2016 QCCA 666, 2016 QCCA 666

Rice v. Agence du revenu du Québec 2016 QCCA 666 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-024124-133 (500-05-006143-943) (500-17-058614-101) (500-17-066353-114) DATE: APRIL 21, 2016 CORAM: THE HONOURABLE NICOLE DUVAL HESLER, C.J.Q. JACQUES CHAMBERLAND, J.A. FRANCE THIBAULT, J.A. ALLAN R. HILTON, J.A. JEAN BOUCHARD, J.A. No: 500-05-006143-943 JOHN LOUIS STEVEN RICE WALLACE STACEY APPELLANTS – Plaintiffs v.

L'AGENCE DU REVENU DU QUÉBEC THE ATTORNEY GENERAL OF QUEBEC THE ATTORNEY GENERAL OF CANADA RESPONDENTS - Defendants and SYLVIA GRÉGOIRE THOMAS DONNA DE LARONDE LEAH DIOME BOBBIJO DELORMIER DEBRA GOODLEAF SHEILA LAZARE JOHN McCOMBER LEE JACOBS DEREK WHITE APPELLANTS – Interveners No: 500-17-058614-101

SYLVIA GRÉGOIRE THOMAS DONNA DE LARONDE LEAH DIOME APPELLANTS – Plaintiffs v. LE SOUS-MINISTRE DU REVENU DU QUÉBEC THE ATTORNEY GENERAL OF QUEBEC THE ATTORNEY GENERAL OF CANADA RESPONDENTS – Defendants No: 500-17-066353-114 BOBBIJO DELORMIER DEBRA GOODLEAF LEE JACOBS SHEILA LAZARE JOHN McCOMBER DEREK WHITE APPELLANTS – Plaintiffs v.

LE SOUS-MINISTRE DU REVENU DU QUÉBEC L'AGENCE DU REVENU DU QUÉBEC THE ATTORNEY GENERAL OF QUEBEC THE ATTORNEY GENERAL OF CANADA RESPONDENTS – Defendants JUDGMENT* [ 1 ] The appellants are status Indians within the meaning of the Indian Act . [1] They appeal the judgment of the Superior Court, District of Montreal rendered on December 5, 2013 by the Honourable Mr. Justice Louis Crête [2] that dismissed three motions for declaratory judgment by which they sought to be exempted from the obligation to collect various taxes upon the sale of gasoline and to remit same to the Minister of Revenue.

They invoked constitutional arguments and other grounds based on the Indian Act . 1 . The context [3] [ 2 ] This litigation between the appellants, who are Mohawk owners of gasoline stations on the Kahnawake Reserve, and the Agence du revenue du Québec ("ARQ") as well as the Attorneys General of Quebec and Canada, dates back some twenty years.

Its origins can be traced to Parliament's adoption of the goods and services tax [4] in 1990 and the provincial legislature's adoption the following year of the Quebec sales tax. [5] Pursuant to a federal-provincial agreement dated December 29, 1990, the Government of Canada conferred the responsibility to administer and collect the GST to the Government of Quebec. [6] In this respect, it must be noted that a provincial fuel tax has existed since 1924. [7] [ 3 ] The Kahnawake Reserve has a population of approximately 10,000 Indians. [8] There are twenty or so active gasoline retailers on the Reserve, which is surrounded by highways on which approximately twenty-eight million vehicles travel each year.

The great majority of drivers are not Indian, but they purchase gasoline from service stations on the outskirts of the Reserve. They are thus able to save money compared to the purchase price in neighbouring municipalities. These savings are due to Kahnawake retailers not collecting applicable taxes when they sell gasoline. [ 4 ] Consumers who live on the Reserve and are status Indians are exempt from paying these taxes pursuant to s. 87 of the Indian Act . On the other hand, other customers are obliged to pay such taxes.

The relevant taxation statutes require the appellants, as mandataries of the State, to collect and then remit these taxes to the Minister of Revenue. For their part, Indian retailers who purchase

fuel from their suppliers pay neither the GST nor the QST on fuel delivered to the Reserve. They do, however, pay an amount equal to the fuel tax, which is then compensated when a retail sale is made. [ 5 ] Based on a belief that it was being deprived of significant tax revenue because of the appellants' failure to collect and remit the various taxes, in the spring of 1994 the Minister of Revenue served a notice of assessment on a dozen or so retailers to recover the taxes that should have been collected and remitted. Faced with their refusal to comply, the Minister revoked their registration certificates .

So doing prevented the retailers in question from being supplied with gasoline products from their suppliers situated off the Reserve, with the effect that they could no longer carry on business. [ 6 ] The retailers answered with an initial motion for declaratory judgment dated May 31, 1994. It sought in the main to have the court recognize that as status Indians, they had no obligation to act as collection agents of federal and provincial sales taxes.

They therefore sought a declaration that certain provisions of the Indian Act , the Excise Tax Act , the Quebec Sales Tax Act and the Fuel Tax Act be declared inapplicable to them.

The motion set out their ancestral rights, but did not invoke the existence of a right to trade based on the Royal Proclamation of 1763. [9] The motion also sought a safeguard order directed mainly at obtaining a stay of the notices of assessment, the revocation of the registration certificates and an order directing their suppliers not to supply them with fuel products. [ 7 ] These conservatory measures were granted by Grenier, J. on June 17, 1994, [10] conditional upon the appellants complying with the requirements of law for the collection and remittance to the Minister of Revenue of the taxes imposed on consumers who were not Indians. [ 8 ] After this judgment had been rendered, the appellants continued to run their business operations, without complying with the conditions Grenier, J. had imposed.

