Date: 20040628
Docket: A-524-03
A-540-03
Citation: 2004 FCA 248
CORAM: DÉCARY J.A.
BETWEEN:
DEPARTMENT OF INDIAN AFFAIRS and
NORTHERN DEVELOPMENT
Appellant (Intervener)
and
SHIRLEY CHOKEN, MYLES SINCLAIR,
WILFRED MARSDEN and JERRY MARSDEN
Respondents (Applicants)
and
LAKE ST. MARTIN INDIAN BAND
Respondent
and
PEACE HILLS TRUST COMPANY and
CANADIAN IMPERIAL BANK OF COMMERCE,
and ANDREW ALKIER
Garnishees
Heard at Winnipeg, Manitoba, on June 1st, 2004.
Judgment delivered at Ottawa, Ontario, on June 28, 2004.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: LÉTOURNEAU J.A.
PELLETIER J.A.
Date: 20040628
Docket: A-524-03
A-540-03
Citation: 2004 FCA 248
CORAM: DÉCARY J.A.
BETWEEN:
DEPARTMENT OF INDIAN AFFAIRS and
NORTHERN DEVELOPMENT
Appellant (Intervener)
and
SHIRLEY CHOKEN, MYLES SINCLAIR,
WILFRED MARSDEN and JERRY MARSDEN
Respondents (Applicants)
and
LAKE ST. MARTIN INDIAN BAND
Respondent
and
PEACE HILLS TRUST COMPANY and
CANADIAN IMPERIAL BANK OF COMMERCE,
and ANDREW ALKIER
Garnishees
REASONS FOR JUDGMENT
[1] The main issue in these appeals is whether moneys paid by the Minister (the Minister) of the Department of Indian Affairs and Northern Development (the Department) to a third party manager (the Manager) and held by the latter in his bank account for the purposes of administering the programs and services which are delivered by the Department to members of the Lake St. Martin Indian Band (the Band), can be garnished by a judgment creditor of the Band. In other words, are the monies paid by the Minister and held by the Manager in his bank account "a debt owing or accruing" to the Band which may be garnished by a Band's judgment creditor pursuant to Rule 449 of the Federal Court Rules, 1998. The other issue is whether the Federal Court Judge should have ordered costs. The impugned judgment is reported at [2004] 1 C.N.L.R. 73 (F.C.T.D.), 2003 FC 1273.
The facts
[2] The respondents Choken, Sinclair, Marsden and Marsden (the respondents) are former employees of the Band. They are owed some $90,000.00 by the Band as a result of awards for unjust dismissal made in their favour by a Canada Labour Code adjudicator. The awards were made judgment debts in the Federal Court when they were registered pursuant to Rule 424 of the Federal Court Rules, 1998.
[3] On April 1, 2003, the Band entered into a Comprehensive Funding Arrangement (CFA) with the Minister. Under the CFA, funds were to be transferred from the Minister to the Council of the Band which, on behalf of the Department, was to provide the Department's programs and services to its members. More on the CFA later.
[4] On May 1, 2003, by Order in Council P.C. 2003-604, the Governor in Council, being satisfied that corrupt practices called into question the integrity of the election held on July 11, 2002, set aside the election (A.B., p. 282).
[5] On May 7, 2003, the Department informed the Band members that it was "in the process of appointing a Third Party Manager for the Indian and Northern Affairs Canada funding for the benefit of the [Band]." The Third Party Manager, in the absence of a Chief and Council, would be "responsible to satisfy the obligations of the Comprehensive Funding Arrangement until further notice." The letter went on to say that "the Department will not be responsible for unauthorized withdrawals from the [Band's] bank accounts" (A.B., p. 286).
[6] On May 12, 2003, Mr. Andrew Alkier (the Manager or the Garnishee) was appointed Third Party Manager pursuant to a Third Party Management Agreement (TPMA) concluded between him and the Department. (The TPMA was eventually maintained after the proper election of a Chief and Council, but it is common ground that this fact is of no consequence for the purpose of these proceedings.) More on the TPMA later.
