Tax Court of Canada Judgments

Date: 20000529

Dockets: 95-3811-GST-G; 95-3901-GST-G; 95-3940-GST-G; 97-1137-GST-G

BETWEEN:

VAUGHN PICTOU, RODERICK A. GOOGOO, JO-ANN TONEY-THORPE, EDWARD GOOGOO,

Appellants,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Bowie J.T.C.C.

[1] These four appeals are from assessments made under Part IX of the Excise Tax Act[1] (the Act), which introduced the goods and services tax (GST) to Canada in 1991. Each of the Appellants is a registered Mi'kmaq Indian. Each of them operates a retail business on a reserve in Nova Scotia. Vaughn Pictou has his store on the Yarmouth Reserve in Yarmouth County. Jo-Ann Toney-Thorpe's is on the Cambridge Reserve in the Annapolis Valley, and Rod Googoo and Edward Googoo carry on business on the Whycocomagh Reserve at Whycocomagh on Cape Breton Island. In carrying on their businesses the Appellants do not pay GST upon goods purchased by them; nor do they collect GST from their customers, either Indian or non-Indian. The Minister of National Revenue has assessed them for GST on their sales to non-Indian customers. They do not take issue with the quantum of these assessments. Their position is that certain treaties entered into between the Crown and the Mi'kmaq people in the 18th century have the effect of excluding them from the operation of the Act. The case was argued before me on the basis that these four Appellants are representative of all the Mi'kmaq people of the present day. That may be so, but my jurisdiction is limited to deciding the four appeals before me.

[2] The Act imposes a tax upon all supplies of goods and services made in the course of commercial activity in Canada (subject to certain exceptions which are not relevant here). The tax is imposed on the purchaser of the goods or the service (section 168(1)), but the supplier, again subject to certain exceptions, is charged with collecting it from the purchaser and remitting it to the Receiver General. Section 221 deems the supplier to be an agent of Her Majesty The Queen for this purpose. A vendor of goods or services who fails to collect the GST exigible upon making a sale is nevertheless liable to account for and remit the amount of the GST in respect of that sale to the Receiver General. In short, the Act makes a retail vendor the unpaid agent of the Crown for the purpose of collecting the tax, and also makes that vendor accountable for any failure in that duty, to the extent of any tax which should have been, but was not, collected and remitted. The substance of the Appellants' case is that they object to having the role of an unpaid tax collector thrust upon them by statute, and they object to being made liable to the Crown for any amount that they have failed to collect in that capacity. They say that they are immune from any such legislation by the operation of the eighteenth century treaties.

[3] I should make it clear that no question arises here of the application of the GST to transactions whereby the Appellants make sales of goods or services to Indians. They have been assessed only in respect of sales to non-Indians. The Appellants do rely, in the alternative, on section 87 of the Indian Act,[2] however, because they characterize the obligation to remit an amount equal to the taxes that they have not collected on sales to non-Indians as a tax imposed upon themselves. They also invoke section 89 of the Indian Act.

[4] I believe the foregoing accurately summarizes the essence of the Appellants' position in these appeals. However, it may be helpful to set out the most cogent parts of a document entitled "Characterization of Claim" which counsel for the Appellants furnished to counsel for the Respondent, and filed with the Court at the beginning of the hearing, for the purpose of clarifying and defining the exact nature of the treaty right which they assert and rely upon. The following appears at pages 2 and 3 of that document:

... a treaty right, common to all members of the Mi'kmaq nation, to trade with non-Indians without collecting and remitting to Her Majesty the GST tax, unless and until the Mi'kmaq nation as a political entity gives its consent to assuming the burden of collecting and remitting the tax.

We are saying that the treaties recognized the Mi'kmaq as an autonomous political entity, capable of giving or withholding its consent to the treaties and to the terms of the treaties. As such, Mi'kmaq consent was required to any restrictions on their freedom. The treaties recognized certain restrictions or burdens. Taxation was not one of them. The treaties also recognized a right or freedom to trade. That trade was not subject to any burdens or restrictions associated with taxation. To impose new obligations on the trading relationship relating to taxation required Mi'kmaq consent. Mi'kmaq consent has not been sought and has not been given.

Based upon the position of the Crown that any rights in the treaties are "subject to regulation" by the Crown through the unilateral enactment of legislation, the further right to "friendship and protection" must be included in a consideration of the rights at stake in this case. These points may be cast in terms of three treaty rights, as follows:

1. A treaty right to trade upon terms that are free of an obligation to pay or collect taxes.

2. A treaty right to friendship and protection, including a right not to be subjected to the unilateral exercise of Crown sovereignty, unless the Crown meets the procedural and substantive obligations of a fiduciary. These include good faith consultation with the Mi'kmaq community and the substantive accommodation of Mi'kmaq interests.

3. A treaty right to be "treated" with according to treaty protocols, including the need for Mi'kmaq agreement and consent. The treaty-making process was based upon the understanding that when new issues or frictions arose between the parties, they would engage as equals in good faith negotiations directed at reconciling the conflicting interests, and would continue the process until all reasonable efforts to reach agreement had been exhausted.

