T-961-03
2003 FC 1273
Shirley Choken, Myles Sinclair, Wilfred Marsden and Jerry Marsden (Applicants)
v.
Lake St. Martin Indian Band (Respondent)
and
Peace Hills Trust Company, Canadian Imperial Bank of Commerce and Andrew Alkier (Garnishees)
and
Department of Indian Affairs and Northern Development (Intervener)
Indexed as: Chokenv. Lake St. Martin Indian Band (F.C.)
Federal Court, Gibson J.--Winnipeg, October 20; Ottawa, October 31, 2003.
Crown -- Creditors and Debtors -- Show cause hearing -- Prothonotary having made ex parte order under Federal Court Rules, 1998, r. 449(1) debts due Indian Band from Bank be attached to satisfy unsatisfied judgment for wrongful dismissal against Band -- Funds provided by Crown under Comprehensive Funding Arrangement, administered by third party manager (TPM) -- Manager's account "in trust" but beneficiaries unspecified -- Whether fund debt owing, accruing to Chief, Council for purposes of r. 449(1) -- Crown monies not subject to garnishment -- Whether monies deposited in TPM's account remain Crown funds -- Whether Band having unconditional right to payment -- Case law on issue referred to -- Court preferring judgment of Muldoon J. in Kostyshyn (Johnson) v. West Region Tribal Council (F.C.T.D.) to that of Sask. Q.B. in Osland v. James Smith Cree First Nation -- In instant case, Crown, not Indians, resisting garnishment -- Duties of TPM including bringing forward debt reduction plan -- Applicants (judgment creditors) arguing account's "in trust" designation only to protect fund from TPM's personal creditors -- Agreement failing to create trust -- Monies no longer Crown funds -- First Nations people had absolute right to fund -- Irrelevant fund administered by independent manager -- Order to go in favour of judgment creditors.
Native Peoples -- Show cause hearing regarding garnishment of funds in Third Party Manager's (TPM) account to be used for program delivery, debt reduction -- Band having many indigent members -- In political turmoil, Chief, Council election having been set aside for corrupt practice -- Judgment creditors are Band members and former employees -- Securing judgment for wrongful dismissal -- Judgment unsatisfied -- Comprehensive Funding Arrangement, Third Party Management Agreement, explained -- Issue whether funds in TPM's "in trust" bank account is debt owing to Chief, Council -- Court applying decision of Muldoon J. in Kostyshyn (Johnson) v. West Region Tribal Council indicating little sympathy for Indians' concerns over loss of social welfare program funding where judgment debtor due to wrongful dismissal -- Agreement herein failing to specify beneficiaries, establish trust -- Band having absolute right to fund -- Bank ordered to pay judgment creditors out of TPM's account.
This was a show cause hearing following upon a prothonotary's ex parte order under Federal Court Rules, 1998, subsection 449(1) that debts due to a judgment debtor--the Lake St. Martin Indian Band--be attached and that the garnishees attend at Court for a show cause hearing.
The applicants are members of the Lake St. Martin First Nation by which they were employed. They were unjustly dismissed and an adjudicator awarded them compensation, the greater part of which remains unpaid. This amount has been made a judgment of this Court.
The Band has an on-reserve population of 1,275, of whom 153 are school children, while 261 families and 279 single persons are on social assistance. The Minister entered into a Comprehensive Funding Arrangement (CFA) with the First Nation, as represented by the Chief and Council. Under this CFA, funds were provided to the Council which, assisted by a co-manager, was to provide departmental programs and services to First Nation members. But, when a successful election appeal meant that the First Nation was without a Chief and Council, the Minister advised that one Alkier, a certified management consultant, (a garnishee herein) had been appointed as third party manager (TPM). CIBC and Peace Hills Trust Company were the First Nation's financial institutions but the Bank had only modest sums standing to its credit. The Bank did, however, have enough in the TPM's account to more than cover the judgment debt. Under the third party management agreement, the TPM had to establish with a financial institution an account in his own name with explicit notification that the account was established in trust and contained all funding advanced by the Minister under the agreement. The TPM was responsible neither for any Council actions prior to the agreement date nor for any actions taken thereafter unless he had authorized or consented to them. It was funds received by the manager from the Minister that have been attached by applicants in the hands of CIBC in a trust account in the manager's name. The issue, then, was whether such monies constitute a debt owing or accruing to the Chief and Council for the purposes of subsection 449(1) of the Federal Court Rules, 1998.