[7] Funds paid by the Department to the Manager were kept by him in an account he had at the Canadian Imperial Bank of Commerce (the CIBC) in his capacity as Third Party Manager. The Band also had an account at the CIBC. The Band's account was very modest and is not at issue. On the other hand, the balance in the Manager's account exceeded the amount of the judgment debt at all times relevant to this matter.
[8] On August 7, 2003, a prothonotary ordered, inter alia, that "all debts due or accruing due from CIBC ... to Andrew C. Alkier ... as third party manager of the Judgment Debtor [the Band] ... and on deposit or due and payable by CIBC to Andrew C. Alkier ... as third party manager of the Judgment Debtor, shall be attached to answer the Judgment Debt of $89,897.69 .. owing to the [respondents]" (A.B., p. 11). The Order was made ex parte and without personal appearance in accordance with Rule 449.
[9] The garnishee appeared at a show cause hearing held by a Federal Court Judge (the Judge). On October 31, 2003, the Judge ordered the garnishee to pay the judgment debt to the respondents. He found that the funds paid by the Minister to the Manager had not remained Crown funds and had taken on the character of funds to which the Band had a legal and unconditional right to payment, hence the within appeal. He also ordered costs which he fixed at $1,500.00 despite an alleged agreement between counsel during the hearing that there would be no costs.
[10] With respect, I have reached the conclusion that the Judge erred in law in his interpretation of the Comprehensive Funding Arrangement (CFA) and the Third Party Management Agreement (TPMA) and in deciding that the amounts held in the Third Party Manager's account were "a debt owing or accruing" to the Band within the meaning of Rule 449(1)(a)(i).
Relevant Rule
[11] Rule 449(1)(a)(i) 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; ...
|
|
449. (1) Sous réserve des règles 452 et 456, la Cour peut, sur requête ex parte du créancier judiciaire, ordonner : a) que toutes les créances suivantes du débiteur judiciaire dont un tiers lui est redevable soient saisies-arrêtées pour le paiement de la dette constatée par le jugement : (i) les créances échues ou à échoir dont est redevable un tiers se trouvant au Canada, ... |
Third Party Management Policy
[12] The Department determines the manner in which, or the mechanism by which, programs and services are to be provided to Indians with the public funds appropriated by Parliament and provided to the Department for this purpose. It is the Department which determines and establishes the particular programs and services to be provided.
[13] These public funds are generally released to the council of a band as representatives of the band on behalf and for the benefit of its members. The Department and the council enter into a Comprehensive Funding Arrangement (CFA). Under the CFA, funds are to be transferred from the Minister to the council which, on behalf of the Department, provides the Department's programs and services to the members of the band.
[14] Where, however, circumstances warrant the appointment of a Third Party Manager, the Department provides its programs and services through that Third Party Manager (a private company or a group of individuals) whose role is limited to the administration of programs and services to the members of the band (Affidavit of Myles Thorsteinson, A.B., pp. 254-262).
[15] The Department has adopted a policy (the Policy) relating to Third Party Managers (A.B., pp. 263-281). The Policy is found in Part 5 of the Financial Policies and Procedures Manual published by the Department.
[16] The Policy is not, of course, binding in and by itself. However, it is reflected to a large extent in the terms of the TPMA and the CFA and is therefore, for most practical purposes, binding on the parties to the agreements. I also note that, in article 5.1(b) of the TPMA, the Minister assumes the obligation, "at the Manager's request, [to] provide any publicly available fiscal management policies, information or guidelines produced by the Minister which are relevant to the funding provided for in this Agreement" (A.B., p. 148). As a result, it will be useful to quote some of the most relevant passages from the Policy:
5.0 Definitions
...
5.8 Third Party Manager: a third party appointed by the Minister to administer the Council's funding and obligations under its Funding Arrangement, in whole or in part.
