First Nations and Insolvency in Canada: A Shifting Landscape
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First Nations and Insolvency in Canada: A Shifting
Landscape
Colin Brousson and Emelie Kozak*
1. INTRODUCTION
The upcoming ten years will be an exciting period for First Nations in terms
of economic development, with First Nations across Canada more poised than
ever to exercise their increasing economic and political clout. First Nations are
now sitting at the table where governments negotiate large resource transactions
and, as a result of the First Nations fiscal management regime, recently obtained
excellent credit ratings. Thus, First Nations should have better access to borrow
less expensive money. Just to use one resource-based example, it has been
estimated that the liquefied natural gas (LNG) industry could add as much as $1
trillion in cumulative gross domestic product before 2050. Further, First
Nations have seen some recent success in the Supreme Court of Canada,
including the first declaration of Aboriginal title in Canada.1 Included within
this decision is a thorough discussion of the rights conferred by Aboriginal title,
including the Crown’s duty to consult and, if appropriate, accommodate.
In light of such developments, First Nations should be positioned well to
increase their participation in the market economy through avenues such as the
negotiation of revenue-sharing agreements. In a similar manner to non-First
Nation matters, more transactions in the financial sector lead to a greater
potential for insolvencies. Despite this reality, the realm of insolvency as it
relates to First Nations in Canada has been largely unexplored.
The purpose of this paper is to provide an overview of this area of the law.
In doing so, certain fundamental questions will be addressed regarding the
interaction between the Indian Act,2 the federal bankruptcy, insolvency and
restructuring regime pursuant to the Bankruptcy and Insolvency Act3 (BIA) and
the Companies’ Creditors Arrangement Act4 (CCAA), as well as the First Nations
* Colin Brousson is a partner at Gowlings LLP and leader of the Restructuring and
Insolvency National Practice Group. He practices in the Vancouver office. Emelie
Kozak was an Articled Student at Gowlings LLP at the time of writing and is now a
lawyer currently obtaining her Masters of Law at American University’s Washington
College of Law in Washington DC.
1 Tsilhqot’in Nation v British Columbia (sub nom. Xeni Gwet’in First Nations v British
Columbia), 2007 BCSC 1700 at para. 455 [Tsilhqot’in], affirmed 2012 CarswellBC 1860
(C.A.), additional reasons 2013 CarswellBC 1 (C.A.), affirmed 2014 SCC 44.
2 Indian Act, R.S.C. 1985, c. I-5.
3 Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 [BIA].190 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
fiscal management regime as established under the First Nations Fiscal
Management Act5 (FMA).
The first part of the paper will consider whether an Indian band, as defined
under the Indian Act, may become bankrupt or subject to the BIA’s bankruptcy
provisions. The second part of the paper will briefly address the relationship
between the CCAA and Indian bands and will discuss some recent examples in
which the CCAA has been applied within the First Nations context. Next, the
focus will shift to receiverships, with a discussion of the potential appointment
of a receiver under the BIA and the role of a receiver appointed over an Indian
band or band council.
Part 5 of the paper involves an overview of the federal government
provision of funds to First Nation communities across Canada through funding
agreements, the role of the federal government upon default and how this might
impact insolvencies. Then, the First Nations fiscal management regime will be
addressed, a relatively new system that has been established to enable First
Nations to raise capital and maximize the economic benefits associated with
their real property tax and other revenue streams. Default under this regime can
invoke intervention of First Nations, which could impact the solvency of such
First Nations and priorities of their other creditors. Finally, the last two sections
of the paper will discuss the various aspects of the exemption from seizure of
property that is situated on a reserve pursuant to s. 89 of the Indian Act and will
provide some brief commentary on the Crown’s duty to consult and
accommodate a First Nation’s claimed or established interest in land.
Outside the scope of this paper is a complete discussion of: (a) creditors’
remedies as they relate to individual judgment debtors and to assets of an Indian
band, band council or corporation; and (b) the Crown’s duty to consult and
accommodate a First Nation’s claimed or established interest in land.
Additionally, the ramifications of personal bankruptcy and insolvency will not
be addressed, thus limiting the discussion to the corporate commercial context.
a) A Note on Terminology
Throughout this paper, reference will be made to an ‘‘Indian”, ‘‘Indian
band” or ‘‘band” as these terms are defined pursuant to the Indian Act or used in
case law that refers to the Indian Act. Reference will be made to a ‘‘First Nation”
or ‘‘First Nations” when discussing the First Nation Fiscal Management regime
or First Nations that have entered into self-government arrangements, are party
to modern treaties or are involved in the British Columbia treaty process.
4 Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36.
5 First Nations Fiscal Management Act, S.C. 2005, c. 9 [FMA].FIRST NATIONS AND INSOLVENCY 191
b) A Note on Modern Treaties and Self-Government Arrangements
More than 600 Indian bands are subject to the Indian Act, representing the
majority of First Nations in Canada. However, any dialogue in respect of First
Nations also requires consideration of self-government arrangements and
modern treaties, particularly in British Columbia, where, historically, treaties
were largely not negotiated.6 While it is not possible to undertake a full
discussion of this complex topic, certain elements are worth briefly mentioning.
There are currently 60 First Nations participating in the British Columbia
treaty process, which includes approximately two-thirds of all First Nations
people in the province.7 At the time of writing, the Tsawwassen First Nation
Final Agreement (Tsawwassen Agreement) and the Maa-nulth First Nations Final
Agreement have both been implemented.8 A number of other First Nations are
in the fifth stage of the six-stage treaty process.9 Additionally, three First
Nations in British Columbia have entered into self-government arrangements
that are independent of the treaty process.10 These and future developments will
have significant implications for anyone dealing with First Nations in the
insolvency context or otherwise, due to the legal status and capacity of First
Nations that are no longer governed by the Indian Act. In addressing the
ambiguous nature of First Nations’ legal capacity under the Indian Act, the
6 Thomas Isaac, Aboriginal Law: Commentary, Cases and Materials, 3d ed. (Saskatoon,
SK: Purich Publishing, 2004) at 103. Isaac notes that ‘‘[t]reaties are not only historical
documents but also include modern land claim agreements and treaties between
Aboriginal people and the Crown” (at 93).
7 Negotiation Update, online: BC Treaty Commission [BC Treaty Commission].
8 Tsawwassen First Nation Final Agreement Act, S.C. 2008, c. 32; Maa-nulth First Nations
Final Agreement Act, S.C. 2009, c. 18.