Held, the TPM failed to discharge the onus on him to show cause why the Bank should not pay the applicants' debt out of funds standing to the credit of the manager's account.
While Crown monies are not subject to garnishment, the question was whether amounts deposited to the credit of the manager's account remained Crown funds or had become monies to which the First Nation had a legal and unconditional right to payment. In the Manitoba case, Mintuck v. Valley River Band No. 63A et al, it was held that, once monies were deposited to the credit of the defendant band, "such moneys lost their identity and characteristic of being public funds or of `The Royal Purse' and were subject to attachment". Even more on point was the decision of Muldoon J. in Kostyshyn (Johnson) v. West Region Tribal Council. A deponent for the Council expressed concern as to the consequences of garnishment on health education and community development. But the Trial Division Judge had little sympathy for the judgment debtor's "crying the blues" when it ought to have thought of that matter before wrongfully dismissing the judgment creditor.
In the instant case, it was not the First Nation but rather the Crown that was resisting garnishment of funds provided by it. The manager's duty under the agreement to bring forward a debt reduction plan extended to the debt of the Chief and Council that underlay the attachment.
A very recent judgment going the other way was that of Saskatchewan Judge Baynton in Osland v. James Smith Cree First Nation. The Queen's Bench Justice wrote that "a judgment debtor cannot set up an artificial scheme to put funds held by a third party beyond attachment" but went on to explain that the Band and the members thereof had no legal claim to the funds--even those "ear-marked" for a specific program--and accordingly the funds did not constitute a "debt due or accruing due" within the attachment of debts legislation. Arguments were advanced for applicants as to why this Court should distinguish Osland and apply Kostyshyn. The Court could not approve of the conclusion arrived at in Osland.
Applicants urged that the bank account's "in trust" designation was intended for the sole purpose of protecting the fund against personal creditors of the manager. As the agreement failed to make clear who were the beneficiaries of the trust, it did not establish a trust. It simply provided for the independent and accountable management of monies that would otherwise have been provided directly to the Chief and Council in order to ensure, at a time when the First Nation was experiencing financial difficulties and political turmoil, both proper management of the funds and the development of an effective debt reduction plan for Ministerial approval. As was held in Mintuk, once advanced, the monies were no longer Crown funds, the provision in the agreement whereunder the Minister could recall all or part of the fund notwithstanding, and the people of the First Nation had an absolute right to the fund. For purposes of this case, it was irrelevant that the fund was under the administration of an independent manager.
The First Nation's right to payment extended not just to program delivery but also to debt reduction, including applicants' unsatisfied judgment.
statutes and regulations judicially
considered
| Attachment of Debts Act, R.S.S. 1978, c. A-32. |
| Crown Liability and Proceedings Act, R.S.C., 1985, c. C-50 (as am. by S.C. 1990, c. 8, s. 21), s. 29 (as am. idem, s. 31). |
| Federal Court Rules, 1998, SOR/98-106, r. 449(1). |
| Indian Act, R.S.C., 1985, c. I-5, ss. 2(1) "band", "council of the band", "Indian", 74. |
| cases judicially considered |
| applied: |
| Mintuck v. Valley River Band No. 63A et al. (1977), 83 D.L.R. (3d) 324; [1978] 2 W.W.R. 159; 9 C.N.L.C. 229 (Man. Q.B.); Federal Distributors Ltd. v. Low, Sinosky and Polar Service Centre Ltd., [1981] S.J. No. 1001 (Q.B.) (QL); Kostyshyn (Johnson) v. West Region Tribal Council, [1994] 1 C.N.L.R. 94; (1992), 55 F.T.R. 48 (F.C.T.D.). |
| not followed: |
| Osland v. James Smith Cree First Nation (2003), 231 Sask. R. 161 (Q.B.). |
SHOW CAUSE HEARING with respect to the garnishment of monies under the administration of a third party manager, which had been advanced by the Crown in relation to programs and services to certain Indians, to satisfy judgment creditors, wrongfully dismissed employees of the First Nation. Judgment for applicants (judgment creditors).
