DATE: 20031203

DOCKET: C39333

COURT OF APPEAL FOR ONTARIO

O’CONNOR A.C.J.O., MOLDAVER and GILLESE JJ.A.

B E T W E E N:

THE ATTORNEY GENERAL OF CANADA

John S. Tyhurst for the applicant

Applicant

respondent by way of appeal,

(Respondent by way of appeal, Respondent by way of cross-appeal)

respondent by way of cross-appeal

• and -

ANISHNABE OF WAUZHUSHK ONIGUM BAND, ANISHNAABEG OF NAONGASHING BAND, BIG GRASSY BAND, BUFFALO POINT FIRST NATION, COUCHICHING FIRST NATION, EAGLE LAKE BAND, GRASSY NARROWS FIRST NATION, ISKATWEIZAAGEGAN #39 INDEPENDENT FIRST NATION, LAC DES MILLE LACS BAND, LAC LA CROIX BAND, LAC SEUL BAND, NAICATCHEWENIN BAND, NAOTKAMEGWANNING BAND, NICICKOUSEMENECANING BAND, NORTHWEST ANGLE #33 BAND, NORTHWEST ANGLE #37 BAND, OCHICHAGEWE’BABIGO’INING FIRST NATION, OJIBWAY NATION OF SAUGEEN INDIAN BAND, OJIBWAYS OF ONIGAMING FIRST NATION, RAINY RIVER BAND, SEINE RIVER FIRST NATION, SHOAL LAKE #40 BAND, SLATE FALLS NATION, STANJIKOMING FIRST NATION, WABASEEMOONG INDEPENDENT NATIONS, WABAUSKANG FIRST NATION, WABIGOON LAKE OJIBWAY NATION and WASHAGAMIS BAY BAND

Donald R. Colborne for the respondents/ respondents by way of appeal, appellants by way of cross-appeal Couchiching First Nation, Naicatchewenin Band, Nicickousemenecaning Band and Stanjikoming First Nation

Alan Pratt and Carla M. McGrath for the respondent, appellant by way of appeal Rainy River Band

Respondents (Respondents by way of appeal, Appellants by way of cross-appeal) (Appellant by way of appeal)

Heard: October 27, 2003

On appeal from the judgment of Justice George P. Smith of the Superior Court of Justice dated September 13, 2002 and from the decision on costs dated October 10, 2002.

O’CONNOR A.C.J.O.:

[1] In 1875, and pursuant to Treaty 3, the Crown created an Indian reserve “not to be for any particular Chief or Band, but for the Saulteaux Tribe, generally” for the purpose of maintaining an Indian agency.

[2] In 2002, the Attorney General of Canada brought an application in the Superior Court of Justice asking the court to identify the Indian Bands for which the reserve had been set apart.

[3] Two groups of bands, the Rainy River Bands and the Rainy Lake Bands, responded to the application and claimed an entitlement to the reserve lands. The applications judge, George P. Smith J., found that the reserve was set apart solely for the use and benefit of the Rainy Lake Bands. The Rainy River Bands appeal that decision.

[4] The applications judge’s conclusion was fact-driven and was supported by the evidence. I see no basis to interfere. I would, however, set aside his order denying costs to the two band groups and require the government to pay their costs on the application.

[5] The proceeding was instituted by an application made by the Attorney General of Canada seeking a ruling as to which bands are the beneficial owners of a reserve commonly known as the Agency One Reserve. The only parties who responded to the application were four bands known collectively as the Rainy Lake Bands[^1] and seven bands known collectively as the Rainy River Bands.

[6] It was accepted by all the parties that the Rainy Lake Bands were entitled to a beneficial interest in the Agency One Reserve. The primary issue for determination was whether the Rainy River Bands were similarly entitled.

[7] In reply to the government’s application, the parties filed extensive material, including two agreed statements of fact, affidavits, many historical documents and opinions of experts addressing the authenticity and other aspects of the historical documents. The bands also called oral evidence of elders.

[8] The hearing lasted six days and, after reserving judgment, the applications judge delivered written reasons concluding that only the Rainy Lake Bands were entitled to benefit from the Agency One Reserve. He declined to make any award of costs.