[5] These appeals were heard together on common evidence. That evidence consisted of the written reports and oral evidence of three historians. Dr. William Wicken, an assistant professor of History at York University, and Dr. John Reid, a professor of History at St. Mary's University, testified for the Appellants. Dr. Stephen Patterson, a professor of History at the University of New Brunswick, testified for the Respondent. All three have impressive academic credentials. Their written reports exceed two hundred pages in total. The same three witnesses gave evidence before Judge Embree of the Nova Scotia Provincial Court in R. v. Marshall.[3] In that case Mr. Marshall, a Mi'kmaq Indian, raised in his defence against certain charges under the Federal Fishery Regulations a treaty right to catch and sell fish arising from the same treaties relied upon by the Appellants in these cases. After hearing the evidence of the three witnesses over a period of some eight days, followed by written and oral submissions from counsel, I indicated to counsel that I intended to reserve judgment until after the Supreme Court of Canada had rendered its decision in R. v. Marshall. That decision was delivered in September 1999, and was followed in November 1999 by a further decision of that Court dismissing a motion for a rehearing of the appeal. Substantial reasons for rejecting that motion were delivered by the Court,[4] and so I invited further written argument from counsel in reference to both sets of reasons of the Supreme Court of Canada. I have now received and considered those written submissions.

[6] While the opinions of the three expert witnesses are voluminous, and the documents relied upon by them, which were entered into evidence by consent of the parties, are even more so, there is no substantial difference among them as to the basic facts of history leading up to and surrounding the making of the treaties of 1760-61. They do, of course, differ in their views as to the meaning to be ascribed to some of the words in those treaties, and as to the understanding of the terms of the treaties which ought to be imputed to the parties. A proper understanding of the issues requires some review of the historical context in which the treaties were negotiated and concluded.

[7] The settlement by Europeans in the 17th and 18th centuries of what was then known as Acadia was marked by a long and bitter struggle between the French and English for supremacy. The original French settlements were on Cape Breton Island (as it is now known), and at Port Royal on the mainland. In the 1650s the English took Port Royal, and established a colony on the mainland, with its headquarters there. By the late 1660s the French claim to Acadia had again been recognized, and French rule prevailed until 1690, when Sir William Phips captured Port Royal and again asserted the English claim to the region. Present day Nova Scotia was included in the area chartered as the colony of Massachusetts Bay in 1691.

[8] The French claim over Acadia was again recognized by the Treaty of Reisling in 1697, only to be formally ceded to the British by the Treaty of Utrecht in 1713. France retained what today are Cape Breton Island and Prince Edward Island. For the next 35 years the seat of the British colonial government was at Port Royal, and consisted of an appointed Governor and Council. It was moved to Halifax following its founding in 1749. During this period Fortress Louisbourg, which had been built by the French between 1720 and 1740, changed hands three times, as the struggle for supremacy continued.

[9] Long before the Europeans came to North America, the Mi'kmaq people inhabited the region which makes up present day Nova Scotia, including Cape Breton Island, north-eastern New Brunswick, Prince Edward Island, and the Gaspé Peninsula of Quebec. Their families formed loosely organized communities, mainly in the coastal regions. The leaders of these communities, known as Sakamows, achieved their position by virtue of their personal qualities, and, by consensus, they exercised leadership through their moral authority. Like the Abenaki in what is now the state of Maine, and the Maliseet of the Saint John river valley in south-western New Brunswick, the Mi'kmaq were Algonkians. Relations among the Mi'kmaq, the Abenaki and the Maliseet were cordial, and they exchanged information among themselves on a regular basis.

[10] Contact between the Algonkians of the east coast and the European explorers took place near the beginning of the 16th century. For the next 150 years or so they traded extensively with each other. Furs were in high demand in Europe, and the Mi'kmaq were pleased to trade those for a variety of European goods, including tools, weapons, ammunition and textiles. By 1700, the Mi'kmaq and the French settlers had formed a loose alliance against the British who, since the mid-17th century had sought to occupy the same territory. During this period the traditional hunting, fishing and gathering lifestyle of the Mi'kmaq was significantly disrupted. A people who, 200 years earlier, had been self-sufficient became dependant, at least in part, upon their trade with the Europeans for the necessaries of life. Along with this increasing dependence came a geographic shift to be closer to the French settlements and military establishment.

[11] Near the end of the 17th century, the English at the colony of Massachusetts Bay began a treaty-making process with the Abenaki people of that area. Five treaties were concluded in 1693, 1699, 1701, 1713 and 1717. There had been open hostilities between the British and the Abenaki for some time, and the aim of the British in negotiating this series of treaties was to promote both peace and trade with the Abenaki. The Mi'kmaq of Nova Scotia (which became a separate colony in 1713) were in contact with the Abenaki, and they were undoubtedly aware of this treaty-making process taking place to the south.

[12] By the 1720s the relationship between the British colony of Massachusetts Bay and the Abenaki had again deteriorated, and relations between the British in Nova Scotia and the Mi'kmaq there were also at a low ebb. The governor of Nova Scotia issued a declaration of war against the Mi'kmaq in 1722. A treaty was apparently entered into between the British and the Mi'kmaq later that year at Annapolis Royal, but no copy survives, and little is known of it. By 1725, however, the treaty-making process was well under way between the British colonial government of Nova Scotia and the Mi'kmaq of the region.

[13] In 1725 and 1726 the British met with representatives of the Abenaki, the Maliseet and the Mi'kmaq at Boston. That meeting produced a treaty which was later ratified at Annapolis Royal in June, 1726. Even after that, the hostilities between the British and the Mi'kmaq in Nova Scotia continued, however, fostered by the French contingent at Louisbourg. English and French both continued to trade with the Mi'kmaq, each attempting to secure their co-operation against the other.