9 BC Treaty Commission, supra note 7 (the six First Nations in stage five of the treaty
process are the: (a) In-SHUCK-ch Nation; (b) K’omoks First Nation; (c) Lheidli
T’enneh Band; (d) Sliammon Indian Band (Tla’amin Nation); (e) Yale First Nation; and
(f) Yekooche Nation). The Yale First Nation Final Agreement Act, S.C. 2013, c. 25,
received Royal Assent in June 2013, but it has not yet entered into force.
10 The Sechelt Indian Band Self Government Act, S.C. 1986, c. 27, came into force in 1986
(with the exception of ss. 17 to 20, which came into force in 1988) and enables the Sechelt
Indian Band to exercise self-government over its lands and to control and administer
resources and services (s. 4). The Nisga’a First Nation and the governments of British
Columbia and Canada signed the Nisga’a Final Agreement in 1999, which was given
effect by the Nisga’a Final Agreement Act, S.C. 2000, c. 7. The Westbank First Nation
and the government of Canada signed the Westbank First Nation Self-Government
Agreement in 2003, which was given effect by the Westbank First Nation Self-
Government Act, S.C. 2004, c. 17.192 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
British Columbia Assembly of First Nations has noted the direct treatment of
the issue in modern governance arrangements:
[P]ractically speaking, the lack of a simple and clear recognition of legal
status and capacity has been a thorn in the side of our First Nation
governments. This is why, for certainty, all sectoral and comprehensive
governance arrangements directly address the legal status and capacity of
the Nation and the governing body to act on behalf of the Nation.11
As a result, First Nations that have ratified modern treaties (Modern
Treaty First Nations) or self-government arrangements (Self-Governing First
Nations) thus far are expressly entitled to all the rights and obligations of a
natural person, with the Tsawwassen Agreement serving as just one example:
Tsawwassen First Nation is a legal entity with the capacity, rights, powers,
and privileges of a natural person including the ability to:
(a) enter into contracts and agreements;
(b) acquire and hold property or an interest in property, and sell or
otherwise dispose of that property or interest;
(c) raise, spend, invest and borrow money;
(d) sue and be sued; and
(e) do other things ancillary to the exercise of its rights, powers and
privileges.12
Presumably, being entitled to all the rights and obligations of a natural
person would mean that Modern Treaty First Nations and Self-Governing First
Nations, plus any other First Nations that eventually fall within these
categories, will be impacted much differently than Indian bands under the
Indian Act. This distinction should be kept in mind throughout the ensuing
discussion of bankruptcy, insolvency and receiverships.
11 Puglaas (Jody Wilson-Raybould) and Tim Raybould, BCAFN Governance Toolkit: A
Guide To Nation Building (West Vancouver: British Columbia Assembly of First
Nations, 2011) [Wilson-Raybould & Raybould] at 45.
12 Tsawwassen First Nation Final Agreement, ch. 16 at s. 7, online: Aboriginal Affairs and
Northern Development Canada . See also Wilson-Raybould & Raybould, supra note
11 at 47.FIRST NATIONS AND INSOLVENCY 193
2. BANKRUPTCY OF AN INDIAN BAND
One of the fundamental questions in respect of Indian bands and insolvency
is whether an Indian band can become ‘‘bankrupt” in the sense that a
corporation or an individual may acquire this legal status under the BIA. This
requires a discussion of certain legislative definitions and related judicial
interpretation. The following section will first examine relevant provisions of the
BIA, and will then address the manner in which Indian bands are defined in the
Indian Act and considered by the courts.
a) The BIA: ‘‘Debtor”, ‘‘Bankrupt” and ‘‘Person”
Pursuant to the BIA, a ‘‘debtor” may become bankrupt.13 The BIA defines
‘‘bankrupt” as ‘‘a person who has made an assignment or against whom a
bankruptcy order has been made or the legal status of that person.”14 A
‘‘person” includes, but is not limited to, a partnership, an unincorporated
association, a corporation, a cooperative society or a cooperative
organization.15 Consequently, whether an Indian band may become bankrupt
turns on whether an Indian band falls within one of the categories in the
definition of ‘‘person”.
b) Partnership or Corporation
While the BIA does not define ‘‘partnership”, the commonly accepted
definition of a partnership is a relationship ‘‘that subsists between persons
carrying on a business in common with a view to profit.”16 Indian bands have
the capacity to enter into partnerships. Nonetheless, it is the authors’ view that,
in accordance with the familiar definition of the term and well as general
principles of partnership law, an Indian band itself does not constitute a
partnership.
Indian bands are not incorporated and as such, are not corporations.
However, as the BIA clearly applies to corporations,17 a company related to an
13 BIA, supra note 3 at s. 2(1).
14 Ibid.
15 Ibid.
16 Alison R. Manzer, A Practical Guide to Canadian Partnership Law, loose-leaf (consulted
March 2014), (Toronto: Carswell, 1994), ch 2 at 2.20.
17 Section 2(1) of the BIA defines ‘‘corporation” as:
a company or legal person that is incorporated by or under an Act of Parliament or of
the legislature of a province, an incorporated company, wherever incorporated, that is
authorized to carry on business in Canada or has an office or property in Canada or
an income trust but does not include banks, authorized foreign banks within the194 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
Indian band can become bankrupt. The case of Re Bigstone Band Enterprises
Ltd (Bankrupt)18 involved a dispute between the trustee and a secured party of
the bankrupt, Bigstone Band Enterprises Ltd. (the ‘‘Company”), over the
interpretation of several security agreements. While the Company was the
grantor of the security in most of the agreements, one agreement declared the
grantor of the security to be ‘‘The Bigstone Band of Indians”. The Court held
that this particular agreement did not provide the secured party with security
against any of the Company assets, finding that ‘‘[t]he Band and the bankrupt
are not one and the same.”19
c) Cooperative Society or Cooperative Organization
The BIA does not define either ‘‘cooperative society” or ‘‘cooperative
organization”, and the courts have not interpreted the meaning of these terms in
the insolvency context. However, it would appear that, in using this
terminology, the legislative drafters may have intended to refer to
incorporated entities such as cooperative associations 20 or cooperative
entities.21 By their very nature, cooperative associations and cooperative
entities are based on a cooperative basis or recognized cooperative principles,
which are unique to their legal existence.22 The British Columbia Supreme Court
has held that an Indian band is not a corporation as it does not ‘‘find [its] genesis
through an act of incorporation.”23 This line of reasoning is capable of
extending to other entities that are created by virtue of incorporation, such as
entities founded on cooperative bases or principles, which leads to the authors’
view that, in all likelihood, an Indian band is not a cooperative society or a
cooperative organization as referred to in the BIA.
meaning of section 2 of the Bank Act, insurance companies, trust companies, loan
companies or railway companies.
