Doing business with First Nations

DOING BUSINESS WITH FIRST NATIONS

Presented by: Stephen Lloyd

stephen.lloyd@fmc‐law.com+1 514 878 5831

October 2, 2012

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OVERVIEW

1. Preliminary Issues

2. Basic Statistics

3. “On Reserve” Tax Exemptions

4. “On Reserve” Seizure Exemptions

5. “Off Reserve” Aboriginal Rights

6. Capacity to Contract

7. Planning Opportunities

8. Cultural Factors

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1. PRELIMINARY ISSUES

• Ancient history

• Recent history

• Cultural differences

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2. BASIC STATISTICSAboriginal peoples = “Status Indians” + Inuit + Métis + “self‐defined”

Status Indians = a person so registered under the Indian Act

Métis = mixed First Nations and non‐First Nations ancestry, as self‐defined

Inuit = Aboriginal peoples of Arctic Canada as self‐defined

Only Status Indians are governed by the Indian Act

Status Indians: 450,000 “on reserve” and 285,000 “off reserve”

On reserve Status Indian population expected to increase by 57.9% from 2003 to 2021 (vs. 12.0% for the Canadian population as a whole)

Approximately 40% of the Status Indian population is under the age of 19 (vs. 25.2% for the Canadian population as a whole)

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2. BASICS STATISTICS cont’d.

First Nations communities:

– 614 communities– 52 nations or cultural groups– more than 50 languages– 60% of First Nations communities have fewer than 500 residents – only 6% have more than 2,000 residents

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LOCATION OF INDIAN RESERVES

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FIRST NATIONS IN QUEBEC

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2. BASICS STATISTICS cont’d.

Growing population of over 1,000,000 people with certain strategic advantages

“There is a rising recognition among Canadian companies that employing Aboriginal people and partnering with Aboriginal communities is a smart business strategy”. – TD Bank Financial Group, June 2009

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3. “ON RESERVE” TAX EXEMPTIONS

INDIAN ACT, R.S.C. c. I‐5

87. (1) Property exempt from taxation ‐ Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83 and section 5 of the First Nations Fiscal and Statistical Management Act, the following property is exempt from taxation:(a) the interest of an Indian or a band in reserve lands or surrendered lands; and(b) the personal property of an Indian or a band situated on a reserve.

(2) Idem ‐ No Indian or band is subject to taxation in respect of the ownership, occupation, possession or use of any property mentioned in paragraph (1)(a) or (b) or is otherwise subject to taxation in respect of any such property.

(3) Idem ‐ No succession duty, inheritance tax or estate duty is payable on the death of any Indian in respect of any property mentioned in paragraphs (1)(a) or (b) or the succession thereto if the property passes to an Indian, nor shall any such property be taken into account in determining the duty payable under the Dominion Succession Duty Act, chapter 89 of the Revised Statutes of Canada, 1952, or the tax payable under the Estate Tax Act, chapter E‐9 of the Revised Statutes of Canada, 1970, on or in respect of other property passing to an Indian.

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3. “ON RESERVE” TAX EXEMPTION cont’d.

Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85– Whether sums owed to a band by provincial government are subject to

seizure:

• objective of exemption is to “insulate the property interests of Indians in their reserve lands from the intrusions and interference of the larger society so as to ensure Indians are not dispossessed of their entitlements”.

• “…one must guard against ascribing an overly broad purpose to ss. 87 and 89. These provisions are not intended to confer privileges to Indians in respect of any property they may acquire and possess, wherever situated”.

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Stony Plain Indian Reserve No. 135, Re (1981), [1982] 1 C.N.L.R. 133 (Alta. Court of Appeal)

– Surrendered reserve lands proposed to be held by a band‐owned corporation:

• "...the status of a corporation as a legal entity which exists independently of the character or status of its shareholders is recognized in law. It follows that the status of any or all of its shareholders, or the presence of a registered office on or off a reservation, has no bearing on the status accorded it at law".

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Northwest/Prince Rupert Assessor, Area No. 25 v. N & V Johnson Services Ltd. (1990), 1 M.P.L.R. (2d) 170 (B.C. Court of Appeal)

– On reserve gas station operated by way of a corporation:

• "The corporation is a separate and distinct legal entity. (...) it is an artificial person and by its nature, it can have neither race nor religion or sex. (...) the words "directly or indirectly" could have been inserted in s. 87 to show a legislative intent to look behind the corporate veil. (...) s. 87 cannot be read such that the word "Indian" includes a corporate entity whose shareholders are Indians."