The Facts

[9] In his reasons, the applications judge referred to the evidence in some detail. Here, I provide the following abbreviated summary of the facts only insofar as is necessary to properly contextualize the discussion that follows.

[10] On October 3, 1873, the Crown in Right of Canada and the Saulteaux Tribe of Ojibway Indians entered into Treaty 3. Treaty 3 did not set apart reserves, but did create a process for doing so. Accordingly, on January 28, 1975, Simon Dawson, one of the Treaty Commissioners, submitted a report to the government describing a number of reserves, including seven on Rainy River, four on Rainy Lake, and the Agency One Reserve that is the subject of this litigation.

[11] The Agency One Reserve is located at the west end of Rainy Lake between the lake and the Town of Fort Frances. Consisting of approximately 170 acres, the reserve is more precisely located where the Rainy River flows from Rainy Lake at a point in land commonly referred to as Pither’s Point. Dawson’s report described the Agency One Reserve in the following language:

This Indian Reserve, not to be for any particular Chief or Band, but for the Saulteaux Tribe, generally, and for the purpose of maintaining thereon an Indian agency and the necessary grounds and buildings.

[12] On February 27, 1875, an Order-in-Council provisionally approved the reserves described in Dawson’s report and set out that the reserves were subject to such future surveys as may be necessary as well as final confirmation by the Governor General in Council.

[13] Later in 1875, the reserves set apart for the Rainy Lake and the Rainy River Bands were surveyed. As I describe below, the amount of land allotted to the Rainy River Bands was increased by the Surveyor General.

[14] From 1875 until 1882, the Rainy Lake and the Rainy River Bands received Treaty annuities at the Agency One Reserve. In 1882, a change in government policy required annuities to be paid at individual band reserves.

[15] In 1908, the Town of Fort Frances, which was located adjacent to the Agency One Reserve, wanted to acquire a portion of the reserve for purpose of creating a municipal park. On October 1 that year, the local Indian agent for the Government of Canada obtained a surrender of approximately 114 acres of land from representatives of the four Rainy Lake Bands.

[16] By Order-in-Council dated November 14, 1908, the Government of Canada approved and accepted the surrender of the lands. The evidence reveals that after 1908, the Government of Canada consistently treated the four Rainy Lake Bands as the beneficiaries of the Agency One Reserve. There were two further surrenders of land, in 1961 and 1976, which were also signed only by the four Rainy Lake Bands.

[17] Throughout the 20th century, the appellant Rainy River Bands made no claims to the Agency One Reserve or to monies received on the surrender of portions of it. It was only when the Government of Canada instituted the application that underlies this appeal that the Rainy River Band came forward and claimed a beneficial entitlement in the Agency One Reserve.

The Decision of the Applications Judge

[18] The applications judge found the following:

▪ Notwithstanding its provisional nature, the 1875 Order-in-Council created the Agency One Reserve;

▪ The wording and language of the Order-in-Council do not clarify which Indians or Bands were entitled to the benefit of the Agency One Reserve;

▪ As a whole, the evidence of events from 1875 until 1908 is “inconclusive, frequently vague and often conflicting” as to the Crown’s intention concerning entitlement;

▪ The 1908 surrender was “a distinct unequivocal act” indicating the Crown’s intention that the Rainy Lake Bands were the only beneficial owners of the Agency One Reserve;

▪ Subsequent to 1908, the intention of the Crown remained clear. There was no evidence of any interest or claim by the Rainy River Bands prior to the institution of this proceeding; and

▪ As such, the Agency One Reserve was set apart only for the Rainy Lake Bands.

Issue

[19] The primary issue in this appeal is whether the applications judge erred in concluding that the Crown intended that only the Rainy Lake Bands were to benefit from the Agency One Reserve.

[20] The secondary issue in this appeal regards the costs of the application. The Rainy River Bands seek leave to appeal the applications judge’s failure to award costs in the proceeding below; the Rainy Lake Bands seek leave to bring a cross-appeal to the same effect.