18 Re Bigstone Band Enterprises Ltd (Bankrupt), 1999 ABQB 868 (Q.B.).
19 Ibid. at para 11.
20 See, e.g., Cooperative Association Act, S.B.C. 1999, c. 28 (associations are formed by
incorporation).
21 Canada Cooperatives Act, S.C. 1998, c. 1, s. 2(1).
22 The Cooperative Association Act, supra note 20, states that ‘‘[a]n association must be
organized and operated and must carry on business on a cooperative basis” (s. 8(1)) and
sets out the principles and methods that constitute a cooperative basis (s. 8(2)). The
Canada Cooperatives Act, ibid., defines a ‘‘cooperative entity” as ‘‘a body corporate
that, by the law under which it is organized and operated, must be organized and
operated on — and is organized and operated on — cooperative principles” (s. 2(1)).
23 William v. Lake Babine Indian Band, 1999 CarswellBC 764 at para. 33, [2000] 1 C.N.L.R.
233 (S.C.).FIRST NATIONS AND INSOLVENCY 195
d) Unincorporated Association
Courts have considered whether an Indian band might be an
unincorporated association. In Keewatin Tribal Council Inc. v. Thompson
(City),24 the Court of Queen’s Bench of Manitoba held that Indian bands, as
creatures of statute, are unincorporated associations with ‘‘rather special
features.”25 In Montana Band v. Canada,26 the Federal Court clarified the issue
of whether Indian bands have the capacity to sue and be sued in their own
names. In discussing whether such an implied capacity could arise from
statutorily imposed rights and obligations, the court noted that a band does not
have corporate status and is not a natural person according to law.27 The Court
went on to state the following:
A band is not an unincorporated association; it is not a group of tenants-in-
common because membership does not confer a present right of possession
of band property. In Keewatin Tribal Council Inc. v. Thompson (City)
[citations omitted], Jewers J. described a band as an unincorporated
association of a unique nature, because it is created by statute rather than
by consent of its members.28
It is evident that in the view of the Federal Court, a band is not an
unincorporated association. The Court’s reference to the Keewatin description
of a band as an unincorporated association appears to suggest only that the
Indian band is a unique entity, not that it is the equivalent of an unincorporated
association for legal purposes.
e) The Indian Band: A Separate Entity with Legal Capacity
Subsection 2(1) of the Indian Act defines a ‘‘band” as a body of Indians:
(a) for whose use and benefit in common, lands, the legal title to which is
vested in Her Majesty, have been set apart before, on or after
September 4, 1951,
(b) for whose use and benefit in common, moneys are held by Her
Majesty, or
24 Keewatin Tribal Council Inc v. Thompson (City), [1989] 5 W.W.R. 202, [1989] 3
C.N.L.R. 121 (Man. Q.B.).
25 Ibid. at para. 67.
26 Montana Band v. Canada, [1998] 2 F.C. 3 (T.D.).
27 Ibid. at para. 20.
28 Ibid.196 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
(c) declared by the Governor in Council to be a band for the purposes of
this Act.
The Supreme Court of British Columbia has remarked that the Indian Act
definition of ‘‘band” does not expressly make an Indian band a legal person. 29
Further, although bands have a separate existence from that of their members,
‘‘they lack many of the abilities of natural persons, corporations, municipalities
and even unincorporated associations.”30
The distinct nature of Indian bands has not prevented the courts from
providing them legal capacity in an array of situations. The Supreme Court of
British Columbia held the following in Willson v. British Columbia:
An Indian band has been considered to be legally capable as:
. an employer for the purposes of the Canada Labour Code;
. a juridical person for the purpose of suing to determine the validity of
surrender of reserve lands;
. capable of contracting, and suing and being sued in contract;
. capable of executing a contract of guarantee;
. competent to sue and defend actions between Indian bands, to
determine which of two bands is entitled to possession and enjoyment
of a reserve;
. competent to sue for a declaration that certain amendments to the
Indian Act were unconstitutional; and
. the proper [party] to an action commenced by a corporation formed by
seven First Nations to claim aboriginal fishing rights, in place of the
corporation, so that the First Nations were substituted for their
corporate vehicle.31
f) Registered Bankruptcies in Canada
The Office of the Superintendent of Bankruptcy Canada (OSB) has an
online database that lists all bankruptcies and proposals registered in Canada
since 1978. Research of the database demonstrates that at the time of writing, no
29 Supra note 1.
30 Ibid., citing Blueberry River Indian Band v. Canada (Department of Indian Affairs &
Northern Development), 2001 FCA 67.
31 Willson v. British Columbia, 2007 BCSC 1324 at para. 50 [citations omitted], (sub nom.
West Moberly First Nations v. British Columbia) 2007 CarswellBC 1999.FIRST NATIONS AND INSOLVENCY 197
First Nation or Indian band has been assigned into bankruptcy in the last 36
years.32 Further, a thorough review of the case law has not yielded examples of
bankrupt Indian bands or First Nations. While neither of these factors leads to
the definitive conclusion that Indian bands cannot be bankrupt, they do suggest
the remoteness of this possibility.
g) Commentary
The foregoing review demonstrates the improbability that an Indian band,
as defined under the Indian Act, can become bankrupt. While perhaps open to
argument, it does not appear that a band classifies as a ‘‘person” under the BIA,
as there is no clear indication that it is a partnership, corporation, cooperative
society, cooperative organization or unincorporated association. Rather, the
courts have held that bands do not have the same legal status as a number of
these entities. On the other hand, Indian bands do have the legal capacity to be
contracting parties and to sue and be sued in a variety of circumstances, and
there has been no express declaration by a court in Canada that an Indian band
is precluded from becoming bankrupt.
