Sands v. Walpole Island First Nations, 2016 ONSC 7983

CITATION: Sands v. Walpole Island First Nations, 2016 ONSC 7983

COURT FILE NO.: 6785-12 (London)

DATE: 20161223

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Rocky Robert Sands

Plaintiff

– and –

Walpole Island First Nations Band Council

Defendant

COUNSEL:

Joyce M. D. Thomas, for the Plaintiff

John C. Peters, for the Defendant

HEARD: May 9, 10, 11, 12, 13, June 20, 22, 23 and 24, 2016

REASONS FOR JUDGMENT

HEBNER J.:

[1] This case is about one man’s love of the land, wildlife and the sport of hunting and the eventual loss of that man’s dream.

[2] Rocky Sands (“Rocky”) is a member of Walpole Island First Nation (“the Band”). In 1995, Rocky agreed to lease from the Band approximately 2,000 acres of hunting grounds at St. Anne’s Island. St. Anne’s Island is owned by the Band and is generally known as a hunting area for waterfowl. Rocky leased the property for the purpose of operating a hunt club business.

[3] Rocky was evicted from St. Anne’s Island on October 1, 2010, right at the commencement of the hunting season. Rocky alleges that the eviction constituted a breach of the agreement he had with the Band. He claims damages as a result. The Band alleges that Rocky was in arrears of rent at the time of the eviction and, by way of counterclaim, claims for unpaid rent due and owing.

Witnesses

[4] The court heard from a number of witnesses for the plaintiff, including Rocky himself, his wife Martha Sands, and his son Jesse Sands. The plaintiff had summonsed several additional witnesses from the Band to give evidence, including Rex Isaac, a former council member, and Donna Isaac-Day, a former Chief of the Band. The plaintiff wished to call Charles Sampson and Nancy Jones, both former members of the Hunt Club Task Force, but he was unable to do so. Despite significant efforts, the plaintiff was unable to serve Ms. Jones and Mr. Sampson with a subpoena. It is eminently clear that Ms. Jones and Mr. Sampson, both of whom live on lands owned by the Band and work for the Band, evaded service. Counsel for the Band, to his great credit, tried to assist but was unable to convince Ms. Jones and Mr. Sampson to attend. The plaintiff has requested an adverse inference as a result.

[5] The witnesses called for the defendant included Chief Dan Miskokomon; Adele Altiman, the finance administrator for the Band; Lucy Jacobs, the lands and membership administrator for the Band; Band Council member Chris Riley; and Band Council member Roger Williams.

Background facts

[6] From 1995 until October 2010 Rocky leased the hunting area at St. Anne’s Island. It began in April 1995 when Rocky submitted a proposal to the then Band administrator, Patrick Isaac. The proposal was eventually accepted and the land-use agreement was struck. Rocky’s hunt camp became known as either the St. Anne’s Hunt Club or the Fin and Feather Hunt Club, depending on the year.

[7] The St. Anne’s Hunt Club was comprised of four islands. Located over these four islands is a large main lodge, a guides’ lodge, a workshop, a granary, boathouses, dog kennels and pump houses used to maintain the water levels for water fowl and hunting.

[8] There were a series of lease or land use agreements negotiated between Rocky and Band Council. The first such lease agreement commenced on July 1, 1995 for a period of five years. Amendments were made to the agreements over the years.

[9] Over the course of the parties’ relationship, Rocky sought approval from the Band to make capital improvements to the buildings and lands of the St Anne’s Hunt Club. Rocky was seeking a credit for the cost of those capital improvements against rent that he was required to pay. The improvements Rocky made to the club took place over several years. It is Rocky’s position that a capital improvement credit of $532,500 was agreed upon. The Band denies that any such credit was agreed upon and, in the alternative, takes the position that Rocky is not entitled to the credit as he did not provide receipts for the amount claimed.

[10] Rocky paid rent until and including 2005. Thereafter he did not pay rent as it was his view that he was drawing down the capital improvement credit for the cost of the improvements to the club. The Band did little to enforce payment of rent until 2010 when steps were taken to evict Rocky from the St Anne’s Hunt Club.

The issues

[11] The issues for determination are as follows:

1. What were the terms of the lease agreements between Rocky and the Band?

2. Specifically, was Rocky entitled to a capital improvement credit against his rent for the improvements he made to the buildings and lands?

3. Is the defendant bound by ostensible authority and, if so, was it present?

4. Does the defendant owe a duty of fairness to the plaintiff?

5. What is the accounting between the parties?

The first land-use agreement

[12] The original land-use agreement was negotiated between Rocky and “Walpole Island First Nation, as represented herein by the Walpole Island First Nation Chief and Council” in July 1995. The agreement was signed by Rocky and by Chief Joseph B. Gillen on behalf of the Band. The land was described as follows:

[A]ll those parcels or tracts of lands and premises and marshes, reeds, rushes, sandbars, and lands covered by water being part of St. Anne’s Islands in the county of Lambton, in the Province of Ontario… (covering approximately 2000 acres of land).

[13] The term of the agreement was five years commencing July 1, 1995 and ending on June 30, 2000. The agreement had a five-year option, unless terminated earlier in accordance with the provisions of the agreement. The agreed upon rent was $40 per acre payable on or before July 1st in each year. Based on approximately 2,000 acres, the annual rent was $80,000.

[14] Rocky was required to pay a deposit of one half of the first year’s rent being $40,000. He did so on July 19, 1995 by way of a certified cheque in US funds totaling $28,573.47. The receipt issued to Rocky identified the payment to be on account of “50% final year’s lease.”