[14] In November, 1752 Governor Hopson entered into a treaty with the Mi'kmaq of Shubenacadie, represented by Jean Baptiste Cope, which contained a trade clause in the following terms:

4. It is agreed that the said Tribe of Indians shall not be hindered from but have free liberty of Hunting and Fishing as usual and that if they shall think a Truck house needfull at the River Chibenaccadie, or any other place of their resort they shall have the same built and proper merchandize lodged therein to be exchanged for what the Indians shall have to dispose of and that in the mean time the said Indians shall have free liberty to bring for Sale to Halifax or any other Settlement within the Province Skins, feathers, fowl, fish or any other thing they shall have to sell where they shall have liberty to dispose thereof to the best Advantage.

5. That a Quantity of bread, flour, and such other Provisions, as can be procured, necessary for the Familys and proportionable to the Number of the said Indians shall be given them half Yearly for the time to come; and the same regard shall be had to the other Tribes that shall hereafter Agree to Renew & Ratify the Peace upon the Terms and Conditions now Stipulated.

6. That to Cherish a good Harmony and mutual Correspondance between the said Indians and this Government His Excellency Peregrine Thomas Hopson Esq. Cap. General & Governor in Chief in & over His Majesty's Province of Nova Scotia or Accadie Vice Admiral of the same & Colonel of One of His Majesty's Regiments of Foot hereby promises on the part of His Majesty that the said Indians shall upon the first day of October Yearly so long as they shall Continue in Friendship, Receive Presents of Blankets, Tobacco, some Powder & Shott, and the said Indians promise once every Year, upon the said first of October, to come by themselves or their Delegates and Receive the said Presents and Renew their Friendship and Submissions.

[15] It may well be that this treaty did not survive the subsequent hostilities which took place between the British and the Mi'kmaq in 1753 and thereafter. Nevertheless, it helps shed light upon the mutual intentions of the parties at the time of the treaty negotiations at the end of that decade.

[16] The right to trade, and to do so on favourable terms which assured that they would not be taken advantage of, was a continuing theme throughout the dealings between the Mi'kmaq and the British colonial government.[5] On February 11, 1760, Chiefs of the Maliseet and the Passamaquody met at Halifax with Colonel Arbuthnot to negotiate a treaty of peace and friendship. At that meeting they agreed to reaffirm the terms of the 1725 treaty, and they went on to say that[6]

... their Tribes had not directed them to propose anything further than that there might be a Truckhouse established, for the furnishing them with necessaries, in Exchange for their Peltry, and that it might, at present, be at Fort Frederick.

It was then agreed that a truckhouse would be established, and that it should be managed by some person

... on whose Justice and good Treatment, they might always depend; and that it would be expected that the said Tribes should not Trafic or Barter and Exchange any Commodities at any other Place, nor with any other Persons.

[17] The minutes of a Council meeting held on February 14, 1760, reflect the following discussion as to the terms of trade to be established with the Mi'kmaq:

Mr. Benjamin Gerrish laid before the Council a List of the several Articles that the Indians (according to their own Information) would have occasion for at the Truckhouse; and the Indian Chiefs attending, they were consulted upon the Price that should be set upon each Article, to be paid for in Beaver, and the same, together with the Price of their Beaver, was settled very much to their Satisfaction; it being made to appear to them that they would be furnished upon much better Terms than they had ever been hitherto, and much cheaper than any private Trader could possibly furnish them.

[18] Two days later, on February 16, the prices to be paid to the Mi'kmaq were settled at a meeting of Council attended by the Chiefs, and it was ordered that the agreed price list would be entered in the records of Council, and that a copy would be given to the Chiefs, along with a set of weights and measures.

[19] On February 29, 1760 two Mi'kmaq Chiefs, Paul Laurent of LaHave and Michael Augustine of Richibucto arrived at Halifax for the purpose of entering into a treaty of peace and friendship. The terms of the treaties just concluded with the Maliseet and the Passamaquody were communicated to them, and they indicated to the Colonial Governor that the Mi'kmaq would be willing to accept the same conditions. Treaties with the Mi'kmaq were in fact concluded upon the same terms as those with the Maliseet and Passamaquody. The British intended to enter into a comprehensive treaty with the various Mi'kmaq villages. This comprehensive treaty was never concluded, but the villages did all enter into treaties on the same terms, including the clause as to trade and truckhouses. As Binnie J. noted in Marshall #1,[7] upon the signing of the last group of Mi'kmaq treaties on June 25, 1761, Lieutenant-Governor Belcher, acting Governor at the time, said to the Mi'kmaq present that

The Laws will be like a great Hedge about your Rights and properties, if any break this Hedge to hurt and injure you, the heavy weight of the Laws will fall upon them and punish their Disobedience.

[20] In view of the judgment of the Supreme Court in Marshall #1, it can hardly be doubted that the Mi'kmaq of Nova Scotia today are all entitled to the benefit of those treaties, and I so find in relation to each of the four Appellants.

[21] The text of this treaty of March 1760, as signed by Paul Laurent and Governor Charles Lawrence reads:

Treaty of Peace and Friendship concluded by [His Excellency Charles Lawrence] Esq. Govr. and Comr. in Chief in and over his Majesty's Province of Nova Scotia or Accadia with Paul Laurent chief of the LaHave tribe of Indians at Halifax in the Province of N.S. or Acadia.

I, Paul Laurent do for myself and the tribe of LaHave Indians of which I am Chief to acknowledge the jurisdiction and Dominion of His Majesty George the Second over the Territories of Nova Scotia or Accadia and we do make submission to His Majesty in the most perfect, ample and solemn manner.

