Date: 19990518
Docket: A-460-98
A-461-98
CORAM: STRAYER J.A.
| DÉCARY J.A. |
| ROBERTSON J.A. |
A-460-98
BETWEEN:
MARGARET AMOS,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
A-461-98
AND BETWEEN:
SOLOMON MARK,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
Heard at Vancouver, British Columbia, Monday the 17th day of May, 1999
Judgment delivered at
Vancouver, British Columbia, Monday the 17th day of May, 1999
REASONS FOR JUDGMENT BY: STRAYER J.A.
Date: 19990518
Docket: A-460-98
A-461-98
CORAM: STRAYER J.A.
| DÉCARY J.A. |
| ROBERTSON J.A. |
A-460-98
BETWEEN:
MARGARET AMOS,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
A-461-98
AND BETWEEN:
SOLOMON MARK,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Vancouver, British Columbia on May 17, 1999)
STRAYER J.A.
[1] This appeal involves two members of the Nootka Indian Band who were employed at a pulp mill operated by the Tahsis Company Ltd., later known as Canadian Pacific Forest Products Ltd., now known as Avenor Inc. ("the Company"). The mill was operated in part on land leased from the Nootka Band. Both appellants claimed exemption from income tax in respect of their employment income, on the basis that such income was "the personal property of an Indian ... situated on a reserve" as exempted from income tax by paragraph 87(1)(b) of the Indian Act as applied through paragraph 81(1)(a) of the Income Tax Act. The Minister assessed such income as taxable and the Tax Court of Canada dismissed their appeals. The two cases were argued together on appeal before this Court.
[2] While we recognize the difficulties faced by the Tax Court in trying to apply the various factors said by existing cases to be relevant in determining the situs of income for the purpose of section 87, we have concluded that, in the light of the case law including recent jurisprudence,1 the income in question here should be treated as located on the reserve.
[3] It is necessary to consider briefly the history of this mill in relation to the reserve. It was the Company which in about 1959 approached the Indian Agent with a view to buying or leasing the reserve for the purpose of establishing a pulp mill. The Band eventually agreed to surrender it for leasing to the Company, and in doing so requested that the lease provide job opportunities for Band members at the mill. By the lease negotiated between the Crown and the Company, the Company agreed to give preference in employment to Band members "in its operations on the premises". Of the 39 acres of the reserve, 28.8 were leased to the Company. Band members resided adjacent to the leased property. The mill operation was located partly on the 28.8 acres of band reserve land and partly on 488 acres of land owned by the Company. The mill itself was situated on the property owned by the Company, but leased reserve land was used for storing fuel and woodchips for the operation of the mill. Neither of the appellants, while employed by the Company, actually worked on that portion of the site leased from the Band. However, both resided on the reserve.
[4] In seeking to apply the recognized factors for determining the situs of such income, we have concluded that the learned trial judge did not, as a matter of law, give sufficient weight in the circumstances to the purpose of the tax exemption under section 87 of the Indian Act, namely,
| "to preserve the entitlements of Indians to their reserve lands and to ensure that the use of their property on their reserve lands was not eroded by the ability of governments to tax ...".2 |
[5] Viewing the present matter broadly, it appears that the following inferences may be drawn. The Company sought to lease this land because it thought it important to the operation of a pulp mill yet to be built. The Band agreed to surrender the reserve for leasing purposes on the understanding that, inter alia, the lease would promote the employment of Band members. The lease so provided. These particular Band members were subsequently employed by the Company and though we have no direct evidence that their employment was due to the term in the lease, it is a fair inference that they benefitted by the availability of employment flowing from the Company obtaining access to their reserve.
[6] A difficult issue arises from the fact that neither of these appellants, in their employment with the Company, actually worked on the leased reserve land. However the parties have agreed that the uses made by the Company of the leased reserve land were "related to the production of pulp",3 the activity in connection with which the appellants were employed. It would appear to us to be too arbitrary to deny the benefits of section 87 to those whom the Company assigned to one area of the pulp mill's operation as opposed to those assigned to another contiguous area. It must be inferred that the use of reserve land was integral to the operation of the pulp mill or the Company would not have leased it prior to establishing its operation. From the point of view of Band members, this surrender of the reserve was in part for the procurement of access to employment that would flow from having the pulp mill operation established on, and contiguous to, their land.
[7] Thus we conclude that this employment was directly related to the realization by the Band and its members of their entitlements to the reserve land and, in accordance with the purpose of the tax exemption in section 87, the government should not be able through income taxation to erode income from such use, direct or indirect, of their land as is found in this case.
[8] The appeal will therefore be allowed with costs and these matters will be referred back to the Minister for reassessment in accordance with these reasons.
(Sgd.) "B.L. Strayer"
J.A.
Vancouver, British Columbia
18 May 1999
FEDERAL COURT OF APPEAL
Date: 19990518
Docket: A-460-98
A-461-98
A-460-98
BETWEEN:
MARGARET AMOS,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
A-461-98
AND BETWEEN:
SOLOMON MARK,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: A-460-98 and A-461-98
| STYLE OF CAUSE: A-460-98 |
| Margaret Amos v. HMQ |
- and -
| A-461-98 |
| Solomon Mark v. HMQ |
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: May 17, 1999
REASONS FOR JUDGMENT OF THE COURT BY: STRAYER J.A.
| CONCURRED IN BY: DÉCARY J.A. |
| ROBERTSON J.A. |
DATED: May 18, 1999
APPEARANCES:
| Mr. J.M. Janes for the Appellant (A-460-98) |
| Ms. Pat Hutchings for the Appellant (A-461-98) |
| Mr. Tom Torrie for the Respondent (A-460-98) |
| Ms. Wendy Yoshida for the Respondent (A-461-98) |
SOLICITORS OF RECORD:
Woodward & Co. for the Appellants
| Victoria, B.C. |
| Mr. Morris Rosenberg for the Respondent |
Deputy Attorney
| General of Canada |
1 See e.g. Recalma v. Canada , [1998] 3 C.N.L.R. 279 (F.C.A.).
2 Williams v. Her Majesty the Queen, [1992] 1 S.C.R. 877 at 885., citing Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85 at 130-31.
3 Agreed Statement of Facts, paragraph 18, Appeal Book, p. 16 (Amos appeal); paragraph 20, Appeal Book, p. 14 (Mark appeal).