6.0 Policy Statement
6.1 The Council is responsible for the delivery of programs and services under the Funding Arrangement and all reasonable efforts should be made to sustain the Council's responsibility for doing so.
6.2 The terms and conditions of the Funding Arrangement set out situations which constitute a default and remedies that may be taken by the Minister. The Minister's Intervention, in the form of an appointment of a Third Party Manager ("TPM"), is taken in order to protect public funds, delivery of one or all Essential Services or maintain Ministerial accountability.
6.3 The appointment of a TPM is considered high level Intervention and a temporary situation while the Council addresses/remedies the difficulty/default which gave rise to a default under the Funding Arrangement or executes a Funding Arrangement [for those situations when a TPM is appointed because no funding Arrangement has been signed by the Council]. Monitoring of the TPM level of Intervention should be done in accordance with the process set out in the Intervention Policy.
6.4 This Policy is about the appointment of a TPM which represents the highest form of Intervention in a Council's affairs. The Policy is designed to establish consistency in regional operations and to facilitate an ongoing process of monitoring and improving upon its effectiveness. An important part of this level of Intervention is working with the Council, through the TPM, in a orderly fashion to enhance the Council's capacity to the point where a lesser, or no form of outside Intervention is required. Third party management provides a framework for remedial management measures and for expert assistance that will enhance the Council's capacity to resume delivery of programs and services.
The Minister commits to this objective and will work, through the TPM, with the Council, the community itself and outside parties such as financial institutions, where required, to enable a transfer of responsibility back to the Council. Furthermore, the Minister commits to the principles of transparency of operations and disclosure of information. It is through working together in a respectful relationship that will enable third party management Intervention to succeed in restoring stability in the delivery of programs and services.
...
9.0 Management of the Funding Arrangement with the Council
...
9.4 The Funding Arrangement shall not be amended in order to attach or to effect the appointment of the TPM. The TPM Agreement is entered into between the TPM and the Minister and the Council is not a required party to the TPM Agreement. Funding under the Funding Arrangement between the Council and the Minister is redirected to the TPM.
...
10.0 Management of a Canada/First Nations Funding Agreement
...
10.4 Under a CFNFA because of the block-budgeting nature of the funding, it is considered that the TPM will be responsible for administering all of the Block Funded Services listed in the schedules attached to the CFNFA, until termination of the CFNFA per section 10.1.
...
11.2 Funding the Third Party Manager
11.2.1 The programs and services to be administered by the TPM are for the benefit of the Council's community members and as such, the TPM Agreement shall be managed as a transfer payment and TPM Agreement is to be entered into under Vote 15 Grants and Contributions funding.
11.2.2 The TPM Agreement shall respect the guidelines of Treasury Board's Transfer Payment Policy.
...
11.3 Roles and Responsibilities of the Third Party Manager
11.3.1 The roles of the TPM are to:
(a) administer, in whole or, depending upon the terms of its appointment, in part, the terms and conditions of the Funding Arrangement;
(b) assist the Council in the retirement of Debt in order to facilitate the return of program management and delivery responsibilities to the Council, including preparation and implementation of the plans identified in subsection 11.4;
(c) act as a facilitator between the Council and its creditors to negotiate repayment plans.
...
11.3.3 The TPM will, during the term of the TPM Agreement:
(a) maintain an account in the financial institution where the main credit facility of the Council resides ... The account shall be in the TPM's name, in trust, with the explicit notation that the account is established "in trust" ("Funding Account") into which all funding provided by the Minister is deposited...
11.4 Plan Development
...
11.4.3 The TPM will develop a Debt reduction plan, which shall, at a minimum, include:
(a) an aged listed of accounts receivable and accounts payable and a list of the Council's total Debt...