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Williams v. Canada, [1992] 1 S.C.R. 877

– Location of intangible property (unemployment insurance payments, financial claims, employment income, etc.):

• Determined on a case‐by‐case basis in light of "connecting factors", including residence of the debtor, residence of the creditor and where associated activities take place.

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Union of New Brunswick Indians v. New Brunswick (Minister of Finance), [1998] 1 S.C.R. 1161

– Liability for provincial sales tax/HST on "off reserve" purchases:

• If point of sale is off reserve, s. 87 does not apply, unless goods are delivered by vendor to the reserve.

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4. “ON RESERVE” SEIZURE EXEMPTIONSINDIAN ACT, R.S.C. c. I‐5

29. Reserve lands are not subject to seizure under legal process.

89. (1) Restriction on mortgage, seizure, etc., of property on reserve ‐ 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) Exception ‐ Notwithstanding subsection (1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachment, levy, seizure, distress and execution.

(2) Conditional Sales ‐ 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 .

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4. “ON RESERVE” SEIZURE EXEMPTIONS cont’d.

INDIAN ACT, R.S.C. c. I‐5

90. (1) Property deemed situated on reserve ‐ For the purposes of sections 87 and 89, personal property that was (a) purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for

the use and benefit of Indians or bands, or (b) given to Indians or to a band under a treaty or agreement between a band and Her

Majesty,

shall be deemed always to be situated on a reserve.

(2) Restriction on transfer ‐ Every transaction purporting to pass title to any property that is by this section deemed to be situated on a reserve, or any interest in such property, is void unless the transaction is entered into with the consent of the Minister or is entered into between members of a band or between the band and a member thereof.

(3) Destruction of property ‐ Every person who enters into any transaction that is void by virtue of subsection (2) is guilty of an offence, and every person who, without the written consent of the Minister, destroys personal property that is by this section deemed to be situated on a reserve is guilty of an offence.

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4. “ON RESERVE” SEIZURE EXEMPTIONS cont’d.

Kingsclear First Nation v. J. E. Brooks & Associates Ltd., 1991 CanLII 4002 (N.B. Court of Appeal)

– Band‐owned school bus was seized while parked off the reserve:

• “(...) the bus was used to transport Indian children from the Kingsclear Reserve to schools outside the Reserve and to return them at the end of the school day. (...) the school bus was parked on the Reserve lands overnight and when not employed in transporting children. Even without the latter inference, the evidence as to the pattern of use of the school bus together with the discernible nexus between the bus and Kingsclear Reserve in the provision of education to Indian children residing on the the Reserve, in my opinion establishes that the "paramount location" of the school bus was on the Kingsclear Reserve."

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS

1. Aboriginal rights are recognized (Calder, 1973)

2. Aboriginal rights are monetized (Kanatewat, 1973)

3. Aboriginal rights are constitutionalized (Constitution Act, 1982)

4. Aboriginal rights are prioritized (Sparrow, 1990)

5. Aboriginal rights are characterized (Van der Peet, 1996)

6. Aboriginal rights are categorized (Delgamuukw, 1997)

7. Aboriginal rights are commercialized (Marshall, 1999)

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.Aboriginal rights are recognized:Calder v. Attorney General of B.C., [1973] S.C.R. 314 • Action by the Nishga for a declaration that their aboriginal title to their ancient tribal territory

(1,000 sq. miles in NW British Columbia) has never been extinguished:– “What we don't like about the Government is their saying this: "We will give you this much

land." How can they give it when it is our own? We cannot understand it. They have never bought it from us or our forefathers. They have never fought and conquered our people and taken the land in that way, and yet they say now that they will give us so much land ‐‐ our own land. These chiefs do not talk foolishly, they know the land is their own; our forefathers for generations and generations past had their land here all around us; chiefs have had their own hunting grounds, their salmon streams, and places where they got their berries; it has always been so. It is not only during the last four or five years that we have seen the land; we have always seen and owned it; it is no new thing, it has been ours for generations. If we had only seen it for twenty years and claimed it as our own, it would have been foolish, but it has been ours for thousands of years. If any strange person came here and saw the land for twenty years and claimed it, he would be foolish. We have always got our living from the land; we are not like white people who live in towns and have their stores and other business, getting their living in that way, but we have always depended on the land for our food and clothes; we get our salmon, berries, and furs from the land.”(1888)

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.

– “(…) the fact is that when the settlers came, the Indians were there, organized in societies and occupying the land as their fore‐fathers had done for centuries. This is what Indian title means and it does not help one in the solution of this problem to call it a ‘personal or usufructuaryright’.”