Analysis

[21] In Ross River Dena Council Band v. Canada, 2002 SCC 54, the Supreme Court of Canada set out the basic principles relating to the creation of reserves. The determination of whether a reserve has been created and, if so, for whose benefit, is a fact-driven process. There is no single method for creating a reserve, although the Order-in-Council has been the most common and the clearest procedure for doing so. Whatever method is used, the Crown’s intention to create a reserve is essential. Further, steps must be taken to set apart the reserve for the benefit of Indians. Finally, the Band or Bands concerned must have accepted the setting apart and have started to make use of these lands.

[22] The trial judge concluded that notwithstanding its provisional nature, the 1875 Order-in-Council created the Agency One Reserve. This conclusion is not challenged by the appellant. Therefore, the sole question that remained was for whose benefit that reserve was created.

[23] The trial judge approached the issue of entitlement by looking to three bodies of evidence: the Order-in-Council; the historical context, including the circumstances contemporaneous with and immediately following the Order-in-Council; and the actions of the parties in 1908 and following years.

[24] I turn first to the Order-in-Council. For convenience, I repeat the wording in Simon Dawson’s report relating to the Agency One Reserve that was adopted by the 1875 Order-in-Council. It reads as follows:

This Indian Reserve, not to be for any particular Chief or Band, but for the Saulteaux Tribe, generally, and for the purpose of maintaining thereon an Indian Agency and the necessary grounds and buildings.

[25] The trial judge considered the intent of the words “for the Saulteaux Tribe generally” in light of the historical and expert evidence. He concluded that the words taken by themselves were vague and inconclusive as to the intent of the government. In their broadest reach, those words could refer to the entire Indian population in the Treaty 3 area as well as bands covered by other treaties outside the Treaty 3 area. This is not an interpretation urged upon us by any of the parties nor is it one that makes any sense given that a large majority of those bands would have had no use for the Agency One Reserve and no connection to it.

[26] I agree with the applications judge’s interpretation that the words “for the Saulteaux Tribe generally” were intended to refer to specific bands living in the general area of the Agency One Reserve. Accepting that, the only question that remains is which bands in that general area did the Crown intend to benefit?

[27] Correctly, in my view, the applications judge considered evidence other than the wording of the Order-in-Council in order to discern the Crown’s intention as to entitlement. He reviewed the events in the historical record and made two findings of fact that are central to his ultimate conclusion as to the Crown’s intention.

[28] First, the applications judge found that the evidence from 1875 until 1908 was “inconclusive, frequently vague and often conflicting.” Implicit in this finding was the conclusion that the historical record for that period did not demonstrate that the government intended to set apart the Agency One Reserve for the benefit of the Rainy River Bands.

[29] I agree with this interpretation of the historical record. There is, as the appellant points out, some evidence that would support a conclusion that the Crown intended that both the Rainy River Bands and the Rainy Lake Bands were to benefit from the reserve. The strongest evidence is the fact that, from 1875 to 1882, both the Rainy River Bands and the Rainy Lake Bands attended at the reserve to receive their annual Treaty entitlements. It is worth noting, however, that during this period, two other bands, the Eagle Lake and the Wabigoon Bands also attended at the Agency One Reserve for the same purpose. Those bands did not respond to the government’s application to determine entitlement to the reserve and apparently claim no interest.

[30] The appellant’s argument is also bolstered by the fact that the two band groups were administratively grouped by the Hudson Bay Company from 1821 to 1874. Similarly, after Treaty 3, they were included in the same administrative agency by the Government of Canada.

[31] There is, however, other evidence relating to the period immediately after the enactment of the Order-in-Council in 1875 that creates significant uncertainty about which bands the Crown intended to be the beneficiaries of the Agency One Reserve.

[32] As mentioned above, the 1875 Order-in-Council was provisional in nature and the lands it referred to were subject to further survey. Soon after the Order-in-Council, the Surveyor General of Canada, J.S. Dennis, was appointed to finish the work selecting the reserves approved in the Order-in-Council. The Surveyor at Fort Frances, E.C. Caddy, advised Dennis that the Indians at Rainy River “are dissatisfied with the quantity of land contained in Reserve No’s 2, 3, 4, 5 and 6.” Dennis set about to address those concerns. The Rainy River Bands told Dennis that Dawson had misunderstood their reserve selection. Dennis found their complaints to be warranted.