[15] Rocky took possession of the lands, opened his hunt club and paid rent for the first five years in the sum of $80,000 per year. Although Rocky paid the deposit of $40,000, and that payment was to be applied towards his rent for the year 1999/2000, he did not receive a credit for the deposit. Accordingly, that $40,000 deposit continued to be due and owing to Rocky.

The second land-use agreement

[16] The second agreement was between Rocky and “her Majesty the Queen in Right of Canada, as represented herein by the Minister of Indian affairs and Northern Development.” This agreement is dated June 13, 2000 and was to commence July 1, 2000 for a term of five years. It is signed by Rocky as lessee and by someone on behalf of Lands, Revenues and Trusts Ontario Region as lessor (the signature is illegible). The lease was registered with the Ministry of Indian Affairs and Northern Development. The rent required under the lease was $88,000 in the first year (by July 1, 2000), $96,000 in the second year (by July 1, 2001), $104,000 in the third year (by July 1, 2002), $112,000 in the fourth year (by July 1, 2003), and $120,000 in the fifth year (by July 1, 2004).

[17] At the conclusion of the first lease, there was no negotiation. Band Council put the second lease before Rocky and he signed it without reading it. Rocky was told that there would be increments or increases to the rent in the amount of $2 per acre per year. The first year, the rent required was $88,000 and Rocky paid $88,000. Sometime before the second year’s rent was due, Rocky approached the then Chief Donna Day and requested a reduction in the rent to $84,000. Apparently, in the years following the September 11, 2001 tragedy, the travel and leisure activities of American customers declined considerably and all of the hunt clubs on lands owned by the Band (there were at least six) experienced a marked decline in revenues. It was Rocky’s evidence that his request was accepted, and $84,000 was the rent required for the next four years. Rocky paid $84,000 in 2001, 2002, 2003 and 2004.

[18] Although Rocky believed that he was required to pay $84,000 per year, according to the Band Council minutes the Band Council had a different understanding. The Council minutes for the meeting dated May 22, 2001 include the following as item number five:

Chief and Council approves Rose John, Financial Comptroller’s recommendation that Zhee-Shee-Benh Club, Rocky Sands Hunt Club, Goose Lake Hunt Club, Mallard Point Hunt Club, Ric Nahdee Hunt Club, and Walpole Sporting Clays rental rates be $42 per acre with a $4 increment per year for five (5) years; further, that there be no further reduction made for that time period; moreover, everyone will have the same Right of First Refusal.

[19] Rocky paid his $84,000 payment for the 2001/2002 and 2002/2003 years. His 2003/2004 payment was late. The Band wrote to Indian and Northern Affairs Canada (INAC) on October 7, 2003 and claimed that Rocky was in arrears in the total sum of $144,000, being $12,000 for 2001/2002, $20,000 for 2002/2003 and $112,000 for 2003/2004. The letter goes on to say the following:

Mr. Sands started paying $42 per acre since 2001 as per a council motion made at that time. The motion made by Counsel was never formally approved and therefore said motion was null and void. We are requesting your assistance in obtaining the outstanding rental amounts owed by Mr. Rocky Sands for his registered hunting lease.

[20] INAC wrote to Rocky on October 14, 2003, requesting payment of $144,000 within 15 days. Rocky wrote back to INAC on November 3, 2003 and said the following:

This letter is in response to your registered letter of October 14, 2003, concerning the alleged rental arrears of lease number 282730 Walpole Island First Nation. I spoke with Chief Donna Day concerning this matter on October 24, 2003. She said you should have received an amended lease in 2001 stating lease payment would remain at $84,000 per year. Therefore I am in arrears only for this year’s lease payment of $84,000 not $144,000 as stated in your letter. This payment will be made to the Finance Department at the Walpole Island First Nation office.

[21] INAC then wrote to Lucy Jacobs, an administrator for Lands and Membership at Walpole Island First Nation, on November 10, 2003 and stated the following:

Further to your letter of October 30, 2003 we have received a response from Rocky Sands (copy attached).

He appears to be of the understanding that the original lease was amended to set the annual lease amount at $84,000. This, he says, has been confirmed by Chief Donna Day.

If I can be of further assistance, do not hesitate to call.

[22] The Band did not respond to this letter.

[23] I find that the conversation between Rocky Sands and Chief Donna Day took place as described by Rocky. Rocky’s evidence was forthright and credible. The events were extremely important to him and it is more likely that he would remember events respecting his hunt club accurately than would an administrator for the Band. In fact, Chief Donna Day could not remember whether the conversation took place. Based on that conversation, I find that Rocky and the Band agreed to amend the second lease to reduce the lease payments to $84,000 per year.

The third lease agreement

[24] Rocky signed a third lease agreement dated April 4, 2005. Again, Rocky did not read the lease. He received a call from someone at the Band’s office and was told that he needed to attend in order to sign a lease agreement. He was not given an option to negotiate or change the terms on the agreement. In each case, he attended and signed whatever lease he was told he had to sign.

[25] Although the second lease was for a period of five years ending on June 30, 2005, the third lease provided for a commencement date of June 1, 2004. There was never any explanation provided for the overlap in the lease agreements.

[26] The lease was between “HER MAJESTY THE QUEEN in Right of Canada, as represented herein by the Minister of Indian Affairs and Northern Development” as lessor and Rocky Sands as lessee. The term of the lease was 10 years, to May 31, 2014. The rent required under the lease was $84,000 per year for each of the years 2004, 2005, 2006, 2007 and 2008. The rent for the five years commencing June 1, 2009 was to be “determined by the Minister as being the annual fair market rent for the demised land.”