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.Aboriginal rights are monetized:James Bay Development Corporation v. Kanatewat, Court of Appeal of Quebec, 1973• James Bay Crees attempt an injunction to halt James Bay hydro‐electric projects:

– “Puisque la requête présentement devant nous est pour une injonction interlocutoire, iln'est pas nécessaire de définir la nature exacte et l'étendue du titre indien à la terre. Il suffit de dire que la preuve dans cette partie montre clairement, qu'à tout le moins, les indiens Cris et les esquimaux ont exercé des droits personnels et des droits d'usufruit sur le territoire et les terres y adjacentes. Ils ont été en possession et ont occupé ces terres et y ont exercé des droits de pêche, de chasse et de trappe depuis des temps immémoriaux. Nous avons déjà démontré que le gouvernement du Canada a passé des traités avec les indiens toutes le fois qu'il a désiré obtenir des terres pour les besoins de la colonisation ou pour d'autres raisons. Tenant compte de l'obligation assumée par la province de Québec dans la législation de 1912, il apparaît que la province de Québec ne peut développer ou autrement ouvrir ces terres à la colonisation sans agir de la même manière, c'est‐à‐dire, sans l'entente préalable des indiens et des esquimaux.”

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– “Ce que la Cour aurait à décider, si elle considérait la balance des inconvénients, ce sont les positions relatives des deux parties quant aux inconvénients causés par les travaux. Les dommages mentionnés dans cette section doivent être compris avec les dommages que les requérants [les Cris]continueront à subir si les travaux continuent. Ailleurs, dans cette partie, le tribunal dit que les dommages aux requérants seront grands. Dans bien des cas, de tels dommages seront non seulement dévastateurs mais irréparables. De plus, il trouve difficile de comparer de telles pertes monétaires aux dommages qu'un si grand nombre de personnes subiront. Le droit des requérants de poursuivre leur façon de vivre dans les terres sujettes au litige dépasse de loin toute considération pouvant être donnée à tout dommage monétaire.”

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.Aboriginal rights are constitutionalized:

Constitution Act, 198235. (1) Recognition of existing aboriginal and treaty rights ‐ The existing

aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.

(2) Definition of "aboriginal peoples of Canada" ‐ In this Act, "aboriginal peoples of Canada" includes the Indian, Inuit and Métis peoples of Canada.

(3) Land claims agreements ‐ For greater certainty, in subsection (1) "treaty rights" includes rights that now exist by way of land claims agreements or may be so acquired.

(4) Aboriginal and treaty rights are guaranteed equally to both sexes ‐Notwithstanding any other provision of this Act, the aboriginal and treaty rights referred to in subsection (1) are guaranteed equally to male and female persons.

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’dAboriginal rights are prioritized:R. v. Sparrow, [1990] 1 S.C.R. 1075• Member of the Musqueam Indian Band was charged with illegally fishing with a drift net of 45

fathoms in length when his license only permitted a net of 25 fathoms in length: – “Section 35(1) suggests that while regulation affecting aboriginal rights is not precluded, such

regulation must be enacted according to a valid objective. Our history has shown, unfortunately all too well, that Canada's aboriginal peoples are justified in worrying about government objectives that may be superficially neutral but which constitute de facto threats to the existence of aboriginal rights and interests. (…) Implicit in this constitutional scheme is the obligation of the legislature to satisfy the test of justification. The way in which a legislative objective is to be attained must uphold the honour of the Crown and must be in keeping with the unique contemporary relationship, grounded in history and policy, between the Crown and Canada's aboriginal peoples. (…) The constitutional recognition afforded by the provision therefore gives a measure of control over government conduct and a strong check on legislative power. While it does not promise immunity from government regulation in a society that, in the twentieth century, is increasingly more complex, interdependent and sophisticated, and where exhaustible resources need protection and management, it does hold the Crown to a substantive promise. The government is required to bear the burden of justifying anylegislation that has some negative effect on any aboriginal right protected under s. 35(1).”

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.Aboriginal rights are characterized: R. v. Van der Peet, [1996] 2 SCR 507• Member of the Sto:lo First Nation, was charged with selling 10 salmon caught by her spouse, whose Indian fish food licence prohibited the sale of the fish:

– Fact‐based test to determine whether an applicant has established an aboriginal right protected by s. 35: "... in order to be an aboriginal right an activity must be an element of a practice, custom or tradition integral to the distinctive culture of the aboriginal group claiming the right".

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– “To satisfy the integral to a distinctive culture test the aboriginal claimant must do more than demonstrate that a practice, custom or tradition was an aspect of, or took place in, the aboriginal society of which he or she is a part. The claimant must demonstrate that the practice, custom or tradition was a central and significant part of the society's distinctive culture. He or she must demonstrate, in other words, that the practice, custom or tradition was one of the things which made the culture of the society distinctive ‐‐ that it was one of the things that truly made the society what it was.”

