purchased partly with Musqueam Indian Band funds, and in part financed by a loan from Canada under the Native Economic Development Program. The Appellants have granted multiple mortgages which are registered against the Properties. Celtic Shipyards (1988) Ltd. ["Celtic"] is a wholly owned subsidiary of Musqueam Holdings Ltd. and operates a marine construction and repair business on Parcels A and B. Celtic employs, and provides skills training for Band members. The area is also used for the fishing activities of Musqueam Band members. Parcel C is leased to various tenants primarily for storage. The Properties are part of the lands claimed by the Musqueam Band in the treaty process as their traditional territory. The Band, since 1992, has attempted to have the Department of Indian Affairs and Northern Development declare the lands a reserve under Section 18 of the Indian Act, R.S.C C. I-5. In April 1995, the Minister turned down a request by the Band to designate Parcel A, and another property owned by Musqueam Properties Ltd., as settlement land.

3 The Properties have never been on the Register of Reserve Lands maintained by Canada, under Section 18 of the Indian Act. On November 17, 1994, the Board of Directors of Musqueam Holdings Ltd. passed a resolution stating it was in the best interests of the Musqueam Indian Band and Musqueam Holdings Ltd. as holder of the formal title of Parcel A, "... that the Lands be held as reserve lands of the Musqueam Indian Band, both generally and pursuant to Section 36 of the Indian Act...". It was resolved by the Band the lands be set apart. Musqueam Properties Ltd. passed an identical resolution in respect of Parcel C. On August 8, 1996, the Board of Directors of Musqueam Holdings Ltd. passed a resolution of similar effect setting aside Parcel B with the resolution to be effective as of November 17, Since 1991, the Band has levied taxes on its reserve lands under the authority of the Musqueam Indian Band Taxation Bylaw and the Musqueam Indian Band Assessment Bylaw. The Bylaws were replaced in 1996, and approved by the Minister of Indian Affairs and Northern Development. The British Columbia Assessment Authority, under contract with the Band, carries out the assessment of reserve lands. Property taxes on the Properties were paid to the City of Vancouver by the Appellants from 1988 through On January 3, 1995, the Appellants received tax notices from the City of Vancouver and on January 19, 1995 the Band requested the Area Assessor place the Properties on the Musqueam Indian Band Assessment Roll for the 1995 and subsequent taxation years. The 1995 and 1997 Courts of Revision ordered the Properties removed from the City of Vancouver Assessment Roll and transferred to the Musqueam Indian Band Assessment Roll. The Area Assessor appealed the decision of the Court of Revision to the Assessment Appeal Board. The City of Vancouver, Attorney General of Canada, and the Union of British Columbia Municipalities were added as parties to the assessment appeal pursuant to Section 57(6) of the Assessment Act. The parties agreed to proceed before the Assessment Appeal Board by way of an Agreed Statement of Facts. The Assessment Appeal Board in its October 24, 1997 decision ordered the Properties returned to the City of Vancouver Assessment Roll, held that only the Federal Crown has the power to set apart land as a reserve, and that Bands cannot, unilaterally, directly or indirectly, create reserves pursuant to Federal statute. The Appellants submitted a Requirement of the Assessment Appeal Board to State a Case pursuant to Section 63(3) of the Assessment Act on November 14, On December 4, 1997 the Assessment Appeal Board filed a Stated Case which contains the questions posed by the Appellants as well as questions posed by the Respondent City of Vancouver. On February 17, 1998 the City of Vancouver served Notice Pursuant to Section 8 of The Constitutional Question Act as follows: At issue in the Stated Case is the interpretation of s. 36 of the Indian Act, R.S.C c. I-5 which provides that where lands are set apart for the use and benefit of an Indian Band and legal title thereto is not vested in the Federal Crown, the Indian Act applies as though the land were a reserve under the Act. The

4 Appellants take the position that they have the capacity to, and have in fact, so set apart several properties located in Vancouver. The City will argue that, if Section 36 of the Indian Act is interpreted as giving the Appellants the power to set apart lands within the meaning of that provision, then the provision is invalid or inapplicable in British Columbia pursuant to the Terms of Union between British Columbia and Canada. A. THE QUESTIONS POSED BY THE ASSESSMENT APPEAL BOARD FOR OPINION OF THE COURT IN THE STATED CASE: The questions required by the Appellants for opinion of the Supreme Court are: 1. Is an action of the Federal Crown, acting through the Minister, the Governor in Council, or in some other way, a prerequisite for lands to be set apart for the use and benefit of an Indian Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c.i-5? 2. Does a corporation held in trust for members of a Band, have the authority or power to set apart lands for the use and benefit of a Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c.i-5? 3. Are the lands at issue set apart by Musqueam Holdings Ltd. and Musqueam Properties Ltd., corporation held in trust for the members of the Musqueam Indian Band, for the use and benefit of the Musqueam Indian Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c.i-5? 4. If the answer to question three is affirmative, are Parcels A, B and C subject to taxation by the City of Vancouver and, if not, in which year did each Parcel cease to be subject to taxation by the City of Vancouver? The questions required by the City of Vancouver for the opinion of the Supreme Court are: 1. (a) With respect to the 1995 City of Vancouver Assessment Roll (i) (ii) (iii) Was Parcel A properly removed from the Roll? Was Parcel B properly removed from the Roll? Was Parcel C properly removed from the Roll? (b) With respect to the 1997 City of Vancouver Assessment Roll (i) (ii) (iii) Was Parcel A properly removed from the Roll? Was Parcel B properly removed from the Roll? Was Parcel C properly removed from the Roll?