[27] The Band sent the third lease to INAC for approval on August 17, 2005. INAC wrote back to the Band on August 23, 2005 and stated the following:

Please find enclosed the Hunt Club lease with applications it is being sent back, the previous lease does not expire till July 1, 2005. There can not be an overlap of leases.

[28] The third lease was never signed by anyone on behalf of the Minister of Indian Affairs and Northern Development. Accordingly, it was of no force and effect. It was not registered with INAC. Rocky’s evidence was that he continued to occupy the St. Anne’s Island hunting grounds and operate the Fin and Feather Hunt Club based on rent owing of $84,000 per year. I accept that to have been the ongoing arrangement between the parties.

The period following the expiration of the second lease

[29] Rocky paid the sum of $74,000 in 2005. He was $10,000 short. It was his view that he was in arrears in the sum of $6,000 (rather than $10,000) because he had paid $88,000 in the year 2000 (when he thought he owed only $84,000). Of course, by 2005, Rocky still hadn’t been given credit for his $40,000 deposit.

[30] In 2005, Rocky completed the bulk of the renovations at the hunt club.

The renovations

[31] On April 20, 2005, Rocky attended at a Council meeting and made a presentation regarding construction on St. Anne’s Island. According to Rocky, he was given permission to proceed with the renovations. An action memo dated April 20, 2005 states the following:

Chief and Council acknowledges the presentation as made by Rocky Sands regarding construction on St. Anne’s Island; further, that Council directs administration in conjunction with the Lands and Membership Department to provide to Council a status report outlining current hunt lease standing of Rocky Sands, identify impacts to revenue generation regarding the issue of lease reduction costs at half the amount for 1 and 2 years, and that this report be provided at the Special Council Meeting scheduled for 1 p.m. on May 11, 2005; furthermore, that Rocky Sands is given approval by the Council to continue construction.

[32] There was no evidence of a status report provided by Lands and Membership Department as required by the action memo. The minutes of the Special Council Meeting on May 11, 2005 were not produced.

[33] A Council meeting took place on May 16, 2005. The minutes of that meeting resulted in an action memo dated May 20, 2005, which reads as follows:

Chief and Council instructs the Lands & Membership Department, in conjunction with Public Works and Resource Protection, to monitor and arrive at appraised value of construction work being done by the lessee Rocky Sands at St. Annes Lodge; further, the final assessment will include receipts for material and labour costs for the renovations with a final report forwarded to the Lands Department, in addition, Lands Department and Administration to provide a legal and appropriate waiver to reflect receipt of lease revenue for the years 2005-2006 and 2006-2007 be reduced at a rate of $20,000.00 each for those respective years for the lease so affected, and for acknowledgement and final approval by Chief and Council, this motion to be actioned immediately.

[34] There was no evidence that the Lands and Membership Department monitored and obtained an appraised value of construction work done by Rocky Sands. There was no final assessment. In effect, it appears as though the Lands and Membership Department dropped the ball.

[35] It was Rocky’s understanding that Council’s approval of the renovations meant that the Band would pay for the renovations by way of a credit against his rent. Rocky continued with the renovations based on that understanding.

[36] The renovations included the following:

1. A construction of a new main lodge, being 96 feet by 48 feet. Blueprints were finished and Rocky broke ground in April 2005. He needed to finish the main lodge before the hunting season, which would commence on the third Saturday of September. The main lodge was completely furnished with furniture, appliances, and hunting equipment and supplies.

2. The dog kennels were rebuilt. Electrical and sewer services were installed.

3. The managers’ building was rebuilt and hardwood was installed in the smaller lodge.

4. Pumping systems were installed. A steel break wall was installed to protect the dykes.

[37] The cost of the renovations was borne by Rocky. He had a number of workers completing the renovations, some of which were on salary and some of which were paid by the hour. Rocky rented the necessary equipment.

[38] Rocky’s insurance company valued the buildings at $451,700 and the contents at $80,800, for a total of $532,500. In a second document prepared by Rocky, he calculated his costs at $548,700.

The Hunt Club Task Force

[39] At the Council meeting on May 8, 2006, the Band created a Hunt Club Task Force. By this point, the Band Council realized it was not dealing effectively with the various hunt clubs. In 2004, Council had prepared a hunt club policy and procedures manual that required the Lands Department to, among other things, “Keep and maintain accurate files and records on each hunt club”; “Take pictures yearly of all the hunt clubs and record any improvements made”; and, “Be responsible for the administration of all the hunt club leases which shall include but not be limited to the drafting of leases, taking of payments, maintenance of files and records, drafting notices, posting and/or tendering of clubs, etc.” The Finance Department, according to the policy manual, was to “[p]rovide monthly arrears statements to the lands department” and “[s]end monthly statement\invoice to each hunt club if balance owing.” There were additional responsibilities of the Lands and Membership Committee, the Resource Protection department and the Director of Operations. The responsibilities of the various departments as set out in the policy manual were simply not being done. Rocky’s evidence was that he never received a statement of rent owing. In my view, the Hunt Club Task Force was struck as Council recognized that the hunt clubs were not being managed properly and the policy manual was not being followed.

[40] The Band Council minutes dated May 8, 2006 include the following:

That this Council authorizes a Hunt Club Leases Task Force of Council to consist of Councillors: Elizabeth A. Altiman, Patrick H. Isaac, Nancy Jones, Daniel Miskokomon, and Charles Sampson, and to use the Lands Office as resources with a report back to Council by June 5, 2006.

