Date: 20040713
Docket: T-1586-02
Citation: 2004 FC 982
BETWEEN:
CLIFFORD ALDERSON
Applicant
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
as represented by the MINISTER OF
INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Respondents
REASONS FOR JUDGMENT
MacKAY D.J.:
[1] These reasons concern the disposition of an application by Mr. Clifford Alderson, the "applicant", with relation to a notice dated July 24, 2002, issued on behalf of the Minister of Indian and Northern Development, the "Minister", specifying that the rent applicable for a three-year term commencing July 1, 2002 under a lease by the applicant for certain real property, "is hereby set at one thousand six hundred and seventy-five dollars ($1,675.00) per annum".
[2] The applicant, who is not a lawyer, represented himself, both in preparation for this proceeding, including preparation of an application record, and when the matter was heard in Prince George, B.C., in November 2003.
[3] In its form, the application commencing these proceedings is akin to an application for judicial review, except that it seeks relief other than that regularly available as a result of a successful review proceeding, and in addition the Notice of Application filed September 23, 2002 describes the application as follows:
NOTICE OF APPLICATION
UNDER SECTION 17(3)(a) OF THE FEDERAL COURT ACT
R.S.C. 1985, c. F-7 AS AMENDED.
[4] If successful, the applicant seeks a determination that the notice of the rent was invalid for it does not constitute notice by the Minister as required by the lease, or in the alternative a determination of the fair market rent by this Court in accord with the lease provisions and under subsection 17(3) of the Federal Court Act, or in the further alternative if the notice of rent is valid it is not acceptable to the applicant who seeks determination of a fair market rent by this Court in accord with the same lease and statutory provisions.
[5] When this matter came on for hearing, the applicant and counsel for the Minister were heard. It then seemed clear that there was no dispute about any essential facts in the case. There were, however, differences about the appropriate process of the Court for resolution of the matter. At the conclusion of the hearing, the Court asked for written submissions from both parties concerning the possibility of the proceedings being declared an action, to be determined as a simplified action, without further evidence, or a further hearing but with written argument concerning the merits of the applicant's claims if they were to be considered as a simplified action. The Court then adjourned, reserving determination after receipt of written submissions. Those were made by both parties in timely fashion and received by the Court by the end of November 2003. The Court has been delayed in determining the matter, which is regretted.
[6] By written submissions, counsel for the Minister acknowledged that there was no objection if the Court treated the proceedings as a simplified action, determining the applicant's claims on the basis of the evidence already adduced and the submissions made at the hearing and written submissions made before the hearing, and subsequently. Since there is no significant difference between the parties on the facts, the applicant's monetary claims are well within limits provided for such an action, and the parties consent, I now deal with this matter as if it were originally initiated as a simplified action pursuant to Rules 299 et seq. of the Federal Court Rules, 1998. That process is directed by the Judgment now released.
The facts
[7] Mr. Alderson leased from Her Majesty, as represented by the Minister of Indian Affairs and Northern Development, Lot 29, Binche Indian Reserve #2, CLSR Plan 55536, near Fort St. James, in British Columbia, for 15 years from August 23, 1992. The lot was one of several leased by Her Majesty, located on Indian reserve land of the Tl'azt'en Nation located at Stuart Lake, north of Prince George. The Council of the Band had approved and consented to the lease including all its terms and conditions.
[8] The term of the lease was for 15 years and 281 days, and the rent was set at $481.00 for the first 281 days, then for the three-year period commencing June 1, 1993 the annual rent was to be $650.00, and for each three-year period thereafter commencing June 1, 1996 the rent was to be the greater of the amount determined by the Minister to be the fair market rent and the annual rent payable in the immediately preceding period. The lease also provided:
3.06 If the Lessee disagrees with the Minister's determination of the fair market rent and the Lessee has paid all rent currently due including any increase thereof [as determined by the Minister], the Lessee may at its expense, within sixty (60) days from the date of the Minister's notice of the fair market rent refer the matter to the Federal Court of Canada for a new determination of the fair market rent pursuant to Section 17 of the Federal Court Act, R.S.C. 1985, c. F-7 as amended or replaced from time to time.
