Canadian Pacific Ltd. v. Matsqui Indian Band [1995] 1 S.C.R. 3: Adequacy of tribunal -- Issue of jurisdiction -- Tribunals set up by First Nations bands to consider issue of assessment for lands located within reserve -- Whether tribunals meeting criteria of independent judiciary

Present: Lamer C.J. and La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Administrative law -- Tribunals -- Adequacy of tribunal -- Issue of jurisdiction -- Tribunals set up by First Nations bands to consider issue of assessment for lands located within reserve -- Appeal process culminating with review by courts -- Tribunal members without fixed salary and security of tenure -- Claim that land not within reserve -- Whether consideration of issue compelled to follow alternative appeal route or whether courts can grant immediate judicial review -- Whether tribunals meeting criteria of independent judiciary -- Indian Act, R.S.C., 1985, c. I-5, s. 83(1), (3) -- Federal

Court Act, R.S.C., 1985, c. F-7, ss. 18, 18.3(1), 18.5, 24(1).

Aboriginal law -- Tribunals set up by First Nations bands to consider issue of assessment for lands located within reserve -- Appeal process culminating with review by courts -- Tribunal members without fixed salary and security of tenure -- Claim that land not within reserve – Whether consideration of issue compelled to follow alternative appeal route or whether courts can grant immediate judicial review -- Whether tribunals meeting criteria of independent judiciary.

Amendments to the Indian Act enabled First Nations bands to pass their own by-laws for the levying of taxes against real property on reserve lands. The appellant bands each developed taxation and assessment by-laws which were implemented following the Minister's approval. The Matsqui Band's assessment by-law provided for the appointment of Courts of Revision to hear appeals from the assessments, the appointment of an Assessment Review Committee to hear appeals from the decisions of the Courts of Revision and, finally, an appeal on questions of law to the Federal Court, Trial Division from the decisions of the Assessment Review Committee. The other bands provided for a single hearing before a Board of Review, with an appeal to the Federal Court, Trial Division. All the by-laws provided that members of the appeal tribunals could be paid, but did not mandate that they indeed be paid, and gave no tenure of office so that members might not be appointed to sit on future assessment appeals. Members of the bands could be appointed to the tribunals.

The appeals were heard concurrently at all levels and turned on essentially identical facts. Each apellant sent the respondent, Canadian Pacific Limited ("CP"), a notice of assessment in respect of the land forming its rail line which ran through the reserves. The Matsqui Band also sent a notice of assessment to the respondent, Unitel Communications Inc., which laid fibre optic cables on the CP land.

The respondents commenced an application for judicial review in the Federal Court, Trial Division, requesting that the assessments be set aside. CP claimed that its land could not be taxed by the appellant bands because it possessed fee simple in the rail line and the rail line therefore formed no part of the reserve lands. The appellants brought a motion to strike the respondents' application for judicial review on the grounds that: (a) the application was directed against a decision which could not be the subject of judicial review because of an eventual right of appeal to the Federal Court, Trial Division or, alternatively; (b) the assessment by-laws provided for an adequate alternative remedy -- an eventual right of appeal to the Federal Court, Trial Division. The motions judge accepted the second of these arguments and struck out the respondents' application for judicial review. The Federal Court of Appeal allowed an appeal from this decision, set it aside and dismissed the appellants' motion to strike. At issue was whether the motions judge properly exercised his discretion to strike the respondents' application for judicial review, thereby requiring them to pursue their jurisdictional challenge through the appeal procedures established by the appellant bands. The determination of whether or not the land was "in the reserve" was not at issue.

Held (L'Heureux-Dubé, Sopinka, Gonthier and Iacobucci JJ. dissenting): The appeal should be dismissed.