3. CCAA REORGANIZATIONS
A review of the CCAA’s purpose and certain definitions has led the authors
to conclude that it is highly unlikely that the CCAA applies directly to Indian
bands. While the CCAA does not have an express purpose clause, eminent
scholars in the field have noted that the long title of the CCAA, An Act to
facilitate compromises and arrangements between companies and their creditors,
indicates its objective of ‘‘assist[ing] insolvent companies in developing and
seeking approval of compromises and arrangements with their creditors.”33
Further, the CCAA defines ‘‘debtor company” in s. 2(1) as follows:
‘‘debtor company” means any company that
(a) is bankrupt or insolvent,
32 Based on searches of the terms ‘‘band”, ‘‘Indian” and ‘‘First Nation” conducted in
March 2014, online: Office of the Superintendent of Bankruptcy Canada: . Correspondence with the OSB indicates
that statistics regarding bankruptcies or receiverships of First Nations are not recorded
separately.
33 Lloyd W. Houlden, Geoffrey B. Morawetz and Janis P. Sarra, The 2013-2014 Annotated
Bankruptcy and Insolvency Act (Toronto: Carswell, 2013-2014) at 1174 [emphasis
added].198 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
(b) has committed an act of bankruptcy within the meaning of the
Bankruptcy and Insolvency Act or is deemed insolvent within the
meaning of the Winding-up and Restructuring Act, whether or not
proceedings in respect of the company have been taken under either of
those Acts,
(c) has made an authorized assignment or against which a bankruptcy
order has been made under the Bankruptcy and Insolvency Act, or
(d) is in the course of being wound up under the Winding-up and
Restructuring Act because the company is insolvent.
The definition of ‘‘company” is also relevant, with the CCAA applying to
four types of companies: (1) federally incorporated companies; (2) provincially
incorporated companies; (3) companies, wherever incorporated, having assets or
doing business in Canada; and (4) income trusts.34 An Indian band is neither an
income trust nor an incorporated entity, so it cannot be a ‘‘company” for the
purposes of the CCAA. That said, insolvency professionals who have had the
opportunity to be involved with CCAA proceedings certainly appreciate the
flexibility of the CCAA, particularly where for practical purposes this appears
necessary. For example, 2013 brought us the CCAA filing of what appears to be
a ‘‘railway”, despite the apparent exclusion of railways from the definition of
‘‘company” under the CCAA.35 Thus, while unlikely in the authors’ view,
perhaps under certain circumstances clever counsel might be able to convince a
Court that an Indian band should be subject to the CCAA.
The authors are aware of at least two recent cases in which a stay pursuant
to the CCAA has been contemplated in a First Nations context. In Alexis
Paragon Limited Partnership (Re),36 a group of companies and a partnership
(the ‘‘Paragon Group”) owed approximately $82 million to a secured creditor,
arising from funds borrowed for the operation of a casino on the reserve of the
Alexis Nakota Sioux Nation in Alberta. The court held that the Paragon Group
had not met the test for granting a stay under the CCAA and instead ordered the
appointment of a receiver/manager. Another recent example of a CCAA
touching on First Nations assets is the Douglas Channel CCAA, filed in British
Columbia in October 2013. This CCAA concerns the development and
operation of an LNG export facility near Kitimat, British Columbia. The
34 Ibid. at 1180.
35 Montreal, Maine & Atlantic Canada Co. (Montreal, Maine & Atlantique Canada Cie)
(Arrangement relatif à), 2013 QCCS 3777. See also Re Forest and Marine Financial
Corp. (2009), 54 C.B.R. (5th) 201 (B.C. C.A.) (partnership allowed to file CCAA,
together with related companies).
36 Alexis Paragon Ltd. Partnership, Re, 2014 ABQB 65.FIRST NATIONS AND INSOLVENCY 199
Haisla Nation, one of the founding partners in the project, owns 50 percent of
one of the petitioners and agreed to provide land for the project site.
4. RECEIVERSHIP
a) Appointment of National Receiver
Section 243 of the BIA governs the appointment of a national receiver.
Subsection 243(1) provides that a receiver may be appointed on application by a
secured creditor, and reads as follows:
243. (1) Subject to subsection (1.1), on application by a secured creditor, a
court may appoint a receiver to do any or all of the following if it
considers it to be just or convenient to do so:
(a) take possession of all or substantially all of the inventory, accounts
receivable or other property of an insolvent person or bankrupt that
was acquired for or used in relation to a business carried on by the
insolvent person or bankrupt;
(b) exercise any control that the court considers advisable over that
property and over the insolvent person’s or bankrupt’s business; or
(c) take any other action that the court considers advisable.
As is evident from the language of s. 243(1), a receiver is appointed to take
possession and control of the undertakings, property and assets of an insolvent
person or bankrupt. This paper has already concluded that it is unlikely an
Indian band may become bankrupt. Following this line of reasoning, a receiver
cannot be appointed over an Indian band pursuant to s. 243 of the BIA unless an
Indian band falls within the BIA definition of ‘‘insolvent person”, which is as
follows:
‘‘insolvent person” means a person who is not bankrupt and who resides,
carries on business or has property in Canada, whose liabilities to creditors
provable as claims under this Act amount to $1,000, and
(a) who is for any reason unable to meet his obligations as they generally
become due,
(b) who has ceased paying his current obligations in the ordinary course
of business as they generally become due, or
(c) the aggregate of whose property is not, at a fair valuation, sufficient,
or, if disposed of at a fairly conducted sale under legal process, would200 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
not be sufficient to enable payment of all his obligations, due and
accruing due.37
The definition requires that an ‘‘insolvent person” be a ‘‘person who is not
bankrupt”. It has already been established that a ‘‘person” under the BIA
includes a partnership, an unincorporated association, a corporation, a
cooperative society or a cooperative organization, and that an Indian band is
not likely to amount to one of these entities. Thus, it appears that an Indian
band itself cannot be subject to a s. 243 receivership.
In addition to listing all bankruptcies and proposals registered in Canada
since 1978, the OSB online database lists all receiverships registered since 1993.