Some of them did not collect and remit to the Minister of Revenue the taxes they were obliged to collect from their non-Indian clientele. Others collected taxes but remitted only symbolic amounts that were clearly inferior to the value of the actual sales to this clientele. [ 9 ] The file remained dormant for several years. [11] In 2006, the owners of neighbouring service stations complained of the unfair competition by retailers on the Reserve. Following an investigation, the ARQ assessed the appellants Thomas and others between December 2009 and March 2010.

These appellants then served a second motion for declaratory judgment. In July of 2011, the appellants Delorimier and others, who had not been assessed, served a third motion for declaratory judgment. [ 10 ] The AGQ filed a motion for directions on February 24, 2009, to which the appellants reacted by raising new grounds in support of their contention that they had the right to trade freely, without hindrance or restriction.

This right was based on the Royal Proclamation of 1763, and an ancestral right within the meaning of s. 35 of the Constitution Act , 1982 . [12] The appellants reiterated their arguments in the original motion founded on s. 91(24) of the Constitution Act, 1867 [13] and the exemption from taxes contemplated by s. 87 of the Indian Act . [ 11 ] The motion introductive of suit was amended six times between 1994 and 2013.

In their fifth amended motion dated December 7, 2012, the appellants added grounds relating to the inapplicability of budget measures Quebec adopted in 2011 which contemplated benefitting Indians living on reserves situated within Quebec by exempting them from paying taxes on fuel products purchased directly at the pump.

It is useful to summarily describe these measures and the context in which they were adopted. [ 12 ] In 2007, the Grand Chief of the Assembly of First Nations of Quebec and Labrador, Ghislain Picard, was authorized to institute a class action on behalf of all Indians of the province. [14] This recourse sought to have the fuel tax reimbursement mechanism contemplated by sections 2 , 3 and 10.2 of the Fuel Tax Act and its implementing regulation declared inoperative on the basis that the mechanism conflicted with the exemption provided at s. 87 of the Indian Act .

At this time, Indians had to pay a fuel tax at the time of purchase, but could claim reimbursement by completing the required form. Very few Indians took advantage of this mechanism, which they thought to be too complex. [ 13 ] The class action never proceeded on the merits. It was settled by a transaction the Superior Court ratified in December of 2012.

The sum of $24,600,000 was paid as indemnification for fuel taxes paid prior to June 30, 2011. [15] [ 14 ] To avoid similar litigation for the period after June 30, 2011, the Department of Finance and the ARQ developed measures to benefit Indians from the exemption to pay fuel taxes when purchasing gasoline on a reserve. The Program for Administering the Fuel Tax Exemption, [16] in force since July 1, 2011, provides in particular that:

(1) Indians wishing to participate in the exemption at the pump program must register with the ARQ by completing the required form; (2) an attestation of registration in the program must be shown to the retailer at the time of purchase together with the holder's certificate as a status Indian, failing which the consumer cannot benefit from the exemption at the time of purchase and must then apply for reimbursement as contemplated in the previous plan. [17] [ 15 ] These new measures also imposed a certain number of obligations on retailers.

They must in particular: (1) maintain a register of retail sales made to Indians; [18] (2) verify at the time of sale the consumer's identity by reference to the certificate of Indian status and the validity of the attestation of registration in the program, [19] and (3), produce a monthly declaration of their purchases and sales to obtain reimbursement of an amount equal to the fuel tax paid to suppliers with respect to fuel sold at retail free from the fuel tax. [ 16 ] Finally, another less stringent measure would allow a retailer to purchase a percentage of his fuel without the amount equal to the fuel tax being collected by the wholesaler, by way of an exception to s. 2 of the Fuel Tax Act .

This percentage would represent the quantity of fuel most probably sold to Indians or band councils. [ 17 ] This program to manage the tax exemption was optional, both for consumers and retailers. None of the appellants took advantage of it such that Indians could not benefit from the exemption on fuel purchased at the pump. [ 18 ] The sixth amended motion dated February 7, 2013 defined the issues to be decided at trial. The trial judge described the various grounds the appellants raised as follows:

(1) Do the Petitioners, who are of Aboriginal origin, have the Aboriginal right to trade freely and openly, given the trading activities

they engaged in before contact with Europeans?

(2) Do the Petitioners have a constitutional right guaranteed by sections 25 and 35 of the Constitution Act, 1982 to trade freely and openly because of the assurances given them in the Royal Proclamation of 1763?

(3) Is the transfer of jurisdiction from the federal authority to the provincial authority for collection of the GST constitutionally invalid inasmuch as Quebec claims to apply its sales tax collection rules in a manner that is said to violate the principle of the division of power established by the Constitution Act, 1867 ?

(4) Do the obligation to collect consumption taxes and the mechanisms set up by federal and provincial legislation violate the Indians' right not to be subject to taxation on their reserves?

(5) Did the two levels of government, federal and provincial, fail in their duties to act honourably toward the Petitioners when, in particular, they neglected to consult them before adopting tax rules that the governments seek to impose on Indian retailers affected by the present proceedings?

(6) Are the various claims by the Agence du revenu du Québec regarding the Petitioners prescribed? [20] [ 19 ] The judge answered these questions in the negative. The two grounds relating to the honour of the Crown (question 5) and the prescription of the claims (question 6) have not been renewed in appeal. With respect to the third question, the appellants are limiting their submissions to the invalidity of the exemption mechanism adopted in 2011. 2. The trial judgment [ 20 ] Here is how the judge decided the questions the parties raised and that remain relevant in appeal.

On the existence of an Aboriginal right to trade freely without interference (paragraphs 136 – 183 ) [ 21 ] After having characterized the right the appellants claimed and examined the evidence, the judge concluded that trading between Iroquois nations – essentially of objects of spiritual value exchanged for ritual, social or diplomatic purposes – was not commercial in nature such that it was impossible to conclude that the Aboriginal right they claimed existed.