[41] The mandate of the Hunt Club Task Force was not spelled out in the minutes of the Council meeting. According to the evidence of various witnesses, the Hunt Club Task Force’s mandate included monitoring all of the hunt clubs, lease negotiations, monitoring and dealing with the improvements to the hunt clubs, collection of outstanding rent arrears, and dealing with the tender process. The Hunt Club Task Force was, in effect, created to take over the various responsibilities of the committees and departments named in the hunt club policy.

[42] The production of the Hunt Club Task Force meeting minutes was lacking. The minutes were not provided in their entirety. Those minutes that were provided were significantly redacted. Accordingly, it is difficult to get an accurate picture of the dealings between Rocky and the Hunt Club Task Force. The following can be gleaned from the minutes that were produced:

1. On September 26, 2006, Counsellor Nancy Jones, Counsellor Dan Miskokomon, Lands Assistant Eugene Altiman and survey technician Mike Sampson attended at the St. Anne’s Hunt Club to view improvements that had been completed by Rocky. Photos were taken of the club and the grounds.

2. On October 31, 2006, Rocky attended a Hunt Club Task Force meeting. The minutes indicate that Rocky requested an adjustment on his statement for his lease payment. The recommendation moved by Nancy Jones and seconded by Elizabeth Altiman was as follows:

That Rocky Sands St. Anne’s Hunt Club lease rates be $42 per acre for five (5) years and year four (4) would begin for rent renewal notification. For clarification for the Finance Department that the previous amount be rescinded and the current amount acknowledged.

Carried by Consensus

Regarding Rocky Sands leasehold improvements to wait for year 3, 4 and 5 for further adjustments and spread out the money he put in for repairs in this time frame. It must be Capital Improvements and they should be dealt with on a year-to-year basis. The Task Force suggested that he keep good documentation of all improvements.

There was no evidence that these recommendations were put to Council. Band Council minutes for the relevant time period were not produced.

3. At the Hunt Club Task Force meeting on May 29, 2008 Rocky Sands attended and made a presentation. The meeting minutes include the following:

ROCKY SANDS PRESENTATION

Referring to past minutes dated May 22, 2008, regarding the negotiation process for St. Anne’s Club. Rocky would like to negotiate using his Capital Improvements cost to offset arrears. Rocky submitted a delivery slip and an inspection sheet dated 1968-1969 for review. Also provided, Rocky owns contents on detailed list with the approximate value of the items at the time of purchase. He can provide receipts for these items. Also, Rocky would like to renegotiate again in two years.

RECOMMENDATION:

MOVED BY: NANCY JONES

SECONDED BY: ELIZABETH ALTIMAN

This Task Force recommends Rocky provide receipts as requested and his Insurance Company, Martin Insurance, provide a letter substantiating the insurance value of St. Anne’s Club and its contents. This letter is to be directed to Eugene Altiman, Lands Assistant. The total expected amount in consideration is $532,500.00, to be used to offset arrears and dispersed yearly for the remainder of the lease with reference to Action Memo dated May 20, 2005.

[43] The minutes of Council meeting in 2008 were not produced. There is no evidence as to whether the recommendations were put to Council or, if so, what its decision was.

[44] As for the request for receipts, Rocky recalls being asked to provide receipts. He did not maintain an accurate record during the course of the improvements and renovations and he did not keep receipts. His evidence was that much of the costs were incurred on a cash basis without receipts. Rocky’s evidence was that he told the Hunt Club Task Force that he did not have receipts to offer. Rocky’s evidence was that he understood he was still to receive the capital improvement credit.

Change in Council

[45] In June 2008, the Band had an election for its Council members. There was a complete changeover in Council membership. As a result, there was also a complete changeover in the membership of the Hunt Club Task Force. None of the members that were on the Task Force at the May 29, 2008 meeting remained on the Task Force as at the date of the next minutes produced; namely, June 10, 2009. The new Chief of the Band, Joseph Gilbert, and Rocky did not get along. With the changeover in Council membership the situation for Rocky quickly declined.

[46] The new members of the Hunt Club Task Force had a meeting on June 10, 2009. Rocky attended and gave another presentation. Rocky’s evidence was that by this time he had attended to present before the Hunt Club Task Force on at least six different occasions. The minutes of the June 10, 2009 meeting include the following:

ROCKY SANDS HUNT CLUB LEASE NEGOTIATION DISCUSSION

This meeting was called to further discuss information for Research and Development for Hunt Club negotiations with Rocky Sands. The Task Force reviewed a Summary Report regarding the negotiation process with Rocky thus far, as was presented at an earlier Council meeting by Roger Williams.

ROCKY SANDS PRESENTATION

Rocky gave a 5 page summary handout and a verbal summary of capital improvements and operating expenses. Rocky states all he is asking for is a fair deal on the money he spent doing capital improvements there (not on operating expenses), to be applied to offset his Hunt Club Lease payments.

ROCKY SANDS HUNT CLUB LEASE NEGOTIATION DISCUSSION FOLLOW-UP

This Task Force: may consider allowing some Capital Improvement costs incurred by Rocky Sands for the Hunt Club to go towards Lease payment; and may consider not to allow content expenses to be applied towards lease payment; and states that a method may have to be developed to determine a value for the Capital Improvements in the absence of substantiating receipts.

[47] Both the summary report and the minutes of the Council meeting referred to in these minutes were not produced.