Research of the database has indicated that, at present, no First Nation or
Indian band has been placed into a receivership governed by the BIA since that
date.38
b) Other Receiverships in a First Nations Context
There have been a number of instances in which a receiver was appointed to
exercise the powers of a band council. However, these situations are
distinguishable from the receivership process as it is commonly understood in
the insolvency context. The appointment of a receiver over a band council has
usually occurred out of a necessity for an impartial third party to take over its
administration due to hostility among band members and council or pending
elections for a new chief and council.39 In such situations, the receiver’s
37 BIA, supra note 3 at s. 2(1) [emphasis added].
38 Supra note 32.
39 This occurred in Martselos v. Poitras, 2009 FC 470. In August 2008, a Salt River First
Nation election took place. Within one month of taking office, the chief and councillors
passed a Band Council Resolution authorizing the payment of $1.188 million of band
funds to certain band members, including the chief. The validity of the 2008 election was
contested and in March 2009, an appeal arbitrator appointed pursuant to the band’s
Customary Election Regulations found that ‘‘infractions were committed which
materially affected the outcome of the 2008 Election in respect of the position of the
Chief and in respect of three positions of Councillor”. The appeal arbitrator ordered a
new election. In the interim, a motion was brought for the appointment of a receiver-
manager to exercise the powers of the band council until a new election could be held.
The Federal Court granted the motion pursuant to s. 44 of the Federal Courts Act,
holding that it was ‘‘only just and convenient, in the circumstances, to appoint a
receiver/manager, in order to avoid irreparable harm” (para. 24). The order laid out the
receiver-manager’s authority in detail, which included taking possession and control of
all monies and accounts administered by the band council and to preserve, protect and
maintain control of such funds.FIRST NATIONS AND INSOLVENCY 201
authority has been limited to select powers in accordance with the court order
and has not included the power to liquidate any band assets.40
In Cook’s Ferry Band v. Cook’s Ferry Band,41 the Federal Court determined
whether it had jurisdiction to appoint a receiver-manager over the assets of a
band council. Litigation was ongoing and certain band members had filed a
motion seeking the appointment of a receiver-manager, as well as injunctive
relief against the band council. The band council alleged that s. 44 of the Federal
Court Act42 (FCA) authorized the appointment of a receiver but not a receiver-
manager. At the time, the wording of s. 44 was as follows:
In addition to any other relief that the Court may grant or award, a
mandamus, injunction or order for specific performance may be granted or
a receiver appointed by the Court in all cases in which it appears to the
Court to be just or convenient to do so, and any such order may be made
either unconditionally or on such terms and conditions that the Court
deems just.43
The Court rejected this argument, stating that s. 44 should not be so
narrowly construed; the word ‘‘receiver” could also include a receiver-manager
as the position involves both the administration and management of assets.
Another of the band council’s arguments was that an Indian band council,
as a legislative body exercising delegated federal authority, should not be subject
to replacement by a receiver-manager. The band council also made submissions
40 For example, in Yellowquill v. Canada (Attorney General), 1998 CarswellNat 2144 (Fed.
T.D.), additional reasons 1998 CarswellNat 2145 (Fed. T.D.), the Federal Court
granted an application for the appointment of a receiver-manager for the Long Plain
Indian Nation until elections for a new chief and council could take place. The Court
limited the receiver-manager’s functions to carrying out administrative matters and
delivering public services to ensure the continuation of the band’s affairs without
interruption. The court explicitly prevented the receiver-manager from exercising any
powers, paying any expenses or making any decisions outside the scope of its order.
Further, it prohibited the receiver-manager from entering into any new contracts unless
absolutely necessary, and only then with the court’s permission.
41 Cook’s Ferry Band v. Cook’s Ferry Band, [1989] 3 F.C. 562, 1989 CarswellNat 10 (Fed.
T.D.).
42 Federal Court Act, R.S.C. 1985, c. F-7.
43 The current language of s. 44 is nearly identical to its construction in 1989. It now states
as follows:
In addition to any other relief that the Federal Court of Appeal or the Federal Court
may grant or award, a mandamus, an injunction or an order for specific performance
may be granted or a receiver appointed by that court in all cases in which it appears to
the court to be just or convenient to do so. The order may be made either
unconditionally or on any terms and conditions that the court considers just.202 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
regarding the lack of express statutory authority to remove its jurisdiction over
the band’s assets. In rejecting these submissions, the court noted that the band
members were not seeking the appointment of a receiver-manager to wind up
the band council. Rather, they were seeking the appointment to preserve the
band’s assets. This factor is consistent with the notion that receiverships over
band councils are of a different nature than receiverships in the normal course of
an insolvency. The court concluded that it did have jurisdiction to appoint a
receiver-manager pursuant to s. 44 of the FCA.
In addition to the Federal Court’s jurisdiction in respect of receiverships,
certain provincial statutes authorize the appointment of a receiver. 44 For
instance, s. 101 of the Ontario Courts of Justice Act45 empowers the Superior
Court of Justice to appoint a receiver or receiver and manager by an
interlocutory order ‘‘where it appears to a judge of the court to be just or
convenient to do so.” The order may include terms that are considered just. 46
A review of the case law demonstrates that there is no reported decision
where a receiver has been appointed over an Indian band pursuant to section
101. However, in Chapman v. Chicago,47 the predecessor of s. 101 was at issue in
a dispute that arose over the validity of the election of the chief and council of
the Lac Des Mille Lacs Indian Band. A receiver-manager had already been
appointed over the assets of the band and a subsequent order had extended the
appointment pursuant to s. 114 of the Courts of Justice Act, 198448 (the
‘‘Extension Order”). The chief and council appealed the Extension Order,
arguing that an order against the band council could only be granted by the
Federal Court. They cited s. 18 of the FCA as a basis for this argument, which
provides the Federal Court with exclusive jurisdiction to grant relief against a
federal board or tribunal. The language of s. 18 at the time was:
The Trial Division has exclusive original jurisdiction
44 See, e.g., Law and Equity Act, R.S.B.C. 1996, c. 253, s. 39(1); Judicature Act, R.S.A.
2000, c. J-2, s. 13(2). A review of the jurisprudence has shown that a receiver has not been
appointed over an Indian band or band council pursuant to these provisions or their
most recent predecessors.
45 Courts of Justice Act, R.S.O. 1990, c. C.43.
46 Ibid. at s. 101(2).
47 Chapman v. Chicago (1991), 5 O.R. (3d) 220, 1991 CarswellOnt 721 (Div. Ct.)
[Chapman].
48 Courts of Justice Act, 1984, S.O. 1984, c. 11. s. 114, provided:
In the Unified Family Court or the Ontario Court (General Division), an
interlocutory injunction or mandatory order may be granted or a receiver or
receiver and manager may be appointed by an interlocutory order, where it appears to
a judge of the court to be just or convenient to do so.FIRST NATIONS AND INSOLVENCY 203
(a) to issue an injunction, writ of certiorari, writ of prohibition, writ of
mandamus, writ of quo warranto, or grant declaratory relief, against
any federal board, commission or other tribunal; and
(b) to hear and determine any application or other proceeding for relief in
the nature of relief contemplated by paragraph (a), including any
proceeding brought against the Attorney General of Canada, to obtain
relief against a federal board, commission or other tribunal.