(b) a proposed repayment schedule of the Debt, including amounts owing, terms and payment obligations, sources of funds to be used for Debt reduction and terms and conditions of Debt compromise or renegotiation that the TPM recommends... Consideration must be given to the factors and circumstances surrounding the Debt in an effort to ensure that creditors are treated in a fair and equitable manner...
(c) proposed meetings with Council and it's creditors to facilitate discussions on repayment and renegotiation of Debt.
...
11.5 Liability Related to Debt Repayment
11.5.1 The TPM must make it clear to creditors that neither the TPM or the Minister is responsible to pay Council's Debt and that payment of Debt does not obligate the Minister or the Crown to pay or accept responsibility for any current or future Debt of the Council.
...
11.6 Programs and Services Administered by the Third Party Manager
11.6.1 At a minimum, the TPM shall be responsible for the administration of all programs and services set out in the Funding Arrangement...
...
13.0 Responsibility of the Third Party Manager for Employees
...
13.7 The TPM has no liability for any Debts of the Council, including Debts for outstanding wages.
...
18.0 Termination of the Third Party Management Agreement
...
18.2 Upon termination of the TPM Agreement, the TPM shall:
(a) return to the Minister all program Surplus funds and the balance of the Funding Account forthwith...
[A.B., pp. 263-277]
[My emphasis]
The Comprehensive Funding Arrangement (the CFA)
[17] The following passages are relevant:
WHEREAS the Minister is providing funding for the delivery of programs and services for the benefit of the Members represented by the Council.
WHEREAS the Council is expending funds to deliver programs and services on behalf of the Members whom they represent.
...
2.0 ARRANGEMENT AMOUNT
2.1 The Minister agrees to provide an amount as identified in Part D - Program Budgets, Authorities and Monthly Expenditure Plan (Cashflow Statement - Detailed Coding, by Agreement) in accordance with the terms and conditions of this Arrangement.
...
PART A
DEFINITIONS
...
THIRD PARTY MANAGER
A third party appointed by the Minister to administer funding otherwise payable to the Council and the Council's obligations under this Arrangement, in whole or in part.
...
PART B
GENERAL TERMS AND CONDITIONS
...
2.0 TERMS OF PAYMENTS
...
2.2 Cash Payments
2.2.1 The Minister shall make payments, through the application of the Federal Cash Management Policy, based on the annual amounts identified in PART D - Program Budgets, Authorities and Monthly Expenditure Plan. The Council may propose changes to the monthly expenditures as required. Such changes will take effect thirty (30) days after being mutually agreed to by the Council and the Minister.
2.2.2 As required by section 40 of the Financial Administration Act, funding under this Arrangement is subject to the appropriation of funds by Parliament with respect to the particular programs and services set out in this Arrangement.
...
2.3 Surpluses and Deficits
2.3.1 For each program or service identified as a Contribution in PART D - Program Budgets, Authorities and Monthly Expenditure Plan:
(a) any Surplus shall be reimbursed by the Council to the Minister. Where there is more than one funding source for the program or service, the Council shall reimburse DIAND a portion equal to DIAND's contribution to the program or service; and
...
4.0 DEFAULT AND REMEDIAL MANAGEMENT
...
4.3 Notwithstanding section 4.2, in the event the Council is in default under this Arrangement, the Minister may take one or more of the following actions as may reasonably be necessary, having regard to the nature and extent of the default:
...
(c) appoint, upon providing notice to the Council, a Third Party Manager;
...
6.0 SUBJECT MATTER OF THE ARRANGEMENT
6.1 This Arrangement is only for the funding and delivery of services in accordance with its terms and conditions...
[A.B., pp. 160-170]
[My emphasis]
None of the programs and services described in the CFA relates to the payment of the Band's debts.
The Third Party Management Agreement (the TPMA)
[18] The relevant provisions are:
BETWEEN:
HER MAJESTY THE QUEEN, IN RIGHT OF CANADA,
as represented by the Minister of Indian Affairs and Northern Development
(hereinafter referred to as the "Minister")
AND:
ANDREW C. ALKIER, CMC, who is providing services hereunder on behalf of the LAKE ST MARTIN FIRST NATION, a "band" as defined in the Indian Act
(hereinafter referred to as the "Manager")
WHEREAS:
...