5 B. JURISDICTION OF THE COURT TO HEAR THE CONSTITUTIONAL QUESTION POSED BY THE CITY OF VANCOUVER: All parties to the appeal submitted that the court lacked jurisdiction under the Assessment Act to deal with the constitutional issues raised by Notice Pursuant to Section 8 of The Constitutional Question Act issued by the City of Vancouver. The reasons advanced by each party for the lack of jurisdiction by the court to hear the constitutional issue vary. I discern from the expressed views of the parties that there is, however, a basis common to their positions. They agree review by the Court should be limited to questions of law arising from the appeal before the Board. Concern was expressed by counsel for the City of Vancouver that the questions posed in the Stated Case may be interpreted broader than required and involve consideration of constitutional issues. Ms. Scheer suggested that the questions ought to be amended. I do not consider that necessary. Counsel for the parties were agreed the appeal should proceed on the basis the issue raised in the Notice Pursuant to Section 8 of The Constitutional Question Act filed by the City of Vancouver was not to be heard. I agreed that following an opportunity to review the written submissions of the parties on the issue I would provide reasons for the Court's lack of jurisdiction. JURISDICTION AS TO THE CONSTITUTIONAL QUESTION RAISED: The appeal before the court pursuant to Section 63(3) of the Assessment Act is from a final decision of the Assessment Appeal Board. The Board was clear in its reasons that despite arguments advanced it made no decision on the constitutional issue: Although extensive legal arguments were made by counsel for the City of Vancouver, the Board finds that it need not address those arguments given the findings of the Board on the interpretation of the Indian Act. It appears to the Board that it is immaterial to this decision whether the Federal or Provincial Crown has the authority to create reserves if it has been determined that the Band does not. [Reasons p. 15] The final decision made by the Assessment Appeal Board was based upon statutory interpretation: The Board finds that "set apart for the use and benefit of a band" in Section 36 of the Indian Act means set apart by the Minister or Governor in Council or some other federal action and there is no authority in the Band on its own, to set apart lands as a reserve. [Reasons p. 14] The Board made no decision on the constitutional issue. Its decision was interpretative only. The jurisdiction of the court pursuant to Section 63(3) of the Assessment Act is therefore restricted to questions of law posed in the Stated Case, and its power to intervene is limited to instances where the Board has either misinterpreted or misapplied a section of the Assessment Act, misapplied a principle of general law, or acted without evidence or upon a view of the facts that could not be reasonably entertained. [See Huie v. Assessor of Area No Burnaby/New Westminster (1993), SC (BCAC Case No. 349, p. 2089)]. The Assessment Act does not give the Board a jurisdiction to answer general questions of law. It has an authority to refer by way of a Stated Case for the opinion of the Supreme Court a question

6 of law arising in the appeal. The Board was not clothed with a jurisdiction to finally determine questions of general law not related to assessments. [See Yorke v. Vancouver Assessor of Area 09 (1992), 70 B.C.L.R. (2d) 136]. The constitutional validity of Section 36 of the Indian Act is a question of general law not related to assessments. The Board did not purport to decide the constitutional validity of Section 36. Neither would a jurisdiction in the Board to decide the constitutional issue as to division of powers between Canada and a Province, or the constitutional validity of Federal legislation, have been conferred upon it even if a Notice Pursuant to Section 8 of The Constitutional Question Act had been issued prior to the Board hearing. I do not accept the premise advanced by counsel for the Appellants based upon the principles in Town of Grandview v. Doering, [1976] 2 S.C.R. 621 and Henderson v. Henderson (1843), 3 Hare 100 that by not raising the constitutionality of Section 36 of the Indian Act before the Assessment Appeal Board, the City of Vancouver is now estopped from raising the issue for the first time on appeal by way of Stated Case. In circumstances where the prior court or tribunal had no jurisdiction over the claim or issue sought to be raised the estoppel principle is inapplicable when that issue is brought before a court that does have jurisdiction. The Assessment Appeal Board lacked a general jurisdiction over the constitutional validity of Federal legislation in issue. If the constitutional issue raised in the Notice Pursuant to Section 8 of The Constitutional Question Act filed by the City of Vancouver need ultimately be addressed, it may properly be dealt with by separate proceeding. In regard specifically to the concern raised by Ms. Scheer as to the possible interpretation of the scope of questions posed, it should be clear to all parties that the questions posed in the Stated Case will be answered on the basis of the arguments advanced by counsel on this appeal restricted to the Board's decision and not the constitutional validity of Section 36 of the Indian Act. 2. DISCUSSION: The issue on appeal concerns the meaning of Section 36 of the Indian Act: Where lands have been set apart for the use and benefit of a Band and legal title thereto is not vested in her Majesty, this Act applies as though the lands were a reserve within the meaning of this Act. It is the position of the Appellants the Properties in question do not have legal title vested in Her Majesty, and as they have been set apart for the use and benefit of the Musqueam Indian Band by resolutions of the Appellants all the requirements for special reserve status under Section 36 of the Indian Act have been met. AUTHORITY OF THE APPELLANTS: The Board accepted the ability of the Appellants to act on behalf of the Band, and for the purposes of the appeal the actions of the corporations were as if done directly by the Band. The trust holding of the shares of the Appellant corporations for the Band and control of the Directors by the Band Council support the Appellants authority to act on behalf of the Band. I accept the validity of the Board's finding and assumption which I continue for the purpose of this appeal.