The band members took the position that the order was granted at the
request of the band to protect band assets, not to restrain the band council. In
their position, s. 18 did not apply as a band, is not a federal board or tribunal
and the order was not made against the band council. They further argued that
this was a matter of property and civil rights and, therefore, within the
jurisdiction of the provincial superior court. The Court agreed with the band
members’ submissions upon a reading of the reasons for granting the Extension
Order:
[W]hen the reasons are read as a whole, they indicate that Wright J. made
the order pursuant to his powers to make orders relating to property and
civil rights in the province. He also clearly states that the order is made at
the request of the Band to protect Band assets for a period during which
there are unresolved issues regarding the administration of the Band’s assets
by those who purport to be the newly elected Band Council. Had a similar
order been requested under s. 44 of the FCA, the Federal Court would have
had jurisdiction to appoint a receiver pending resolution of the election
dispute. Nevertheless, the Ontario Court (General Division) judge was
acting within his jurisdiction when, on a motion in this action, he granted
the order pursuant to s. 114 of the Courts of Justice Act, 1984.49
Interestingly, this case made the distinction between the appointment of a
receiver-manager over the band itself, rather than over the band council.
In Alberta, one of the provisions governing the appointment of a receiver is
s. 13(2) of the Judicature Act.50 In the case of Piikani Nation v. Piikani Energy
Corporation,51 the Piikani Nation was the beneficial shareholder of all the issued
and outstanding shares of Piikani Energy Corporation. One noteworthy aspect
of the case is that the Indian band itself brought the application for the
appointment of a receiver-manager under s. 13(2) of the Judicature Act, which
demonstrates the level of a band’s involvement in these types of proceedings.
49 Chapman, supra note 47 at paras. 14-15.
50 Judicature Act, supra note 44.
51 Piikani Nation v. Piikani Energy Corp., 2010 ABQB 352.204 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
d) Commentary
Based on the definitions in s. 243 of the BIA, it is evident that a national
receiver cannot be appointed over an Indian band. The provincial statutes
provide for the appointment of a receiver, and, in certain cases, a receivership
has occurred over a band or a band council. However, receivers appointed over
bands or band councils appear to have been restricted to an administrative
capacity only, without powers to liquidate assets. The limitation of these
appointments makes intuitive sense, as Indian bands have traditionally faced
obstacles to pledge their assets as collateral. The First Nations fiscal
management regime, to be discussed in a subsequent section of the paper, is
attempting to address this challenge.
5. INTERVENTIONS
The following segment will present an overview of interventions in the
context of federal government funding and the First Nations fiscal management
regime.
a) Federal Government Funding Agreements
The federal government has a policy of supplying funding to band
governments for infrastructure projects and an array of programs and services. 52
One of the means by which this is accomplished is through funding agreements,
also known as comprehensive funding arrangements,53 which are entered into
with the Minister of Indian Affairs and Northern Development 54 (the
‘‘Minister”) on behalf of the federal Crown. The funding agreements require
bands to comply with certain terms and conditions in respect of expenditures. 55
52 Jack Woodward, QC, Native Law, loose-leaf (consulted March 2014), (Toronto:
Carswell, 1990), ch. 7 at 7§331 [Woodward].
53 For a list of the current models of national funding agreements, see National Funding
Agreements Models, online: Aboriginal Affairs and Northern Development Canada
[National
Funding Agreements Models].
54 The Department of Indian Affairs and Northern Development, or DIAND, is the
official legal title of the ministry responsible for Canada’s aboriginal peoples. However,
under Canada’s Federal Identity Program, the Department is now referred to by its
applied title of Aboriginal Affairs and Northern Development Canada, or AANDC.
Indian and Northern Affairs Canada, or INAC, is another commonly used, although
unofficial, term. See Woodward, supra note 52, ch. 3 at 3§490 and Federal Identity
Program, online: Treasury Board of Canada Secretariat .
55 Woodward, supra note 52 at 7§331.FIRST NATIONS AND INSOLVENCY 205
The funding agreements also set out circumstances leading to events of default,
which may include but are not necessarily limited to:
(a) the band council’s default on any of its obligations in the agreement;
(b) the auditor’s denial of opinion or adverse opinion on the band
council’s financial statements;
(c) the Minister’s opinion that the band council’s financial position is such
that the delivery of programs or services for which funding is provided
is at risk; and
(d) the Minister’s opinion that the health, safety or welfare of funding
recipients is compromised.56
In 2011, Aboriginal Affairs and Northern Development Canada (AANDC)
replaced its Intervention Policy with the Default Prevention and Management
Policy (Policy).57 The 2011 Policy has since been replaced by a new version that
took effect in November 2013.58 The Policy involves a three-part approach,
which includes default prevention, default management and sustainability.
While the Policy has an emphasis on prevention, the default management
stage is invoked in the event that a default does occur. Subject to the terms and
conditions of the specific funding agreement, AANDC has authority to employ
various default management actions, which may include (a) requiring the band
to develop and implement a plan within a specified time frame; (b) requiring the
band to engage a person or organization to assist with addressing the default; 59
and (c), as a last resort, appointing a third party to administer funding and the
band’s obligations pursuant to the funding agreement.60 The decision to appoint
a third party, frequently referred to as a third-party manager, has been viewed as
contentious in certain situations and has been subject to judicial review.61
56 Attawapiskat First Nation v. Canada, 2012 FC 146 at para. 14; and Attawapiskat First
Nation v. Canada, 2012 FC 948 at para. 30 [Attawapiskat II]. See also National Funding
Agreements Models, supra note 52.
57 Backgrounder — Default Prevention and Management Policy (Formerly Intervention
Policy), online: Aboriginal Affairs and Northern Development Canada .
58 Default Prevention and Management Policy 2013, online: Aboriginal Affairs and
Northern Development Canada .
59 Ibid. The Policy defines a ‘‘Recipient-Appointed Advisor” as ‘‘a person or organization
hired by a recipient to assist and facilitate in the development and/or execution of any
aspect of the Management Action Plan.” The Management Action Plan is ‘‘[a] plan
developed by the recipient and acceptable to the department(s) which reflects measures
to be taken to address a default.”