And I do promise for myself and my tribe that I nor they shall not molest any of His Majesty's subjects or their dependents, in their settlements already made or to be hereafter made or in carrying on their Commerce or in any thing whatever within the Province of His said Majesty in any thing whatever within the Province of His said Majesty or elsewhere and if any insult, robbery or outrage shall happen to be committed by any of my tribe satisfaction and restitution shall be made to the person or persons injured.

That neither I nor any of my tribe shall in any manner entice any of his said Majesty's troops or soldiers to desert, nor in any manner assist in conveying them away but on the contrary will do our utmost endeavours to bring them back to the Company, Regiment, Fort or Garrison to which they shall belong.

That if any Quarrel or Misunderstanding shall happen between myself and the English or between them and any of my tribe, neither I, nor they shall take any private satisfaction or Revenge, but we will apply for redress according to the Laws established in His said Majesty's Dominions.

That all English prisoners made by myself or my tribe shall be sett at Liberty and that we will use our utmost endeavours to prevail on the other tribes to do the same, if any prisoners shall happen to be in their hands.

And I do further promise for myself and my tribe that we will not either directly or indirectly assist any of the enemies of His most sacred Majesty King George the Second, his heirs or Successors, nor hold any manner of Commerce traffick nor intercourse with them, but on the contrary will as much as may be in our power discover and made known to His Majesty's Governor, any ill designs which may be formed or contrived against His Majesty's subjects. And I do further engage that we will not traffick, barter or Exchange any Commodities in any manner but with such persons or the managers of such Truck houses as shall be appointed or Established by His Majesty's Governor at Lunenbourg or Elsewhere in Nova Scotia or Accadia.

And for the more effectual security of the due performance of this Treaty and every part thereof I do promise and Engage that a certain number of persons of my tribe which shall not be less in number than two prisoners shall on or before September next reside as Hostages at Lunenburg or such other place or places in this Province of Nova Scotia or Accadia as shall be appointed for that purpose by His Majesty's Governor of said Province which Hostages shall be exchanged for a like number of my tribe when requested.

And all these foregoing articles and every one of them made with His Excellency C.L., His Majesty's Governor I do promise for myself and on of sd part – behalf of my tribe that we will most strictly keep and observe in the most solemn manner.

In witness whereof I have hereunto putt my mark and seal at Halifax in Nova Scotia this day of March one thousand

Paul Laurent

I do accept and agree to all the articles of the forgoing treaty in Faith and Testimony whereof I have signed these present I have caused my seal to be hereunto affixed this day of March in the 33 year of His Majesty's Reign and in the year of Our Lord – 1760

Chas Lawrence

[22] Professor Reid's oral evidence as to the treaty process, and the meaning to be given to the treaties, occupied some three and one-half days. The written statement of his evidence is 43 pages. As with the other opinion witnesses, much of it is devoted to a fairly detailed account of historical facts which are not in dispute. Some of it is a restatement of the well-known principle that great care must be exercised in the interpretation of treaties with the Indians because they were not accustomed to reducing matters to writing, and were not totally conversant with the English language, in which the treaties were recorded. He cited one example of a Boston merchant who reported to the Board of Trade at London in 1715 that he had seen a treaty which, by order of the Governor, read differently in the version presented to the Indians than that recorded in the government record. The surrounding circumstances, including the speeches and discussions had with those in authority, must be taken into account. Among those surrounding circumstances are the treaties made between the colonial government at Massachusetts Bay and the Abenaki, upon which the later treaties with the Mi'kmaq were patterned. According to Professor Reid, the willingness of the British to establish a system of trade for the Indians through truckhouses, involving some expense to the government, together with the continuing practice of providing gifts to the Indians to secure their cooperation in the ongoing struggle with the French, is to be interpreted as assurance that they would not later be made subject to taxation by the British Crown, nor required to take part in a scheme of taxation against their will.

[23] Professor Reid concluded his oral evidence with a summary which emphasized the importance of trade to both the British and the Mi'kmaq during the treaty-making process, and the importance of establishing a relationship of peace and friendship between them which would free them both from the intermittent hostilities that had marked their relationship for at least half a century. The Mi'kmaq, he said, were looking for a relationship without coercion, without any thought of taxation by the British, and in which gifts would continue to flow to them from the British Crown. For their part, the British were looking above all for peace, so that settlement of the region could proceed safely.

[24] The thrust of Professor Reid's evidence was to the effect that the Mi'kmaq, despite the language of the treaties, did not accept subjugation to the British Crown, and in particular to be taxed by the British Crown, and that they therefore were not, either at the time the treaties were entered into or thereafter, subject to unilateral legislation which would require them to participate in a scheme of taxation. On cross-examination he was unable to offer any explanation of what relationship the Mi'kmaq might have with the Crown, other than that of subjects.

[25] I do not find Dr. Reid's evidence to be helpful. He used phrases such as "...I would argue that..." several times in the course of his evidence. It was all too obvious, both in his written and his oral evidence, that he saw his role not as assisting the Court, but as that of an advocate for the Appellants. His conclusion that taxation of the Mi'kmaq by the British "was unthinkable at this time on both principled and practical grounds" may well be so, but it does not speak to the question whether there is, by implication, a term in the treaties which exempts the Mi'kmaq from any requirement to collect the GST from non-Indians to whom they sell goods at their stores.