In his opinion, the clearly commercial right the appellants were asserting was not an integral part of the distinctive culture of Mohawks before contact with Europeans. As a result, their contentions amount to an inappropriate extension of non-commercial trading activities that existed between Aboriginal nations. On the submission based on the Aboriginal right to trade freely recognized in the Royal Proclamation of 1763 (paragraphs 184 – 275 ) [ 22 ] The judge held that the historical context of this document and its

interpretation did not allow him to conclude that it gave the appellants the right to trade freely without hindrance.

This was all the more so since the Royal Proclamation had no binding constitutional status and did not amount to an independent source of Aboriginal rights. [ 23 ] His review of the text and historical sources led him to conclude that the Royal Proclamation reflected the intention of the English Crown to re-establish normal commercial relations after the war through the elimination of French monopolistic practices by establishing harmonious relations with Aboriginals and protecting them from the avarice of Europeans.

On the constitutional validity of the provincial at the pump exemption mechanism (paragraphs 297 – 306 ) [ 24 ] The judge was of the view that this mechanism did not offend s. 91(24) of the Constitution Act, 1867 and that it was not ultra vires of the provincial legislature to the extent the appellants' so-called Indianness and legal status as Indians were unaffected by the legislative and administrative measures that had been implemented.

On the argument according to which the obligation to collect federal and provincial taxes and the mechanisms put in place had the effect of abrogating the right of Aboriginals not to be taxed on their Reserves (paragraphs 307 – 380 ) [ 25 ] The judge held that the impugned tax laws did not impose any obligation on the appellants in their capacity as consumers, but rather as merchants doing business in the sale of taxable products. As merchants, they were not themselves subject to the payment of taxes.

They were obliged, however, as agents of the tax authorities to collect consumption taxes from their non-Indian customers.

As such, they did not benefit from the exemption provided for in ss. 87 and 89 of the Indian Act . [ 26 ] He went on to say that insofar as the obligations of sellers of taxable products were concerned, the appellants were subject to the same regime as all vendors in Canada and Quebec, and that they suffered no unfair or exaggerated administrative burden arising out of the fact that they had to ensure that all Indian customers benefitted from the tax exemption to which they were entitled, all the while continuing to collect applicable taxes arising out of sales to other consumers. 3.

Analysis [ 27 ] The appellants have renewed their constitutional arguments in appeal based on their rights under ss. 87 and 89 of the Indian Act . Their submissions address the following seven subjects. 3.1

Section 35 of the Constitution Act, 1982 [ 28 ] The appellants' first ground of appeal against the judgment is based on s. 35 of the Constitution Act, 1982 , which reads as follows:

(1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed. 35.

(1) Les droits existants – ancestraux ou issus de traités – des peuples autochtones du Canada sont reconnus et confirmés. [ 29 ] At the outset of this analysis it is important to note that if one of the objectives of s. 35(1) is to recognize the rights Aboriginals held by reason of their presence on territory prior to the Europeans' arrival, such rights must nevertheless be compatible with our legal system and the affirmation of British sovereignty on Canadian territory. [21] [ 30 ] Also, it is with these considerations in mind that the Supreme Court has developed an analytical framework designed to determine the existence of the ancestral Aboriginal rights recognized and confirmed in s. 35(1) of the Constitution Act, 1982 .

This framework is three-fold: • at the outset, the ancestral right must be characterized based on the proceedings; • next, the evidence must be assessed to determine whether the practice, tradition or custom forming an integral part of the distinctive aboriginal society existed prior to contact with Europeans; • finally, whether there existed a correlation or reasonable continuity between the contemporary right claimed and the practice, tradition or custom in question had to be verified. [22] [ 31 ] With respect to the first branch of the test, the trial judge concluded from his reading of the motion introductory of suit that the appellants were claiming a right to trade openly and freely with all subjects of the Crown. [23] [ 32 ] Moving on to the second branch, despite the fact that this right flowed principally from the Royal Proclamation of 1763 rather than s. 35(1) of the Constitution Act, 1982 , [24] the judge concluded from the historical evidence the parties' experts produced that the appellants are the descendants of the members of an Iroquois confederation of five nations which, at the time of the arrival of Europeans, occupied the Great Lakes region and the northern part of what is now the State of New York. [25] [ 33 ] The Mohawks were essentially a non-migrant society whose economy was based on agriculture, hunting, fishing and food gathering.

They lived in villages that were self-sufficient. According to the experts who testified, this did not prevent them from trading what they called “Orenda”: rare and precious objects (shell-beads, leather goods, clay pipes) to which they attributed a spiritual or symbolic value. [26] [ 34 ] The appellants contend that this practice, tradition or custom of exchanging objects of spiritual or symbolic value is the basis of their right to trade freely, without their being subject, as Aboriginals, to the constraints or restrictions that the federal or provincial governments may purport to impose on them here.

The trial judge rejected their submissions in this respect as he found that the evidence showed that the trading in question was of a social, ritual or diplomatic nature and, accordingly, was not of a commercial character. [27] [ 35 ] In this Court, the appellants reiterate that they hold an ancestral right to trade freely without hindrance. The very act of trading had a central place in their culture.

According to the principle that an ancestral practice must be susceptible of evolving over time, it was therefore unnecessary for them to show that the trading in which they were engaged prior to contact with Europeans was commercial in nature. [28] [ 36 ] In Lax Kw'alaams , [29] the Supreme Court examined what constituted a logical evolution of an ancestral practice. The underpinning of the case was the claim of the Lax Kw'alaams to fish and commercially sell all types of fish that were found in their traditional waters.

