Rath and Company v Stoney First Nation, 2013 ABQB 255

Court of Queen ’ s Bench of Alberta Citation: Rath and Company v Stoney First Nation, 2013 ABQB 255 Date: 20130507 Docket: 1201 02914 Registry: Calgary Between: Rath and Company Applicant - and - Stoney First Nation, as represented by its Chiefs and Councillors, Bearspaw First Nation, as represented by its Chief and Councillors, Chief David Bearspaw Jr., Trevor Wesley, Patrick Twoyoungmen, Roderick Lefthand and Gordon Wildman Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice G.C.

Hawco _______________________________________________________ [ 1 ] This is an application directed by a review officer, Ms. Wendy Young, following an application for an “ Appointment for Review of retainer agreement/lawyer ’ s charges ” which was scheduled for March 5, 2012. [ 2 ] The Appointment for Review arose as a result of an account having been submitted by the Applicant, Rath and Company, to Stoney First Nation for work which Mr. Rath claimed he had done on behalf of Stoney First Nation. Stoney First Nation maintains it

had neither requested Mr. Rath to do any work on its behalf, nor had it authorized Mr. Rath to carry out any work on its behalf. Background [ 3 ] Some background is in order. [ 4 ] Stoney First Nation, or Stoney Nakoda Nations, is an Indian band under the Indian Act , RSC 1985, c.1-5. Stoney Nakoda Nations is comprised of three separate first nations, the Bearspaw First Nation ( “ BFN ” ), Chiniki First Nation ( “ CFN ” ) and the Wesley First Nation ( “ WFN ” ). [ 5 ] Each of the separate First Nations causes and conducts its own election of Chief and Councillors pursuant to its respective customs.

Once elected, all of the three First Nations comprise the Stoney Tribal Council. In total, the Stoney Tribal Council contains fifteen elected members. Under the Indian Act , it is this body that is recognized as the “ council of the band ” for the single Stoney Indian Band. [ 6 ] The Stoney Tribal administration is the joint administrative and executive branch of the Stoney Nakoda Nations and takes it directions from the Tribal Council. [ 7 ] The Tribal Council makes collective decisions on such matters as oil and gas and land use development, education, family services and public works.

For Stoney Nakoda Nations legal matters, the Tribal Council convenes and provides direction and instruction to the Stoney Tribal Administration and legal counsel. The Tribal Council makes decisions with respect to retention of lawyers, approval of legal fees, budgets and arguments to be made on legal matters. These are not administrative decisions under the authority of the tribal administration. These are decisions made by the elected members of the tribal council. [ 8 ] According to Ms.

Heather Carnahan, the Tribal Administrator of the Stoney Tribal Administration, the Stoney Nakoda Nations practice is that the Tribal Council makes decisions to retain legal counsel and to delegate signing authority to an individual to sign a retainer agreement.

There does not appear to be any evidence of a motion or direction of the Tribal Council to either retain Rath and Company or to delegate signing authority. [ 9 ] On December 16, 2010, an application for a judicial review was initiated in the Federal Court challenging a decision made by the then Chief of the Bearspaw First Nation and a number of his councillors to not hold an election for the Chief position and the council positions on December 10, 2010. [ 10 ] The application for a judicial review named, as Respondents, the Respondents in this application.

The Applicants were six members of the Bearspaw First Nation. [ 11 ] On December 20, 2010, a Fee Agreement and Terms of Engagement with Rath and Company was signed by two members of the Tribal Council, namely Chief David Bearspaw of the Bearspaw First Nation and Chief Bruce Labelle of the Chiniki First Nation. [ 12 ] The agreement purported to be signed by Chief Bearspaw and Chief Labelle on behalf of the Stoney Tribal Council and related to the judicial review application of Robert Shotclose and others against “ Stoney First Nations and Bearspaw First Nation ( “ the Respondent ” ) in the application.

Schedule 2A to the agreement stated that the name of the client was Stoney Tribal Council. It purported to give authority to Greg Varricchio, the Chief Executive Officer of Stoney Tribal Administration to instruct Mr. Rath. [ 13 ] There is no evidence of any resolution having been passed authorizing or ratifying the retainer agreements by the Tribal Council or any of the three separate first nations.

[ 14 ] It does appear, through notes made by someone from Rath and Company, that on December 20, 2010, a discussion was held with Mr. Trent Blind, the band administrator for Bearspaw First Nation, that a band council resolution would be required from three chiefs to delegate authority with respect to the judicial review to either Chief Bearspaw or to Mr. Blind. [ 15 ] There does not appear to have been any such resolution. [ 16 ] It was pursuant to this fee agreement that Mr.