H. The Minister has 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; and
...
2.0 PROGRAMS AND SERVICES
2.1 The Manager agrees to:
(a) deliver, on behalf of the Council, the programs and services provided for in PART D - Program Budgets, Authorities and Monthly Expenditure Plan of the Comprehensive Funding Arrangement, in accordance with the terms and conditions of the comprehensive Funding Arrangement...
(b) competently administer and manage, to the standard of a prudent professional manager, all funding advanced by the Minister pursuant to this Agreement, ... and account to the Minister for the use of the funding advanced and the results achieved in terms of programs and services delivered to the Council's members.
...
4.0 FUNDING
4.1. Cash Payments
4.1.1 The Minister shall make payments to the Manager, in accordance with the Federal Cash Management Policy, based on the amounts identified in PART D - Program Budgets, Authorities and Monthly Expenditure Plan of the Comprehensive Funding Arrangement.
...
4.1.3 The Minister shall advise the Manager, on a timely basis, of any expenditures reported by the Manager that the Minister deems unacceptable or not in conformance with the policies approved by the Minister.
4.1.4 The Minister shall hold-back ten percent (10%) of full and final payment under this Agreement due to the Manager until the Manager has fulfilled, to the Minister's satisfaction as confirmed in writing to the Manager, all reporting requirements of this Agreement, ...
4.1.5 Subject to subsection 4.1.6, and notwithstanding anything to the contrary in the Comprehensive Funding Arrangement, any Surplus, as defined in the Comprehensive Funding Arrangement, or other amount owing by the Manager to the Minister is a debt due and payable when it arises...
4.1.6 Notwithstanding anything to the contrary set out in the Comprehensive Funding Arrangement, the Manager shall deposit any Surplus, as defined in the Comprehensive Funding Arrangement, into an interest bearing trust account until the Minister provides direction on the use of these funds.
...
5.0 MINISTER'S OBLIGATIONS
5.1 The Minister shall:
(a) transfer the funding required to administer the programs and services referred to in this Agreement 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;
(b) at the Manager's request, provide any publicly available fiscal management policies, information or guidelines produced by the Minister which are relevant to the funding provided for in this Agreement;
...
6.0 MANAGER'S OBLIGATIONS
6.1 Funding
6.1.1 The Manager shall:
(a) accept the funding provided by the Minister subject to the terms and conditions provided in this Agreement and use such funding only for the purposes expressly provided for herein;
(b) assume all of the obligations of the Council as set out in the Comprehensive Funding Arrangement as though the Manager were the signatory thereto and carry out these obligations in accordance with the terms and conditions contained therein, as amended by the terms of this Agreement;
(c) ensure that no budget amount that has been approved by the Minister is exceeded without the prior written consent of the Minister;
(d) pay all accounts in respect of programs and services when due, and
(e) not co-mingle funding provided hereunder with funds of or from the Council or any person, government agency or entity not a party to this Agreement.
6.2 Funding Account
6.2.1 The Manager shall establish an account with a recognized Canadian financial institution in the Manager's name, with the explicit notation that the account is established in trust ("Funding Account") into which all funding, advanced by the Minister under this Agreement shall be deposited, other than the Surplus funds identified in subsection 4.1.6.
6.3 Management Plan, Debt Reduction Plan and Remedial Management Plan
6.3.1 The Manager shall review the Council's books and records, advise the financial institution where the main credit facility of the Council resides of the appointment of the TPM, and ... develop and provide to the Minister for the Minister's approval:
...
(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...