[48] The same Task Force met again on June 17, 2009. At this meeting, the Task Force came to the conclusion that Rocky would not receive a capital improvement credit. The minutes read as follows:

It is the opinion of the Hunt Club Task Force that the Capital Improvements process as presented is not acceptable. The council motion of May 16, 2005 motion number 2 directed lease reduction but directive was subject to compliance issues.

• Renovations need to be preapproved by WIFN & Rocky Sands

• Receipts were not provided by Rocky Sands, as agreed upon by Hunt Club Task Force & Rocky Sands

• Ref: Hunt Club Task Force minutes March 6, 2008 minutes approved by Chief & Council April 14, 2008

• reference: INAC registered Lease Agreement Item 12

[49] The Task Force recommended that the Lands Department research the seawall improvement done by Rocky Sands and that the Lands Department prepare a draft plan of action. There is no evidence that the seawall was researched or that the Lands Department prepared a draft plan of action. The Hunt Club Task Force minutes dated March 6, 2008 were not produced. The Band Council minutes dated April 14, 2008 were not produced. The lease agreement referred to was the third agreement that was rejected by INAC, was never signed by INAC and was not registered. Item 12 of that agreement provided that the lessee not “construct, demolish, alter, remodel or replace buildings or any part thereof or make improvements” on the lands unless the lessee “has obtained the Band Council’s or Minister’s written approval in advance.”

The Offer

[50] The Hunt Club Task Force held another meeting on July 3, 2009. The minutes of that meeting indicate that Rocky’s “lease has not been registered with INAC because of default of payment on the previous lease.” That was not the case. The lease had not been registered with INAC because of an overlap in the term of the second lease.

[51] Also at that meeting, the Hunt Club Task Force concluded that they would accept a credit of “half of $532,000.00 insurance estimate” plus another $40,000 referenced in the May 16, 2005 Council meeting minutes. The total credit agreed upon was $306,000. It calculated that with this credit Rocky owed $100,000. It based the figure on a statement from the Finance Department dated March 31, 2009 indicating that Rocky owed $406,000. The statement from the Finance Department was inaccurate in 2 respects:

1. It did not account for the $40,000 deposit that was never credited to Rocky; and

2. It calculated the arrears owing based on the rents owing in the written second lease agreement rather than the verbal amendment that had been made to that agreement reducing the rent to $84,000 per annum.

[52] The Band prepared an agreement for Rocky to sign confirming the $100,000 due and owing to the Band and promising payment over the next following four years. The agreement also set the rent owing over the next four years. Rocky refused to sign the agreement. At this point he did not understand the numbers. He believed he did not owe anything to the Band and did not trust the math of the Finance Department. He was told to just sign it and “we’ll deal with it later.” He refused.

The eviction

[53] At a Council meeting on October 4, 2010, Council voted to evict Rocky. The information appears in an action memo dated October 5, 2010:

Based on the historical events that have taken place over the years, and based on outstanding arrears, Chief and Council will close down Fin & Feather Hunt Club based on no production of receipts or other types of information to back up capital improvements or otherwise other upgrades to facilities; it is the duty for Walpole Island First Nation to seize and evict Rocky Sands from Fin & Feather Hunt Club located on St. Anne’s Island; therefore, this is based upon nonpayment of lease since the year 2005-2010.

[54] The minutes of that Council meeting were not produced until June 17, 2016, after Rocky and Rex Isaac gave their evidence and in the middle of the trial. Rocky and Rex Isaac gave their evidence as to what occurred at that meeting in reply. Rocky was a Counsellor at the time and attended the meeting in that capacity. Rocky was asked to leave the room at the time his hunt club was the subject of discussion due to a conflict of interest. A first motion was made to accept the amount of $118,000 “before any consideration of a new lease or a continuation of the current lease.” Rocky was never told of this option. The motion was defeated by a vote of 5 opposing to 4 in favour. The following note appears:

Rex Isaac left the meeting 10:53 p.m., stating Council would not allow him to vote; however, when the vote was called, Counsellor Rex Isaac did not make a decision until after the motion was questioned; thereby, being ruled a no vote.

[55] The minutes disclose a second motion to evict Rocky, after Rex Isaac had left the meeting, in the wording set out in the action memo. This motion was carried with 5 in favour and 4 opposed.

[56] Rocky was asked to return to the meeting and read the decision of Council on the overhead screen. He was never told about the motion to accept $118,000. He was told that the locks would be changed in the morning and that all of his possessions would be forfeited and had to stay at the hunt camp.

[57] Rocky was shocked when he saw the minutes during the course of the trial for the first time. Rocky had served on Council a total of six years. He said that he had never before seen a vote that wasn’t recorded, he had never before seen a time limit on a vote, and he had never before seen a vote ruled a “no vote”.

[58] Rocky received a letter confirming his eviction on October 5, 2010. That letter was left for him in his mailbox at Council office. It read as follows:

As per Council Motion #9 of the Regular Council Meeting of October 4, 2010, this is your written notice that Walpole Island First Nation is seizing and evicting you from Fin & Feather Hunt Club effective immediately.

[59] The eviction happened one day prior to the opening of the duck hunting season. Some of Rocky’s clients already had their hunting gear delivered in anticipation of the upcoming season. Rocky and his son Jesse immediately attended at the hunt club that night in order to collect their personal belongings and the hunters’ gear. The locks were then changed and Rocky lost all of the remainder of his possessions.