Rath purported to act on behalf of Stoney First Nation, submitting accounts for the next year in the amount of approximately $295,000 through a series of $20,000 cheques. Pursuant to the Stoney First Nation financial administration policy, cheques in the amount of $25,000 or more were required to be signed over the signature of the three chiefs, in addition to the initials of the Chief Financial Officer. [ 17 ] On June 22, 2012, Mr. Justice Mosley of the Federal Court delivered his reasons for judgment with respect to the judicial review.

He quashed the decision of the Bearspaw First Nation Chief and Council who purported to amend the Bearspaw election regulations and ordered that Chief Bearspaw and his Council be removed from office.

A new election was ordered. [ 18 ] On September 7, 2011, costs in the amount of $285,000 were awarded against the Respondents on a solicitor/client basis for a number of reasons by Justice Mosley, including the improper conduct of the Chief and Councillors and their counsel. [ 19 ] On June 30, 2011, without any apparent authority, Rath and Company filed a Notice of Appeal and also filed a notice requesting a stay of Justice Mosely ’ s judgment. [ 20 ] On July 11, 2011, the Stoney Tribal Council issued a resolution that Rath and Company was not to represent the Stoney First Nation and that the stay application was not to be pursued. [ 21 ] Notwithstanding this, Mr.

Rath filed a motion for an interim stay of Justice Mosley ’ s order on July 15, 2011. [ 22 ] On July 28, 2011, Justice Stratas of the Federal Court of Appeal dismissed the motion for an interim stay. [ 23 ] On August 9, 2011, the election of the current Chief and Council took place. The new Chief instructed Rath and Company to file a notice of discontinuance. [ 24 ] On August 12, 2011, Mr. Rath sent a letter to the current Chief and Council of Bearspaw First Nation stating: We are in receipt of your letter of today ’ s date. We will act per your instruction to file a Notice of Discontinuance.

However, given that we were only ever instructed by Stoney Tribal Council through Chief David Bearspaw, Chief Bruce Labelle and CEO Greg Varicchio, we would ask that these instructions be confirmed through the acting Stoney Tribal Council ’ s CEO. Upon receipt, we will file the discontinuance on behalf of the appellants forthwith. [ 25 ] On August 17, 2011, Mr. Rath sent a letter to the Federal Court of Appeal enclosing a Notice of Discontinuance on behalf of the Appellants Stoney First Nation as represented by its Chiefs and Councillors and Bearspaw First Nation as represented by its Chief and Councillors.

The letter went on to state: Our office is presently obtaining instructions from former Bearspaw First Nation Chief David Bearspaw Jr. and former Bearspaw First Nation Councillors Trevor Wesley, Patrick Twoyoungmen, Roderick Lefthand and Gordon Wildman with respect to whether or not they wish to pursue this appeal, and we will advise the court and the parties accordingly.

[ 26 ] On September 14, 2011, the Federal Court of Appeal issued the following direction: On August 17, 2011, a Notice of Discontinuance was filed on behalf of the only entities named as appellants, Stoney First Nation and Bearspaw First Nation. Certain individuals were also named in the recital of appellants, but they are only representatives of the entities Stoney First Nation and Bearspaw First Nation. They are not parties in their own right.

Therefore, the status of the appeal is that it has been discontinued by the only two entities who are appellants. [ 27 ] On August 24, 2011, Rae and Company filed an Appointment for Review of the retainer agreement and Rath and Company ’ s charges, as a result of a new invoice in the amount of $216,882.85 which was challenged by Stoney First Nation. [ 28 ] That led to the application before this court. Issues [ 29 ] The primary issues are: 1. Who was Rath and Company ’ s client? 2.

Did Chief Bearspaw and Chief Labelle have the actual authority to hire Rath and Company to conduct the judicial review on behalf of Stoney First Nation? 3. Did Chief Bearspaw and Chief Labelle have the ostensible authority to hire Rath and Company? [ 30 ] The crux of all of these issues is simply whether Rath and Company had the authority to conduct a judicial review and incur fees which Stoney First Nation is required to pay. Conclusions 1.

Having received no submissions or evidence from Chief Bearspaw himself, I should not say that he was the client, although he and his councillors certainly appear to have been. I can say that Stoney First Nation was not Rath and Company ’ s client. 2. Chief Bearspaw and Chief Labelle did not have the actual authority or the ostensible authority to purport to bind either the Stoney Tribal Council or the Stoney First Nation. They were aware that certain procedures had to be followed and they did not follow them. Rath and Company were aware of the procedures and that they had not been followed.