60 Directive 205: Default Prevention and Management at 5.2.4.2, online: Aboriginal Affairs
and Northern Development Canada .
61 See e.g. Attawapiskat II, supra note 56 (Court allowed application for judicial review);206 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
In some cases, the third-party managers AANDC appoints have
professional insolvency training or designation, but, in some cases, they may
not. It is unclear how the appointment of a third-party manager by AANDC
would interact with an intervention manager appointed under the FMA.62
b) The First Nations Fiscal Management Regime
The FMA is federal legislation that came into force on April 1, 2006.63 As
stated in its preamble, it was enacted to increase economic development, provide
investment opportunities and establish a comprehensive fiscal management
system for First Nations in Canada. This regime is voluntary; presently, there
are more than 100 First Nations listed in the Schedule to the FMA.
The three institutions that are fundamental to the regime, each of which will
be discussed in turn, are: (a) the First Nations Finance Authority (FNFA); (b)
the First Nations Tax Commission (FNTC); and (c) the First Nations Financial
Management Board (FMB).
c) The First Nations Finance Authority
The FNFA is an independent64 non-profit corporation that secures
financing and provides investment services and planning advice to member
First Nations. Its purposes are essentially to secure for its borrowing members
the best possible credit terms in:
(a) long-term financing of capital infrastructure for the provision of local
services on reserve lands,
(b) lease financing of capital assets for the provision of local services on
reserve lands, or
(c) short-term financing to meet cash-flow requirements for operating or
capital purposes.65
Under s. 76(1) of the FMA, a First Nation may apply to the FNFA to
become a borrowing member. The FNFA will only accept a First Nation that
has received a certificate issued by the FMB that demonstrates compliance with
the FMB’s standards.66
Kehewin Cree Nation v. Canada, 2011 FC 364 (Court dismissed application for judicial
review).
62 A less likely but potential conflict could arise between an AANDC-appointed third-
party manager and a receiver appointed pursuant to a provincial statute.
63 At that time, the name of the statute was the First Nations Fiscal and Statistical
Management Act, but its title was amended on April 1, 2013.
64 FMA, supra note 5 at s. 60(1).
65 Ibid. at ss. 58 and 74.
66 Ibid. at s. 76(2).FIRST NATIONS AND INSOLVENCY 207
The FNFA is authorized to borrow on behalf of its borrowing members by
issuing bond securities on the capital markets. Under the original FMA regime,
the bonds were to be secured by property tax revenues of the First Nations,
much like a municipal bond system. However, on September 30, 2011, prior to
any debentures being issued, the regime was expanded to include revenues from
non-property tax sources, as defined by regulation, which could include royalty
payments, leases on reserve lands, contract revenues, First Nation businesses,
provincial or municipal (and federal where permitted) transfer payments and
interest revenues.67 While it is anticipated the non-property tax revenue streams
being securitized will be of high quality, this expansion has increased the
possibility for a clash with other insolvency regimes should a First Nation ever
default under the FMA.
The FNFA lends the proceeds from the bond offering to the borrowing
members. This requires the council of each borrowing First Nation to enter into
a borrowing agreement with the FNFA68 that sets out each party’s covenants,
the borrowing structure, repayment obligations and details in the event of a
default by the First Nation. In addition, the FMA framework establishes a debt
reserve fund (up to 5% of any loan amount) and a credit enhancement fund ($10
million) as well as a debt reserve fund replenishment requirement imposed on all
borrowing members.
If a First Nation defaults on its repayment obligations under the borrowing
agreement or fails to pay a charge imposed by the FNFA pursuant to the FMA,
the FNFA can require the FMB to intervene by either imposing a co-
management arrangement or assuming third-party management of the First
Nation’s revenues.69
On March 7, 2014, Moody’s Investor Services assigned a debt rating of A3
to the FNFA and DBRS assigned an issuer rating of A (low) and a provisional
rating of A (low) to the proposed ten-year Canadian $110 million debenture
issuance.70 On June 19, 2014, the FNFA issued its first bond into the financial
markets in the amount $90 million using almost exclusively non-property tax
revenue of the First Nations involved. This bond issuance should provide a
borrowing rate in the range of 3.45% to the First Nations taking part.
67 Financing Secured by Other Revenues Regulations, SOR/2011-201 [Other Revenues
Regulations].
68 FMA, supra note 5 at s. 5(1)(d).
69 Ibid. at s. 86(4).
70 Moody’s Investor Services, Press Release, “Moody’s Assigns As Debt Rating to the
First Nations Anticipated CAD 110 Million Debenture Issue” (7 March 2014); DBRS,
Press Release, “First Nations Finance Authority” (7 March 2014).208 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
d) The First Nations Tax Commission
The FNTC was developed to assist First Nation governments with creating
and maintaining fair, efficient and beneficial property tax regimes. 71 Among its
other functions, the FNTC is responsible for reviewing and approving First
Nations’ taxation laws72 and establishing standards and procedures regarding
various aspects of such laws.73 The FNTC also has authority to conduct a
review, either upon request or independently, if it appears that a First Nation
has not complied with the FMA or its associated regulations or has unfairly or
improperly applied a taxation law.74 The FNTC will order that the situation be
remedied and, if that fails, will request an intervention by the FMB.
e) The First Nations Financial Management Board
The FMB plays a vital management and enforcement role within the First
Nations fiscal management regime. Pursuant to s. 49 of the FMA, the FMB’s
mandate is to:
(a) assist first nations in developing the capacity to meet their financial
management requirements;
(b) assist first nations in their dealings with other governments respecting
financial management, including matters of accountability and shared
fiscal responsibility;
(c) assist first nations in the development, implementation and improve-
ment of financial relationships with financial institutions, business
partners and other governments, to enable the economic and social
development of first nations;
(d) develop and support the application of general credit rating criteria to
first nations;
(e) provide review and audit services respecting first nation financial
management;
71 About FNTC: Mission and Mandate, online: First Nations Tax Commission .
72 FMA, supra note 4 at s. 31(3). Such approval is subject to s. 32(1) of the FMA, which
states the following:
The Commission shall not approve a law made under paragraph 5(1)(d) for financing
capital infrastructure for the provision of local services on reserve lands unless (a) the
first nation has obtained and forwarded to the Commission a certificate of the First
Nations Financial Management Board under subsection 50(3); and (b) the first nation
has unutilized borrowing capacity.
