Federal Court of Appeal Decisions

Date: 20060314

Docket: A-714-04

Citation: 2006 FCA 103

CORAM:        DÉCARY J.A.

                        LÉTOURNEAU J.A.             

                        SEXTON J.A.

BETWEEN:

HER MAJESTY THE QUEEN

Appellant

and

MICHAEL G. (JERRY) WETZEL

Respondent

Heard at Halifax, Nova Scotia, on February 13, 2006.

Judgment delivered at Ottawa, Ontario, on March 14, 2006.

REASONS FOR JUDGMENT BY:                                                                               SEXTON J.A.

CONCURRED IN BY:                                                                                                  DÉCARY J.A.

                                                                                                                           LÉTOURNEAU J.A.

Date: 20060314

Docket: A-714-04

Citation: 2006 FCA 103

CORAM:        DÉCARY J.A.

                        LÉTOURNEAU J.A.             

                        SEXTON J.A.

BETWEEN:

HER MAJESTY THE QUEEN

Appellant

and

MICHAEL G. (JERRY) WETZEL

Respondent

REASONS FOR JUDGMENT

SEXTON J.A.

I.           INTRODUCTION

[1]    This is an appeal from Wetzel v. Canada, 2004 TCC 767 ["Wetzel"], a Tax Court of Canada decision rendered under the informal procedure. The court below found that government officials who were responsible for Indian affairs violated the equality rights of the respondent, Michael Wetzel, contrary to subsection 15(1) of the Canadian Charter of Rights and Freedoms (the "Charter"). It went on to say that these officials had deliberately excluded the respondent from a list of members of the Miawpukek Indian Band, also known as the Conne River Band (the "Band") and that, because of their machinations, the order-in-council setting out the criteria for Band membership required members to be "of Canadian Indian ancestry." The respondent did not satisfy this criterion, and so his name did not appear on the Band list. The Tax Court of Canada ("TCC") remedied this constitutional violation by essentially vacating the respondent's 1994 and 1995 tax assessments under subsection 24(1) of the Charter.

[2]    The appellant attacks the TCC's decision on four main grounds. First, the appellant argues that the TCC erred in finding that the respondent was not obliged to serve notices of a constitutional question with regards to his Charter claim. Second, the appellant disputes the existence of a Charter violation in this case. Third, the appellant questions the jurisdiction of the TCC to grant a remedy pursuant to subsection 24(1) of the Charter, specifically the vacating of the assessments. Finally, the appellant challenges the TCC's jurisdiction to order an accounting.

II.         FACTSAS FOUND BY THE TAX COURT OF CANADA

[3]    In the 1970s and 1980s, the respondent, an "American Indian," was active in organizing native communities in Newfoundland and Labrador. As a result of his confrontations with the appellant's bureaucracy and the forceful manner in which he proceeded with his advocacy work, the TCC found that he made enemies of certain persons high up in the department responsible for Indian affairs (the "Department"). These officials, according to the TCC, made it clear that they were going to exact revenge on the respondent.

[4]    During this period, the Band and the federal government were negotiating the criteria for Band membership. The TCC found that the respondent's name was included on a Band list drawn

up by the Conne River Registration Advisory Committee. It was also on a list of proposed Band members that the then-Minister of Indian Affairs and Northern Development submitted to Cabinet. However, the 1984 order-in-council that created the Band under the Indian Act included the membership criterion "of Canadian Micmac ancestry." The respondent was of American Indian ancestry, so his name did not appear on the resultant Band list. Subsequently, several ministers, the TCC said, committed to changing the ancestry requirement to "of Indian ancestry." The respondent would have qualified for Band membership under this criterion. Ultimately, though, the revised, 1989 order-in-council ("the Order-in-Council") set out the requirement "of Canadian Indian ancestry." Since the respondent was not of this ancestry, he did not satisfy this criterion, so his name was again omitted from the Band list. Had the respondent's name been on the list, he would have been eligible for tax exemptions to which non-Band members are not entitled.

[5]    Indeed, according to the court below, it was the actions of the aforementioned, vengeful officials, who were attempting to keep the respondent off the Band list, that led to the wording "of Canadian Indian ancestry" in the Order-in-Council. Further, the TCC found as a matter of fact that some individuals whose names appeared on the Band list did not qualify for Band membership under this ancestry criterion.