[60] Rocky’s guides lost a significant amount of revenue as a result of the eviction. The entire hunting season was lost. Rocky was humiliated. He had received deposits from customers for the hunting season. Most of the money had been spent on supplies and workers to ready the camp. He could not return the deposits. His reputation suffered greatly as a result.

Rex Isaac

[61] The court heard evidence from various members of the Band, much of which was helpful in making sense of the facts. One of the most helpful witnesses was Mr. Ernest Rex Isaac (“Rex”). Rex was a Council member from 2008 to the date of his evidence, with the exception of a two-year period between 2012 and 2014. Rex’s description of Rocky was that of an “honest man” who “put his heart and soul into the club.” Rex was a member of Council at the time of Rocky’s eviction. He recalls the vote to accept $118,000 from Rocky. He said that his vote wasn’t counted so that there would not be a tie. In the event of a tie, the Chief is required to cast the tie-breaking vote. Rex was upset that his vote was not allowed to stand. Rex’s evidence, which I accept, was that he raised his hand to vote in favour of the proposal and the Chief at the time told him that he did not see the raised hand and so his vote would not be counted. This was the first time he had ever seen a vote discarded at a Council meeting.

[62] Rex said that Rocky was not treated fairly. The timing of Rocky’s eviction itself was unfair. Rex’s evidence was that the Walpole Island First Nations Band has a 50% unemployment rate. The annual hunting season is critical to members as they work to earn sufficient monies to sustain their families over the coming year. All of Rocky’s guides suffered a serious loss of income.

[63] Rex’s evidence was that Rocky and the Chief in 2009-2010 did not get along. As a result, Rocky was not necessarily treated fairly or the same as everyone else.

[64] Rex’s evidence was that the practice in 2005 was to apply the cost of capital improvements against lease payments. Many hunt club lessees would come before Council and ask that their rates be lowered on the basis that they made capital improvements to the property. The request was most often granted.

Band witnesses

[65] I am able to conclude the following from the Band members who gave evidence at the trial:

1. The Band was mismanaged in the relevant time period (2005-2010). The record-keeping of the Band was not consistent.

2. The Band was not consistent in their application of capital improvement credits between hunt club owners.

3. Minutes of Council meetings should be available to all members and should not be redacted. (This is important as many minutes were not produced; the ones that were produced were significantly redacted).

4. The purpose of a task force is to make recommendations to Council. It is then up to Council whether to accept or reject those recommendations.

5. The recommendation of the Hunt Club Task Force in May 2008 that Rocky be given a credit was never dealt with by Council due to a changeover in Council members. The vote for Council members took place in June 2008.

6. The proceeds from the hunt club lease agreements were important to the Band. They were used to fund programs for Band members.

7. A lease between the Band and one of its members that is not registered with INAC is referred to as a “buckshee lease”. The first lease agreement between Rocky and the Band was a buckshee lease. Sometimes leases were not registered with INAC as some counsellors did not want INAC to know the business of the Band and particularly the income earned by the Band.

8. There was no communication between the Band and INAC respecting Rocky and his hunt camp between 2005 and 2010. In registered leases, INAC takes care of evictions and deals with outstanding arrears. The Band did not seek INAC’s advice or help in their dealings with Rocky.

9. Rocky was given the clear message from Band Council to proceed with his construction renovations. He was also given the clear message that the cost of those improvements would be paid for by the Band by way of a credit against his rent.

10. The Hunt Club Task Force did not follow through on its own recommendations. Specifically, the Hunt Club Task Force was to ensure that it had all the information necessary to determine the rent arrears and the value of the capital improvements. They did not obtain this information and they did not follow up with the Finance Department for clarification. The Hunt Club Task Force dropped the ball.

11. The Hunt Club Task Force had access to the Fin and Feather Hunt Club property and could have completed their own appraisal of the improvements.

12. Every decision of Band Council was not turned into a Band Council Resolution. The lack of a Band Council Resolution approving any decision did not mean that the decision was not made and followed.

The Law

[66] The Indian Act, R.S.C. 1985, c. I-5 provides as follows:

2(3) Unless the context otherwise requires or this act otherwise provides,

(a) a power conferred on a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the electors of the band; and

(b) a power conferred on the council of a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the councillors of the band present at a meeting of the council duly convened.

[67] Section 28(1) of the Indian Act provides that a deed, lease or any other document by which a band purports to permit a person other than a member of that band to exercise any rights on a reserve is void, unless authorized in writing by the Minister. That section does not apply as Rocky is a member of the Band.

[68] In Maloney v. Eskasoni First Nation, 2009 NSSC 177, 278 N.S.R. (2d) 298, a decision of the Supreme Court of Nova Scotia, s. 2(3) of the Indian Act was considered. In that case, the plaintiff signed a five-year employment contract to implement and administer a difficult program for controlling alcohol and other drug abuse in workplaces at Eskasoni First Nation. He was fired. Eskasoni pleaded that the contract was not binding as it was signed by the Chief without Band Council approval and that it was unconscionable. One of the questions to be determined by the court was whether the contract was binding on Eskasoni by reason of ostensible authority. The court described ostensible authority as follows at para. 251:

A person may be bound by the words or deeds of an apparent agent. Ostensible agency is created by making a representation, through words or conduct, that leads another to believe that the apparent agent has actual authority.

[69] The court reviewed several cases in which first nations were bound up by an apparent agent. The court then said the following at paras. 256 and 258:

So, there is an emerging body of judicial authority for the proposition that a first nation may be bound by ostensible authority. These authorities are somewhat inconsistent with the approach to s. 2(3) in the Leonard v. Gottfriedson line of cases and, as already noted, the ostensible authority cases support the approach in Basque v. Woodstock Indian Band, which I see as being more consistent with the contextual interpretation of s. 2(3).