The reasons of Binnie, J., writing for the Court, are to the effect that trading in only one species of fish – the grease derived from the smelt-like species called the eulachon – could not lead to such a result, for to do so would create a qualitatively and quantitatively different modern right: [49] If established, an Aboriginal right is not frozen at contact, but is subject to evolution both in terms of the subject matter and the method of its exercise, depending on the facts. [50] In terms of the mode of exercise, the courts have repeatedly recognized that fishing methods continue to evolve.

The Aboriginal source of fishing rights does not require rights holders in the Pacific Northwest to fish from dugout canoes. Pre-contact trade in Pacific smoked salmon (if established) should not exclude preparation and sale of the frozen product when the technology became available. (All of this, of course, is subject to the interest of conservation and other substantial and compelling interests ( Sparrow , at pp. 1108-10; and N.T.C. Smokehouse , at paras. 96-97).) [51] However, when it comes to “evolving” the subject matter of the Aboriginal right, the situation is more complex.

A “gathering right” to berries based on pre-contact times would not, for example, “evolve” into a right to “gather” natural gas within the traditional territory. The surface gathering of copper from the Coppermine River in the Northwest Territories in pre-contact times would not, I think, support an “Aboriginal right” to exploit deep shaft diamond mining in the same territory. While courts have recognized that Aboriginal rights must be allowed to evolve within limits, such limits are both quantitative and qualitative.

A “pre-sovereignty aboriginal practice cannot be transformed into a different modern right” ( Marshall (2005), at para. 50) . [Emphasis added] [ 37 ] Applying these principles to the law of general application the Lax Kw'alaams claimed, Binnie, J. wrote: [55] Counsel for the Lax Kw’alaams argues that, even if pre-contact trade had been limited to eulachon grease (which they deny), the modern right should not be “frozen” but should be generalized and “evolved” to include all other fish species and fish products. [56] However, such an “evolution” would run counter to the trial judge’s clear finding that the ancestors of the Lax Kw’alaams fished all species but did not trade in any significant way in species of fish or fish products other than eulachon.

Extension of a modern right to

all species would directly contradict her view that only the “species-specific” trade in eulachon grease was integral to the distinctive culture of the pre-contact society. A general commercial fishery would represent an outcome qualitatively different from the pre-contact activity on which it would ostensibly be based, and out of all proportion to its original importance to the pre-contact Tsimshian economy . .… [59] The trial judge concluded that transformation of the pre-contact eulachon grease trade into a modern commercial fishery would not be “evolution” but the creation of a different right.

On that basis, the claim failed both the integrality and continuity requirements of the Van der Peet test.

These findings were supported by the evidence . [Emphasis added] [ 38 ] Apart from the judgment in Lax Kw'alaams , there are other examples in the jurisprudence that support the proposition that an ancestral practice cannot evolve to the point of being so radically changed. [ 39 ] Thus, in its judgment in Van der Peet , [30] the Supreme Court rejected the contentions of the Sto:lo who had argued that their ancestral right to fish for food as a matter of subsistence conferred on them the modern right to fish for commercial purposes: [87] For similar reasons, the evidence linking the exchange of salmon to the maintenance of kinship and family relations does not support the appellant's claim to the existence of an aboriginal right.

Exchange of salmon as part of the interaction of kin and family is not of an independent significance sufficient to ground a claim for an aboriginal right to the exchange of fish for money or other goods. [ 40 ] The Court is of the view that there is a clear parallel between the circumstances of that case and the nature of the trading (Orenda) the appellants invoke in support of their contentions in this appeal. [ 41 ] The same logic prevailed when the judgments in Sappier and Gray [31] were rendered.

There, the Supreme Court took the trouble to specify that the rights of the Maliseet and Mi’kmaq to cut wood on Crown land for domestic purposes could not be transformed into a commercial right to do so: [25] The word “domestic” qualifies the uses to which the harvested timber can be put. The right so characterized has no commercial dimension. The harvested wood cannot be sold, traded or bartered to produce assets or raise money. This is so even if the object of such trade or barter is to finance the building of a dwelling.

In other words, although the right would permit the harvesting of timber to be used in the construction of a dwelling, it is not the case that a right holder can sell the wood in order to raise money to finance the purchase or construction of a dwelling, or any of its components. [ 42 ] It is true that s. 35(1) of the Constitution Act, 1982 must be given a large and liberal

interpretation in favour of Aboriginals. [32] There must, however, be a reasonable degree of continuity between the ancestral practice being invoked and the modern right being asserted. Even if the object of an ancestral right can evolve over time, this does not mean it can be transformed into a completely different modern right. That, however, is where the appellants' argument leads us.

For this reason, the Court is of the view that the practice of trading objects to which the spiritual power symbolic of Orenda attached cannot be the basis of the modern right the appellants claim, that is, the right to trade freely without hindrance.

The trial judge did not err when he wrote this: [180] Although it is true that rights can and must evolve (we hardly ever hunt now with bows and arrows) and that those rights are not condemned to remain traditions that are frozen in time (think of the allegory of the living tree), the Court cannot make the quantum leap proposed by the Petitioners from the practice of exchanging spiritual "orenda" artefacts to the practice of the commercial sale of fuels (regular, super, diesel), i.e. refined synthetic products supplied by petroleum companies, their suppliers. [181] Nothing in the evidence allows us to set aside the clear teachings of the Supreme Court of Canada on the subject. [182] In short, trading of the type that the Petitioners now engage in is not a distinctive activity of their Aboriginal ancestors nor is the Petitioners' claim that their ancestors were actively involved in east/west and north/south trade in any way supported by the evidence. [183] The essentially commercial right claimed here by the Petitioners in their proceedings, that is, "the Petitioners' constitutionally protected Aboriginal right to free and open trade ... contrary to sections 35 and 52 of the Constitution Act, 1982 ", is an indefensible extension of the secondary trading activities of a ritual, spiritual or diplomatic nature that occurred in pre-contact Iroquois/Mohawk societies before 1603 or 1614-1615, as the case may be. [Emphasis added] [ 43 ] There is no rational connection between the pre-contact trading in which the appellants' ancestors engaged and their commercial activities.