| appearances: |
| Harvey I. Pollock, Q.C. and Wayne P. Forbes for applicants. |
| No one appearing for respondent. |
| Harley I. Schachter for garnishee Andrew Alkier. |
| Michelle D. Adrian for intervener. |
| solicitors of record: |
| Pollock & Company, Winnipeg, for applicants. |
| Duboff, Edwards, Haight & Schachter, Winnipeg, for garnishee Andrew Alkier. |
| Deputy Attorney General of Canada for intervener. |
The following are the reasons for order rendered in English by
Gibson J.:
INTRODUCTION
[1]By order dated 7 August 2003, Prothonotary Tabib granted the following relief in favour of the applicants:
IT IS ORDERED that all debts due or accruing due from Peace Hills Trust Company . . . to the Judgement Debtor (Lake St. Martin Indian Band, Respondent) and on deposit or due and payable by Peace Hills Trust Company to the Judgement Debtor, shall be attached to answer the Judgement Debt of $89,897.69 plus costs in the amount of $300.00 owing to the Applicants.
AND IT IS ORDERED that all debts due or accruing due from CIBC (Canadian Imperial Bank of Commerce), . . ., P.O. Box 70, Ashern, Manitoba, R0C 0E0 . . . to the Judgement Debtor . . . and on deposit or due and payable by CIBC to the Judgement Debtor, shall be attached to answer the Judgement Debt of $89,897.69 plus costs in the amount of $300.00 owing to the Applicants.
AND IT IS ORDERED that all debts due or accruing due from CIBC, Box 70, Ashern, Manitoba, R0C 0E0 to Andrew C. Alkier, CMC, . . . as third party manager of the Judgement Debtor . . . and on deposit or due and payable by CIBC to Andrew C. Alkier, CMC, as third party manager of the Judgement Debtor, shall be attached to answer the Judgement Debt of $89,897.69 plus costs in the amount of $300.00 owing to the Applicants.
AND IT IS ORDERED that the said Garnishees attend before this Court at Winnipeg, Manitoba, on the 22nd day of September, 2003, at 9:30 o'clock in the forenoon or apply to the Court no later than 14 days from the date of service of this order, to appear by telephone conference at such date as shall be fixed by the Registry office. [Some contractions, identifications of the judgement debtor and addresses omitted.]
[2]By further order dated 18 September 2003, Prothonotary Tabib added the Department of Indian Affairs and Northern Development as an intervener herein with full party status for the purpose of opposing a garnishment order against the garnishee Andrew Alkier. Further, Prothonotary Tabib adjourned the show cause hearing that was originally scheduled for 22 September to 20 October 2003.
[3]Prothonotary Tabib's order of 7 August 2003, was made ex parte and without personal appearance. The substantive authority for the order was a portion of subsection 449(1) of the Federal Court Rules, 1998.1 The relevant portion of subsection 449(1) reads as follows:
449. (1) Subject to rules 452 and 456, on the ex parte motion of a judgment creditor, the Court may order
| (a) that |
| (i) a debt owing or accruing from a person in Canada to a judgment debtor, or |
. . .
be attached to answer the judgment debt; and
| (b) that the person attend, at a specified time and place, to show cause why the person should not pay to the judgment creditor the debt or any lesser amount sufficient to satisfy the judgment. |
Rules 452 and 456 are not relevant for the purposes of this matter.
[4]These reasons and a related order issue following the show cause hearing.
THE PARTIES
| (1) The Applicants |
[5]All of the applicants are Indians and members of the Lake St. Martin First Nation. As at 5 June 1998, they all lived on reserve. On that date, it was not in dispute that Myles Sinclair, Wilfred Marsden and Jerry Marsden, all employees of the First Nation, were terminated from their employment with the First Nation. While it was initially alleged on behalf of the First Nation that Shirley Choken had quit her employment with the First Nation on that date, in a subsequent adjudication, it was determined that she, like the other three applicants, had been terminated from employment with the First Nation on the same date. Each of the applicants was determined to have been unjustly dismissed. Each was awarded compensation, that compensation totalling $131,897.69. Each has received a single payment since compensation was ordered to be paid. In the result, $89,897.69 in compensation remains payable to the applicants. That amount has been made a judgment of this Court in favour of the applicants and payable by the First Nation.