7 The Appellants' position is that according to an interpretation based on the plain meaning of Section 36, the requisite conditions of that section have been met and although the lands do not become an actual reserve, the provisions of the Indian Act apply to the lands as though they were a reserve. Immediate consequences of a "setting apart" under Section 36 would include an exemption from taxation of the Properties under Sections 87 and a seizure under Section 29 of the Indian Act. Section 18 of the Indian Act provides: Subject to this Act, reserves are held by Her Majesty for the use and benefit of the respective bands for which they were set apart, and subject to this Act and to the terms of any treaty or surrender, the Governor in Council may determine whether any purpose for which lands in a reserve are used or are to be used is for the use and benefit of the band. The Appellants argue that the requirement of Section 18 that "... reserves are held by her Majesty..." does not apply to Section 36 because no reserve is actually created by operation of that section. The Respondents argue whether lands are an actual reserve, or treated as if a reserve, is essentially a difference without consequence in relation to necessity of Federal Crown action in their creation. The Respondents' position, accepted by the Assessment Appeal Board, was that some form of executive action of the Federal Crown was a prerequisite to lands being "set apart" for the use and benefit of an Indian Band within the meaning of Section 36 of the Indian Act. The "golden" rule of statutory construction would appear to have general application in an analysis of the appropriate interpretation of Section 36. The implication of a unilateral ability of a band to create special reserves without involvement of the Crown Federal could lead to absurd consequences. In Construction of Statutes, Driedger, 1994, 3rd Edition, Butterworths, Chapter 3, p. 80 et seq. the learned author provides a comprehensive review of avoiding absurd consequences in statutory interpretation. I find the learned author's summary of the modern absurdity rule ("golden rule") has general application in consideration of the issue in this appeal: The modern view of the "golden" rule may be summarized by the following propositions. (1) It is presumed that legislation is not intended to produce absurd consequences. (2) Absurdity is not limited to logical contradictions and internal incoherence; it includes violations of justice, reasonableness, common sense, and other public standards. Also, absurdity is not limited to what is shocking or unthinkable; it may include any consequences that are judged to be undesirable because they contradict values or principles that are considered important by the courts.

8 (3) Where the words of a legislative text allow for more than one interpretation, avoiding absurd consequences is a good reason to prefer one interpretation over the other. Even where the words are clear, the ordinary meaning may be rejected if it would lead to an absurdity. (4) The more compelling the reasons for avoiding an absurdity, the greater the departure from ordinary meaning that may be tolerated. However, the interpretation that is adopted should be plausible. [Driedger on the Construction of Statutes p ] I note that upon a reading of Section 36, in isolation, it may be said that the lands could be located anywhere. They need not have historical context to an existing reserve or Indian Band community. It is not necessary they be traditional lands of the Band. It designates no person or entity with the authority to set the lands apart. There is no requirement as to who has legal title to the lands so long as they are not vested in Her Majesty. There is no specific requirement that the Band concur, or even be consulted. Obviously, a reasonable interpretation of the section cannot be made in isolation. It is helpful to consider the historical context and genesis of Section 36 of the Indian Act. Special Reserves were defined in the Indian Acts of 1876, 1880, 1906, and 1927 as: "Special Reserve" means any tract or tracts of land, and everything belonging thereto, set apart for the use or benefit of and held in trust for any Band or irregular Band of Indians, the title of which is vested in a society, corporation or community legally established, and capable of suing and being sued, or any person or persons of European descent. There have only been four "special reserves" recognized by the Federal Crown since the Indian Act first came into effect in Title in relation to those lands was held in trust by a religious or charitable organization. The last of these trusts ceased to exist in [See Affidavit of Robert Eyahpaise, Ex. E. Assessment Appeal]. Counsel for the Appellants suggests it may be possible other "special reserves" exist unknown or unrecognized by the Federal Crown. Logic dictates they would be few given the long periods of time involved, and the significant interaction between the Crown and Indian Bands in regard to their reserve lands, finances, activities, and welfare issues. The Appellants argue that when Section 36 came into the Indian Act in 1951, replacing the previous "special reserve" provisions, it indicated an expansive legislative intent coupled with removal of discrimination as to the persons or entities who could set apart land for the use and benefit of a Band. Prior to the creation of the present Section 36 the Indian Act contained several provisions strongly indicating an intention to monitor and control special reserves and ultimately see them absorbed as ordinary reserves if title vested in the Crown. In R. v. Lewis (1996) 1 S.C.R. 921 at p. 954, Iacobucci J. quoted with approval the cautionary words of La Forest J. in Mitchell v. Peguis Indian Band [1990], 2 S.C.R. 85 regarding interpretation of statutes effecting Indians.