[26] Professor Wicken's evidence also consisted in large part of a comprehensive account of historical events which are not disputed. He detailed the history of the settlement of the region, the struggle between French and English, and the treaty-making process. Like Professor Reid, and Professor Patterson, he dealt at length with the dangers of reliance on the written records of treaties with the Indians, and the need to take the surrounding events and discussions, including the treaties with the Abenaki, into account. Towards the end of his 114-page written statement of his evidence he turns to the subject of taxation in Nova Scotia during the relevant time period. The principal direct taxes in the mid-18th century in Nova Scotia were the quitrent paid annually by the recipients of land grants from the government, and poll taxes, which were in the nature of a head tax on the male population. Neither of these were paid by the Mi'kmaq. The other significant taxes of that time were the import duties which were imposed on goods entering from non-British points of origin. These included a duty on rum and other spirits, of which all but one penny per gallon was remitted in the case of sales to the Mi'kmaq through the truckhouses. It is doubtful if the Mi'kmaq were aware that the price they paid for rum at the truckhouse included this small component of indirect taxation.

[27] Professor Wicken ends his written statement with the following passage, which can fairly be called a summary of the reasoning behind his conclusion that the treaties provide the Mi'kmaq with an exemption from the obligations imposed by the Act upon persons in trade in respect of collecting, remitting and accounting for GST.

In none of these cases did the Mi'kmaq directly pay taxes, reflecting their different status from other peoples, both British and Acadian, living in the region. Nor did any Mi'kmaq trader collect taxes for the Crown.

The reasons for this are attributable to various factors. First, and foremost, the Mi'kmaq were a fishing and hunting peoples who depended principally on game and fish for their survival. Thus, they lived outside of the major farming and urban areas settled by British and Acadian peoples. Indeed, the Mi'kmaq were encouraged by British officials to continue to live in areas outside of these settlements and to continue to subsist by hunting and fishing. This economic and political separation between the two communities was implicitly part of the treaty relationship. This separation between the two is most forcefully articulated in an account written by an individual close to the Maliseet community and published in Peter Fisher's The First History of New Brunswick. According to this account, upon coming to Halifax in 1765, the Maliseet threatened to war upon the British if certain injustices were not corrected.

So that the result of their complaints, amounted to nothing more than that the inhabitants had frequently killed more Beavers, Moose, and other animals, but not far from their houses, which the Chiefs alleged was their exclusive property; and that it was of the condition of a former treaty that the English settlers should not be allowed to kill any wild game in any part of the wilderness, beyond the limits of their farms and improvements. The Governor informed them in his answer, that all treaties before that time, should be strictly observed, and that if the inhabitants had in any instance, done anything contrary to such treaties, they should be severely reprimanded and restrained from continuing such practises.

For both the Maliseet and the Mi'kmaq, the treaties had established mechanisms to establish a commercial and political relationship with British officials. However, as the 1760 treaty negotiations during the Autumn of 1759 and Winter of 1760 suggest, these relationships were the product of discussion between the two parties. Therefore, the Mi'kmaq understood that any change in their relationship with the British Crown would be subject to further negotiation and agreements. Any unilateral alternation in their relationship would have been inconceivable.[8]

   (footnote omitted)

Professor Wicken concludes, in effect, that as the subject of taxation was not specifically dealt with in the treaty it may not be the subject of legislation which would impose new obligations upon the Mi'kmaq, unless it is first negotiated with them, and they agree to be subject to it.

[28] The principles governing the interpretation of treaties with the Indians have been most recently restated by the Supreme Court of Canada last year in Marshall # 1.[9] Binnie J., speaking for the majority, reaffirmed the rule expressed by Cory J. in the following passage from Badger:[10]

... when considering a treaty, a court must take into account the context in which the treaties were negotiated, concluded and committed to writing. The treaties, as written documents, recorded an agreement that had already been reached orally and they did not always record the full extent of the oral agreement: see Alexander Morris, The Treaties of Canada with the Indians of Manitoba and the North-West Territories (1880), at pp. 338-342; Sioui, supra, at p. 1068; Report of the Aboriginal Justice Inquiry of Manitoba (1991); Jean Friesen, Grant me Where-with to Make my Living (1985). The treaties were drafted in English by representatives of the Canadian government who, it should be assumed, were familiar with common law doctrines. Yet, the treaties were not translated in written form into the languages (here Cree and Dene) of the various Indian nations who were signatories. Even if they had been, it is unlikely that the Indians, who had a history of communicating only orally, would have understood them any differently. As a result, it is well settled that the words in the treaty must not be interpreted in their strict technical sense nor subjected to rigid modern rules of construction.

(emphasis added by Binnie J.)

Binnie J. then continued:

"Generous" rules of interpretation should not be confused with a vague sense of after-the-fact largesse. The special rules are dictated by the special difficulties of ascertaining what in fact was agreed to. The Indian parties did not, for all practical purposes, have the opportunity to create their own written record of the negotiations. Certain assumptions are therefore made about the Crown's approach to treaty making (honourable) which the court acts upon in its approach to treaty interpretation (flexible) as to the existence of a treaty (Sioui, supra, at p. 1049) the completeness of any written record (the use, e.g. of context and implied terms to make honourable sense of the treaty arrangement: R. v. Simmon, [1985] 2 S.C.R. 387; 62 N.R. 366; 71 N.S.R. (2d) 15; 171 A.P.R. 15, and R. v. Sundown (J.), [1999] 1 S.C.R. 393; 236 N.R. 251; 177 Sask R. 1; 199 W.A.C. 1) , and the interpretation of treaty terms once found to exist (Badger). The bottom line is the court's obligation is to "choose from among the various possible interpretations of the common intention [at the time the treaty was made] the one which best reconciles" the Mi'kmaq interests and those of the British Crown (emphasis added) (Sioui, per Lamer J., at p. 1069).