| (2) Lake St. Martin Indian Band |
[6]Lake St. Martin First Nation is a "band" within the meaning of paragraph 2(1)(a ) of the Indian Act2 (the Act). The "council of the band", once again as defined in subsection 2(1) the Act, is se lected by election held in accordance with section 74 of the Act. The Council consists of a chief and eight councillors. The Lake St. Martin First Nation reserves are located north of the town of Ashern on the shores of Lake St. Martin, in the province of Manitoba. As of August 2003, the total membership of the Lake St. Martin First Nation was approximately 1,939 people, with the on-reserve portion of the population amounting to approximately 1,275 people. Of the on-reserve membership, approximately 153 were children attending school as of October 2002 and approximately 261 families and 279 single persons are currently dependant on social assistance for their basic needs.3
[7]On 11 Ju1y 2002, the First Nation held an election for its Chief and Council. The applicant Jerry Marsden, the incumbent Chief, was re-elected. The July 11, 2002 election was set aside in its entirety, by an order-in-council dated 1 May 2003 on the basis of a corrupt practice which "called into question the integrity of the entire election."4 On 13 June 2003, a new election was held and a new Chief was elected.
[8]On 1 April 2003, the First Nation, as represented by the Chief and Council, and the Minister of Indian Affairs and Northern Development (the Minister) entered into a comprehensive funding arrangement (the CFA). Under the CFA, funds were to be transferred from the Minister to the Council, which, on behalf of the Department of Indian Affairs and Northern Development, (the intervener), and with the assistance of a co-manager, was to provide the intervener's programs and services to the members of the First Nation. The Chief and Council contracted separately with the co-manager.
[9]Following the successful election appeal, between 1 May 2003 and 13 June 2003, the First Nation had no validly elected Chief and Council. To fill this gap, by letter dated 7 May 2003, the intervener advised members of the First Nation that a third party manager (the TPM) would be appointed. Effective 12 May 2003, the garnishee Andrew Alkier became the TPM pursuant to a third party management agreement (the agreement).
| (3) The Financial Institutions |
[10]Peace Hills Trust Company and the Canadian Imperial Bank of Commerce operate bank accounts at their branches at Ashern, Manitoba in favour of the Lake St. Martin First Nation. At all times relevant to this matter, the balances in those accounts were very modest.
[11]In addition, the Canadian Imperial Bank of Commerce, at its branch in Ashern, Manitoba, operates a bank account on behalf of the TPM in his capacity as third party manager of the Lake St. Martin First Nation. At all times relevant to this matter, the balance in that account exceeded the amount of the judgment debt.
| (4) Andrew Alkier |
[12]Andrew Alkier (the manager) is a certified management consultant who, as earlier indicated, entered into a third party management agreement with the Department of Indian Affairs and Northern Development on 12 May 2003 relative to certain programs and services benefiting the members of the Lake St. Martin First Nation.
| (5) Department of Indian Affairs and Northern Development |
[13]The Department of Indian Affairs and Northern Development is the Department of the Government of Canada charged with the responsibility, under the authority of the Minister, of administering funds voted by Parliament for the purpose of providing a wide variety of programs and services to persons registered as "Indians", as that term is defined in the Act, who resides on reserves such as the reserves of the Lake St. Martin First Nation.
THE COMPREHENSIVE FUNDING ARRANGEMENT
[14]As earlier noted in these reasons, on 1 April 2003, Her Majesty the Queen in Right of Canada, as represented by the Minister of Indian Affairs and Northern Development entered into a comprehensive funding arrangement with the Lake St. Martin First Nation, as represented by the Chief and Council of that First Nation, for the purpose of providing funding for the delivery of programs and services for the benefit of members of the First Nation as represented by the Chief and Council. The arrangement continues in effect until 31 March 2004 subject to any earlier termination in accordance with the terms of the CFA itself.
[15]Under the CFA, the Chief and Council undertake the responsibility to deliver the programs and services funded by the Minister under the CFA. The Minister undertakes to make payments in accordance with a schedule of payments to be made monthly. Surplus funds, that is to say amounts by which funds provided by the Minister and from other sources exceed eligible expenditures by the Chief and Council for delivery of funded programs and services are to be returned to the Minister. In the event that the Chief and Council fall into default under the CFA, the Minister is entitled to withhold funds otherwise payable under the CFA and, in addition to other actions that he or she considers reasonably necessary, may terminate the CFA. In circumstances where the Chief and Council are not in default, either party may terminate the CFA on 60 days written notice. On termination, unexpended funding transferred to the Chief and Council by the Minister are to be returned and any monies owed to the Chief and Council by the Minister are to be paid.