III.        RELEVANT ENACTMENTS

[6]    Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)

Indian Act, R.S., 1985, c. I-5

Charter

Tax Court of Canada Act, R.S. 1985, c. T-2

Interpretation Act, R.S. 1985, c. I-21

IV.        THE FINDINGS OF THE TAX COURT OF CANADA

[7]    One of the first issues addressed by the TCC was the respondent's failure to file notices of a constitutional question. The TCC found that section 57 of the Federal Courts Act requires the service of such notices on the Attorney General of Canada and the attorney general of each province, but because the respondent was not seeking to have the Order-in-Council declared invalid, and was challenging its effect, he did not have to comply with this provision.

[8]    Next, the TCC focused on its jurisdiction to deal with the respondent's complaint. It acknowledged that it had no jurisdiction to determine the respondent's status as an "Indian" under the Indian Act. However, the issue of whether the respondent was entitled to be registered was the subject matter of the respondent's Charter challenge. The TCC found it had jurisdiction over this question, because it had the jurisdiction required to deal with the validity of the assessments in issue. It also observed that in O'Neill Motors Limited v. Her Majesty the Queen, 96 DTC 1486 (T.C.C.), the TCC had dealt with whether it was appropriate and just to vacate certain tax assessments by virtue of subsection 24(1) of the Charter. The court below found that this was exactly the question before it in this case.

[9]    The TCC then addressed the substance of the respondent's complaint. First, it acknowledged the appellant's argument that the respondent had not specified the basis of the alleged breach of his Charter rights. According to the appellant, this made it impossible to reply to the respondent's allegations in a meaningful way. However, in the view of the TCC, the respondent had produced sufficient evidence for the TCC to conclude that the respondent was alleging discrimination based upon his race, national or ethnic origin.

[10]            The TCC began to analyze this discrimination claim by referring to Law v. Canada, [1999] 1 S.C.R. 497 ["Law"] at 509. There, the Supreme Court of Canada cautioned that it would be inappropriate to attempt to confine analyses under subsection 15(1) to a "fixed and limited formula."

[11]            Keeping this in mind, the TCC found that the respondent's subsection 15(1) rights had been violated. Other persons did not satisfy the criterion "of Canadian Indian ancestry" set out by the Order-in-Council, yet their names were on the Band list. Obviously, then, according to the TCC, the respondent was treated differently from them. In the opinion of the TCC, the evidence also made it clear that he was so treated because he had offended certain Department officials. According to the

TCC, persons in high authority, including ministers responsible for Indian affairs, had assured the respondent that the criteria for Band membership would be changed to "of Indian ancestry" and that the respondent would qualify to be on the final list of Band members as he was on the initial list. However, the respondent's enemies in the Department, the TCC found, intended to get even with the respondent by keeping his name off the Band list. In the opinion of the TCC, the final wording of the Order-in-Council was fashioned to exclude the respondent from the list and thus prevented him from being treated as an equal with all the other residents of Conne River Reserve "of Indian ancestry." This, the TCC ruled, was a clear violation of the respondent's Charter rights for which he was entitled to a remedy.

[12]            The TCC allowed the appeals and remitted the matter to the Minister of National Revenue (the "Minister") for reconsideration and reassessment based upon the finding that the 1994 and 1995 assessments be vacated. It could not order that the respondent's name be added to the list of Band members. However, it recommended that the Minister make a Remission Order in favour of the respondent for all of the years that he should have been considered a Band member. In addition, it ordered the Minister to make an accounting of the respondent so that the respondent could determine the amount that he owed and the basis for it. Finally, it awarded costs of $2,000 to the respondent.

V.         ISSUES

1.       Did the Tax Court of Canada err in determining that the respondent was not obliged to file notices of a constitutional question?

2.       Did the Tax Court of Canada err in its application of the Charter?

3.       Did the Tax Court of Canada have the jurisdiction required to award the subsection 24(1) Charter remedies that it granted in this case?