Adequacy of the Appeal Tribunals and the Exercise of Discretion on Judicial Review

Per Lamer C.J. and L'Heureux-Dubé, Sopinka, Gonthier, Cory and Iacobucci JJ.: Administrative tribunals can examine the boundaries of their jurisdiction although their decisions in this regard lack the force of res judicata. Their determinations are reviewable on a correctness standard and will generally be afforded little deference. Here, the jurisdiction of the appeal tribunals includes both the classification of taxable property and the valuation of that property, as the words "assessment"/"évaluation" used in s. 83(3) of the Indian Act refer to the entire process undertaken by tax assessors. A purposive analysis favours this "process approach". Parliament clearly intended the bands to assume control over the assessment process on the reserves, since the entire scheme would be pointless if assessors were unable to engage in the preliminary determination of whether land should be classified as taxable and thereby placed on the taxation rolls.

The Federal Court, Trial Division and the appeal tribunals established under s. 83(3) of the Indian Act have concurrent jurisdiction to hear and decide the question of whether the respondents' land is "in the reserve". In keeping with the traditionally discretionary nature of judicial review, judges of the Federal Court, Trial Division have discretion in determining whether judicial review should be undertaken. In determining whether to undertake judicial review rather than requiring an applicant to proceed through a statutory appeal procedure, courts should consider: the convenience of the alternative remedy, the nature of the error, and the nature of the appellate body (i.e., its investigatory, decision-making and remedial capacities). The category of factors should not be closed, as it is for courts in particular circumstances to isolate and balance the factors that are relevant.

The adequacy of the statutory appeal procedures created by the bands, and not simply the adequacy of the appeal tribunals, had to be considered because the bands had provided for appeals from the tribunals to the Federal Court, Trial Division. Certain factors are relevant only to the appeal tribunals (i.e., the expertise of members, or allegations of bias) or to the appeal to the Federal Court, Trial Division (i.e., whether this appeal is intra vires the bands). In applying the adequate alternative remedy principle, all these factors must be considered in order to assess the overall statutory scheme.

It was not an error for the motions judge to consider the policy underlying the scheme in determining how to exercise his discretion to undertake judicial review. He could reasonably conclude that, since the scheme was part of the policy promoting Aboriginal self-government, allowing the respondents to circumvent the appeal procedures would be detrimental to the overall scheme.

The bands have jurisdiction to create by-laws with appeals to the Federal Court, Trial Division. Section 18.5 of the Federal Court Act does not set down conditions for the creation of statutory appeals from decisions of federal tribunals; it only limits the judicial review powers of the Federal Court, Trial Division where a statutory right of appeal exists. Section 24(1) provides that the Trial Division has exclusive original jurisdiction to hear and determine all appeals that, under any Act of Parliament, may be taken to the court. The appeal procedures here fell squarely within this section because they were authorized "under" s. 83(3) of the Indian Act.

Parliament intended the bands to have considerable scope for creating appeal procedures through their by-laws, with the caveat that such procedures would be

"subject to the approval of the Minister" (s. 83(1)). The Minister approved all of the by-laws at issue, clearly believing that the power to create appeals to the Federal Court, Trial Division was intra vires the bands. The courts should not narrow the scope of possible appeal procedures available to the bands.

The question to be determined was whether the appeal tribunals here were adequate fora; it was not necessary to consider whether they were better fora than the courts. They allowed for a wide-ranging inquiry into all of the evidence and were considered by Parliament to be equipped to deal with complex issues that might come before them. Section 18.3(1) of the Federal Court Act allows an appeal tribunal to seek the guidance of the courts if it encounters legal, procedural or other issues which it cannot resolve.

It was reasonable for the motions judge to consider the following factors in exercising this discretion: (1) the tribunals were adequate for purposes of conducting a far-reaching and extensive inquiry at first instance; (2), the statutory appeal procedure provided an appeal from the tribunals to the Federal Court, Trial Division where a decision could be taken with the force of res judicata; and (3), the policy of promoting the development of Aboriginal governmental institutions favoured resolving the dispute within the statutory appeal procedures.