THE THIRD PARTY MANAGEMENT AGREEMENT
[16]Once again as earlier noted in these reasons, the Minister entered into a third party management agreement with the manager on 12 May 2003. Recitals to the agreement reflect the existence of the CFA, the fact that there existed from 1 May 2003, a situation in which the First Nation was without a Chief and Council and would remain so until at least 13 June 2003 and that in the result, the Minister had appointed the manager "to administer, in whole or in part, the funding otherwise payable to the Council and to fulfil the Council's obligations under the CFA".
[17]Although the term of the agreement is stated to be from 12 May 2003 to the earlier of the expiry of the election appeal period, with no appeals forthcoming, following the election held on 13 June 2003, and 31 March 2004, the agreement continues in force. As under the CFA, any surplus arising in the hands of the manager is a debt due and payable by him to the Minister, in this case, unless otherwise directed by the Minister.
[18]The Minister is required to transfer the funding needed to administer the programs and services covered by the CFA to the manager "to be held by the manager in trust for the purposes provided for in this agreement, and subject to applicable terms and conditions contained herein". The manager is required to accept the funding provided by the Minister subject to the terms and conditions in the agreement and to use such funding "only for the purposes expressly provided for [in the agreement];". The manag er is further required to "establish an account with a recognized Canadian financial institution in the manager's name with the explicit notification that the account is established in trust . . . into which all funding, advanced by the Minister under [the ] agreement shall be deposited". Finally, in relation to the duties of the manager, he is required to develop and provide to the Minister, for the Minister's approval:
6.3.1 . . . .
| (b) a debt reduction plan, which shall include: |
| i) an aged listing of accounts receivable and accounts payable and a list of the total debt/liabilities of the Council's total consolidated operations. The total consolidated operations are those that are encompassed in a "government reporting entity" as defined by generally accepted accounting principles; or |
| ii) where the Manager is unable to receive the information under subsection 6.3.1(b)(i), the Manager shall use its best efforts to provide the aged listing of accounts receivable and accounts payable and a list of the total debt/liabilities of the Council's operations related to the programs and services funded through this Agreement; |
including amounts, terms and payment obligations, terms upon which the Manager has tentatively renegotiated (subject to Minister and the Council approval) the debt, or proposes to renegotiate the debt, including a schedule proposed by the Manager for repayment of the debt, proposed use of Surplus funds in respect thereof, and details of meetings arranged by the Manager between the Council, the Manager and the Council's creditors; and
It was not suggested before me that the judgment debt here at issue was not incurred in the "total consolidated operations" of the Chief and Council of the day.
[19]The manager's obligations are limited in the following terms:
The Manager takes on the obligations associated with the funding and administration of programs and services for the benefit of the Council's members as provided in this Agreement, and assumes no liability for any actions of the Council, or any of its employees or staff, arising prior to the date of executing this Agreement, which without limiting the generality of the foregoing will include outstanding debts incurred by any employee of the Council or the Council itself; nor for actions of the Council arising hereafter that have not been authorized or consented to by the Manager.
While it would appear from the foregoing that the manager assumes no liability for the judgment debt here at issue, I cannot conclude that, on that account alone, particularly in light of his obligations regarding a debt reduction plan, the funds attached are exempt from attachment.
[20]As with the CFA, the Minister retains the right to terminate the agreement, in the case of the agreement, upon providing the manager with 90 days prior written notice.
THE ISSUES
[21]It is, in the predominant part, funds received by the manager from the Minister under the terms of the agreement that have been attached by the applicants in the hands of the Canadian Imperial Bank of Commerce in an account in the name of the manager, albeit "in trust".
