Court of Appeal for Ontario

Date: 2017-12-15

Docket: C63943

Panel: Hourigan and Brown JJ.A. and Himel J. (ad hoc)

Between

Taylor's Towing, JR Towing and Salvage and Mohawk Towing Appellants

and

Intact Insurance Company Respondent

Counsel

Ian Gerald Smits, for the appellants

Lisa Carr, for the respondent

Heard and released orally: December 13, 2017

On appeal from the judgment of Justice R. John Harper of the Superior Court of Justice, dated November 30, 2016.

Reasons for Decision

[1] This appeal arises from an application under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (RSLA). The primary issue is whether s. 89(1) of the Indian Act, R.S.C., 1985, c. I-5 prevents the respondent from exercising its rights under the RSLA.

[2] The background facts may be briefly stated as follows. Certain vehicles owned by Ontario residents and insured by the respondent were involved in accidents or stolen. After the accidents or thefts, ownership transferred to the respondent.

[3] The vehicles were towed and stored by the appellants, who are towing companies owned by members of the Six Nations of Grand River Indian Reserve, Brant County. All of the businesses are located within the boundaries of Six Nations. Most of the vehicles were towed and stored at the request of Six Nations police.

[4] There was a dispute among the parties regarding towing and storage fees. The respondent brought applications under the RSLA in Small Claims Court to permit it to retrieve the vehicles in exchange for payment of money into court to the credit of any actions by the appellants for their fees. The appellants refused to release the vehicles. They brought an application seeking declaratory relief to the effect that ss. 23 and 24 of the RSLA are not available to the respondent. They argued that they acquired a property interest in the vehicles and pursuant to s. 89(1) of the Indian Act the vehicles are exempt from execution or seizure. That section 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.

[5] The application judge held that the RSLA is a provincial law of general application, and dismissed the appellants' application for exemption. He ordered the appellants to immediately release the vehicles to the respondent.

[6] On appeal, the appellants submit that the application judge erred in his interpretation of the interaction of the RSLA and the Indian Act. They argue that they have a statutory lien on the vehicles as a result of s. 4 of the RSLA and/or s. 170(15) of the Highway Traffic Act, R.S.O. 1990, c. H.8, and/or that their storage and preservation of the vehicles was sufficient to establish a common law lien. In any case, they submit that "personal property" in s. 89(1) of the Indian Act ought to be defined broadly to include all choses in action and evidence of debt, including liens. Thus, their position is that where assets sought to be attached belong to an Indian or a Band, and when the assets are located on a reserve, the property cannot be attached by non-Indian parties.

[7] This appeal raises a number of issues regarding the nature of personal property protected by s. 89(1) of the Indian Act. However, we are able to decide the case on the narrow question of whether s. 89(1) applies to the respondent as a non-creditor. In our view, it does not and accordingly the appeal must fail.

[8] We accept the respondent's submission that s. 89(1) of the Indian Act only protects against seizure from creditors or the Crown. In Mohawk Council of Akwesane v. Toews, 2012 FC 1442, Justice Near explained at para. 34:

The Supreme Court of Canada has held on more than one occasion that the purpose of the exemptions in [s. 89] "was to preserve the entitlements of Indians to their reserve lands and to ensure that the use of their property on their reserve lands was not eroded by the ability of governments to tax, or creditors to seize." (Citing Bastien Estate v. Canada, 2011 SCC 38, [2011] 2 SCR 710 at para. 23; McDiarmid Lumber Ltd. v. God's Lake First Nation, 2006 SCC 58, [2006] 2 SCR 846 at para. 27; Williams v. Canada, [1992] 1 SCR 877.)

[9] In this case, the respondent is a debtor not a creditor. It follows that the appellants cannot claim the protection of s. 89(1) of the Indian Act.

[10] In reaching this conclusion, we reject the submission of the appellants that Benedict v. Ohwistha Capital Corporation, 2014 ONCA 80, stands for the proposition that s. 89(1) protections extend beyond seizure from the Crown or creditors. In that case, a creditor loaned $125,000 to an Indian. The parties tried to structure the loan to circumvent s. 89(1) protections by complying with s. 89(2). This court held that the transaction was "effectively a sham," and so s. 89(1) applied. The lender was a creditor caught by s. 89(1). That case does not depart from the line of Supreme Court cases cited by the respondent.

[11] The appeal is dismissed. The appellants Taylor's Towing and Mohawk Towing, shall pay costs of the appeal to the respondent in the amount of $4,500, all inclusive.

"C.W. Hourigan J.A."

"David Brown J.A."

"Himel J."