Reasoning Client [ 31 ] Rath and Company were aware from the very beginning – December 20, 2010 – that before Stoney First Nation or the Tribal Council, or anyone purporting be act on the behalf of either entity could enter into an agreement with respect to the provision of legal services and payment of fees, a resolution was required from the Stoney Tribal Council. They were aware that any such agreement had to be signed by three chiefs. [ 32 ] Rath and Company held itself out to be knowledgeable, if not experts, in aboriginal law. They either knew, or certainly ought to have known, of section 2(3) (

b) of the Indian Act , R.S.C., 1985, c. I-5. It states:

3 Unless the context otherwise requires or this Act otherwise provides, ... (

b) a power conferred on the council of a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the councillors of the band present at a meeting of the council duly convened. [ 33 ] The Stoney Nation Financial Advisory policy, dated December 14, 1999, required that the Tribal Council approve payments for funding services (section 4.1(c)). [ 34 ] That same policy provided that the purchase of services, not within the annual budget, be pre-approved by resolution of the Tribal Council (section 10.2(c)). [ 35 ] Again, Rath and Company were advised of the requirements to have a resolution from the Tribal Council by Mr.

Blind on December 20, 2010. [ 36 ] Ms. Heather Carnahan, the Tribal Administrator of Stoney Tribal Administration, has reviewed the records of the Stoney Nakoda Nations and has stated, to the best of her information and belief, neither the Stoney Tribal Council nor any of the separate First Nations that comprise the Stoney Nakoda Nations passed a resolution authorizing the entering of the fee agreement or the Wesley fee agreement. [ 37 ] Notwithstanding the knowledge of Rath and Company, Mr. Rath had Chief Bearspaw and Chief Labelle sign the fee agreement.

Chief Bearspaw and his four councillors were the people whose actions were being challenged and were the people whose positions were being placed in jeopardy. Nowhere is there any indication that the Stoney First Nation would benefit in any manner by having the judicial review take place. [ 38 ] It is somewhat odd that Rath and Company makes the argument that the client was the Stoney First Nation at this time when, on July 15, 2011, Mr.

Rath took the position, when presented with a resolution signed by all ten of the elected members of the Stoney Tribal Council, that he could refuse to accept that resolution as actual authority terminating Rath and Company ’ s purported representation of Stoney Tribal Council and the Stoney Nakoda Nation. At that time, Rath and Company took the position that the band council resolution did not specifically terminate its retainer with Stoney First Nation as it was only signed by two of the three chiefs, Chief Labelle and Chief Wesley.

Indeed, notwithstanding the resolution was signed by Chief Labelle and all of the Chiniki First Nation councillors and Chief Wesley and the Wesley First Nation councillors, resolving that the Federal Court be advised that Rath and Company does not represent the Stoney Tribal Council and that the subject of appeal and stay were not being pursued by the Stoney Indian Band nor by the Tribal Council, Rath and Company went ahead and filed a Notice of Motion for the stay, advising the Federal Court of Appeal that there was uncertainty as to the legal representation. [ 39 ] In any event, I am satisfied that the Stoney First Nation did not retain Rath and Company and did not agree that it should act on its behalf.

It was not a client of the Applicant. Authority – Actual or Ostensible [ 40 ] The Appellant argues that the client actually was Stoney First Nation because Chief Bearspaw and Chief Labelle had either the actual authority or the ostensible authority to hire the Applicant and sign the fee agreement. [ 41 ] For the reasons given above relating to the provisions of the Indian Act , the regulations of the Tribal Council, and what Rath and Company was told on December 20, 2010 by Mr.

Blind, there is no doubt but that Stoney First Nation did not grant the actual authority to Chief Bearspaw and Chief Labelle to contract on its behalf. The Applicant must have known this or were willfully blind as to this state of affairs.

[42] The Appellant argues, however, that in the alternative, Chief Bearspaw and Chief Labelle had the ostensible authority toenter into the agreement on behalf of the Stoney First Nation. In support of this argument, the Applicant cites Schwartz v Maritime LifeAssurance Co., (1997) 7 CCLI (3d) 75. In that decision, the Newfoundland Court of Appeal said this, at para 23: As stated, the nature of the contract between the parties will normally determine the nature of the agency. However, an agency may alsoarise by operation of law without any contract, express or implied, having been entered into.