[22]The relevant portions of subsection 449(1) of the Federal Court Rules, 1998 are quoted earlier in these reasons. Under that subsection, on ex parte motion of a judgment creditor, the Court may order that a debt owing or accruing from a person in Canada to a judgment debtor be attached to answer to a judgment debt. It was not in dispute before me that the Canadian Imperial Bank of Commerce is a "person in Canada" and that t he Chief and Council is a "judgment debtor". Thus, the sole issue before me, as framed on behalf of the manager, is whether or not amounts paid by the Minister into an account in the name of the manager "in trust", held by the Canadian Imperial Bank of Com merce, for disbursement by the manager, for purposes specified in the Agreement, is a debt owing or accruing to the Chief and Council. Counsel for the manager framed the question differently in the following terms:
Does the Council have the legal right to unconditional payment to it of the funds in the accounts in question.
ANALYSIS
[23]Crown funds cannot be garnisheed. Section 29 [as am. by S.C. 1990, c. 8, s. 31] of the Crown Liability and Proceedings Act5 reads as follows:
29. No execution shall issue on a judgment against the Crown.
[24]It follows then that the first question becomes whether or not funds paid by the Minister to the manager and deposited in the account in question to be expended by the manager to deliver programs and services on behalf of the Chief and Council, as provided in the CFA as modified by the agreement, remain Crown funds or have taken on the character of funds to which the First Nation, as represented by its Chief and Council, have a legal and unconditional right to payment.
[25]In Mintuck v. Valley River Band No. 63A et al,6 Justice Darichuk of the Manitoba Court of Queen's Bench was faced with a somewhat similar fact situation, the major dis tinguishing feature there being that the funds in question were on deposit directly in a general account of a First Nation. At page 327, the learned Justice wrote:
The defendants contend that although the moneys were deposited in a general account, the moneys were not exigible in law as they were trust moneys, appropriated by Parliament for the use and benefit of the Valley River Indian Band. The money so received from the Department of Indian Affairs could only be disbursed in accordance with circularized directives.
Much the same could be said here substituting for "circularized directives" the CFA and the agreement.
[26]The learned Justice concluded at page 332:
Unless and until the moneys were advanced by the Department of Indian Affairs and were deposited to the credit of the account of the defendant band, they were not subject to garnishment by the plaintiff or anyone else. To this point in time lies the inability of the Court to make an order against the Crown. However, once deposited to the credit of their account, such moneys lost their identity and characteristic of being public funds or of "The Royal Purse" and were subject to attachment. The anticipated use or contemplated disbursal of such funds by the Parliament of Canada and/or the Band Council, for the benefit and use of the members of the defendant band as a whole did not preclude the issuing of [the] garnishment order and the attachment of such moneys.
[27]As to the terms of the agreement indicating some form of trust arrangement with respect to the bank account in question, in Federal Distributors Ltd. v. Low, Sinosky and Polar Service Centre Ltd.7 where the issue was garnishment of a trust account, Justice Walker wrote at paragraph 5:
Just because the funds may have been placed in a trust account does not make them unattachable. Just because the funds were received in trust does not make them unattachable. Just because the funds are held in trust does not make them unattachable. All of this, without more, does not make the funds unattachable.
[28]One of the two cases cited before me that are perhaps most directly on point is Kostyshyn (Johnson) v. West Region Tribal Council.8 There, an employee of the West Regional Tribal Council Inc. sought to enforce a judgment debt against her former employer arising, as here, out of a finding of unjust dismissal from employment. Justice Muldoon of this Court wrote at pages 98-99 of his reasons:
Mr. Nepinak [a deponent for the West Region Tribal Council Inc.] also expresses concern for the West Region Tribal Council Inc., the judgment debtor, of which he is a board member, that the impact of the garnishment of the $129.011.68 will have on its "programming. . . in the health education and community development fields". When that consideration is raised, the usual reply is that the board ought to have thought of that matter before it dismissed the judgment creditor unjustly. Like all other corporations, this corporation must bear the usual responsibility for its board's misdeeds. Unfortunately, according to Mr. Nepinak's paragraph 6 [of his affidavit], it is ultimately the taxpayers of Canada who will pay for the board's misdeeds. Paragraphs 7, 8 and 9 [of the same affidavit] deserve the same response. Now the judgment debtor is "crying the blues" about its budgeted programs, but of course, it deserves no more sympathy than any other judgment debtor in the same sort of self-inflicted plight.