[9] The Minister's authority for the management of leases on reserve lands is delegated through his department's Lands and Trusts Services ("LTS") to a Land Management Officer. In practice the annual rent is determined by applying a rate of return to an independently appraised estimated fair market value of the lot described in a lease. The rate of return may be recommended by the independent appraiser, or by the department of Public Works and Government Services Canada ("PWGSC") which retains the appraiser, and which may make a recommendation on the appraisal to LTS. In June 1998 LTS and PWGSC by agreement arranged that release of an appraisal would be limited to the First Nation concerned, and LTS considers it is not authorized to release an appraisal to a lessee, although it is said to have done so in exceptional circumstances.
[10] As provided by the lease the annual rent for the three years from June 1, 1993 was $650.00 and for the next period commending June 1, 1996 the rent was 4% of the appraised fair market value, $920.00 for the leased property. For the next term, commencing June 1, 1999 the independent appraiser recommended two rates: 3% for part-time lessees and 5% for full time lessees, or alternatively 3% for all lessees. After consultation by LTS with the Tl'azt'en First Nation, the annual rent was determined to be 5% of the appraised value, or $1,650.00, and the applicant was so advised.
[11] Mr. Alderson, who used his leased property for recreational purposes on a seasonal basis, not for the full year, obtained a copy of the appraiser's report for the period commencing June 1, 1999 from the Band of the First Nation, and through his negotiations with the Band Council he arranged that he was to pay rent, and he did pay 3% of the appraised fair market value, or $990.00 per annum. This was in accord with a Band Council Resolution that recommended two rates, $1,650.00 or 5% for full-time users, and $990.00, or 3%, for part-time users of their leased lands for the term from June 1, 1999 to May 31, 2002.
[12] Thereafter LTS and the First Nation attempted to amend the leases of the reserve land of the First Nation since the leases did not specifically provide for more than one rental rate, or for full-time and part-time leases. Those efforts were abandoned without any amendment to the leases in question.
[13] In April 2002 the responsible LTS officer requested PWGSC to obtain an appraisal of the fair market value of the annual rent for the leased properties. That appraisal, for the term commencing June 1, 2002, concluded the fair market value of the lots leased, including that leased to the applicant, was $33,500.00, and the recommended annual rental at 5% would be $1,675.00. That rental rate, in turn, was recommended by PWGSC. The LTS officer reviewed the recommendation and sent it to the Chief and Council of the Tl'azt'en Nation, asking that if they agreed with the proposed fair market rental to so advise.
[14] The Chief and Council by Resolution dated July 2, 2002, noted that the department of Indian Affairs advised that since lessees who were seasonal users of the leased land had exclusive occupation of the land, their occupation may be defined as full-time. The Resolution determined that there would not continue to be a distinction between a full-time user and a seasonal user. In the words of the Resolution "All lessees will be required to pay the $1,675.00 per annum." The essence of that Resolution was conveyed by separate letter to Mr. Alderson with the notice of July 24, 2002 concerning the annual rental rate of $1,675.00 per annum commencing June 1, 2002.
The Issues
[15] Mr. Alderson objects in principle to the rent established in his case. He sought but was denied, by the respondent, access to the report of the independent appraiser provided to PWGSC. While that had been sought in 1999 for the rate established for the three-year term commencing then, that request was then denied on behalf of the respondent. Mr. Alderson was then provided access to that report by the Band Council. He then discovered the report assessed two classes of user, those using their leased land for recreational use on a seasonal basis and those occupying leased land on a full-time basis. The appraiser had then recommended a 3% rate, or a 5% rate of return for full-time users, or if this were not acceptable then a rate of 3% for all lessees. The LTS had then determined to apply a yearly rental rate of 5%, or $1,650.00. Thereafter, as earlier noted, the Band agreed with Mr. Alderson, and perhaps others, that rent for seasonal recreational use would be at a 3% rate, or $990. per annum for the three-year term commencing June 1999. When notice was given of the adjusted rent to be paid annually for three years commencing June 1, 2002, and Mr. Alderson sought a copy of the report of the independent appraiser, LTS refused to provide access to the report or to provide any other explanation, except that it was based on an independent appraisal arranged by PWGSC and approved by the Band Council.