Per La Forest J.: The Federal Court, Trial Division and the appeal tribunals established under s. 83(3) of the Indian Act have concurrent jurisdiction to address the question whether the respondents' land is "in the reserve". The motions judge, however, did not exercise his discretion properly in deciding that the band appeal tribunal system constitutes an adequate alternative remedy in this context. Determining whether the respondents' land is "in the reserve" is a jurisdictional question that brings into play discrete and technical legal issues falling outside the specific expertise of the band appeal tribunals. It is ultimately a matter for the judiciary. The band appeal procedure is not an adequate remedy since any decision by a band appeal tribunal regarding this question will lack the force of res judicata and will be reviewable by the Federal Court, Trial Division on a standard of correctness. The respondents should be allowed the opportunity to have this jurisdictional question determined with the force of res judicata by the Federal Court at the outset without being compelled to proceed through a lengthy, and possibly needless, band appeal process.

Per McLachlin and Major JJ.: The adequate alternative remedies principle does not apply to a jurisdictional issue. Here, the assessment review board has jurisdiction to determine all questions relating to the valuation of land "within the reserve" but has no jurisdiction to determine whether a parcel of land is "within the reserve". Deciding whether land is "within the reserve" or not requires consideration of a variety of factors, such as real property law, survey results, and treaty interpretations, in which the board has no expertise and over which there is no evidence that Parliament had any intention to grant the board jurisdiction.

The board here would be deciding upon its jurisdiction when deciding whether or not the land was "within the reserve" as opposed to acting within its jurisdiction. A court, on an application for judicial review on this issue, could apply the standard of correctness. Where the fundamental issue of lack of jurisdiction is raised as the only issue, the respondent should not be compelled to proceed needlessly to the appeal tribunal because it is not an adequate alternative remedy in that it cannot determine the question. Rather, a party can either have the tribunal consider the jurisdictional matter (but this option is not mandatory) or have recourse directly to court on the jurisdictional matter.

Institutional Impartiality

Per Lamer C.J. and L'Heureux-Dubé, Sopinka, Gonthier, Cory and Iacobucci JJ.: Impartiality refers to the state of mind or attitude of the decison-maker whereas independence involves both the individual independence of members of the tribunal and the institutional independence of the tribunal. Institutional impartiality and institutional independence were both at issue here. With respect to impartiality, if no reasonable apprehension of bias arises in the mind of a fully informed person in a substantial number of cases, allegations of an apprehension of bias cannot be brought on an institutional level but must be dealt with on a case-by-case basis. This determination must be made having regard for a number of factors including, but not limited to, the potential for conflict between the interests of tribunal members and those of the parties who appear before them.

No apprehension of bias arose from want of structural impartiality. It is appropriate to have band members sit on appeal tribunals to reflect community interests. A pecuniary interest that members of a tribunal might be alleged to have, such as an interest in increasing taxes to maximize band revenue, is far too attenuated and remote to give rise to a reasonable apprehension of bias at a structural level. No personal and distinct interest in money raised exists on the part of tribunal members, and any potential for conflict between the interests of members of the tribunal and those of parties appearing before them was speculative at this stage. Any allegations of bias which might arise should be dealt with on a case-by-case basis.

Institutional Independence

Per L'Heureux-Dubé, Sopinka, Gonthier and Iacobucci JJ.: The reasons of Lamer C.J. were agreed with on all issues, except the issue of lack of institutional independence, as a ground for finding the motions judge erred in exercising his discretion to refuse judicial review.

First, the issue of bias was not properly raised at first instance. Second, appellate courts must defer to the exercise of the motion judge's discretion to strike out unless the conclusion is unreasonable or has been reached on the basis of irrelevant or erroneous considerations, a wrong principle or as a result of insufficient or no weight having been given to a relevant consideration. The discretion to exercise judicial review is not being assessed de novo in this Court. The motions judge here did not err in declining to consider the question of reasonable apprehension of lack of institutional independence at this stage. The essential conditions of institutional independence in the judicial context need not be applied with the same strictness in the case of administrative tribunals.