Thus, where a person who by his or herwords or conduct has allowed another to appear to the outside world to be his agent, with the result that third parties deal with him in thiscapacity, that person cannot thereafter repudiate this apparent agency if, by doing so, injury would be caused to those third parties. Inother words, the principle of estoppel would apply. As stated by Fridman, ... the agent's authority in agency by estoppel is not an actual or real authority at all.

That is to say it does not result from consent on thepart of the principal, whether express, or implied according to the rules already discussed, that the agent should have any authority at all,or the kind of authority which he has purported to exercise. The agent's authority here is the product of the principal's conduct, hisrepresentation that the agent is authorized to act on his behalf. It is an authority which 'apparently' exists having regard to the conduct ofthe parties. In fact it does not exist.

But as a matter of law, arising out of the factual position, the agent is said to have authority. [43] With respect, there is no evidence whatsoever of any conduct by the principal, Stoney First Nation, which would indicate toanyone that Chief Bearspaw or Chief Labelle were authorized to act on its behalf in so far as retaining the Applicant and signing the feeagreement.

The Applicant also cites Scherer v Paletta, (ON CA), [1966] 2 OR 524 (CA) and Russelsteel Ltd. vConsolidated Northern Drilling & Exploration Ltd., (AB KB), [1981] 4 WWR 113 to the effect where a principalgives an agent general authority to conduct business on its behalf, the principal will be bound by any act done by the agent which isincidental to the ordinary course of such business or which falls within the apparent scope of the authority. Once again, that is not thesituation here.

Chief Bearspaw and Chief Labelle did not have the authority to enter into any fee agreement on behalf of Stoney FirstNation and, in so far as I am aware, did not have a general authority to conduct any business on Stoney First Nation’s behalf. Again, thisis not a situation where the Applicant has been misled in any manner by Stoney First Nation as to what Chief Bearspaw and ChiefLabelle could do on its behalf. [44] The turmoil within Stoney First Nation over the elections, or the failure to hold elections, was known by the Applicant. Thefact that there were several factions arguing with others was clear. Mr.

Rath was of the view that the governance of the Stoney FirstNation was in disarray. He was aware of the adverse interests of the three chiefs and council of Stoney First Nation at the time the feeagreements were signed. A large red flag was raised by Mr. Blind on December 20, 2010. Nothing points to any actions by Stoney FirstNation which might be held to be conveying authority to Chief Bearspaw and Chief Labelle to sign the agreements.

To the contrary,everything seemed to call for a full investigation to determine who had the authority to do what before these agreements werepurportedly made and acted upon in any manner. [45] I am satisfied that Chief Bearspaw and Chief Labelle lacked the authority, actual or ostensible, to purport to enter intoagreements on behalf of Stoney First Nation. [46] I am also satisfied and accept the reasoning of Justice Moir in Maloney v Eskasoni Indian Band, (2009) 2009 NSSC 177, 278 NSR (2d) 298, wherein Justice Moir accepted the reasoning of Justice Rae of the British Columbia Supreme Court inLeonard v.

Gottfriedson, (BC SC), [1980] 21 B.C.L.R. 326. In Maloney, Justice Moir accepted the followingreasoning, as it appears to have been so stated in Leonard, at para 16: It appears to me also that the position under the Indian Act is analogous to the exercise of powers of a municipal corporation. Suchpowers are, speaking generally, to be exercised in close conformity with the provisions of the incorporating statute. The rationale forsuch limitation with respect to the exercise of powers is that they are being exercised in the interests of the welfare of the inhabitants whoare thus to be protected.

The Act is clearly of a tenor indicating the need and intent to benefit and protect the Indian Bands and their individual members comingunder its provisions. It is to be read, interpreted and applied in that light. Just as the exercise of a power by a municipality is required tobe exercised in strict accord with the statute, to protect the interests of the inhabitants, so, it seems to me, and on the same principle, thecouncil's powers under the Indian Act are to be exercised strictly in accord with the Act in the interests of the benefit and protection ofthe Indians.

Conclusion [ 47 ] As a result of the above findings, I am satisfied that Stoney First Nation was not a client of the Applicant and that the retainer agreements are not valid and are of no force and effect as against Stoney First Nation. The retainer agreements were not authorized or ratified by Stoney First Nation or by the Tribal Council. [ 48 ] The Respondents are entitled to their costs. Heard on the 27 th day of March, 2013. Dated at the City of Calgary, Alberta this 6 th day of May, 2013. G.C. Hawco J.C.Q.B.A. Appearances: M.C. Freeman Freeman Litigation for the Applicants W.T. Osvath B.A. Barrett Rae & Company for the Respondent