[29]On the facts of this matter, it is not the First Nation that is "crying the blues" about the impact of the proposed garnishment on its programs and services for the members of the First Nation, the First Nation was not directly rep resented before the Court, but rather the Crown whose funds have been provided to support those programs and services and the manager appointed to disburse those funds for the benefit of the members of the First Nation. While their interest is laudable, it is subject to comments similar to those directed by Justice Muldoon at the West Region Tribal Council Inc. particularly in light of the manager's duty under the agreement to bring forward for the approval of the Minister a debt reduction plan which would, I am satisfied, extend to the debt of the Chief and Council that underlies the attachment under consideration.
[30]Standing in stark contrast to the Kostyshyn decision, supra, from this Court is the very recent decision of Judge Baynton of the Saskatchewan Court of Queen's Bench in Osland v. James Smith Cree First Nation .9 On the facts that were before Justice Baynton, First Nations Management Services Inc. was a third party manager with responsibilities in relation to the James Smith Cree First Nation substantially similar to those of the manager in this matter. As here, First Nations Management Inc. sought to defend against an attachment of funds standing to its credit. The Attorney General of Canada claimed for recovery of the funds sought to be attached by the garnishee summons.
[31]At paragraph 28 of his reasons, Justice Baynton wrote:
The answer to the question of whether the funds in the hands of the garnishee constitute a debt due or accruing due, is usually readily apparent. The fundamental issue is whether the judgment debtor has the legal right to unconditional payment of the monies that are sought to be attached. The only case cited to me on this issue was one relied upon by the applicant. In Brandt v. Burrows . . ., Mr. Justice Tucker of this court stated:
| The question to be decided is whether at the time of service on the garnishee of the garnishee summons, there was a debt due or accruing due to the defendant. When money has been received by one person which in justice and equity belongs to another under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as for money had and received to his use: . . . . |
| If money is received for the use of another, then it becomes a debt and by implied contract is payable from the receiver to the one for whom he is trustee: . . . . [Citations omitted.] |
[32]At paragraph 32, Justice Baynton continued:
But a judgment debtor cannot set up an artificial scheme to put funds held by a third party beyond attachment.
The parties before me were in agreement that the arrangements at issue did not constitute an artificial scheme on the part of the First Nation, as represented by its Chief and Council, to put funds held by or on behalf of the manager beyond attachment.
[33]Justice Baynton then went on to describe at some length the funding by parliamentary appropriation of programs and services for the benefit of the James Smith Cree First Nation's members and the third party management arrangement that was before him. He then concluded in the following terms at paragraph 45:
On the basis of the provisions I have outlined, I conclude that the scheme under which funds are provided by Parliament through the Minister/claimant and the recipient/garnishee [the First Nation that was there the defendant] for the benefit of the members of the First Nation judgment debtor, constitute trust funds in the hands of the recipient/garnishee. Neither the Band nor the members of the First Nation judgment debtor have a legal claim to the funds, even those that are "ear-marked" for a specific program. As such, the funds are not a "debt due or accruing due" within the meaning of s. 5 of the [Attachment of Debts.] Act and are not attachable by a garnishee summons.
[34]Counsel for the applicants urged that I should distinguish the Osland decision on a number of grounds and follow, by analogy, the Kostyshyn decision earlier referred to. The grounds on which I was urged to distinguish Osland are the following: first, Mr. Osland was not an Indian and the applicants here are Indians, members of the First Nation and, in three cases out of four, currently residents on the reserves of the First Nation; secondly, in Osland, the Court did not consider whether the attached monies were First Nation monies but rather focussed on the issue of whether they were monies impressed by a trust; thirdly, the Court failed to consider the impact of the Comprehensive Funding Arrangement that underlay the third party management agreement that was before it; fourthly, in finding that the garnisheed monies were trust funds, the Court relied on rigid trust principles applied to the facts before it; fifthly, the Court did not fully take into account the special relationship between the Crown and the First Nation; sixthly, the Court made no reference to the third party manager's contractual obligation to formulate and present a debt reduction plan which would take into account, as on the fac ts before me, all debts, presumably including the debt owed to Mr. Osland; and finally, the reality that the statutory scheme there at issue was the Attachment of Debts Act [R.S.S. 1978, c. A-32] of the province of Saskatchewan which, of course, is not applicable on the facts before me. Finally, counsel noted that the Osland decision was not binding on me.
