Court File and Parties

COURT FILE NO.: 27,115/16 DATE: 2016-04-08 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE THESSALON FIRST NATION Applicant – and – THE MUNICIPALITY OF HURON SHORES Respondent

Counsel: Paul Williams, Counsel for the Applicant J. Paul R. Cassan, Counsel for the Respondent

HEARD: March 11, 2016

VARPIO J.

Reasons on Interim Injunction Application

[1] This is an injunction application which was heard by me on March 11, 2016. At the time, I signed an Order. These are the reasons in support thereof.

[2] The facts of the dispute are simple. The Thessalon First Nation (“TFN”) claims that certain lands (the “Land”) situated within The Municipality of Huron Shores (the “Municipality”) are part of its reservation as described in the Huron Treaty of 1850. This assertion flows from an alleged error that occurred in the surveying of the reservation in the Nineteenth Century. The Crown official who allegedly transcribed the Treaty document in 1850 subsequently wrote a report stating, effectively, that he had misinterpreted an Aboriginal term connoting distance. Such a misinterpretation could account for the disparity between the reserve as it exists, and the reserve as TFN contends was always contemplated.

[3] The Land is currently owned by Chief Mary Jane Wardell in trust for the benefit of the TFN.

[4] The Municipality agrees with TFN’s position and the Municipality has not collected municipal taxes for said lands since 2000 as reserve lands are not subject to municipal taxes. The tax arrears on the Land currently exceed $750,000.

[5] In Ontario, municipalities pay levies to the Provincial Government based upon municipal taxes collected. In the case before me, the Municipality appears to have paid over $160,000 to the Province as a levy on the Land despite the fact that the Municipality has received no tax income regarding same.

[6] While the Municipality has recognized the validity of TFN’s claim to the Land, the Provincial and Federal Governments have not, as yet, entered into negotiations with the TFN to either recognize or disavow TFN’s claim to the Land.

[7] Accordingly, the Municipality has commenced proceedings to seize and sell the Land pursuant to a tax sale under the Municipal Act, 2001, S.O. 2001, c. 25 as am. in order to collect upon the arrears and cease the negative cash flow associated with this situation.

[8] TFN brings this injunction in order to halt said process.

The Law

Aboriginal Land Title

[9] The law on Canadian Aboriginal title is grounded in a variety of Supreme Court of Canada jurisprudence. In Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14 at paras 65 – 67, the majority of the Court stated:

The Principle of the Honour of the Crown

The appellants argue that Canada breached a duty owed to the Métis based on the honour of the Crown. The phrase "honour of the Crown" refers to the principle that servants of the Crown must conduct themselves with honour when acting on behalf of the sovereign.

The honour of the Crown arises "from the Crown's assertion of sovereignty over an Aboriginal people and de facto control of land and resources that were formerly in the control of that people": Haida Nation, at para. 32. In Aboriginal law, the honour of the Crown goes back to the Royal Proclamation of 1763, which made reference to "the several Nations or Tribes of Indians, with whom We are connected, and who live under our Protection": see Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, [2010] 3 S.C.R. 103, at para. 42. This "Protection", though, did not arise from a paternalistic desire to protect the Aboriginal peoples; rather, it was a recognition of their strength. Nor is the honour of the Crown a paternalistic concept. The comments of Brian Slattery with respect to fiduciary duty resonate here:

The sources of the general fiduciary duty do not lie, then, in a paternalistic concern to protect a "weaker" or "primitive" people, as has sometimes been suggested, but rather in the necessity of persuading native peoples, at a time when they still had considerable military capacities, that their rights would be better protected by reliance on the Crown than by self-help ("Understanding Aboriginal Rights" (1987), 66 Can. Bar Rev. 727, at p. 753)

The ultimate purpose of the honour of the Crown is the reconciliation of pre-existing Aboriginal societies with the assertion of Crown sovereignty. As stated in Taku River Tlingit First Nation v. British Columbia (Project Assessment Director), 2004 SCC 74, [2004] 3 S.C.R. 550, at para. 24:

The duty of honour derives from the Crown's assertion of sovereignty in the face of prior Aboriginal occupation. It has been enshrined in s. 35(1) of the Constitution Act, 1982, which recognizes and affirms existing Aboriginal rights and titles. Section 35(1) has, as one of its purposes, negotiation of just settlement of Aboriginal claims. In all its dealings with Aboriginal peoples, the Crown must act honourably, in accordance with its historical and future relationship with the Aboriginal peoples in question.