As a result, it is impossible to conclude that the ancestral right claimed can be grounded in s. 35(1) of the Constitution Act, 1982 . 3.2 The

interpretation of the Royal Proclamation of 1763 [33] [ 44 ] The appellants remind the Court of the importance of the Royal Proclamation for Aboriginals. They consider that it recognized that they enjoyed significant rights and amounted to a kind of "charter of rights for the Indians". [34] In their view, the trial judge committed two errors. First, he erred in his assessment of the Royal Proclamation ’s normative value by failing to attribute a constitutional status to it. Second, his

interpretation was flawed because he failed to recognize that it conferred the right to trade freely without hindrance on Aboriginals.

[45] With respect to the normative value of the Royal Proclamation, the appellants contend that the judge erred in law when heconcluded that it was not an independent and autonomous source of rights, but merely the recognition of existing rights. Such aconclusion was contrary to the holdings of the Supreme Court in R. v. Sioui[35] and Van der Peet,[36] and was grounded in an erroneousanalysis of s. 25 of the Canadian Charter of Rights and Freedoms:[37] 25. The guarantee in this Charter of certain rightsand freedoms shall not be construed so as toabrogate or derogate from any aboriginal, treatyor other rights or freedoms that pertain to theaboriginal peoples of Canada including (

a) any rights or freedoms that have beenrecognized by the Royal Proclamation ofOctober 7, 1763; and (

b) any rights or freedoms that now exist by wayof land claims agreements or may be so acquired. 25. Le fait que la présente charte garantit certainsdroits et libertés ne porte pas atteinte aux droitsou libertés -- ancestraux, issus de traités ou autres-- des peuples autochtones du Canada,notamment :

a) aux droits ou libertés reconnus par laproclamation royale du 7 octobre 1763;

b) aux droits ou libertés existants issus d’accordssur des revendications territoriales ou ceuxsusceptibles d’être ainsi acquis. [46]

Section 25 of the Canadian Charter protects Aboriginal rights from being contested on the basis of other Charter grounds, butin addition, according to the appellants, it goes further and gives the rights therein mentioned a constitutional status. From thatperspective, the fact that it does not appear in the

schedule to the Constitution Act, 1982 is not determinative, because it is understoodthat the enumeration in s. 52(2) thereof is not exhaustive. They add that certain fundamental constitutional principles, such as thoserelating to the rights of Aboriginals and the honour of the Crown, flow directly from the Royal Proclamation. This would make thedocument an integral part of the Canadian constitution. [47] Finally, the appellants argue that the clause in question was drafted to benefit Aboriginals. The Crown recognized their right totrade freely and its intention was to facilitate the exercise of this right rather than restrain it. The judge's restrictive

interpretation had theeffect of negating any benefit in their favour. Such an

interpretation was contrary to the principle according to which recognizedAboriginal rights should be given a large and liberal

interpretation. [48] They therefore contend that the duty to collect the GST, QST and fuel tax amounts to a violation of their constitutional right totrade freely, a right the Royal Proclamation expressly recognized. 3.2.1 The normative value of the Royal Proclamation of October 7, 1763 [49] The appellants are right to assert that the Royal Proclamation granted them significant rights. In R. v.

Sioui, Lamer, J. said sowhen he wrote: [38] […] The purpose of the Proclamation was first and foremost to organize, geographically and politically, the territory of the newAmerican colonies, namely Quebec, East Florida, West Florida and Grenada, and to distribute their possession and use. It also grantedcertain important rights to the native peoples and was regarded by many as a kind of charter of rights for the Indians: White and Bob,supra, at p. 636; Calder v. Attorney General of British Columbia, (SCC), [1973] S.C.R. 313, at p. 395 (Hall J.,dissenting); R. v.

Secretary of State for Foreign and Commonwealth Affairs, [1982] 2 All E.R. 118 (C.A.), at pp. 124-25 (Lord Denning).The very wording of the Royal Proclamation clearly shows that its objective, so far as the Indians were concerned, was to provide asolution to the problems created by the greed which hitherto some of the English had all too often demonstrated in buying up Indian landat low prices. The situation was causing dangerous trouble among the Indians and the Royal Proclamation was meant to remedy this[…]. [Emphasis added] [50]

Section 25 of the Canadian Charter, however, does not have the scope that the appellants attribute to it. This rarely invokedprovision has been the subject of little treatment in the jurisprudence. To the extent that courts and authors have considered its meaning,they all agree that s. 25 does not create new rights. Rather, the provision is interpretative, and is aimed at preventing contestation ofAboriginal rights based on other provisions of the Canadian Charter. In his constitutional law text, Peter Hogg describes the scope of s.25 as follows:

Section 25 is part of the Charter of Rights, but it does not create any new rights. It is an interpretative provision, included to make clearthat the Charter is not to be construed as derogating “any aboriginal, treaty or other rights or freedoms that pertain to the aboriginalpeoples of Canada”. In the absence of s. 25, it would be perhaps have been arguable that rights attaching to groups defined by race wereinvalidated by s. 15 (the equality clause) of the Charter.[39] [51] The Royal Proclamation is certainly an important document for Aboriginals.

Its inclusion in s. 25 of the Canadian Charterconfirms its importance, but neither the jurisprudence nor doctrine supports the thesis according to which the right to trade freelyacquired constitutional status as a result of such inclusion. [52] For these reasons, the trial judge did not err by holding that the right to trade freely in the Royal Proclamation does not haveconstitutional status.