[35]With great respect, I reach a different conclusion from that arrived at in Osland and prefer the succinct analysis of Justice Muldoon in Kostyshyn.
[36]The agreement, as earlier noted, requires that the manager establish an account with a recognized Canadian financial institution, in his name, "with the explicit notation that the account is established in t rust" into which all funding advanced by the Minister under the agreement, with the exception of surplus funds, is to be deposited. In all other respects, the agreement is silent as to the nature of any trust relationship. Counsel for the applicants urged that the designation "in trust" for the bank account must be assumed to be, in the absence of elaboration of the nature of the trust, for the sole purpose of protecting the funds advanced by the Minister from any personal creditors of the manager. Certainl y, it is not at all evident on the face of the agreement who the beneficiary or beneficiaries of the trust might be, the Crown itself, the Chief and Council, the members at large of the First Nation or some other person or persons. I conclude that no trust arrangement is established by the agreement. Rather, that agreement simply provides for independent and accountable management of monies that would otherwise have been provided directly to the Chief and Council pursuant to the CFA, to ensure that, during a period of both political turmoil in the First Nation and financial difficulty, the funds would be appropriately managed and that, further, an effective debt reduction plan would be developed for the approval of the Minister.
[37]Reverting to a quotation from the Mintuck10 decision, I accept that, "[u]nless and until the monies were advanced by the Department of Indian Affairs and were deposited to the credit of the account of the defendant band, they were not subject to garn ishment by the plaintiff[s] or anyone else." Until the funds here at issue were advanced, they were public monies not open to attachment. Here, the funds were not advanced directly to the First Nation but were advanced to the manager. I am satisfied that t hat distinction is without a difference. Once again, the manager, for purposes of administration of the funds advanced by the Minister, simply stands in the place of the Chief and Council of the First Nation. Once the funds were advanced, they ceased to be Crown funds. They were directed to a particular purpose, the funding of programs and services for the First Nation. They ceased to have the character of Crown funds. Subject to the provisions of both the CFA and the agreement providing for circumstances under which the Minister could call back all or a portion of the funds, and there was not evidence before me that such a right was exercised or could have been exercised at the time of the attachment, there was an absolute right to such funds in the people of the First Nation, through its Chief and Council when such were properly in office as they would appear to have been at the time of the attachment. The monies were, in effect, First Nation monies that were administered by an independent manager for reasons that are irrelevant for the purposes of this matter.
[38]In the result, and without in any way relying on the facts that the applicants are Indians and members of the First Nation, which question I am satisfied should more appropriately be reserved for a different fact situation, I conclude that the monies here at issue are monies to which the First Nation has, in the absence of the exercise of the authority of the Minister to call back the monies, the legal right to unconditional payment, not simply for the delivery of programs and services to the First Nation, but also for the implementation of a debt reduction plan, which debt reduction plan would extend to the judgment in favour of the applicants. In the absence of such a plan and of any evidence that the manager has worked with the applicants to develop an appropriate plan in relation to their judgment, I am satisfied the manager has simply failed to discharge the onus on him to show cause why the Canadian Imperial Bank of Commerce should not pay to the applicants, out of the funds standing to the credit of the manager, the debt owed to them, in the words of subsection 449(1) of the Rules, or any lesser amounts sufficient to satisfy the judgment registered in this Court.
COSTS
[39]The applicants seek their costs of the show cause hearing. I am satisfied that they are entitled to costs. I fix costs in their favour, inclusive of disbursements and GST, at $1,500, such amount to be added to the amount payable to the applicants out of the attached funds standing to the credit of the manager and held by the Canadian Imperial Bank of Commerce.
1 SOR/98-106.
2 R.S.C., 1985, c. I-5.
3 Affidavit of Myles Thorsteinson, paras. 14 and 16, affirmed 26 September 2003.
4 Affidavit of Myles Thorsteinson, para. 19.
5 R.S.C., 1985, c. C-50 [as am. by S.C. 1990, c. 8, s. 21].
6 (1977), 83 D.L.R. (3d) 324 (Man. Q.B.).
7 [1981] S.J. No. 1001 (Q.B.) (QL).
8 [1994] 1 C.N.L.R. 94 (F.C.T.D.).
9 (2003), 231 Sask. R. 161 (Q.B.).
10 Supra, note 6.