The honour of the Crown thus recognizes the impact of the "superimposition of European laws and customs" on pre-existing Aboriginal societies: R. v. Van der Peet, [1996] 2 S.C.R. 507, at para. 248, per McLachlin J., dissenting. Aboriginal peoples were here first, and they were never conquered (Haida Nation, at para. 25); yet, they became subject to a legal system that they did not share. Historical treaties were framed in that unfamiliar legal system, and negotiated and drafted in a foreign language: R. v. Badger, [1996] 1 S.C.R. 771, at para. 52; Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, at pp. 142-43, per La Forest J. The honour of the Crown characterizes the "special relationship" that arises out of this colonial practice: Little Salmon, at para. 62. As explained by Brian Slattery:

... when the Crown claimed sovereignty over Canadian territories and ultimately gained factual control over them, it did so in the face of pre-existing Aboriginal sovereignty and territorial rights. The tension between these conflicting claims gave rise to a special relationship between the Crown and Aboriginal peoples, which requires the Crown to deal honourably with Aboriginal peoples. ("Aboriginal Rights and the Honour of the Crown" (2005), 29 S.C.L.R. (2d) 433, at p. 436)

[10] The majority Court also discussed the manner in which the Honour of the Crown could be engaged at paragraphs 68 to 72:

(2) When is the Honour of the Crown Engaged?

The honour of the Crown imposes a heavy obligation, and not all interactions between the Crown and Aboriginal people engage it. In the past, it has been found to be engaged in situations involving reconciliation of Aboriginal rights with Crown sovereignty. As stated in Badger:

... the honour of the Crown is always at stake in its dealing with Indian people. Interpretations of treaties and statutory provisions which have an impact upon treaty or aboriginal rights must be approached in a manner which maintains the integrity of the Crown. [para. 41]

This Court has also recognized that the honour of the Crown is engaged by s. 35(1) of the Constitution. In R. v. Sparrow, [1990] 1 S.C.R. 1075, the Court found that s. 35(1) restrains the legislative power in s. 91(24), in accordance with the "high standard of honourable dealing": p. 1009. In Haida Nation, this Court explained that "[i]t is a corollary of s. 35 that the Crown act honourably in defining the rights it guarantees": para. 20. Because of its connection with s. 35, the honour of the Crown has been called a "constitutional principle": Little Salmon, at para. 42.

The application of these precedents to this case indicates that the honour of the Crown is also engaged by an explicit obligation to an Aboriginal group that is enshrined in the Constitution. The Constitution is not a mere statute; it is the very document by which the "Crow[n] assert[ed its] sovereignty in the face of prior Aboriginal occupation": Taku River, at para. 24. See also Mitchell v. M.N.R., 2001 SCC 33, [2001] 1 S.C.R. 911, at para. 9. It is at the root of the honour of the Crown, and an explicit obligation to an Aboriginal group placed therein engages the honour of the Crown at its core. As stated in Haida Nation, "[i]n all its dealings with Aboriginal peoples, from the assertion of sovereignty to the resolution of claims and the implementation of treaties, the Crown must act honourably": para. 17 (emphasis added).

An analogy may be drawn between such a constitutional obligation and a treaty promise. An "intention to create obligations" and a "certain measure of solemnity" should attach to both: R. v. Sioui, [1990] 1 S.C.R. 1025, at p. 1044; R. v. Sundown, [1999] 1 S.C.R. 393, at paras. 24-25. Moreover, both types of promises are made for the overarching purpose of reconciling Aboriginal interests with the Crown's sovereignty. Constitutional obligations may even be arrived at after a course of consultation similar to treaty negotiation.

The last element under this rubric is that the obligation must be explicitly owed to an Aboriginal group. The honour of the Crown will not be engaged by a constitutional obligation in which Aboriginal peoples simply have a strong interest. Nor will it be engaged by a constitutional obligation owed to a group partially composed of Aboriginal peoples. Aboriginal peoples are part of Canada, and they do not have special status with respect to constitutional obligations owed to Canadians as a whole. But a constitutional obligation explicitly directed at an Aboriginal group invokes its "special relationship" with the Crown: Little Salmon, at para. 62.

[11] Finally, the Court dealt with the nature of the duties imposed as a result of the Honour of the Crown at paras 73 and 74:

(3) What Duties Are Imposed by the Honour of the Crown?