3.2.2

Interpretation of the Royal Proclamation and the right to trade freely [40] [ 53 ] The appellants contend that the text itself of the Royal Proclamation recognizes their right to trade freely without being subjected to any form of regulation. Their reasoning is as follows: (1) trading between Aboriginals and British subjects is declared to be free and open;

(2) British subjects must, however, be licensed to trade with Aboriginals; (3) no licensing obligation is imposed on Aboriginals; (4) thus, the British Crown promised Aboriginals they would not be subject to any form of regulation in commercial matters. [ 54 ] The text of the trading clause granted British subjects the right to trade freely and openly with Aboriginals, subject to their obtaining a license to that end, but it did not grant Aboriginals an explicit right to trade without being subject to any form of regulation.

The trial judge rejected the a contrario position the appellants urged on him because it did not flow from the text and because it was inconsistent with the historical context in which the Royal Proclamation was made. [ 55 ] It is worth noting that the Royal Proclamation was not a treaty, but a unilateral declaration of the Imperial Crown.

An examination of the historical context shows what George III, its author, had in mind when writing: "[…] we do…declare and enjoin that the Trade with the said Indians shall be free and open to our Subjects whatever, provided that every Person who may incline to Trade with the said Indians do take out a licence for carrying on such Trade […]." [ 56 ] The expert evidence was to the effect that "Trade…shall be free and open" which the Royal Proclamation mentions must be seen in a very precise context, that of the end of the war with the French.

It must be understood by the need for the British to ally themselves with the various Aboriginal nations living on the conquered territory. It also satisfied an ideological objective by bringing an end to the monopolistic approach to fur trading that prevailed under the French regime, all the while responding to the economic policy of mercantilism that prevailed in that era. [ 57 ] In his report and testimony on behalf of the ARQ, Michel Lavoie explained that after the war, it was natural and indeed desirable that trading activities resume.

This required that fair, equitable and profitable relations be maintained in order to respond to such concerns and to ensure the security of the colonies, whose relations with the Iroquois nations were threatened. It was essential to gain their confidence, especially of those that had been allied with the French. Trading freely was the diametric opposite of the monopolistic practices of the French, which had no place in the British concept of commercial relations.

Trading freely was a component of a mercantilist economic policy: the British had markets to develop and protect. [ 58 ] This expert concluded that the scope of the Royal Proclamation did not extend beyond what was intended before it was promulgated, that is, to eliminate monopolies and protect new markets, all the while ensuring that Aboriginals would fall victim to abuse at the hands of unscrupulous merchants: There is no doubt that the provisions of the Royal Proclamation did not in any way exceed the intentions developed before its publication with respect to the elimination of monopolies, the protection and exploitation of new markets, the temporary protection of hunting grounds, the desire to ensure security within the colonies, the consolidation of Indians' attachment to the Crown, the central management of Indian affairs, and finally, the openness, the liberalization of trade regulation with Indians for the faithful subjects of Her Majesty.

In short, the goal of the Royal Proclamation was not to innovate in matters of trade.

It established rules that would have to be specified, to change and to evolve with the circumstances. […] the provisions of the Royal Proclamation dealing with trade were aimed at assuring the security of the colonies, supported by trade that was free, open and profitable to all subjects and equitable for Indian suppliers without their being abused. [Translation] [ 59 ] As the expert Lavoie and the trial judge noted, the mention of free and open trade was consistent with the recommendations of the Board of Trade, which, in and of themselves, reflected the policy Governors Murray, Gage and Amherst had put in place during the military occupation between 1760 and 1763.

Experience had shown that uncontrolled free trade was susceptible to giving rise to the exploitation of Aboriginals. It was for this reason that trading with them was made subject to regulation, that is, the necessity of obtaining a licence. [ 60 ] The expert report and testimony of Alain Beaulieu on behalf of the AGC was to the same effect. [ 61 ] The appellants' expert, Gerald Reid, did not testify at length on the meaning of trading freely set out in the Royal Proclamation .

He explained that it contemplated the security of the colonies and that the regulation to which it referred, licensing, did not apply directly to Aboriginals. [ 62 ] On this latter point, Alain Beaulieu nevertheless recalled that even if the obligation to obtain a licence did not apply directly to Aboriginals, they were required to submit to other rules the British authorities imposed, such as the obligation to contract in British forts under military supervision, rules which had the effect of modifying their trading practices. [ 63 ] The evidence shows that the clause providing for the right to trade freely did not contemplate giving Aboriginals the right to trade without hindrance.

Its objective was to protect them from the abuses of certain unscrupulous merchants, by obliging the latter to obtain a licence. Nothing in the text of the Royal Proclamation or its historical context gives rise to the conclusion that British Crown promised Aboriginals an unrestricted right to trade that was exempt from regulation of any kind. [ 64 ] Therefore, the trial judge did not err in his

interpretation of the right to trade clause. [ 65 ] This ground of appeal based on the Royal Proclamation is accordingly dismissed. 3.3 The collection of taxes under the Excise Tax Act ( s. 225 ), the Quebec Sales Tax Act (s. 428) and s. 87 of the Indian Act

[ 66 ] Pursuant to the formula described in ss. 225 of the Excise Tax Act and 428 of the Quebec Sales Tax Act , at the end of a given reporting period, the merchant must remit the difference between the taxes (GST and QST) that should have been collected from customers and those taxes the merchant paid on the purchase of goods in the course of that merchant's business activities and that are reimbursed as an input tax credit.

The merchant is personally responsible for the payment of the amount of taxes thus calculated. [ 67 ] At trial, the appellants pleaded that the obligation to collect taxes and the means by which they were collected abrogated their right not to be subjected to taxation on a Reserve. The judge rejected their submission, emphasizing that the law did not impose any obligation on them as consumers, but rather as merchants selling taxable goods. As such, they were not taxed but, as mandataries of the State, merely subject to the obligation to collect and remit taxes collected from their non-Indian clients.