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
...
and the Manager shall implement the budget/expenditure plan and comply with it from and after the Minister has approved it, and will take all reasonable steps to prepare for implementation of the debt reduction plan and the Remedial Management Plan upon their approval by the Minister and will implement them in full upon receiving the approval of the Council. The Manager shall seek a band council resolution ("BCR") signed by a quorum of the Council as evidence of the Council's approval...
...
6.6 General
...
6.6.5 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 on 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.
...
14.0 GENERAL
...
14.4 The parties acknowledge that the Manager is not an employee, servant, officer or agent of the Minister, and it is not intended by the parties that any term of this Agreement be interpreted as creating such a relationship and the Manager will not so represent itself.
[A.B., pp. 144-154]
[My emphasis]
Analysis
[19] Counsel and the Judge have examined, applied or distinguished various decisions which have no binding authority on this Court and none of which - counsel agreed - is directly on point. I did not find these cases very helpful as the present matter is to be resolved in the light of the relevant agreements. I hasten to add that these reasons do not address the status of funds held in a band's account where no third party manager has been appointed.
- A debt owing or accruing
[20] It is fair to say that the words "a debt owing or accruing" mean, in the context of garnishment proceedings, a sum of money which is now payable or will become payable in the future by reason of an existing and certain obligation and which is or will become recoverable in an action (see John A. Yogis, Canadian Law Dictionary, 5th ed. (Hauppauge, NY: Barron's, 2003), p. 74; Words and Phrases, (Toronto: Carswell, 1998) (Supp.), Vol A-Z, p. 217; Daphne A. Dukelow and Betsy Nuse, Dictionary of Canadian Law, 2nd ed. (Toronto: Carswell, 1995), p. 301; Words and Phrases legally defined, 3rd ed. (London: Butterworths, 1989), Vol. 2, p. 21; Stroud's Judicial Dictionary of Words and Phrases, 6th ed. (London: Sweet & Maxwell, 2000), Vol. 1, p. 612; Black's Law Dictionary, 7th ed., (St. Paul, Minn.: West Group, 1999), p. 410; Central Capital Corp. (Re) (1996), 27 O.R. (3d) 494, at 531-532 (C.A.); Ross v. HVLD Systems (1997) Ltd. (1999), 170 D.L.R. (4th) 600 (Sask. C.A.); Bank of Montreal v. I.M. Krisp Foods Ltd. (1996), 140 D.L.R. (4th) 33 (Sask. C.A.); Siegner v. Pettipas (2000), 191 Nfld. & P.E.I.R. 170 (P.E.I.S.C.T.D.)).
[21] Even though the French text of Rule 449 uses "positive" language, "créances échues ou à échoir," it has the same meaning, in my view, as the English text. To quote from Le Dictionnaire de droit québécois et canadien, 2nd ed. (Montréal: Wilson & Lafleur, 1996), p. 149, a "créance" is "un droit personnel en vertu duquel une personne, appelée créancier, peut exiger d'une autre, appelée débiteur, l'exécution d'une obligation, le paiement d'une dette."
[22] I therefore agree with the Federal Court Judge when, at para. 38 of his reasons, he says that for a debt to exist, the creditor must "have the legal right to unconditional payment."
- Whether the moneys are public funds
[23] It is settled law that Crown funds are immune from a garnishment order unless a statute expressly provides otherwise (see Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, at 116-118, Wilson J.; Hogg and Monahan, Liability of the Crown, 3rd ed. (Toronto: Carswell, 2000), p. 56). It has been observed that the common law immunity in that regard has been replaced by the statutory immunity set out in section 29 of the Crown Liability and Proceedings Act (R.S. 1985, c. C-50, as amended) (see Sgayias et al, Crown Liability and Proceedings Act (Toronto: Carswell, 1995), p. 119).
[24] This immunity is relevant where the Crown, as here, is not the judgment debtor, but may perhaps be the third party who owes money to the judgment debtor. Should it be found that the moneys held by the Manager have retained their status of public funds, Crown immunity would prevent the garnishment of the funds.