The honour of the Crown "is not a mere incantation, but rather a core precept that finds its application in concrete practices" and "gives rise to different duties in different circumstances": Haida Nation, at paras. 16 and 18. It is not a cause of action itself; rather, it speaks to how obligations that attract it must be fulfilled. Thus far, the honour of the Crown has been applied in at least four situations:

1. The honour of the Crown gives rise to a fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest (Wewaykum Indian Band v. Canada, 2002 SCC 79, at paras. 79 and 81; Haida Nation, at para. 18);
2. The honour of the Crown informs the purposive interpretation of s. 35 of the Constitution Act, 1982, and gives rise to a duty to consult when the Crown contemplates an action that will affect a claimed but as of yet unproven Aboriginal interest: Haida Nation, at para. 25;
3. The honour of the Crown governs treaty-making and implementation: Province of Ontario v. Dominion of Canada, (1895), 25 S.C.R. 434, at p. 512, per Gwynne J., dissenting; Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 S.C.R. 388, at para. 51, leading to requirements such as honourable negotiation and the avoidance of the appearance of sharp dealing (Badger, at para. 41); and
4. The honour of the Crown requires the Crown to act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples: R. v. Marshall, [1999] 3 S.C.R. 456, at para. 43, referring to The Case of The Churchwardens of St. Saviour in Southwark (1613), 10 Co. Rep. 66 b, 77 E.R. 1025, and Roger Earl of Rutland's Case (1608), 8 Co. Rep. 55 a, 77 E.R. 555; Mikisew Cree First Nation, at para. 51; Badger, at para. 47.

[12] Thus, the duty that flows from the honour of the Crown varies with the situation in which it is engaged. What constitutes honourable conduct will vary with the circumstances.

Injunctions

[13] The test for an injunction was laid out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311:

1. Is there a serious question to be tried?
2. Will the Applicant suffer irreparable harm if the application is refused?
3. Which of the two parties will suffer the greater harm from the granting or the refusal of the interlocutory injunction pending a decision on the merits (the balance of inconvenience)?

[14] The Court in RJR-MacDonald indicated that the threshold for “serious question” is a low one at paras 49 and 50:

What then are the indicators of "a serious question to be tried"? There are no specific requirements which must be met in order to satisfy this test. The threshold is a low one. The judge on the application must make a preliminary assessment of the merits of the case. The decision of a lower court judge on the merits of the Charter claim is a relevant but not necessarily conclusive indication that the issues raised in an appeal are serious: see Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers, Local 832, [1987] 1 S.C.R. 110, supra, at p. 150. Similarly, a decision by an appellate court to grant leave on the merits indicates that serious questions are raised, but a refusal of leave in a case which raises the same issues cannot automatically be taken as an indication of the lack of strength of the merits.

Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. A prolonged examination of the merits is generally neither necessary nor desirable.

[15] The Court then described two exceptions to the rule which do not apply to this case.

[16] With respect to “irreparable harm”, the Court stated at paras 58 – 59:

At this stage the only issue to be decided is whether a refusal to grant relief could so adversely affect the applicants' own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court's decision (R.L. Crain Inc. v. Hendry (1988), 48 D.L.R. (4th) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985] 3 W.W.R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).

[17] Finally, with respect to the “balance of inconvenience”, the Court stated at paras 62 and 63:

The third test to be applied in an application for interlocutory relief was described by Beetz J. in Metropolitan Stores at p. 129 as: "a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits". In light of the relatively low threshold of the first test and the difficulties in applying the test of irreparable harm in Charter cases, many interlocutory proceedings will be determined at this stage.

The factors which must be considered in assessing the "balance of inconvenience" are numerous and will vary in each individual case. In American Cyanamid, Lord Diplock cautioned, at p. 408, that:

[i]t would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.

[18] Thus, the framework to be used by the Court must in determining whether or not to grant in injunction is, by definition, a flexible one that must take into account all the relevant contextual factors.

Analysis

[19] It would appear that, upon reading the materials before me, the Honour of the Crown is engaged in this matter. Simply put, the delineation of which lands constitute reserve lands and which do not goes to the heart of the historical interaction between the Canadian Governments and the Peoples of Canada’s First Nations. As noted in Haida Nation (quoted in Manitoba Metis Federation, above): “The honour of the Crown arises ‘from the Crown's assertion of sovereignty over an Aboriginal people and de facto control of land and resources that were formerly in the control of that people’".

[20] The situation before me is exactly such a situation and, absent any evidence suggesting otherwise, it would appear that Honour of the Crown is engaged by the instant dispute.

[21] With respect to the injunction, the Application of the RJR-MacDonald test is relatively simple in the circumstances.

[22] Firstly, as has been noted in many cases including those quoted in these reasons, the matter of reserve boundaries is an important one. Very little need be said in this regard except to state that the matter of Aboriginal Land Title is fundamental to many First Nations peoples and goes to the core of the Canadian identity. Further, the evidence suggests that TFN has an arguable case to suggest that an error was made in the original survey. As such, TFN’S case is both serious and tenable.

[23] Secondly, with respect to irreparable harm, if the Land were sold to a bona fide purchaser for fair value, it is possible that TFN would have little or no claim to the Land since the sale could potentially stand in priority to TFN’s claim. Such harm would potentially be irreparable.