9 At the same time, I do not accept that this salutary rule that statutory ambiguities must be resolved in favour of Indians implies automatic acceptance of a given construction simply because it may be expected that the Indians would favour it over any other competing interpretation. It is also necessary to reconcile any given interpretation with the policies the Act seeks to promote. The Indian Acts of 1876, 1880, 1906 and 1927 provided that the trustee of the "special reserve" lands might at any time surrender them to Her Majesty in trust to be continued as an ordinary reserve. The Indian Acts provided that legal title in respect of a "special reserve" would become vested in Her Majesty if there was a violation of the trust, the society or trustee entity "broke up", or if a person holding legal title died without a legal successor and therefore the title lapsed or became void in law. A common sense view of the change, in historical perspective, supports more an intent to continue a provision for the protection of any "special reserves" that might still exist and strengthens the Federal Crown control of reserve lands whether the title was vested in the Crown or not. The historical context of the need for charities and religious organizations to provide lands and services to Indians for educational, health and welfare not provided by government has long been replaced with the Crown assuming appropriate responsibility. The need for "special reserves" has thereby diminished rather than increased. The Federal Crown has developed a very detailed Policy regarding the creation of reserves, including Additions to Reserves [Land Management and Procedural Manual, Chapter 9, Exhibit 16, Assessment Appeal Board]. The Federal Crown incurs substantial financial obligations in respect of the maintenance of reserve lands. The concept of allowing a Band, by unilateral declaration, to convert lands it might own to the status of reserve lands under Section 36 of the Indian Act is totally inconsistent with the carefully developed and detailed Policy the Federal Crown follows for negotiating any increase to the reserve lands of a Band. The Musqueam Band requested reserve status for the lands in issue under the Additions to Reserves Policy and it has not been granted. I did not discern from the evidence or arguments of counsel for the Appellants any apparent reason why the Federal Crown, without the prerequisite of its agreement and involvement, would expose itself to the substantial financial burden that would be imposed upon it, nor permit the social and political impact of unknown dimension which would follow allowing Bands unilaterally to significantly alter the status of non reserve lands to that of reserve lands. JUDICIAL REFERENCES TO SECTION 36: The Appellants cite in support of their interpretation a trilogy of decisions which contain references to Section 36 of the Indian Act said to indicate the ability of a Band to create a special reserve without action or involvement of the Federal Crown. [See Davey v. Isaac (1977), 77 D.L.R. (3d) 481 (S.C.C.), Re Stony Plain Indian Reserve No. 135, [1982] 1 W.W.R. 302 (Alberta C.A.), and Petro-Canada Inc. v. Capot-Blanc (1992), 72 B.C.L.R. (2d) 28 (S.C.)].

10 I have reviewed the decisions and, in my view, they do not support the ability of an Indian Band to unilaterally create reserve status for land as contended. The Appellants referred to a quotation of Mr. Justice Martland in Davey v. Isaac referring to Section 36: It might be objected that there is no "reserve" unless the title to the land is vested in the Crown. In my view, any difficulty in this regard is overcome by s. 36 of the Act, which provides: 36. Where lands have been set apart for the use and benefit of a band and legal title thereto is not vested in His Majesty, this Act applies as though the lands were a reserve within the meaning of this Act. The comment appears obiter to the Court's decision. In any event, Mr. Justice Martland was only affirming that the title to lands need not be vested in the Crown for the lands to be considered as reserve lands. That was not the issue before the Assessment Appeal Board, nor before the court on this appeal. The Re Stony Plain Indian Reserve decision concerned a reference to the Alberta Court of Appeal in which proposals or scenarios were posed by an Indian Band regarding what the effect of surrender of certain reserve lands for urban development would be and to determine the application of provincial laws to the reserve lands following surrender. One scenario was whether reserve lands which were surrendered would cease to be "lands reserved for the Indians" within the meaning of Section 91(24) of the British North America Act 1867 if the lands were granted in fee simple to a corporation, and further if the court's conclusion would differ if the fee simple in the surrendered reserve lands came to be held in trust, in perpetuity, by a corporation for the benefit of the Indian Band. The court expressed an opinion that lands granted in fee simple in trust for the benefit of the Indian Band and its members in perpetuity, would not cease to be a reserve as the Indian Band would retain all the benefits and usufruct appurtenant to a reserve and the lands would fall within Section 36 of the Indian Act. The court stated, at p :... we will assume first that the terms of the surrender require that the land be granted in fee simple to one or other of the categorized grantees with such a trust imposed upon it. Thus, the band has not ceded an iota of these benefits and usufruct appurtenant to a reserve; it has been at specific pains to state its retention of them. The change in title of the land from Her Majesty to the grantee cannot affect the scope and operation of the trust. There are no other details, information or circumstances given, and we are left with no alternative to the conclusion that the lands fall within s. 36 and remains a reserve for the purposes of the Act. In our view, if such a grant were made, it would come within s. 36 and the Indian Act would apply. The facts at issue in Re Stony Plain Indian Reserve vary dramatically from those on this appeal. The lands in issue were reserve lands. The reserve lands were being surrendered under a trust agreement. The "... details, information or circumstances given..." were limited, and the Band was not ceding any of "... the benefits and usufruct appurtenant to a reserve...".