One explanation for applying ostensible authority in a field where indoor management is rejected would be that ostensible authority engages principles of probity and fairness. Like promissory estoppel, it prevents a kind of misleading the law will not tolerate.

[70] The court concluded that the Eskasoni Band Council could be bound through ostensible authority.

[71] In the case of McDonough v. Maliseet First Nation, 2001 CanLII 11436 (NB QB), the plaintiff was employed by the Band under a written agreement for one year. The agreement was extended orally. The plaintiff sought damages for the agreed-upon monthly wage that remained unpaid. The Band defended the action on the basis that the contract relied upon was of no force or effect because it was not executed in accordance with s. 2(3)(b) of the Indian Act. The court found in favour of the plaintiff. Specifically, the court found that Council authorized the Chief to negotiate contracts with the plaintiff; the Council was aware of the existence of the contracts and did not object to them; the Band paid McDonough for the first year in accordance with the contractual terms; the Band did not normally pass Band Council resolutions in conducting its business except when contracts related to land or federal funding; and the Band terminated the contract because of financial difficulties. The court found that the Band could not use its own habitual failure to follow the Indian Act as a defence to a contract into which it clearly did enter.

[72] In Woodstock Indian Band v. Basque, 1996 CanLII 4875 (NB CA), the plaintiff, at trial, was awarded judgment of $99,356 for work done to the infrastructure on Band lands. The plaintiff had been engaged to perform the work by the Chief. The Chief had been authorized by Band Council to negotiate with the plaintiff to perform the work. In dealing with s. 2(3) of the Indian Act, the court said the following:

Thus, even if Chief Tomah did not have sufficient authority to enter into the agreement with Mr. Basque as a result of the June 1991 resolution, his actions were subsequently ratified by the Band Council. The elements required for a valid ratification are present. Chief Tomah purported to act for the Band. The Band was a competent principal and was legally capable of entering into the contract. The actions of the Band Council requesting additional funding is a positive act of ratification, thus bringing the contract with Mr. Basque within s. 2(3) of the Indian Act. Because of the positive actions of the band Council in requesting additional funding, Mr. Basque does not have to rely on acquiescence by the Council to support ratification of Chief Tomah’s actions. On that point, however, it would be difficult to understand how the Band Council could be heard to say that it did not acquiesce in Mr. Basque’s contract when the members of the Band Council were aware of the work being done on the Reserve and made no objection to it. In any event, there was a positive act of ratification by the members of the Band Council in their request for additional funding.

Findings

[73] In this case, Rocky and the Band had a long-standing relationship, with Rocky leasing the St. Anne’s Island lands and marshes for a hunt club. The relationship benefited both parties. Rocky was able to operate his hunt club and the Band lands and resources were cared for. Members of the Band were employed by Rocky as hunting guides and in other capacities.

[74] In 2005, Rocky and the Band, through Council, agreed that Rocky could proceed with construction and renovations at St. Anne’s Hunt Club. I find that the Band agreed to reimburse Rocky for the improvements by way of a capital improvement credit to his rent. This finding is supported by the evidence that the Band gave Rocky approval to continue construction and instructed the Lands and Membership Department to arrive at an appraised value of the construction work. Over the next two years, the Band was aware of the work being done on its property and did not object. Rocky attended at Council meetings to provide reports on the work. When the Hunt Club Task Force was struck, Rocky attended at task force meetings to provide reports on the work. Rocky did so because he expected to be reimbursed for the improvements to the Band’s lands. It is inconceivable that the Band would not have known of the work being done. It is inconceivable that the Band would not have known of Rocky’s expectation of reimbursement. At the time, other band members leasing hunt clubs on lands owned by the Band had an expectation of reimbursement for improvements. Rocky was no exception. Accordingly, the Band allowed and encouraged the work to be completed knowing Rocky expected to be reimbursed for same.

[75] For five years, Rocky paid no rent and the Band did not take steps to collect the rent. On the contrary, the steps taken by the Band were to form the Hunt Club Task Force and authorize them to deal with the hunt clubs. The Hunt Club Task Force heard Rocky, attended at Rocky’s hunt club for a viewing, and came to the conclusion that Rocky was entitled to a credit in the amount of $532,500.

[76] The Band knew, either directly or through the Hunt Club Task Force, that Rocky did not keep receipts for the cost of the improvements. The work was done by Rocky and his men, much of it on a cash basis, and receipts were not available. Knowing that, and accepting that the improvements provided considerable betterment to the hunt club lands, the Band is not then entitled to evict Rocky for failing to provide the receipts.

[77] The procedure followed at the October 4, 2010 Council meeting was completely improper. I find that the Band Council refused to count Rex’s vote on purpose, so as to ensure that there was not a tie vote.

[78] I also find that Rocky cannot be faulted for refusing to accept the offer that was put to him in July 2009. The statement from the Finance Department dated March 31, 2009 was manifestly inaccurate. Rocky was entitled to question the numbers.

The Issues revisited

1. What were the terms of the lease agreements between Rocky and the Band?

[79] For the time period between July 1, 2001 and June 30, 2005, Rocky agreed to lease the St. Anne’s Hunt Club lands from the Band, and the Band agreed to lease the lands to Rocky, for the price of $84,000 per year.

[80] Commencing July 1, 2005 there was no written lease agreement in place. The lease arrangements continued by way of oral agreement at the same price of $84,000 per year.