73 Ibid. at s. 35.
74 Ibid. at ss. 33(1) and (2).FIRST NATIONS AND INSOLVENCY 209
(f) provide assessment and certification services respecting first nation
financial management and financial performance;
(g) provide financial monitoring services respecting first nation financial
management and financial performance;
(h) provide co-management and third-party management services [in an
intervention]; and
(i) provide advice, policy research and review and evaluative services on
the development of fiscal arrangements between first nations’ govern-
ments and other governments.
The FMB applies a rigorous process for a First Nation to be accepted into
the pool of borrowing members. As such, the FMB may be likened to the
gatekeeper for First Nations entering the fiscal management regime.
Intervention may occur at the behest of the FNTC or the FNFA, but the
FMB may also independently decide that an intervention is required if there is a
serious risk of default of a First Nation on an obligation to the FNFA. 75 The
FMB can appoint an agent to exercise its powers under the FMA and conduct
an intervention. It is anticipated that such an agent, if so appointed, will be
selected from the insolvency professionals practicing in accounting firms, similar
to the commercial insolvency context.
f) FNFA Priority over Insolvent First Nations
Section 78 of the FMA is the starting point for issues of priority over a First
Nation’s local revenue account:
78. (1) The Authority has a priority over all other creditors of a first
nation that is insolvent for any moneys that are authorized to be paid
to the Authority under a law made under paragraph 5(1)(b) or (d).
(2) For greater certainty, subsection (1) does not apply to Her Majesty.
When First Nations secure financing by other revenues,76 s. 78(1) is adapted
to provide as follows:
78. (1) If a first nation is insolvent, the Authority has a priority over all
other creditors of the first nation for any moneys that are authorized
to be paid to the Authority under a law made under paragraph 5(1)(b)
or (d), or under an agreement governing a secured revenues trust
account, for any debt that arises after the date on which the First
75 Ibid. at s. 52(1)(a).
76 Other Revenues Regulations, supra note 67 at s. 3.210 JOURNAL OF INSOLVENCY IN CANADA, VOL. 3 [2014 J.I.I.C.]
Nation requests from the First Nations Finance Authority financing
that is to be secured by other revenues.
Essentially, under s. 78 of the FMA, together with its adapted version in the
regulations, the FNFA is given priority over all other creditors of an insolvent
First Nation (other than the federal Crown and possibly the provincial Crown)
for the amount of money owed by the First Nation to the FNFA under a
borrowing agreement. This priority appears broad and might extend beyond just
the revenue stream securitized and into other property of the First Nation, real
or personal. The priority to the FNFA under s. 78 would come into effect either
after the date expenditure or borrowing laws concerning the FNFA payment
and borrowing are implemented by the First Nation or, in the case of other
revenues, after a First Nation requests financing secured by other revenues from
the FNFA. It is unclear how s. 78 would interact with more familiar insolvency
regimes, such as the BIA and the CCAA, or provincial personal property
statutes.
6. EXEMPTION FROM SEIZURE UNDER SECTION 89
No paper on First Nations and insolvency would be complete without a
discussion of s. 89 of the Indian Act. This provision pertains to the real and
personal property of Indians and Indian bands and reads as follows:
89. (1) Subject to this Act, the real and personal property of an Indian or a
band situated on a reserve is not subject to charge, pledge, mortgage,
attachment, levy, seizure, distress or execution in favour or at the
instance of any person other than an Indian or a band.
(1.1) Notwithstanding subsection (1), a leasehold interest in designated
lands is subject to charge, pledge, mortgage, attachment, levy,
seizure, distress and execution.
(2) A person who sells to a band or a member of a band a chattel under an
agreement whereby the right of property or right of possession thereto
remains wholly or in part in the seller may exercise his rights under the
agreement notwithstanding that the chattel is situated on a reserve.
The following discussion will address exemption from seizure under s. 89 as
it specifically concerns Indian bands and related entities, and as such is not an
exhaustive commentary on creditors’ remedies or the personal insolvency of
registered Indians.FIRST NATIONS AND INSOLVENCY 211
a) Interpretation of ‘‘Situated on a Reserve”
Section 89 applies to property situated both on reserves and on designated
lands.77 However, the meaning of the phrase ‘‘situated on a reserve” has led to
uncertainty and subsequent litigation, particularly because that same language is
used in s. 87 of the Indian Act, which is the provision that deals with exemption
from taxation.
The Supreme Court of Canada considered the phrase ‘‘situated on a
reserve” under s. 89 of the Indian Act in McDiarmid Lumber v. God’s Lake First
Nation.78 God’s Lake First Nation, a band located in northeastern Manitoba,
was entirely funded by federal government monies pursuant to a funding
arrangement. The band maintained its bank accounts at Peace Hills Trust
Company, which was located off-reserve in Winnipeg. The band defaulted on
payments to McDiarmid Lumber Ltd. (‘‘McDiarmid”), a company that had
provided it construction materials and services over a number of years.
McDiarmid obtained a consent judgment and then a garnishment order and
sought to seize the funds owing. The band moved to set aside the garnishment
order and maintained that the funds were exempt from seizure pursuant to s. 89
of the Indian Act. One of the issues before the Supreme Court of Canada was
how the location of a banking debt should be determined for the purposes of s.
89(1):
The question is whether the expression ‘‘situated on a reserve” is to be given
its plain meaning and subjected to the common law and statutory situs
rules, or whether it has a more abstract meaning unique to the Indian Act.79
The band cited Williams v. Canada,80 in which it was held that
unemployment insurance benefits received by an Indian were notionally
situated on reserve and thus exempt from taxation pursuant to s. 87 of the
Indian Act. In that case, the Court had considered a number of factors that
connected the transaction and the parties to the reserve. Writing for the
majority, McLachlin C.J. rejected the Williams approach in the context of
exempting funds from seizure. She held that Williams was distinguishable from
the case at bar as it was based on a different section of the Indian Act and related
to intangible personal property:
Adopting the contextual form of analysis developed for cases — such as one
involving a taxation transaction — where the location is objectively difficult
to determine does not mean that the ordinary sense of ‘‘location” should be
77 Woodward, supra note 52 at ch. 11 at 289.
78 McDiarmid Lumber v. God’s Lake First Nation, 2006 SCC 58 [McDiarmid Lumber].
79 Ibid. at para 11.
80 Williams v. R., [1992] 1 S.C.R. 877.You can also read