[29] The Appellants' position, once it is reduced to its essentials, consists of four propositions. First, they argue that the effect of the trade clause in the treaties of 1760-61 is to render the Mi'kmaq immune from any legislation which would have the effect either of imposing a tax upon them, or of requiring them to assist the government by collecting a tax from others in the course of trade. At the time the treaties were negotiated, the Mi'kmaq were not subject to direct taxation, nor were they required to participate as collectors in a scheme of taxation. The system of trade for their furs through truckhouses, which the treaties implemented, was subsidized for their benefit by the colonial government, and so they have a treaty right not to have the burdens of the GST collection provisions of the Act imposed on them. By 1991, when the legislation was enacted, this treaty right had become entrenched in the constitution by virtue of section 35 of the Constitution Act, 1982.

[30] Second, it is argued that, quite apart from the trade clause, the treaties, having been entered into to promote peace and friendship between the Mi'kmaq and the British, have the effect of immunizing the Mi'kmaq people from legislation which imposes burdens upon them, unless the Mi'kmaq people are first consulted and agree to accept those burdens. As I understand counsel for the Appellants, this immunity would extend to new issues, which I take to mean matters that were not within the ambit of the treaties at all. As it was put by Professor Reid at one point in his evidence, "... friends do not exert coercive powers on each other, or attempt to do so ...".

[31] Third, the Appellants take the position that the obligation to collect GST from their non-Indian customers, account for it, and remit it to the government amounts in law to the imposition of a tax, and so long as they carry on their businesses on Indian reserves they are exempt from this tax by the provisions of section 87 of the Indian Act. Finally, the Appellants rely on section 89 of the Indian Act, which provides that the property of an Indian situated on a reserve is not subject to attachment, levy, seizure, distress or execution. The relevant parts of those sections read as follows:

87(1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to section 83, the following property is exempt from taxation , namely,

(a) the interest of an Indian or a band in reserve lands or surrendered lands; and

(b) the personal property of an Indian or a band situated on a reserve.

(2) No Indian or band is subject to taxation in respect of the ownership, occupation, possession or use of any property mentioned in paragraph (1)(a) or (b) or is otherwise subject to taxation in respect of any such property.

...

89(1) Subject to this Act, the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band.

[32] For the following reasons, I am of the opinion that neither the trade clause nor the promises of peace and friendship which are spelled out in the treaties can support the interpretation advanced by the Appellants. The evidence falls far short of persuading me that the subject of taxation was in the mind of either party when these treaties were entered into. The Mi'kmaq people were, for practical purposes, free of taxation at the time, and there is no evidence to suggest that there was any thought on the part of the British to change that. Nor was there any reason for the Mi'kmaq to address their minds to the subject of taxation during the negotiations. There was simply no issue concerning taxation between them.

[33] As Binnie J points out in Marshall #1,[11] generous rules of interpretation should not be confused with, and allowed to turn into, a vague sense of after the fact largesse. The purpose of treaty interpretation is not to expand the agreement reached to cover matters that were not, and could not have been, in the contemplation of the parties at the time they entered into their agreement. As it was put by Lamer J. in Sioui,[12] "... [e]ven a generous interpretation of the document ... must be realistic and reflect the intention of both parties, not just that of the Hurons".

[34] In the present case the issues between the parties were solely in relation to peace and trade. As the historical record shows, the British were concerned to end the repetitive skirmishing and occasional bloodshed that had characterized the relationship on and off for decades. Orderly settlement could not proceed until that was done. For their part, the Mi'kmaq were intent upon forging a trading relationship in which they would receive a fair price for their furs. They had long been victimized by unscrupulous traders; they wanted, and they got, assurances that in future they would receive fair value for the goods that they brought to trade.

[35] The Appellants rely upon all the treaties entered into between the British and the Mi'kmaq between 1725 and 1768, but the focus of the argument was upon the identically worded treaties of 1760-61, which were those considered by the Supreme Court of Canada in Marshall. They must, of course, be considered in the light of the whole history of relations between the parties, including the other treaties. As counsel for the Appellants put it in one of his written submissions, quoting Binnie J. in Marshall #1 at paragraph 40 "... It is their common intention in 1760 – not just the terms of the March 10, 1760 document – to which effect must be given."

[36] In Marshall, the common intention which the Supreme Court found was that the Mi'kmaq would be free to engage in trade for the product of their hunting, fishing and gathering, and they would be protected from the then prevalent practices of unscrupulous non-Indian traders. By necessary implication this right includes the right to take fish, free from regulation, but only to the extent required to secure for themselves a moderate livelihood. This right was found to be a necessary incident of the express terms of the treaties as to trade, for the right to trade would be empty without the right to carry out the traditional practices of hunting and fishing, and so have produce to take to the market-place. The Supreme Court made it abundantly clear, in both Marshall #1 and Marshall #2, that this implied right is subject to the limitation to which I have referred above, and does not extend to the accumulation of wealth.