4.       Did the Tax Court of Canada err in ordering an accounting?

VI.        ANALYSIS

1)       Did the Tax Court of Canada err in determining that the respondent was not obliged to file notices of a constitutional question?

[13]            In addressing the issue of whether the respondent should have served notices of a constitutional question, the TCC remarked in Wetzel at para. 85:

The Court is satisfied in accordance with the argument of the Appellant that he was not bound by the provisions of section 57 of the Federal Court Act [sic.]. The Court is satisfied that he is not seeking to have the Income Tax Act or any part thereof struck down, nor is he seeking to have any part of the Indian Act struck down, nor is he seeking to have any of the Orders-in-Council declared to be invalid. Since he is not seeking to have a statute declared to be invalid, or of no consequence or to have some other section written in which would have the effect of varying the statute in question, then he is not bound by the requirements of section 57 of the Federal Court Act [sic.].

[14]            With all due respect, the court below was wrong to rely on section 57 of the Federal Courts Act. The respondent brought his Charter challenge in the Tax Court, not the Federal Court. Therefore, the Tax Court of Canada Act ("TCCA"), not the Federal Courts Act, was the pertinent piece of legislation. That said, the relevant wording of section 57 of the Federal Courts Act and the equivalent provision in the TCCA is almost identical, so this error did not affect the result in the decision below.

[15]            According to subsection 19.2(1) of the TCCA:

[16]            The precondition to the operation of this subsection is the questioning of "the constitutional validity, applicability or operability of an Act of Parliament or its regulations." In this court, the respondent explained his Charter challenge in part, as follows:

. . . the discrimination against him [the respondent] is to be found in the actions of servants of the Crown who deliberately, and with malice, took action to change the membership criteria for Band membership so as to exclude the respondent from membership. These actions were taken in the face of agreements which had been made and in defiance of Ministerial directions.

[17]            The respondent argued in this court that he was not challenging the validity of the Order-in-Council, but simply its effect upon him and therefore it was unnecessary to serve notices of a constitutional question. I do not agree. In my view, the respondent's action amounted to a challenge to the operability of the Order-in-Council. Indeed, in place of the English word "operability," the French version of subsection 19.2(1) uses the word "l'effet" or "effect." In this case, the effect of the Order-in-Council was to exclude the respondent from the Band list. This is exactly the thing about which the respondent complains.

[18]            I am reinforced in my view by R. v. Lyons (1993), 5 C.M.A.R. 130 and R. v. Matthews (1993), 5 C.M.A.R. 140. The appellants in those cases had been convicted and sentenced on various charges. A provision of the National Defence Act automatically included in their sentences a reduction of rank. The appellants invoked the Charter to challenge the constitutionality of their sentences, but did not serve notices of a constitutional question. Both courts reached the same conclusion on this issue. In R. v. Lyons (1993), 5 C.M.A.R. 130 at paras. 8 and 11, it was framed as follows:

¶ 8            The appellant does not expressly ask for a declaration that paragraph 140(f) is invalid, inapplicable or inoperative but rather an order quashing the sentence or, alternatively, quashing the included punishment of reduction in rank. To the extent that the appellant relies on the Charter for either result, it seems to me that such an order would imply a conclusion that paragraph 140(f) is unconstitutional, if not entirely then in the particular circumstances, and, indeed, those were the arguments.

...

¶ 11          In view of the appellant's failure to notify the attorneys general of his intention to raise them, I propose not to deal with the merits of the attacks on paragraph 140(f) based on sections 12 and 15 of the Charter.

In other words, notices of a constitutional question must accompany Charter challenges to the effect of a statutory or regulatory instrument.