11 The Band in Re Stony Plain Indian Reserve was seeking to preserve for the lands the reserve status they already enjoyed; not as in the present appeal, seeking to unilaterally create rights incident to reserve status they did not otherwise enjoy. The decision does however illustrate one proper and necessary reason for the continuation of a special reserve concept as embodied in the present section 36 of the Indian Act. In my view Re Stony Plain Indian Reserve does not decide the present matter. Petro-Canada Inc. v. Capot-Blanc was an action in which Petro-Canada sought relief by way of restitution, or a finding of unjust enrichment, to recover gasoline taxes it was required to pay for product it sold and delivered for the vehicles of an Indian band. The band stored some of its vehicles on property owned by four band members in trust for the band. The property was adjacent to the band's reserve. An incorporated contracting company wholly owned by the band was the occupier of the property. Mr. Justice Trainor found the plaintiff had not established the necessary elements of proof of the tort of negligent misrepresentation. Specifically he found the representation that gasoline delivered to the property would be exempt from taxation was a question of law, not fact; that there was no evidence the Band or any member of it possessed any special skill or knowledge about the tax exemption issue; and that there was no evidence of reliance by Petro-Canada on the skill or knowledge of the defendants. In the course of his judgment Trainor J., at pp observed: Here, delivery was effected to the band's vehicles. At the time of the transfer of the fuel to the vehicles, they were actually off the reserve but their paramount location was on the reserve. In reaching that conclusion, I have looked at the pattern of the use of those vehicles on the reserve for the many purposes which form an integral part of the administration and operation of the band. Some of those vehicles were kept in the shop operated by Eh Cho Dene Enterprises Co. Ltd., which shop was located on land held by trustees for the band. Although not actually part of the reserve, I am satisfied that these lands come within the category of a special reserve pursuant to s. 36 of the Indian Act. Where lands have been set apart for the use and benefit of a Band and legal title thereto is not vested in her Majesty, this Act applies as though the lands were a reserve within the meaning of this Act. Consequently those vehicles which were kept in the Eh Cho Dene shop were habitually situated on the Fort Nelson Indian Reserve. I am in agreement with the Assessment Appeal Board who found that Mr. Justice Trainor's reference to Section 36 of the Indian Act was unnecessary to the decision he reached and his reference to Section 36 appears not to have involved argument from any party as to the criteria for establishment of a special reserve, or the authorities, statutory context, or the history of reserve creation and status. I find Mr. Justice Trainor's reference to Section 36 of the Indian Act was in the circumstances not binding on the Board, nor helpful in analysis of the problem underlying their decision. [Hansard Spruce Mill Limited (In Bankruptcy) (1954), B.C.S.C.] Section 36 was also recently considered in a decision of the Tax Court of Canada. In Johnny Dixon v. Canada (Minister of National Revenue) [1995] C.N.L.R. 60, Proulx T.C.J. considered

12 when lands under the James Bay Agreement between Canada and Quebec became reserve lands. An Agreement in principle between the Federal and Provincial Crown had been reached in 1974; the Agreement was signed in It was not until July 1977 however that Canada passed an Act for the implementation of the Agreement, and later in October 1978 before an Order in Council accepting the transfer of the lands from the province was passed. The applicant Indian Band members, who wished to gain an exemption for income earned on the lands covered in the Agreement, argued that the lands became a reserve under Section 36 of the Indian Act in 1975 when both Canada and the province signed the Agreement; or alternatively and at the latest, in July 1977 when Canada passed an Act to implement the Agreement. Proulx T.C.J. at p. 70, held: In my view the order in council taken on the recommendation of the Minister administering the Indian Act, was essential for the said lands to become reserves within the meaning of the Indian Act. His finding appears to be based upon his agreement with the views of the learned author of the text Native Law, J. Woodward, [Scarborough: Carswell, 1994]. Proulx T.C.J. quoted from p. 68 of the text: For a very long time now, the legal way of setting apart lands for the use and benefit of a band is by an order in council. In Woodward (supra) it is said "the instrument by which reserve lands are formally set apart from other Crown lands is usually an order in council". I find this decision of interest, but certainly not definitive of the issue on this appeal. It could be argued on the facts of that case that the lands in question were not "set apart" for the use and benefit of an Indian Band until the Order in Council was made. EFFECT OF HOLDING LEGAL TITLE: Counsel for the Appellants argued that only the entity holding legal title to lands could set those lands apart for the use and benefit of the Band. I agree it is logical that a person declaring a trust of property for the use and benefit of another must itself have title to the property. However, when a corporation or a person "sets apart" lands for the use and benefit of another the trust created only sets apart the lands of the trust from the other lands held by the trustee. The private creation of a trust cannot of itself invoke the special statutory status accorded lands under section 36 of the Indian Act. When the Federal Crown accepts or recognizes that lands, for which it does not hold title, have been the subject of a trust declared by their owner to set them apart for the use and benefit of a Band, the Crown may then elect to accept those lands set apart in a much broader context. The Crown may consider that the lands set apart from the other lands of the trustee are to be set apart from all other lands generally. It is application of that general power of the Federal Crown setting the lands apart that gives rise to special reserve status under Section 36 of the Indian Act. MORTGAGE ARGUMENT:

13 Counsel for the Respondent City of Vancouver raised a further impediment to the Appellants succeeding on the specific facts pertaining to the Properties in issue here. The evidence discloses the Appellants did not have legal title to the Properties they claim to have "set apart" for the use and benefit of the Band pursuant to section 36 of the Indian Act. This is because the Appellants have granted mortgages against the Properties in issue. In numerous sections of the Indian Act, the distinction between "lands" and "interest in lands" is made. [See Section 2(1) definitions of "designated lands", "estate", and "surrendered lands"; s. 35(1); s. 37(2); s. 54; s. 64(1)(e); s. 83(1)(a); s. 87(1)(a). The Appellants at law have only a reversionary interest in the Properties in issue subject to repayment of the mortgage debt. [See Land Title Act, 1996 R.S., c. 250, s. 231; North Vancouver v. Carlisle, [1992] 3 W.W.R. 811 (B.C.C.A.); Coronation Credit Corporation Ltd. v. Industrial Mortgage & Finance Corporation Limited et al (1967), 64 D.L.R. (2d) 752 (B.C.S.C.); North West Trust Company v. Christian Inn (1974) Ltd., [1976] 4 W.W.R. 622]. The Appellants do not by virtue of the existing mortgages have legal title to the Properties. They have only an "interest in the lands". They cannot thereby set the lands apart for the use and benefit of the Band. At best they hold only a reversionary interest to the legal title to the Properties. 3. CONCLUSION: There is no unilateral ability of the Musqueam Indian Band to create a special reserve under s. 36 of the Indian Act. "Set apart for the use and benefit of a band" within the meaning of Section 36 requires action by the Federal Crown. The answers to the four questions which the Board was required by the Appellants, Musqueam Holdings Ltd. and Musqueam Properties Ltd., to ask for the opinion of the court are: Question 1 YES Question 2 NO Question 3 NO Question 4 PARCELS A, B AND C ARE SUBJECT TO TAXATION BY THE CITY OF VANCOUVER. The answer to the question which the Board was required by the Respondent City of Vancouver to ask for the opinion of the court is: Question 1(a): (i) (ii) (iii) NO NO NO Question 1(b)

14 (i) (ii) (iii) NO NO NO The Respondents are entitled to their costs of this appeal. Case 391A - Cont. Musqueam Holdings et al v. AA09 et al MUSQUEAM HOLDINGS LTD. & MUSQUEAM PROPERTIES LTD. v. ASSESSOR OF AREA 09 VANCOUVER, ATTORNEY GENERAL OF CANADA, CITY OF VANCOUVER & UNION OF BRITISH COLUMBIA MUNICIPALITIES British Columbia Court of Appeal (CA025358) Vancouver Registry Before the HONOURABLE MADAM JUSTICE SOUTHIN, the HONOURABLE MADAM JUSTICE RYAN, the HONOURABLE MADAM JUSTICE HUDDART, the HONOURABLE MR. JUSTICE MACKENZIE, and the HONOURABLE MADAM JUSTICE PROUDFOOT Vancouver, May 2, 2000 D.W. Roberts, Q.C. and W.A. Baker for the Appellants J.E.D. Savage for the Respondent Assessor of Area 09 Vancouver J.R. Haig, Q.C. and J.R. Power, Q.C. for the Respondent Attorney General of Canada P.J. Scheer and T. Zworski for the Respondent City of Vancouver R.H. Mackenzie for the Respondent Union of British Columbia Municipalities J. De Villiers, Q.C. for the Attorney General of British Columbia S. 36 Indian Act Special Reserve Unilateral Creation by Band S. 87 Indian Act The Musqueam Indian Band, through a corporation, purchased property in fee simple in Vancouver adjacent to their reserve. After unsuccessful negotiations to have the land added to their reserve, the corporation that held the land in trust for the Band, and the Band, passed a series of resolutions declaring the land to be part of their reserve. The Band argued that it thereby created a reserve under the authority of section 36 of the Indian Act. Section 36 was amended to its present form in The Court of Revision (Property Assessment Review Panel) held that the property was a reserve and therefore was not subject to taxation by the City of Vancouver. This decision was reversed on appeal to the Assessment Appeal Board (Property Assessment Appeal Board) and on further appeal the BC Supreme Court upheld the Board decision. HELD: Appeal Dismissed. The interpretation put forward by the Appellants could only be correct if Parliament has the power under section 91(24) of the Constitution Act to unilaterally transmute land owned by Indians anywhere in Canada into lands reserved for Indians with such privileges as Parliament confers by legislation on lands so reserved and their occupants. Quite apart from the constitutional clash between Parliament and the Provinces such an interpretation would create, it would mean that in 1951 Parliament intended by section 36 to supplant provincial jurisdiction and to divest the Crown in Right of Canada of its prerogative right to decline a legal burden. Such a change in constitutional law was clearly not intended. The Court below came to the correct result.