[37] The present cases are far removed from this. These Appellants have led no evidence that could bring them within the protection of the trade clause in the treaties. There was no evidence at all as to the nature of their businesses, but it is agreed in the pleadings that Jo-Ann Toney-Thorpe's business is a convenience store, and that those of the other three Appellants are combination gas bars and convenience stores. Their sales to non-Indian customers range from about $26,000 per month in the case of Edward Googoo to about $159,000 per month in the case of Roderick Googoo. There is no evidence as to the profitability of their businesses, but clearly they are substantial enterprises. It is equally clear that they do not deal in the product of the traditional Mi'kmaq way of life. Their stock-in-trade consists of gasoline, tobacco products, confectionery, and, no doubt, other manufactured goods which they purchase for the purpose of resale at a profit. There is no analogy to be drawn between this type of trade and the trade of furs and fish for European goods that was to be protected by the trade clause in the treaties. In my view the Appellants' trading businesses do not correspond, either quantitatively or qualitatively, to the type of trade that the signatories to the treaties could have had in contemplation in 1760.

[38] The Appellants sought to bolster this branch of their case by the argument that if they were required to collect GST that would increase the cost of their goods to their customers, and so put them at a competitive disadvantage. This submission ignores the fact that their non-Indian competitors must collect GST along with the price of their goods. In fact, the burden on the Appellants would be less than that on their competitors. They pay no GST on the purchase of their stock-in-trade, and therefore do not have to use working capital for that purpose, or account for entitlement to input tax credits.

[39] The second branch of the case for the Appellants is put on two different, but related, bases. It was argued, first, that the promises of friendship and protection which were fundamental to the treaties required "...good faith consultation with the Mi'kmaq community and substantive accommodation of Mi'kmaq interests ..."[13] before the Mi'kmaq people could be bound by any exercise of sovereignty by the British Crown. Second, counsel for the Appellants argued that the treaty-making process was based on an understanding that when new issues arose between the parties "... they would engage as equals in good faith negotiations directed at reconciling the conflicting interests, and would continue the process until all reasonable efforts to reach agreement had been exhausted."[14]

[40] These arguments proceed from the undoubted proposition that the treaties were treaties of peace and friendship. As I have said, the interest of the British throughout the period was to promote peaceful relations with the Mi'kmaq. This is reflected consistently in the instructions to the Governors of the British colonies throughout the New World, and in particular in Nova Scotia. It can be found, too, in the language of the Royal Proclamation of 1763. There is nothing in the evidence before me, however, which could lead to the conclusion that either the Governors or the Council from time to time had any thought of conferring on the Mi'kmaq the status of citizens who would not be bound by the ordinary laws of general application unless they had first been specially consulted, and had agreed to be bound.

[41] Counsel made much of the passage, which I have quoted above at paragraph 19, from the speech of Jonathan Belcher, Lieutenant-Governor of Nova Scotia, made at his farm on June 25, 1761, following the signing of the last of the Mi'kmaq treaties of 1760-61. He refers there to the laws as a hedge protecting the rights and properties of the Mi'kmaq. That speech, as translated by Father Maillard,[15] concluded with the words

... That your cause of War and Peace may be the same as ours under one mighty Chief and King, under the Same Laws and for the same Rights and Liberties.

Father Maillard's account goes on to say that

... The Chief of the Cape Breton Indians in name of the rest addressing himself as to His Britannick Majesty Spoke as follows: which was likewise interpreted by Mr. Maillard.

My Lord and Father!

We come here to assure you, in the name of all those of whom we are Chiefs, that the propositions which you have been pleased to cause to be sent to us in writing have been very acceptable to me and my Brethren and that our Intentions were to yield ourselves up to you without requiring any Terms on our part.

Our not doubting your Sincerity has chiefly been owing to your Charitable, mercifull and bountifull behaviour to the poor French wandering up and down the Sea Coasts and Woods without any of the necessaries of Life; Certain it is that they, as well as we, must have wretchedly perished unless relieved by your humanity, for we were reduced to extremeties more intollerable than Death itself.

You are now Master here; such has been the will of God, He has given you the Dominion of those vast Countries, always crowning your Enterprises with Success. You were, before these Acquisitions, a very great People; but we now acknowledge you to be much more powerfull, tho' less Great, in the extensiveness of your possessions, than in the uprightness of your Heart, whereof you have given us undoubted and repeated proofs, Since the Reduction of Canada. You may be confident that the moderation and Lenity wherewith we have been treated, has deeply imprinted in our Hearts a becoming Sense of gratitude. Those good and noble Sentiments of yours, towards us in our distressed and piteous Circumstances have emboldened us to come out of the Woods, our natural Shelter, from whence we had previously resolved not to stir, till the Establishment of Peace between both Crowns, whatever Hardships we might have suffered.

Your Generous manner, Your good Heart, your propensity to Clemency, make us hope that no mention will ever be made of any Hostilities that have been committed by us against you and Yours. The Succours so seasonably given us in our greatest wants and necessities have been so often the Subject of our Thoughts that they have inspired us with the highest Sentiments of gratitude and Affection.

We felt ourselves in consequence, forcibly drawn to Halifax to acquaint the Representative of the King, not only with the resolutions we had taken in his favour, arising from his kindness to us, but also to let him understand that the many proofs he has given us of the goodness of his Heart at a time and in a Conjuncture in which we could not hope for such favourable treatment have so intirely captivated Us that we have no longer a will of our own. His will is ours.

You now, Sir, see us actually in your presence, dispose of us as you please. We account it our greatest misfortune that we should so long have neglected to embrace the opportunity of knowing you so well as we now do. You may depend we do not flatter. We speak to you at this time according to the dictates of our Hearts. Since you are so good as to forget what is past we are happy in its being buried in Oblivion. Receive Us into your Arms; into them we cast ourselves as into a safe and Secure Asylum from whence we are resolved never to withdraw or depart.