[19]            In conclusion, I wish to point out that section 19.2 of the TCCA does not specifically mention orders-in-council. It only refers to statutes and regulations. As this was not argued by the respondent as a ground why no notice was required under section 19.2, it is unnecessary to examine it. However, it is worth pointing out that subsection 2(1) and section 3 of the Interpretation Act read:

2)    Did the Tax Court of Canada err in its application of the Charter?

a)          Introduction

[20]            Unfortunately, the court below did not precisely pinpoint the Charter violation that so troubled it. In Wetzel at paras. 119 and 120, it stated:

¶ 119        Bearing that in mind, the Court is satisfied on the basis of the evidence presented and any reasonable inferences that it is entitled to draw from the evidence presented, that the Appellant's rights under sections 15 and 24 of the Charter have been violated. It is clear from the evidence that other persons whose names appear on the list of Band members do not satisfy the criteria as set out by the Order-in-Council. Therefore, it is obvious that the Appellant was treated differently from those members and the evidence makes it clear that he was treated differently because he had offended officials who were in positions of authority within the Ministry. The Court is further satisfied that the Appellant was given assurance from persons in high authority, including Ministers, that the criteria for Band membership would be changed to "of Indian Ancestry" and that the Appellant would have qualified to be on the final list of Band members as he was on the initial list.

¶ 120        It is clear that the Appellant in attempting to organize the various bands in Newfoundland and Labrador and in dealing with persons who occupied high positions in the bureaucracy of the Department of Indian and Northern Affairs fermented their consternation against him and they intended to get even with him by fashioning some method for keeping his name off of the Band list. From all that

the Court can conclude from the evidence he was entitled to be on that Band list, he was initially on the Band list and the final wording of the Order-in-Council was fashioned so as to prevent him from being treated as an equal with all the other residents of Conne River Reserve "of Indian Ancestry". This was a clear violation of his Charter rights and he is entitled to an appropriate remedy.

[21]            In my view, the nature of the alleged constitutional wrong is not entirely clear from these reasons. Was it that the respondent was treated differently from other people on the Band list who also did not meet the ancestry criterion or was it because the criteria for Band membership were crafted to exclude the respondent from the Band list? Paragraph 119 suggests that the Charter violation occurred in the differential application of the Order-in-Council. Meanwhile, it can be inferred from paragraph 120 that the formulation of the Order-in-Council violated the Charter because the Order-in-Council was intentionally worded to exclude the respondent from the Band list.

[22]            Regardless of whether the TCC viewed the constitutional wrong as occurring in the application or the formulation of the Order-in-Council, one thing is clear. In the mind of the TCC judge, the Order-in-Council was applied and worded to exclude the respondent from the Band list as a result of the nefarious actions of the vengeful government officials and this violated the Charter.

[23]            I take a different view of the matter. Although the respondent and the TCC clothe their arguments in the language of the Charter, once it is stripped away, it is obvious that the mischief that the TCC sought to remedy is not subsection 15(1) discrimination, but rather administrative law wrongs. What the respondent really complains about-although he does not articulate it in these terms-is bad-faith conduct by Department bureaucrats. In other words, the respondent's claim calls attention to executive action taken for an improper purpose. According to Rand J. in Roncarelli v. Duplessis, [1959] S.C.R. 121 at 143:

'Good faith' in this context . . . means carrying out the statute according to its intent and for its purpose; it means good faith in acting with a rational appreciation of that intent and purpose and not with an improper intent and for an alien purpose; it does not mean for the purposes of punishing a person for exercising an unchallengeable right . . .

[24]            The parties did not address themselves to any administrative law issues, let alone whether the TCC would have the jurisdiction required to award a remedy in the event of a favourable finding for the respondent. The TCC also did not consider the respondent's claims in administrative law terms. It is not the duty of this court at this late stage to reconstitute the respondent's complaint in a different form and then address it. Therefore, I will not do so here.

[25]            In summarizing the three key inquiries in the subsection 15(1) Charter analysis, the Supreme Court of Canada instructed in Law at para. 88:

. . . a court that is called upon to determine a discrimination claim under s. 15(1) should make the following three broad inquiries:

(A) Does the impugned law (a) draw a formal distinction between the claimant and others on the basis of one or more personal characteristics, or (b) fail to take into account the claimant's already disadvantaged position within Canadian society resulting in substantively differential treatment between the claimant and others on the basis of one or more personal characteristics?

(B) Is the claimant subject to differential treatment based on one or more enumerated and analogous grounds?

and

(C) Does the differential treatment discriminate, by imposing a burden upon or withholding a benefit from the claimant in a manner which reflects the stereotypical application of presumed group or personal characteristics, or which otherwise has the effect of perpetuating or

promoting the view that the individual is less capable or worthy of recognition or value as a human being or as a member of Canadian society, equally deserving of concern, respect, and consideration?