[25] By its very words and intent, it seems to me that the TPMA is based on the premise that the moneys paid in the account of the Manager remain public funds at least until such time as they are effectively used for the delivery of the programs and services determined under the CFA. The status of the funds once they leave the Manager's bank account is not a question I need to decide and I pass no comment on it.
[26] The Band is not a party to the TPMA. The Manager administers the funding otherwise payable to the Council under the CFA (paragraph H of the recitals to the TPMA). The funding is advanced by the Minister to the Manager pursuant to the TPMA (art. 2.1(b), 4.1.1, 6.1.1(a), 6.2.1). The moneys are "held by the Manager in trust for the purposes provided for" in the TPMA (art. 5.1(a) and the Manager can only establish an account with a recognized bank "with the explicit notation that the account is established in trust" (art. 6.2.1). Any surplus or balance is to be returned to the Minister (art. 11.2(a)). Any surplus or other amount owing by the Manager to the Minister is a "debt due and payable" to the Minister (art. 4.1.5). Any surplus shall be deposited by the Manager "into an interest bearing trust account until the Minister provides direction on the use of these funds" (art. 4.1.6). The moneys can "only" be "used" by the Manager "for the purposes expressly provided for" in the TPMA (art. 6.1.1). The accounts in respect of programs and services are only payable by the Manager "when due" (art. 6.1.1(d)). The Manager "assumes no liability for any actions of the Council ... arising prior to the date of execution of" the TPMA, "which without limiting the generality of the foregoing will include outstanding debts incurred ... by the Council itself" (art. 6.6.5).
[27] The word "trust" in articles 5.1(1) and 6.2.1 of the TPMA should not be read in isolation. It is a "trust account" the TPMA is referring to, i.e. an account established by a first person (the Manager) to hold funds in the hands of that person but which are intended for a second person (the Band). The trust account is used to prevent the intermingling of the personal funds of the Manager with the funds paid by the Minister (see art. 6.1.1(e) of the TPMA). The use of a trust fund is not determinative of the relationship between the first and the second person (see Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787), but it is an indication that the person in whose name the account stands claims no personal interest in the funds. That fact is consistent with the funds retaining their character as public funds at least until such time as they are used by the Manager for the purposes expressly provided in the TPMA (see art. 6.1.1(a)).
[28] In these circumstances, the moneys advanced by the Minister to the Manager and held by the latter in his account have retained their status of public funds. As such, they cannot be garnished.
- Whether the Band has a legal right to unconditional payment
[29] Even if the moneys were found no longer to be public funds, it could not be said that they are debts owing to the Band within the meaning of Rule 449. The documents make it clear that the Band has no unconditional right to be paid the funds. The Band has no contract with the Manager and so the Band has no contractual right to call upon him to pay them the funds. The Band's contract is with the Minister. The fact that the funds are intended to be spent on members of the Band does not make them a debt.
[30] Finally, the very idea that a creditor of the Band could garnish the bank account of the Manager is incompatible with one of the main functions of a Third Party Manager, i.e. to prepare a debt reduction plan (art. 6.3.1 of the TPMA). The very purpose of a debt reduction plan, as appears from article 6.3.1(b), is to identify the outstanding debts, to renegotiate them à la baisse and to set a schedule for their repayment. To allow a creditor to garnish the Manager's account and to fully pay himself in priority is to make the debt reduction plan impracticable and illusory and disregards the wording of article 11.4.3(b) which requires "an effort to ensure that creditors are treated in a fair and equitable manner."
[31] For all these reasons, I have reached the conclusion that the moneys advanced by the Minister to the Manager and held by the latter in a bank account cannot be garnished as they are not "a debt owing or accruing" to the Band for the purposes of Rule 449. I would therefore allow the appeal, but without costs as they were not sought by the appellant nor by Mr. Alkier.