Therefore, the exemption from the payment of taxes contemplated by s. 87 of the Indian Act was inapplicable. [ 68 ] In appeal, the appellants criticize the judge for having failed to consider that in the collection of GST and QST, each participant in the chain of production and sale is susceptible to being held personally responsible for the payment of taxes.

As far as they are concerned, however, the balance at the end of each particular reporting period will necessarily be positive since they pay neither GST nor QST on goods they acquire in the course of their commercial activities, with the result that they do not claim any input tax credit.

They are therefore invariably the debtors of the tax authorities, contrary to the exemption contemplated by s. 87 of the Indian Act . [ 69 ] The appellants add that the judge erred by relying on a series of judgments dealing with the collection of taxes on tobacco and fuel when he concluded that, as tax collectors, they were not personally responsible for the payment of the GST and the QST.

The manner in which these taxes function is totally different since, contrary to the GST and the QST, they do not involve the concept of "net tax" for which a merchant becomes personally liable in the event of a positive balance. [ 70 ] Finally, the appellants claim that the provisions of the Quebec Sales Tax Act that render them responsible for the reimbursement of a tax payable by others (in this instance, consumers of taxable goods) are ultra vires the provincial legislature as they constitute an indirect tax ( s. 92(2) of the Constitution Act, 1867 ). [ 71 ]

Section 87 of the Indian Act provides as follows: 87.

(1) Notwithstanding any other Act of Parliament or any Act of the legislature of a province, but subject to

section 83 and

section 5 of the First Nations Fiscal Management Act, the following property is exempt from taxation: (

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.

(3) No succession duty, inheritance tax or estate duty is payable on the death of any Indian in respect of any property mentioned in paragraphs (1)(

a) or (

b) or the succession thereto if the property passes to an Indian, nor shall any such property be taken into account in determining the duty payable under the Dominion Succession Duty Act,

chapter 89 of the Revised Statutes of Canada, 1952, or the tax payable under the Estate Tax Act,

chapter E-9 of the Revised Statutes of Canada, 1970, on or in respect of other property passing to an Indian. 87.

(1) Nonobstant toute autre loi fédérale ou provinciale, mais sous réserve de l’article 83 et de l’article 5 de la

Loi sur la gestion financière des premières nations, les biens suivants sont exemptés de taxation :

a) le droit d’un Indien ou d’une bande sur une réserve ou des terres cédées;

b) les biens meubles d’un Indien ou d’une bande situés sur une réserve.

(2) Nul Indien ou bande n’est assujetti à une taxation concernant la propriété, l’occupation, la possession ou l’usage d’un bien mentionné aux alinéas (1)

a) ou

b) ni autrement soumis à une taxation quant à l’un de ces biens.

(3) Aucun impôt sur les successions, taxe d’héritage ou droit de succession n’est exigible à la mort d’un Indien en ce qui concerne un bien de cette nature ou la succession visant un tel bien, si ce dernier est transmis à un Indien, et il ne sera tenu compte d’aucun bien de cette nature en déterminant le droit payable, en vertu de la Loi fédérale sur les droits successoraux,

chapitre 89 des Statuts revisés du Canada de 1952, ou l’impôt payable, en vertu de la Loi de l’impôt sur les biens transmis par décès,

chapitre E-9 des Statuts revisés du Canada de 1970, sur d’autres biens transmis à un Indien ou à l’égard de ces autres biens.

[ 72 ] When beginning to consider submissions based on ss. 87 , 89 and 90 of the Indian Act , it must be remembered that these provisions should not be interpreted over-broadly, as they were conceived not to give Indians a general economic advantage, but rather to preserve their rights on the lands they occupied and to ensure that governments' taxation powers or those of their creditors to seize property would not impair the use of their property on the Reserves. [41] [ 73 ] The appellants' position flies in the face of the opinions the Supreme Court of Canada has expressed in references relating to the goods and services tax [42] and the Quebec sales tax. [43] The GST and the QST are direct taxes destined to be paid by the ultimate purchaser of a taxable product.

The vendor of such a product is the State's mandatary for the collection and remittance of such taxes. In all instances, it is the purchaser who pays the tax, not the vendor. [44] [ 74 ] The costs associated with the performance of this function as a State mandatary is not itself a tax and it leads to no dispossession of the merchant's property.

The latter pays no tax personally because that which the merchant paid at an earlier stage in the product's sequence of sales is recovered by means of the input tax credit. [ 75 ] The concept of "net tax" on which the appellants rely does not render the merchant personally liable to pay the tax. It is simply an accounting technique that determines the amount of the tax to be paid by the merchant to the government (in the event of a "positive amount") or reimbursed to the merchant (in the event of a "negative amount").

This accounting technique is an integral feature of the way in which the law provides the GST and the QST are collected. [ 76 ] In the event of a "positive amount", the merchant remits to the State the money the merchant holds as a mandatary. The merchant is not personally responsible for the payment of taxes, but only for the remittance of those taxes the ultimate consumers have paid. [ 77 ] The fact that the appellants do not claim any input tax credit since they pay neither GST nor QST on products delivered on the Reserve adds nothing to their submission.

They do not have to take the benefit of the input tax credit because, unlike other merchants, they are already exempt from the burden of paying taxes. The balance of their "net tax" will invariably be positive when they sell taxable products to non-Indian customers.

They are required thereafter to remit the taxes they were obliged to collect to the tax authorities, that is, money that does not belong to them for which they are mere depositaries. [ 78 ] The fact that the appellants choose not to collect GST and QST (despite their obligation to do so) does not transform the tax assessments to which they have become subject into a tax on their personal property. [45] The taxes appearing on the notices of assessment remain taxes payable by the ultimate consumer at the end of the chain of the product's commercialisation.