Conditions of institutional independence must take into account their operational context. This context includes that the band taxation scheme was part of a nascent attempt to foster Aboriginal self-government. This contextual consideration applies to assessing whether the bias issue was premature and extends to the entire exercise of judicial discretion. Furthermore, before concluding that the by-laws in question deprive the band taxation tribunals of institutional independence, they should be interpreted in the context of the fullest knowledge of how they are applied in practice. The reasonable person, before making a determination of whether or not he or she would have a reasonable apprehension of bias, should have the benefit of knowing how the tribunal operates in actual practice. Case law has tended to consider the institutional bias question after the tribunal has been appointed and/or actually rendered judgment. It is not safe to form final conclusions as to the workings of this institution on the wording of the by-laws alone. Knowledge of the operational reality of these missing elements may very well provide a significantly richer context for objective consideration of this institution and its relationships.

Per Lamer C.J. and Cory J.: Allegations of bias arising from the want of institutional independence cannot be avoided by simply deferring to the exercise of discretion by the motions judge. A lack of sufficient institutional independence in the bands' tribunals is a relevant factor which must be taken into account in determining whether the respondents should be required to pursue their jurisdictional challenge before those tribunals. Although the larger context of Aboriginal self-government informs the determination of whether the statutory appeal procedures established by the appellants constitute an adequate alternative remedy, this context is not relevant to the question of whether the bands' tribunals give rise to a reasonable apprehension of bias at an institutional level. Principles of natural justice apply to the bands' tribunals and are not diluted by a federal policy of promoting Aboriginal self-government.

Judicial independence is a long standing principle of our constitutional law which is also part of the rules of natural justice even in the absence of constitutional protection. Natural justice requires that a party be heard by a tribunal that not only is independent but also appears to be so. The principles for judicial independence accordingly apply in the case of an administrative tribunal functioning as an adjudicative body. A strict application of the principles for judicial independence is, however, not always warranted. Therefore, while administrative tribunals are subject to these principles, the test for institutional independence must be applied in light of the functions being performed by the particular tribunal at issue. The requisite level of institutional independence (i.e., security of tenure, financial security and administrative control) depends on the nature of the tribunal, the interests at stake, and other indices of independence such as oaths of office. Cases dealing with the security of the person require a high level of independence and warrant a stricter application of the applicable principles. Here, the bands' administrative tribunals are adjudicating disputes about property taxes and a more flexible approach is clearly warranted.

Even given a flexible application of the principles for judicial independence, a reasonable and right-minded person, viewing the whole procedure in the assessment by-laws, would have a reasonable apprehension that members of the appeal tribunals are not sufficiently independent. Three factors lead to this conclusion: (1) the complete absence of financial security for members of the tribunals; (2) the complete absence of security of tenure (in the case of Siska), or ambiguous and therefore inadequate security of tenure (in the case of Matsqui); and (3) the fact that the tribunals, whose members are appointed by the Band Chiefs and Councils, are being asked to adjudicate a dispute pitting the interests of the bands against outside interests. Effectively, the tribunal members must determine the interests of the very people, the bands, to whom they owe their appointments. These three factors in combination lead to the conclusion that the tribunals lack sufficient independence in this case; any one factor in isolation would not necessarily lead to the same conclusion.

Although the allegations of an absence of institutional impartiality were premature, the allegations surrounding institutional independence were not. The two concepts are quite distinct. It is mere speculation to suggest that members of the tribunals will lack impartiality, since it is impossible to know in advance of an actual hearing what these members think. In assessing the institutional independence of the appeal tribunals, however, the inquiry focuses on an objective assessment of the legal structure of the tribunals, of which the by-laws are conclusive evidence. The by-laws merely afford the Band Chiefs and Councils the discretion to provide institutional independence. It is inappropriate to leave issues of tribunal independence to the discretion of those who appoint tribunals.

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