I swear, for myself, Brethren and People, by the Almighty God who sees all things, Hears all things, and who has in his power all things, visible and invisible, that I sincerely comply with all and each of the Articles that you have proposed to be kept inviolably on both Sides.

As long as the Sun and Moon shall endure, as long as the Earth on which I dwell shall exist in the same State you this day see it, so long will I be your friend and Ally, submitting myself to the Laws of your Government, faithful and obedient to the Crown, Whether things in these Countries be restored to their former State or not; I again Swear by the Supreme Commander of Heaven and Earth, by the Sovereign disposer of all things that have life on Earth or in Heaven, that I will for ever continue in the Same Disposition of mind I at present am in.

Neither of these speeches hints at a qualification of the kind the Appellants contend for upon the Mi'kmaq acceptance of British sovereignty. To the contrary, it is clear that the Mi'kmaq understood very well that they were to have the protection of the British system of laws, and that along with it went the burden of being subject to those laws. It is not remarkable that such a bargain should be struck at a time when the French military presence in North America was virtually extinguished. It must have been obvious to the Indians that their long term interest would be best served by joining the British on the basis offered to them of equal status under the law with other British citizens.

[42] I do not accept the suggestion of counsel for the Appellants that Father Maillard's translation of the speeches at John Belcher's farm is not reliable, and that the Mi'kmaq did not understand the concept of sovereignty, and so did not intend to be bound by British laws. The many volumes of documents entered into evidence contain only fragments of evidence of misleading translations of the interactions of the British and the Indians, and none of them are germane to the particular events in issue here. Father Maillard was certainly trusted by the Mi'kmaq; he had lived with them for many years. I am not persuaded that he would have misrepresented to them the nature of the documents they were signing, nor the meaning of the speech of the British Governor. Nor would he have had any motive to create a falsified record of the Indians' response.

[43] Certainly the British in 1760 had no reason to offer the Mi'kmaq terms that would be more favourable to them than those that applied to the British settlers. The French forces were no longer a threat. Friendly relations with the Indians was certainly an item on the British agenda, but it would not have been acceptable to the general populace to be subject to the laws passed from time to time, while the Mi'kmaq had all the benefits of them, and none of the burdens. It is not supported by the evidence, nor would it be logical, to impute such an intention to them.

[44] For all these reasons, I do not accept that the Appellants are exempted by treaty from the obligations, as agents of the Crown by statute, to collect GST from their non-Indian customers, to account for it, and to remit it to the Receiver General according to the terms of the Act.

[45] I turn now to the arguments based upon the Indian Act. The Appellants' position is that the provisions of the Act in question impose a tax upon a retail merchant, because they require the merchant to collect and remit the GST exigible upon a retail sale, and, upon failing to do so, to remit an amount equal to the tax not collected. If this is so, then section 87 exempts an Indian from its operation.

[46] In my view this argument is effectively foreclosed by the judgment of the Supreme Court of Canada in Reference re Goods and Services Tax.[16] That case began with a reference by the Lieutenant-Governor of Alberta to the Alberta Court of Appeal as to the constitutional validity of the Act. The third constitutional question posed reads:

Having regard to s. 103 of the Constitution Act, 1867 and the common law, are suppliers entitled to charge and to collect from the Consolidated Revenue Fund of Canada all costs, charges and expenses incidental to collecting and paying a remittance under the GST Act?

On the appeal from the Alberta Court of Appeal to the Supreme Court, the Attorney General of Alberta advanced the argument that the Act, by requiring vendors of taxable supplies to collect and remit the tax, imposed a forcible taking by the Crown of the property of the vendor, and so gave rise to a right in the vendor to be compensated under the principle in Manitoba Fisheries.[17] Lamer, C.J., for the majority of the Court, disposed of this argument, both as it applied to the administrative burden imposed on a retailer, and as to any amount the retailer might have to pay in respect of GST not collected. At pages 474-5 he said:

... Alberta's suggestion that in collecting and remitting the GST the vendor of a taxable supply has had his property "taken" is difficult to understand. It is the purchaser, not the supplier, who is obliged to pay the GST. The supplier is simply the agent of the Crown in right of Canada for the purposes of collection. Even in those cases where the vendor is obliged to absorb the GST in order to maintain sales, the resulting reduction in revenue cannot reasonably be characterized as a "taking" of the supplier's property by the federal government. Were such reasoning to prevail, virtually any governmental policy which resulted directly or indirectly in the reduction of a supplier's revenue could be characterized as a "taking" of property which would give rise to a right to compensation. In truth, since no property of the supplier is "taken" by the imposition of the GST collection and remittance obligations, a right to compensation cannot be supported on this basis.

Since there is no "taking" from the vendor by the operation of the statute, it cannot be said that there is a tax imposed on the vendor, because a tax by its very nature is an involuntary taking by the state of property of the subject. Section 87 of the Indian Act, therefore, cannot have any application.

[47] The final argument advanced for the Appellants is based on section 89 of the Indian Act, which protects the property of an Indian situated on a reserve from seizure. The short answer to this submission is that it is premature. The immunity of property from seizure to satisfy the liability to the Crown which is embodied in an assessment does not affect the validity of the assessment. That immunity can, of course, be invoked as a defence to collection action by the Crown. However there is no evidence that any collection action has ever been taken with respect to these assessments, and of course my jurisdiction on these appeals is limited to determining whether or not the assessments are well-founded in fact and in law. For the reasons I have given, I conclude that they are.

[48] The appeals are dismissed, with costs.

Signed at Ottawa, Canada, this 29th day of May, 2000.

"E. A. Bowie"

J.T.C.C.

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