[32] At the hearing, the Court raised an argument of a procedural nature which, if accepted, would vitiate the proceedings undertaken by the respondent employees. The garnishment, as ordered by the prothonotary on August 7, 2003, pertained to "all debts due or accruing due from CIBC ... to Andrew C. Alkier ... as third party manager of the Judgment Debtor (Lake St. Martin Indian Band) ..." (A.B., p. 104). It did not pertain to the debts allegedly due or accruing due from Mr. Alkier to the Band. Indeed, Mr. Alkier is not, properly speaking, a garnishee in these proceedings. Counsel for all parties have urged the Court not to decide this appeal on the basis of this procedural argument. I agree, to the extent that I make it an additional ground on which the appeal ought to be allowed.
[33] With respect to the issue of costs, it appears that it is by inadvertence that the Federal Court Judge granted costs despite counsel's agreement at the end of the hearing before him not to seek any. The appeal in that regard should therefore be allowed, so as to respect the will of the parties. I would not order costs on the issue of costs. The matter could have been raised in a less formal way through a motion for reconsideration under Rule 397.
Disposition
[34] The appeal in File No. A-524-03 should be allowed without costs, the decisions of the Federal Court Judge and of the Prothonotary should be set aside and an order should go to the effect that the moneys held by Mr. Alkier in his capacity as Third Party Manager in his account with the Canadian Imperial Bank of Commerce are not attachable by the respondent employees and not subject to garnishment.
[35] The appeal in File No. A-540-03 should be dismissed without costs.
"Robert Décary"
J.A.
"I agree.
Gilles Létourneau, J.A."
"I agree.
J.D. Denis Pelletier, J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-524-03 / A-540-03
(Appeal from an Order of the Federal Court Dated October 31, 2003, in Docket No. T-961-03)
STYLE OF CAUSE: Shirley Choken et al v. Lake St. Martin Indian Band
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: June 1, 2004
REASONS FOR JUDGMENT: Décary J.A.
CONCURRED IN BY: Létourneau J.A., Pelletier J.A.
DATED: June 28, 2004
APPEARANCES:
Darrin Davis FOR THE APPELLANT (INTERVENER)
Marlaine Anderson-Lindsay Department of Indian Affairs and Northern
Development
Harvey I. Pollock, Q.C. FOR THE RESPONDENTS (APPLICANTS)
Wayne P. Forbes Shirley Choken, Myles Sinclair, Wilfred Marsden and Jerry Marsden
Lake St. Martin Indian Band FOR THE RESPONDENT
Lake St. Martin Indian Band
NO ONE APPEARING
Peace Hills Trust Company FOR THE GARNISHEE
Peace Hills Trust Company
NO ONE APPEARING
David Jackson FOR THE GARNISHEE
CIBC
NO ONE APPEARING
Harley I. Schachter FOR THE GARNISHEE
Andrew Alkier
SOLICITORS OF RECORD
Morris Rosenberg FOR THE APPELLANT (INTERVENER)
Deputy Attorney General of Canada Department of Indian Affairs and Northern Ottawa, Ontario Development
Harvey I. Pollock, Q.C. FOR THE RESPONDENTS (APPLICANTS)
Wayne P. Forbes Shirley Choken, Myles Sinclair, Wilfred
Pollock & Company Marsden and Jerry Marsden
Barristers & Solicitors
Winnipeg, Manitoba
Lake St. Martin Indian Band FOR THE RESPONDENT
Gypsumville, Manitoba Lake St. Martin Indian Band
NO ONE APPEARING
Peace Hills Trust Company FOR THE GARNISHEE
Winnipeg, Manitoba Peace Hills Trust Company
NO ONE APPEARING
David Jackson FOR THE GARNISHEE
Taylor McCaffrey CIBC
Barristers & Solicitors NO ONE APPEARING
Winnipeg, Manitoba
Harley I. Schachter FOR THE GARNISHEE
Duboff Edwards Haight & Schachter Andrew Alkier
Barristers & Solicitors
Winnipeg, Manitoba