15 Reasons for Judgment (Oral) (Revised) May 2, 2000 SOUTHIN, J.A.: This is an appeal by leave of the Chief Justice pronounced 17 th February 1999 from the judgment of the Honourable Mr. Justice Holmes pronounced 12 th November 1998: THIS COURT ORDERS that the questions posed by the Appellants in the Stated Case being: 1. Is an action of the Federal Crown, acting through the Minister, the Governor in Council, or in some other way, a prerequisite for lands to be set apart for the use and benefit of an Indian Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c. I-57? 2. Does a corporation held in trust for members of a Band, have the authority or power to set apart lands for the use and benefit of a Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c. I-57? 3. Are the lands at issue set apart by Musqueam Holdings Ltd. and Musqueam Properties Ltd., corporations held in trust for the members of the Musqueam Indian Band, for the use and benefit of the Musqueam Indian Band within the meaning of Section 36 of the Indian Act, R.S.C. 1985, c. I-57? 4. If the answer to question three is affirmative, are Parcels A, B and C subject to taxation by the City of Vancouver and, if not, in which year did each Parcel cease to be subject to taxation by the City of Vancouver? BE ANSWERED AS FOLLOWS: 1. YES. 2. NO. 3. NO. 4. PARCELS A, B AND C ARE SUBJECT TO TAXATION BY THE CITY OF VANCOUVER. THIS COURT FURTHER ORDERS that the questions posed by the City of Vancouver in the Stated Case being: 1.(a) With respect to the 1995 City of Vancouver Assessment Roll (i) Was Parcel A properly removed from the Roll? (ii) Was Parcel B properly removed from the Roll? (iii) Was Parcel C properly removed from the Roll? (b) With respect to the 1997 City of Vancouver Assessment Roll (i) Was Parcel A properly removed from the Roll? (ii) Was Parcel B properly removed from the Roll? (iii) Was Parcel C properly removed from the Roll? BE ANSWERED AS FOLLOWS:

16 Question 1(a): (i) NO (ii) NO (iii) NO Question 1(b): (i) NO (ii) NO (iii) NO What this case is about is whether certain parcels of land in the City of Vancouver registered in the names of the Appellants are exempt from taxation. The Assessment Act, R.S.B.C. 1996, c. 20, of this Province makes certain provisions for assessments throughout British Columbia of lands, and of some relevance are subsections 3(1) and (2) and s. 27: Completion of assessment roll 3. (1) On or before December 31 of each year, the assessor must... (a) complete a new assessment roll containing a list of each property that is in a municipality or rural area and that is liable to assessment, and (b) mail a notice of assessment to each person named in the assessment roll. (2) Subject to this Act, an assessment roll completed under subsection (1) is the assessment roll for the purpose of taxation during the calendar year following completion of that roll. Exempt land held by occupier liable to assessment 27. (1) Land, the fee simple of which is held by or on behalf of a person who is exempted from taxation under an Act, and which is held or occupied otherwise than by or on behalf of that person, is, with its improvements, liable to assessment under this section. (2) The land and improvements referred to in subsection (1) must be entered in the assessment roll in the name of the holder or occupier, whose interest must be valued at the actual value of the land and improvements determined under section 19. (3) This section applies to improvements owned by, leased to, held or occupied otherwise than by, or on behalf of, a person exempted from taxation by an Act, located on land the fee simple of which is held by or on behalf of a person exempted from taxation by any Act. By s. 396 of the Vancouver Charter, S.B.C. 1953, c. 55, Crown lands are exempt from taxation: Liability to taxation 396. (1) All real property in the city is liable to taxation subject to the following exemptions:-

17 Crown exempt, tenant or occupier liable (a) Crown lands;... "Crown lands" are defined thus in s. 2: "Crown lands" means real property belonging to Canada or the Province, and includes real property held in trust for a body or tribe of Indians; By the Indian Act, R.S.C. 1985, c. I-5, s. 2: "reserve" means a tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band; After the appeal was heard and dismissed, the Court became concerned that it had not properly expressed the Appellants position in its oral reasons. In response to an inquiry of him as to that exact position, Mr. Roberts has replied: The Appellants submission was that the properties are exempt from taxation by reason of the application of s. 36 and s. 87 of the Indian Act, and that such exemption cannot be overridden or encroached upon by provincial legislation, including the Vancouver Charter. The fact that s. 396 of the Vancouver Charter does not explicitly exempt reserve lands from taxation does not alter the fact that the City of Vancouver has no taxing jurisdiction over such lands. Section 87 of the Indian Act operates notwithstanding any Act of the provincial legislature. These are the sections of the Indian Act referred to: 36. Where lands have been set apart for the use and benefit of a band and legal title thereto is not vested in Her Majesty, this Act applies as though the lands were a reserve within the meaning of this Act. 87. (1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83, the following property is exempt from taxation, namely, (a) the interest of an Indian or a band in reserve lands or surrendered lands;... The Appellant corporations in 1995 received notices of assessment on these three parcels of land. For convenience, I shall only address that of Lot D, Block 8, Plan 11178, District Lots 194 and 315, the City of Vancouver (known in this litigation as "Parcel C") which is registered in the name of the Appellant Properties. On 11 th January, 1995, counsel for the Musqueam Indian Band applied to the Court of Revision. He said this: This is our notice of appeal to Court of Revision of the 1995 assessment of the above noted property. We are appealing on the grounds that the property has been improperly assessed in that the lands have been set apart for the use and benefit of the Musqueam Indian Band and, as such, are not subject to assessment by the City of Vancouver. The lands are, if assessable at all, assessable by the Musqueam Indian Band.