[26]            The TCC pointed out that certain Band members, like the respondent, were not "of Canadian Indian ancestry." Their names appeared on the Band list, whereas the respondent's name did not. It can be inferred that the TCC found that this differential application of the Order-in-Council satisfied the first branch of the Law analysis.

[27]            With all due respect, I do not believe that this conclusion is correct. In Law, the Supreme Court of Canada was clear that only a distinction based on "one or more personal characteristics" would violate subsection 15(1). The court below found that the respondent "was treated differently because he had offended officials who were in positions of authority within the Ministry." Wetzel at para. 119. In other words, the differential treatment in this case did not stem from a personal characteristic of the respondent, but from "his confrontation with the bureaucracy and from the forceful manner in which he proceeded when he attempted to have the Band created." Wetzel at para. 93.

[28]         In Wetzel at para. 120, the TCC also stated:

. . . the final wording of the Order-in-Council was fashioned so as to prevent him [the respondent] from being treated as an equal with all the other residents of Conne River Reserve "of Indian Ancestry". This was a clear violation of his Charter rights and he is entitled to an appropriate remedy.

Accordingly, the TCC found that, because of the insertion of the criterion "of Canadian Indian ancestry" into the Order-in-Council, the respondent was treated differently from "all the other residents of Conne River Reserve 'of Indian Ancestry'."

[29]            This line of reasoning is incorrect as well. Among "all the other residents of Conne River Reserve 'of Indian Ancestry'" are Conne Riverresidents "of non-Canadian Indian ancestry." These non-Canadian residents are disqualified from Band membership by the words "of Canadian Indian ancestry" in the Order-in-Council, just as that phrase excludes the respondent from the Band list.

Contrary to the findings of the TCC, then, the wording of the Order-in-Council does not result in the respondent being treated differently from "all the other residents of Conne River Reserve 'of Indian

Ancestry' [emphasis added]." In fact, the criterion "of Canadian Indian ancestry" has the same effect on the respondent as it does on the other residents of Conne River Reserve of non-Canadian Indian Ancestry.

[30]            In conclusion, then, the TCC erred in finding that the respondent's subsection 15(1) Charter rights had been violated in this instance.

3)    Did the Tax Court of Canada have the jurisdiction required to award the subsection 24(1) Charter remedies that it granted in this case?

[31]            In light of my conclusion that the respondent was obliged to serve notices of a constitutional question and my determinations on the Charter issue, it is unnecessary for me to address the jurisdiction of the TCC to grant a remedy where there is a Charter violation.

4)       Did the Tax Court of Canada err in ordering an accounting?

[32]            In the court below, the appellant agreed to the accounting that was ordered by the TCC. Since that accounting has now taken place, there is no need to address this moot issue.

VII.      CONCLUSIONS

[33]            I would allow the appeal with costs to the respondent in accordance with section 18.25 of the TCCA. I would set aside the decision of the TCC and, proceeding to render the decision that should have been rendered, I would dismiss the respondent's appeals in the TCC with respect to the 1994 and 1995 tax assessments.

"J. Edgar Sexton"

"I agree

     Robert Décary J.A.".

"I agree

     Gilles Létourneau J.A.".

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-714-04        

STYLE OF CAUSE:                                                               HER MAJESTY THE QUEEN v. MICHAEL G. WETZEL         

PLACE OF HEARING:                                                         HALIFAX, NOVA SCOTIA   

DATE OF HEARING:                                                           FEBRUARY 13, 2006

REASONS FOR JUDGMENT BY:                                      SEXTON J.A.

CONCURRED IN BY:                                                          DÉCARY J.A.

                                                                                                LÉTOURNEAU J.A.               

                                                                                               

DATED:                                                                                  MARCH 14, 2006       

APPEARANCES:

Peter J. Leslie	FOR THE APPELLANT
Gary G. Boyd	FOR THE RESPONDENT

SOLICITORS OF RECORD:

John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario	FOR THE APPELLANT
Low Murchison LLP Ottawa, Ontario	FOR THE RESPONDENT