[33] On October 1, 1875, Dennis entered into an agreement with the Rainy River Bands by which the reserves listed in Dawson’s report were increased, in some instances substantially. Significantly, Dennis also changed the nature of the entitlement to some reserves. In Dawson’s report, some reserves on the Rainy River were described as being “for the Indians generally.” The entitlements to these reserves were changed to be directed to particular Rainy River Bands with only fishing to be open to the “Indians generally.” There was no mention of the Agency One Reserve in any of Dennis’ dealings with the Rainy River Bands nor is the Agency One Reserve referred to in the agreement by which Dennis settled the Rainy River Bands’ complaints. In a subsequent speech, Dennis said that the Rainy River Chiefs were perfectly satisfied with the new reserve scheme.

[34] The fact that the Agency One Reserve is more accessible to the Rainy Lakes Bands than to the Rainy River Bands lends further support to the notion that the Rainy Lake Bands were the intended beneficiaries.

[35] I do not propose to review the remaining evidence relating to events for the period from 1875 to 1908. Suffice it to say that I agree with the applications judge that the evidence for this period is not conclusive as to what the Crown’s intention was with respect to the beneficial entitlement to the Agency One Reserve.

[36] This then brings me to the second critical finding of fact made by the applications judge. He found as follows: “It was only in 1908 that a distinct unequivocal act takes place to clearly establish the intention of the Crown.” Indeed, the applications judge considered the evidence relating to the 1908 surrender as the best evidence available, showing that it was the Crown’s intention to set the Agency One Reserve apart only for the benefit of the Rainy Lake Bands.

[37] Around 1904, the Town of Fort Frances, which is located adjacent to the Agency One Reserve, indicated its interest in creating a municipal park on the reserve. To do so, it was necessary to obtain a surrender of interests from the Indian bands with an entitlement to the reserve.

[38] The Department of Indian Affairs instructed the local Indian Agent, John Wright, to obtain a surrender from those Indian bands “for whom the reserve had been set aside.” Wright was an experienced Indian Agent, having worked with the Department of Indian Affairs for 33 years. He had been the Indian Agent at Fort Frances for eight years and would have been very familiar with the Rainy Lake and Rainy River Bands, both of which fell within the administrative agency for which he was responsible.

[39] Wright reported back to the Department that the Rainy Lake Bands were “the only bands for whom this reserve was set aside.” As a result, he obtained a surrender from the Rainy Lake Bands and forwarded it to Ottawa. The surrender was accepted by Order-in-Council on November 14, 1908.

[40] There is no evidence of exactly what investigations Wright carried out in reaching the conclusion that the Agency One Reserve was set apart only for the Rainy Lake Bands. However, it is reasonable to infer that because he was the Indian Agent in the region, he would have had regular contact with both the Rainy Lake and the Rainy River Bands. There was no reason for Wright not to obtain a surrender from all of the bands whom he concluded had an interest in the Agency One Reserve. The surrender was obtained only 33 years after the creation of the Agency One Reserve; if the Rainy River Bands considered themselves entitled to a beneficial interest in the reserve, it seems likely that they would have made their views known to him.

[41] Wright’s conclusion that the Rainy Lake Bands were the only beneficiaries of the reserve is supported by subsequent events. The fact of the 1908 surrender and the subsequent creation of the municipal park on the Agency One Reserve would have been a matter of public notice. The Rainy River Bands did not at that time, or subsequently, object to the fact that they were not involved in granting the surrender or that the Town was occupying a significant part of the reserve. Moreover, the federal government obtained further surrenders from the Rainy Lake Bands of additional Agency One Reserve lands in 1961 and in 1976. Again, there was no objection from the Rainy River Bands.

[42] At no time from 1908 until the government instituted this proceeding in 2000 did the Rainy River Bands assert a claim or an interest to the Agency One Reserve.

[43] I am satisfied that it was open to the applications judge to rely upon the evidence relating to the events in 1908 and after in reaching the conclusion that the Agency One Reserve was set aside only for the Rainy Lake Bands.