18 We thank you for your consideration. It is interesting to note that the assessed value of this parcel was $2,419,000. The Court of Revision deleted the lands from the assessment roll saying: Court lacks jurisdiction over subject land and property as this property is a reserve Section 36 of the Indian Act. This led to an appeal by the Assessor to the Assessment Appeal Board: I, David Lee, Deputy Assessor for Assessment Area 9 Vancouver, do hereby appeal the 1995 Court of Revision decision for the above noted properties for the following reason: a) that the properties were improperly deleted from the City of Vancouver Assessment Roll and transferred to the Musqueam Indian Band Assessment Roll. By the time the matter came on to be determined by the Assessment Appeal Board, the 1997 assessment roll was also an issue. The Assessment Appeal Board has under s. 58 plenary powers: When board may vary assessment 58. (1) In an appeal under this Act, the board has and may exercise with reference to the land or improvements, or both, in respect of which the appeal is made, all the powers of the Court of Revision. (2) Without limiting subsection (1), the board may determine, and make an order accordingly,... (c) whether or not an exemption has been properly allowed or disallowed, (d) whether or not the land or improvements, or both, have been wrongfully entered on or omitted from the assessment roll,... By s. 57(8) parties to an appeal may call evidence. By subsections 57(4) and (6) the parties to the appeal are the Assessor and any other person affected by the appeal who is accepted by the board as a party. Hence, the Board heard from the Appellants, the Assessor, the Attorney General of Canada, the City of Vancouver and the Union of B.C. Municipalities. A substantial body of evidence was adduced, much of it by agreement. In its decision of 24 th October, 1997, the Board summarized the evidence thus: The parties provided the Board with an Agreed Statement of Facts (Exhibit No. A), which the Board accepts as a complete statement of facts in this case, and which may be summarized as follows: The three properties under appeal are located along the north arm of the Fraser River, near Musqueam Indian Reserve IR2, which is the principal community of the Musqueam.

19 All of the parcels were purchased on September 26, 1988 by Musqueam Holdings Ltd. ("M.H.L."), Parcel C was transferred to Musqueam Properties Ltd. ("M.P.L.") on June 25, Both companies are provincially incorporated, and the Directors of each of the Companies are Musqueam Indian Band ("the Band") members. The sole share of M.H.L. is held by James Reynold, who is not a member of the Band, in trust for the Council of the Band. The sole share of M.P.L. is held by George Geurin, a member of the Band, in trust for the use and benefit of the Band. The purchases were made with Band money following votes of the Band membership to release the funds from the Band s restricted account. The funds came in part from monies belonging to the Band and in part from a loan from Canada pursuant to the Native Economic Development Program (NEDP). The incorporation of MHL and Celtic Shipyards (1988) Ltd. ("Celtic"), a wholly owned subsidiary of MHL, was a precondition of the NEDP loan. Members of the Board of Directors of each of the companies (collectively referred to as "the Companies") are elected directly by and from the membership of the Band every two years, concurrent with Band Council elections. Parcels A and B are used by Celtic for the construction and repair of a variety of water craft. Celtic operates a variety of training programs to provide skills and employment training for the members of the Band. The area is also used by members of the Band for their fishing activities. Parcel C is leased by M.P.L. to various businesses, primarily for storage. The properties are part of the lands claimed by the Band in the treaty process as part of their traditional territory. Since 1992, the Band has attempted to have the lands declared a reserve by the Department of Indian Affairs and Northern Development ("DIAND") under Section 18 of the Indian Act. In April 1995, the Band requested that the Minister of DIAND designate Parcel A and another piece of property owned by M.P.L. as settlement land. That request has not been granted. The properties are not now, and have never been on the register of reserve lands maintained by Canada, either under Section 18 or Section 36 of the Indian Act. On November 17, 1994, the Board of Directors of M.H.L. passed a resolution which stated, in part, that it was in the best interests of the Band and of M.H.L. as holder to the formal title to Parcel A, "... that the Lands be held as reserve lands of the Musqueam Indian Band, both generally and pursuant to Section 36 of the Indian Act..." and resolved that they were set apart. An identical resolution was passed by the Board of Directors of MPL in respect of Parcel C. On August 8, 1996, the Board of Directors of MPL passed a resolution setting aside land identified as parcel B on the terms outlined above, but stating that the resolution was to be effective as of November 17, The Appellant Properties has one shareholder, Chief George Guerin. He holds that share in trust for the Musqueam Indian Band by a declaration of trust which is not in the material but which counsel assured us is in the same form as that relating to Musqueam Holdings Ltd.: DECLARATION OF TRUST The undersigned Trustee, being the registered holder of the number and class (if any) of shares in the capital of the Company as hereinafter set forth (hereinafter called the