[16] Mr. Alderson raises the following issues concerning the rent assessed for the term commencing in June 2002:
1) Was the decision on the fair market rent improperly made, by PWGSC rather than the Minister?
2) Was the decision establishing the rent unfairly made in light of the increase in rent assessed over the term, or in assessing a single rental figure without regard to the full-time or part-time use of the leased land, or because of the lack of consistency in the process over the term of the lease, or because the respondent provided no explanation how the rent was established and refused to provide access to the assessor's report?
3) Is there evidence before the Court that the rent assessed was not "fair market rent" and if so is there evidence upon which the Court could determine an alternate figure?
Who made the decision determining the rent?
[17] Section 3.03 of the lease provides that the Minister determines the annual fair market rent for each three-year period. Under the Indian Act and relevant regulations the Minister's authority to do so is delegated through the LTS to a Land Management Officer.
[18] In the notice of July 24, 2002 Mr. Alderson was advised that the annual rent applicable from June 1, 2002 to May 31, 2005 was set at $1,675.00 and
This amount is based on an appraisal completed on behalf of the Real Estate Division of Public Works and Government Services Canada, who have determined that the above amount represents the market rental value for the period in question.
In Mr. Alderson's view that statement clearly indicates who made the decision, and that was not the Minister or his delegate under the Act.
[19] However that notice was worded, the sworn evidence by affidavit of Sheryl Yoner, Area Manager North, LTS of the Department of Indian Affairs and Northern Development, is that she is the person authorized to determine the appropriate rental by specific delegation of the Minister's statutory authority, and that she determined the rental amount in respect of Mr. Alderson's lease of which he was notified on July 24, 2002. Her evidence is not contradicted and I accept that the decision here questioned was made by her in the exercise of authority delegated by, and on behalf of, the Minister.
[20] In accord with the Act and the Minister's delegation, the decision was made by the appropriate officer.
Was the decision establishing the rent unfair?
[21] Mr. Alderson urges that the decision establishing the annual rental for 2002 and following two years was unfair for a variety of reasons. I deal with each of these submissions in turn.
[22] It is urged that the rent established in 2002 was unfair in light of previous increases over the term of the list which were significantly greater than increases in the fair market value of the land. Thus, the rent paid for the first 281 days commencing in 1992 was $481; it increased 35% to an annual figure of $650 in 1993, and by 42% to $920. in 1996, by 7½ % to $990. in 1996 and by 69% to $1,675. in 2002. Over the expired term of the lease from 1993 the annual rent increased from $650. to $1,675., i.e. more than 2.5 times the original annual rent paid, an increase not comparably reflected in the increase in fair market value of the property in question.
[23] I note that, while it does not affect the overall increase over the term from 1993 to 2002, the parties have a different view of the rent assessed for the term commencing in 1999. For the applicant the applicable rent was $990. per annum, the amount paid by him after negotiations with the Band Council, an amount consistent with at least part of the recommended rental rate, that for recreational users of the land leased. For the Minister, the rent for that period commencing in 1999 was consistent with that recommended by the appraiser for full-time users was 5% of the assessed fair market value of $33,000. or $1,650., an amount notified to Mr. Alderson in 1999 but which as a result of his negotiations with the Band Council was varied as earlier noted. The different perceptions of the "fair market rent" applicable to the 1999-2002 period continues to cloud any shared perception of the parties of their lease relationship over the time. In my opinion, the difference is unimportant for the issues which concerns the Court relating to the rent for the term commencing in 2002.