2. Was Rocky entitled to a capital improvement credit against his rent for the improvements he made to the buildings and lands?

[81] Yes, Rocky was entitled to a capital improvement credit. The best evidence before the court is that the credit should have been in the sum of $532,500.

3. Is the defendant bound by ostensible authority and, if so, was it present?

[82] The initial approval for Rocky to proceed with construction was given directly by Counsel in the form of an action memo dated April 20, 2005. Accordingly, ostensible authority is not necessary.

[83] In so far as the actions of the Hunt Club Task Force are concerned, the Hunt Club Task Force was created specifically to negotiate with, and oversee, the hunt clubs on Band lands. From the point where the Hunt Club Task Force was struck, Rocky had all of his dealings with the Task Force as opposed to with Council directly. The Task Force had ostensible authority to make representations to Rocky, and to make agreements with Rocky on Council’s behalf.

4. Does the defendant owe a duty of fairness to the plaintiff?

[84] The contract between Rocky and the Band was a private contract and not a public contract. Accordingly, it cannot be said that the Band owed a duty of fairness to Rocky.

[85] However, I am guided by the following words of Lord Wright in G. Scammell & Nephew Ltd. v. Ouston et al., [1941] A.C. 251, at p. 268, as repeated by Killeen J. in Schramek v. C Corp (Ontario) Inc. (1994), 38 R.P.R. (2d) 250 (Ont. Gen. Div.):

The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted.

[86] It is this court’s job to do justice between the parties and to give effect to their intention. In my view, and in all of the circumstances, justice requires that Rocky be given a capital improvement credit against rent owing in the sum of $532,500.

5. What is the accounting between the parties?

[87] Rocky is entitled to the sum of $532,500 for the improvements and betterment to the St. Anne’s Hunt Club. He is also entitled to the return of his $40,000 deposit. Against that sum, and based on time periods from July 1 to June 30, Rocky owes the following in rent:

2004/2005 – $10,000 (Rocky paid $74,000 when he should have paid $84,000)

2005/2006 – $84,000

2006/2007 – $84,000

2007/2008 – $84,000

2008/2009 – $84,000

2009/2010 – $84,000

[88] Given Rocky’s eviction in October of 2010, it is my view that there should be no rent payable for the time period after June 30, 2010. As a result, the total rent owing is $430,000.

[89] Accordingly, Rocky is entitled to judgment in the sum of $572,500 ($532,500 plus $40,000) minus $430,000, for a total of $142,500.

[90] Rocky submits that he is entitled to the sum of $50,000 in damages for bad faith. I prefer to consider, instead, aggravated damages. In Plester v. Wawanesa Mutual Insurance Company, 2006 CanLII 31721 (ON CA), at para. 6, the Court of Appeal referred to the distinction between punitive and aggravated damages as described by the Supreme Court of Canada in Vorvis v. Insurance Corporation of British Columbia, 1989 CanLII 93 (SCC), [1989] 1 S.C.R. 1085:

Before dealing with the question of punitive damages, it will be well to make clear the distinction between punitive and aggravated damages, for in the argument before us and in some of the materials filed there appeared some confusion as to the distinction. Punitive damages, as the name would indicate, are designed to punish. In this, they constitute an exception to the general common law rule that damages are designed to compensate the injured, not to punish the wrong-doer. Aggravated damages will frequently cover conduct which could also be the subject of punitive damages, but the role of aggravated damages remains compensatory. The distinction is clearly set out in Waddams, The Law of Damages (2nd ed. 1983) at p. 562, para. 979, in these words:

… The expression “aggravated damages”, though it has sometimes been used interchangeably with punitive or exemplary damages, has more frequently in recent times been contrasted with exemplary damages. In this contrasting sense, aggravated damages describes an award that aims at compensation, but takes full account of the intangible injuries, such as distress and humiliation, that may have been caused by the defendant’s insulting behaviour. The expressions vindictive, penal and retributory have dropped out of common use.

[91] The Court of Appeal concluded at para. 7, “It is clear that aggravated damages are compensatory.”

[92] In this case, aggravated damages are called for in connection with the manner in which Rocky was evicted. The defendant refused to count Rex Isaac’s vote in order to ensure that it had a majority necessary to carry a vote to evict Rocky. The defendant then proceeded to evict Rocky the night before hunting season was to start, knowing that Rocky would suffer significant distress and monetary damages as a result. Rocky, and all of his guides, lost the opportunity to earn income during the hunting season that would have assisted in supporting their families throughout the remainder of the year. Rocky was humiliated in the eyes of his customers, his guides and the Band. There was no good reason to treat Rocky in this fashion. The Band would have lost nothing by waiting until after the hunting season was finished.

[93] It is my view, in all of the circumstances, that Rocky is entitled to aggravated damages as a result of the foregoing. I assess those damages at $30,000.

Disposition

[94] For the reasons set out above, the defendant, Walpole Island First Nations Band Council, shall pay to the plaintiff, Rocky Robert Sands, damages in the sum of $142,500 plus aggravated damages in the sum of $30,000, for a total of $172,500.

[95] In the event the parties are unable to agree on costs, they may make written submissions, to include a costs outline and any relevant offers to settle, according to the following timeline:

1. The plaintiff shall provide his submissions by January 27, 2017;

2. The defendant shall provide its submissions by February 17, 2017;

3. The plaintiff shall provide any reply submissions by March 3, 2017.

Original signed “Hebner J.”

Pamela L. Hebner

Madam Justice

Released: December 23, 2016