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– “The time period that a court should consider in identifying whether the right claimed meets the standard of being integral to the aboriginal community claiming the right is the period prior to contact between aboriginal and European societies. Because it is the fact that distinctive aboriginal societies lived on the land prior to the arrival of Europeans that underlies the aboriginal rights protected by s. 35(1), it is to that pre‐contact period that the courts must look in identifying aboriginal rights.”

– “Clearly, the Sto:lo fish for food and ceremonial purposes. Evidence presented did not establish a regularized market system in the exchange of fish. Such fish as were exchanged through individual trade, gift, or barter were fish surplus from time to time. Natives did not fish to supply a market, there being no regularized trading system, nor were they able to preserve and store fish for extended periods of time.”

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5. “OFF‐RESERVE” ABORIGINAL RIGHTS cont’d.Aboriginal rights are categorized: Delgamuukw v. British Columbia, [1997] 3 SCR 1010• Chiefs of the Gitksan (4 to 5,000 people) and Wet'suwet'sen (1,500 to 2,000 people) claimed aboriginal title to 58,000 square kilometres in British Columbia:

– “(…) the aboriginal rights which are recognized and affirmed by s. 35(1) fall along a spectrum with respect to their degree of connection with the land. At the one end, there are those aboriginal rights which are practices, customs and traditions that are integral to the distinctive aboriginal culture of the group claiming the right. However, the “occupation and use of the land” where the activity is taking place is not “sufficient to support a claim of title to the land”(at para. 26 (emphasis in original)). Nevertheless, those activities receive constitutional protection. In the middle, there are activities which, out of necessity, take place on land and indeed, might be intimately related to a particular piece of land. Although an aboriginal group may not be able to demonstrate title to the land, it may nevertheless have a site‐specific right to engage in a particular activity. I put the point this way in Adams, at para. 30:

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Even where an aboriginal right exists on a tract of land to which the aboriginal people in question do not have title, that right may well be site specific, with the result that it can be exercised only upon that specific tract of land. For example, if an aboriginal people demonstrates that hunting on a specific tract of land was an integral part of their distinctive culture then, even if the right exists apart from title to that tract of land, the aboriginal right to hunt is nonetheless defined as, and limited to, the right to hunt on the specific tract of land. [Emphasis added.]

At the other end of the spectrum, there is aboriginal title itself. As Adamsmakes clear, aboriginal title confers more than the right to engage in site‐specific activities which are aspects of the practices, customs and traditions of distinctive aboriginal cultures. Site‐specific rights can be made out even if title cannot. What aboriginal title confers is the right to the land itself.”

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– While aboriginal title can include exclusive rights to the land and its resources, it is sui generis and NOT fee simple. Aboriginal title: i) is inalienable, except to the Crown;

ii) has its source in pre‐contact possession; and

iii) is held communally.

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Aboriginal rights are commercialized: R. v. Marshall, [1999] 3 S.C.R. 456

– Mi'kmaq was charged with catching out of season (and with an illegal net) and selling 463 pounds of eels without a license:• Court found that under vague terms of 1760 treaty, Mr. Marshall had an

aboriginal right which was limited to "securing 'necessaries' (which I construe in the modern context, as equivalent to a moderate livelihood) and do not extend to the open‐ended accumulation of wealth". He was acquitted on all charges.

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6. CAPACITY TO CONTRACT

Bands have separate legal capacity to sue or be sued or enter into contracts

Kucey v. Peter Ballantyne Band Council, 1987 CanLII 986 (SK C.A.)

Telecom Leasing Canada (TLC) Ltd. v. Enoch Indian Band of Stony Plain

Indian Reserves No. 135, 1992 CanLII 6177 (AB Q.B.)

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6. CAPACITY TO CONTRACT

Band Council resolution required

Heron Seismic Services Ltd. v. Muscowpetung Indian Band, 1991 SK Court of Queens Bench

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7. PLANNING OPPORTUNITIES

Appropriate business structures and strategies for Aboriginal and non‐Aboriginal joint ventures:

– “flow through vehicles” vs. contractual certainty– sharing of tax benefits– procurement advantages– reduced manpower costs– geographic scope of business activities– right of band to tax

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8. CULTURAL FACTORS

Interconnectedness vs. Limitation of Liability

Profit‐making Incentive vs. Sharing with the Collectivity

“Majority Rules” Decision‐making Structure vs. Consensus Building

The preceding presentation contains examples of the kinds of issues companies dealing with Insurance could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.

Thank you!stephen.lloyd@fmc‐law.com

+1 514 878 5831

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Doing business with First Nations