[24] I am not persuaded that the increase in fair market rent assessed for 2002, whether that be perceived as an increase from the rent paid from 1999-2002 or the rent originally assessed by LTS for that period, is not in itself an indication that the rent assessed was unfair. Even if the figure set is not explained, it appears to have been established on the basis of the recommendation of an independent appraiser, recommended by PWGSC and adopted by the delegated officer of LTS after consultation with the Chief and Band Council. That process appears consistent with the statutory and regulatory regime under the Indian Act and the Minister's delegation of authority and it was also consistent with the terms of the lease for adjusting the rent in accord with clauses 3.03 - 3.04. Nor is the total increase in rent payable from 1992 to 2002 in itself evidence of unfairness, for each determination of rent, made for a three-year period, has been consistent with the statute, the regulations and the lease.
[25] Mr. Alderson also contends that the decision in 2002 changed the basis on which rents were paid by recreational users, who previously paid rent on a basis which implicitly recognized they made less than full-time use of the property leased. The majority of the lessees used their respective properties similarly and a minority were full-time or year-round occupants of their land. The independent appraiser's report in 1999 recognized this difference and recommended a 3% rate of assessed fair market value for recreational users and 5% for full-time users. That recommendation was not adopted by LTS which sought to apply a single rate (5%) for all lessees on the basis that all lessees had exclusive occupation rights to their property. That was the basis of the Band Council's determination in 2002 to have one rental rate for all lease holders, as persons with exclusive claims to their leased land over the full year.
[26] LTS, in my opinion, could have dealt with Mr. Alderson and other lessees in 2002 in a more open manner and could have explained the basis of its assessment more effectively, but its failure to do so cannot be characterized as unfair in process as a matter of law for the process was, as indicated earlier, consistent with the statute, the delegation requirements and the terms of the lease. Moreover, LTS failure to treat Mr. Alderson consistently, in a manner reflecting his continuing recreational use on a seasonal basis, is another aspect of its less than open treatment of lessees like Mr. Alderson, but that too does not constitute unfairness in law which would support intervention of the Court. That change was recommended by the appraiser in 2002 as it appears from his report, by PWGSC, and accepted by Band Resolution, before it was determined and notified by Ms. Yoner, the LTS officer concerned.
[27] Finally, the refusal of LTS to provide to lessees a copy of the appraiser's report on which the fair market rental figure was said to be based was not an error in law or unfairness in process that would support intervention. Why the government departments would agree not to release the appraiser's report, appears to reflect bureaucratic interests and to ignore the general principle of open access to information held by government that is reflected in the Access to Information Act. The practices of big brother seem hard to modify to serve the public interest in access. That said, failure to disclose the appraisal report is not a basis to intervene in an action for the Court to reassess the fair market rent payable under the lease.
Is there evidence the rent assessed was not "fair market rent"?
[28] While I have considerable sympathy for Mr. Alderson's position, mainly because of the manner in which he was treated, there is not evidence before me that the rent assessed in 2002 is not the "fair market rental" provided for under the lease.
[29] Indeed the fair market value on average of the lots leased was determined by the independent appraiser for the term to commence June 1, 2002 was $33,500. and he proposed a rental rate of 5% to reflect current market conditions. That is an annual market rental of $1,675.00. That basis, that same rental rate and the same annual rental were considered, accepted and recommended by PWGSC to LTS, and the responsible officer delegated to determine the rent, reported those results to the Band Council which by Resolution approved the rent and that it be the only rent to be assessed against all leaseholders. Under their leases the lessees held exclusive rights to use of the land for purposes of residential property throughout the term of the lease.
[30] The evidence before the Court supports the process by which LTS determined the annual rent to be paid from June 1, 2002. It is true LTS was not consistent in its assessments of rent after 1996, and its increases in dollars claimed in 1999 and 2002 bore no relationship to the factors normally considered in appraising real property, at least no relationship explained to Mr. Alderson as a lessee. But there is no evidence the figure set for June 1, 2002, or any earlier applicable rent, was "unfair".