[44] Accordingly, I would dismiss the appeal.

Costs

[45] The application seeking clarification as to entitlement to the Agency One Reserve was instituted by the Attorney General of Canada. The applications judge ordered that there be no costs awarded for the application, reasoning that “an award of costs is not appropriate when the question before the court was novel, unsettled or where it involves the interpretation of a statute.” In addition, he found that his decision as to entitlement would assist the other outstanding proceedings that were before the Superior Court and the Federal Court and that had been stayed pending the outcome of the application. The applications judge concluded that, in these circumstances, to penalize the Crown by making an order for costs against the government would be unjust and unfair.

[46] The appellant Rainy River Bands and the respondent Rainy Lake Bands (by way of cross-appeal) both seek leave to appeal the order denying their costs and, if leave is granted, appeal that order.

[47] I am satisfied that leave should be granted and the appeals with respect to costs be allowed. In my view, the applications judge erred by failing to attach sufficient weight to the relationship between the Crown and the bands and to the circumstances that gave rise to the application.

[48] The federal Crown holds reserve lands as a fiduciary for the beneficiary bands. This application was instituted by the Crown in order to clarify its obligations in its fiduciary role. In some senses, the application was similar to an executor of an estate seeking directions. Typically, in such a case, the beneficiaries responding to such a proceeding would be indemnified for their costs.

[49] Moreover, the need for the application resulted directly from the Crown’s failure in 1875 and after to clearly specify which bands were the intended beneficiaries of the reserve grant. The Crown must have perceived there to be uncertainty or it would not have found it necessary to bring the application.

[50] There is nothing in the conduct of either of the Rainy River or Rainy Lake Bands that contributed to the uncertainty. Equally, there is nothing in the conduct of the bands during the application that should disentitle them to their costs.

[51] The Rainy Lake Bands were ultimately successful and should be entitled to their costs on a substantial-indemnity basis.

[52] Given the uncertainty of the historical record, it was reasonable for the Rainy River Bands to respond to the application and to take the positions that they did before the applications judge. I note that the positions adopted by the Rainy River Bands, while ultimately unsuccessful, were not unreasonable. I am satisfied that it is fair that the Rainy River Bands should also be awarded their legal costs on a substantial-indemnity basis for the proceeding below.

[53] This court is not in a position to fix the costs of the application. I would direct that the issue of costs be remitted to the applications judge to be fixed on a substantial-indemnity basis. The costs award should include only those amounts that were reasonably incurred in responding to the Crown’s application.

Costs of this Appeal

[54] The Rainy Lake Bands have been successful on the appeal. They seek an order of costs against the unsuccessful appellant, the Rainy River Bands, with respect to the entitlement issue. I am satisfied that costs should follow the event and would award costs on a partial-indemnity scale. I would fix those costs in the amount of $20,000, inclusive of disbursements and G.S.T.

[55] In addition, the Rainy Lake Bands were successful on their cross-appeal against the denial of costs of the application. The cross-appeal succeeded against the Crown. I would order the Attorney General of Canada to pay those costs and would fix them in the amount of $3,000, inclusive of disbursements and G.S.T.

[56] The Attorney General of Canada was successful in opposing the main appeal. I am satisfied that the Rainy River Bands should make some payment towards the Government’s costs of the appeal and I would fix those costs in the amount of $5,000, all inclusive. I would deny the Rainy River Bands’ request for costs against the Government in the main appeal.

[57] The Rainy River Bands were successful in that portion of their appeal relating to the costs of the proceeding below. I would order the Government to pay those costs and would fix them in the amount of $3,000, inclusive of disbursements and G.S.T.

Released: DEC 03 2003 Signed: “D. O’Connor A.C.J.O.”

“I agree. M.J. Moldaver J.A.”

“I agree. E.E. Gillese J.A.”

[^1]: Indian bands are now referred to as First Nations. However, the historical records that form part of the evidence in this case refer to the entities as bands, not First Nations. Similarly, the parties in their submissions and the applications judge in his reasons used the term “bands”. Accordingly, throughout these reasons, I will use the same nomenclature.