[24] As regards to the balance of inconvenience, the cost to the Municipality can be mitigated by a stay in the Province’s ability to collect money as a result of the levy associated with the Land. Such a result would inconvenience the Province somewhat but would not, I would imagine, greatly impact the ability of the Province to continue to fund its activities.

[25] On the other hand, the Municipality has submitted that levy payments could have a meaningful effect on its finances. I realize that the Province has not had an opportunity to make submissions in this regard and, as such, I will permit the Province to appear before me after a short adjournment to make any submissions it chooses. However, when looking at the effect that levy payments will have upon a small municipality (as compared to likely minimal effect it will have on the Province’s budget), it is clear that the Province should not attempt to collect levy funds until I have heard its submissions in this regard.

[26] Thus, the balance of inconvenience weighs heavily in favour of granting the interim injunction at this stage as the evidence before me demonstrates that permitting the sale of the Land could prevent TFN from effectively advancing its claim while the financial impact of an interim injunction would likely be minimal to the major government entities.

[27] It is also important to note that I am only adjourning the injunction hearing to April 11, 2016 – a period of approximately one month. At that time, the Province and the Government of Canada will have the opportunity to consider their positions. Any inconvenience to the Government institutions is therefore mitigated greatly.

[28] It should also be noted that I am making many of these findings without the benefit of submissions or evidence from the Federal Government or the Province of Ontario. Accordingly, I do not wish for these reasons to be determinative of the final result of the injunction application. I may not have all the evidence before me and all affected parties should have the opportunity to make submissions prior to any determination.

[29] The Court is also willing to assist the parties, if they ultimately attempt to negotiate a final settlement of the mater, in a manner that is consistent with its duties. That being said, I will wait for further submissions from the parties as to how such assistance is to be provided in these circumstances. Finally, I wish to be clear that the wording of my order should not be read as being inconsistent with this statement.

[30] As such, I make the following Order:

1. An interim injunction, to be reviewed by this Court on April 11, 2016 will issue on the following terms: a. Huron Shores will be enjoined from advertising the Lands for sale and from taking any other steps towards the sale of the Lands; b. Huron Shores will be enjoined from enforcement of the Arrears in any manner during the term of this injunction; c. The status quo vis-à-vis the tax sale will be preserved in the event this injunction is on longer in effect. In other words Huron Shores will be permitted to proceed with the tax sale by advertising the property thirty (30) days after the injunction is lifted and thereafter proceeding in accordance with the provisions of the Municipal Act, 2001, S.O. 2001, c. 25 as am.; d. Arrears of municipal taxes will cease to accrue on the Lands for the term of the injunction; e. Huron Shores will not be required to pay levies in respect of the Lands including but not limited to education taxes, levies for Algoma Public Health, the Municipal Property Assessment Corporation (MPAC), Ontario Provincial Police and the Algoma District Services Administration Board for the term of this injunction; f. Her Majesty the Queen in Right of Ontario will be enjoined from collecting or seeking to collect the above payments from Huron Shores during the term of the injunction; g. The forgoing is without prejudice to the position Her Majesty the Queen in Right of Ontario may take that these amounts should accrue or should be paid, and without prejudice to Thessalon’s position that the amounts are not payable or assessable.

2. The materials disclose that her Majesty the Queen in Right of Ontario is seeking a Ministerial Mandate to enter negotiations in this regard. This matter will be made returnable on April 11, 2016 before this Court at which point Her Majesty the Queen in Right of Ontario is expected to be present to advise this Court of its proposal to address these issues including the rights of Thessalon and Huron Shores;

3. On April 11, 2016 this Court will consider whether Her Majesty the Queen in Right of Ontario and her Majesty the Queen in Right of Canada should be made parties to these proceedings.

[31] As noted above, I have not heard submissions from either the Provincial or Federal governments. It would appear that they may have relevant evidence and/or submissions to add. Accordingly, I reserve the right to alter my interim findings of fact depending upon the evidence and submissions provided to me by those entities (if any). As such, I am hopeful that representatives of both the Federal and Provincial governments can appear on April 11, 2016 so that the parties can hopefully begin the process of resolving this matter once and for all.

[32] The interim injunction is therefore granted. The continued hearing is adjourned to April 11, 2016 and costs of today are reserved.

Varpio J.

Released: April 8, 2016

ONTARIO SUPERIOR COURT OF JUSTICE THE THESSALON FIRST NATION

• and – THE MUNICIPALITY OF HURON SHORES REASONS ON INTERIM INJUNCTION APPLICATION Varpio J.

Released: APRIL 8, 2016