[31] Even if this Court had found that the rent established in 2002 was unfair, there is no evidence before the Court upon which it could rely to determine any other figure to be applicable as the fair market rent under the lease. In Canada v. Meyer, [1990] F.C.J. No. 34 (T.D.)(QL), upheld on appeal [1992] F.C.J. No. 1133 (C.A.) (QL), Mr. Justice Martin of this Court did determine, under paragraph 17(3)(a) of the Federal Court Act, the fair market rental applicable under a lease of property on Reserve land when the parties were unable to agree. In that case, unlike this one, there was evidence before the Court upon which it relied, including separate appraisal evidence introduced by each party. Here the only appraisal is that obtained by PWGSC and relied upon by LTS and the First Nation concerned.
[32] Thus, there is no basis on which this Court could conclude the rent in issue was not a "fair market rent", or could determine any other value for that rent.
Conclusion
[33] For the reasons set out the Court, by separate judgment, dismisses the action by Mr. Alderson, including his claim to relief under subsection 17(3) of the Federal Court Act in accord with the terms of the lease here in issue.
Costs
[34] The judgment now issued provides that each party shall bear its own costs of the action.
[35] Ordinarily an award of costs tends to go to the successful party to an action. I decline to award costs against Mr. Alderson for it seems to me the manner in which he was treated by the Minister's department before he commenced this proceeding left him no reasonable alternative to seek to address his concerns. LTS failed to recognize that the actual rent he paid from 1999 to 2002 was $990., and failed to explain a basis for establishing rent at $1,675. per annum from June 1, 2002 other than that it had been recommended by PWGSC on the basis of an independent appraisal to which the respondent refused to provide access by Mr. Alderson.
"W. Andrew MacKay"
Deputy Judge
July 13, 2004.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1586-02
STYLE OF CAUSE: Clifford Alderson v. Her Majesty the Queen et. al.
PLACE OF HEARING: Prince George, British Columbia
DATE OF HEARING: October 30, 2003
REASONS FOR ORDER OF:
THE HONOURABLE MR. JUSTICE MACKAY
DATED: July 13, 2004
APPEARANCES:
Clifford Alderson ON HIS OWN BEHALF
Janice Rodgers FOR RESPONDENT
SOLICITORS OF RECORD:
FOR APPLICANT
Morris Rosenberg
Deputy Attorney General of Canada FOR RESPONDENT
Date: 20040713
Docket: T-1586-02
Ottawa, Ontario, July 13, 2004
Present: The Honourable Mr. Justice W. Andrew MacKay
BETWEEN:
CLIFFORD ALDERSON
Applicant
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
as represented by the MINISTER OF
INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Respondents
JUDGMENT
UPON application by the applicant pursuant to paragraph 17(3)(a) of the Federal Court Act, R.S.C. 1985, c. F-7 as amended for relief including a determination of a fair market rent in accord with a base for a lot of land located on the Binche Indian Reserve #2, at Stuart Lake in British Columbia;
UPON hearing the applicant appearing for himself and counsel appearing for the Minister at Prince George, B.C. in November, 2003 when decision was reserved and the parties were invited to make further written submissions concerning, inter alia, the possibility of treating this proceeding as a simplified action, in accord with Rule 299 et seq. of the Federal Court Rules 1998, without further appearance at a hearing;
UPON consent of the parties to this proceeding being dealt with as a simplified action, and upon consideration of submissions made initially by motion records, those heard at the hearing in Prince George, and written submissions filed thereafter;
IT IS ORDERED THAT:
1. This proceeding, initiated by an application for consideration pursuant to subsection 17(3) of the Federal Court Act, is ordered to be considered and determined as if it had been initiated as a simplified action pursuant to Rules 299 et seq. of the Court's Rules, on the basis of submissions made orally when the matter was heard and those made in writing before and after the hearing.
2. The action by the applicant, Mr. Alderson, is dismissed.
3. Each party shall bear its own costs.
"W. Andrew MacKay"
Deputy Judge