When the appellants act in this manner, they cannot claim the tax exemption contemplated in s. 87 of the Indian Act and thus, by ricochet, protect their customers who are not Indians from the application of the GST and the QST. [46] [ 79 ] The trial judge correctly rejected the appellants' arguments relating to the GST and the QST collection mechanism and the application of the tax exemption found in s. 87 of the Indian Act . 3.4 The collection of the fuel tax and ss. 87 and 89 of the Indian Act [ 80 ] A fuel tax has been part of the Quebec fiscal landscape since 1924.

As described earlier, since July 1, 2011 the Quebec Ministry of Finance and the ARQ have put measures in place with a view to exempting Indians and Band Councils (including tribal councils and entities mandated by a Band) from having to pay this tax when purchasing fuel on the Reserve (the Program for Administering the Fuel Tax Exemption for Indians). [ 81 ] These measures impose certain obligations on retailers: (1) to keep a register of retail sales to Indians and Band Councils; (2) to verify the customer's identification by means of the certificate of Indian status and the enrolment of the customer in the program; and finally, (3) to produce, on a monthly basis, a statement of their purchases and sales to claim the reimbursement of the "amount equal to the fuel tax" paid to their suppliers with respect to fuel sold to Indians or Band Councils. [ 82 ] A last measure to reduce the burden that would otherwise lie on them allows retailers to purchase a percentage of their fuel without having to remit the "amount equal to the fuel tax" to their supplier.

The percentage reduction corresponds to the amount of fuel that is expected to be sold to Indians or Band Councils. To take advantage of this measure, the retailer must choose a designated supplier and satisfy certain formalities. [ 83 ] This program is optional, both for consumers and retailers.

None of the appellants participate in the program, with the effect that Indians cannot benefit from the exemption of payment of taxes sold at the pump. [ 84 ] The trial judge held that the fuel tax (like the GST and the QST) is a consumption tax that is designed to be paid by the ultimate consumer at the last step in the chain of production and commercialisation, and never by the retailer.

The fact that the "amount equal to the fuel tax" is paid and reimbursed at each step in the chain does not change the fact that the tax is ultimately paid by no one other than the consumer. [ 85 ] In appeal, the appellants contend that the pre-payment of the tax on fuel they purchase, which constitutes personal property situated on the Reserve, and which they are unable to collect from their Indian customers (being exempt pursuant to the Program for Administering the Fuel Tax Exemption for Indians) poses a problem to the extent that, by reason of this fact, they become personally liable to pay the tax, thus contravening s. 87 of the Indian Act .

They contend that the only way to avoid payment of the tax would be to do business exclusively with non-Indians despite having chosen to benefit from the protection of the system which the Reserve provides [47] and to carry on business within its territorial limits. [ 86 ] Finally, they plead that the fuel tax they pre-pay that they cannot recover constitutes a charge or levy ("une charge ou une réquisition") on their personal property that infringes s. 89(1) of the Indian Act .

[ 87 ]

Section 89 of the Indian Act provides as follows: 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. Exception

(1.1) Notwithstanding subsection (1), a leasehold interest in designated lands is subject to charge, pledge, mortgage, attachment, levy, seizure, distress and execution. Conditional sales

(2) A person who sells to a band or a member of a band a chattel under an agreement whereby the right of property or right of possession thereto remains wholly or in

part in the seller may exercise his rights under the agreement notwithstanding that the chattel is situated on a reserve. 89.

(1) Sous réserve des autres dispositions de la présente loi, les biens d’un Indien ou d’une bande situés sur une réserve ne peuvent pas faire l’objet d’un privilège, d’un nantissement, d’une hypothèque, d’une opposition, d’une réquisition, d’une saisie ou d’une exécution en faveur ou à la demande d’une personne autre qu’un Indien ou une bande. Dérogation

(1.1) Par dérogation au paragraphe (1), les droits découlant d’un bail sur une terre désignée peuvent faire l’objet d’un privilège, d’un nantissement, d’une hypothèque, d’une opposition, d’une réquisition, d’une saisie ou d’une exécution. Ventes conditionnelles

(2) Une personne, qui vend à une bande ou à un membre d’une bande un bien meuble en vertu d’une entente selon laquelle le droit de propriété ou le droit de possession demeure acquis en tout ou en

partie au vendeur, peut exercer ses droits aux termes de l’entente, même si le bien meuble est situé sur une réserve. [ 88 ] Contrary to what they imply, the appellants can obtain a reimbursement from the ARQ of the "amount equal to the fuel tax" paid to their supplier with respect to the fuel sold at retail to Indians or Band Councils under the fuel tax exemption pursuant to the Program for Administering the Fuel Tax Exemption. [48] [ 89 ] In the event of the inapplicability or omission to participate in the exemption program, an Indian customer must pay the tax to the retailer and then claim its reimbursement pursuant to s. 10.2 of the Fuel Tax Act , as was the case prior to July 1, 2011. [ 90 ] In either case, the retailer is not personally responsible for any tax: either the retailer is reimbursed if the exemption program applies, or the retailer, as a mandatary, collects the tax from the customer and remits it to the tax authorities. [ 91 ] Neither the pre-payment mechanism nor the retailer's percentage collection option transforms the "amount equal to the fuel tax" into an indirect tax.

At each stage in the chain of transactions, the sale price of fuel includes an "amount equivalent to the tax", even if the obligation to pay the fuel tax only takes effect when the sale is made to a consumer, that is, at the final stage of the transactions. The courts have recognized the validity of such a mechanism not only with respect to the fuel tax [49] but also with respect to the tobacco tax [50] (the operation of which is similar).

Section 87 of the Indian Act is therefore inapplicable to the circumstances of a retailer, just as it is inapplicable to the GST and the QST. [ 92 ] With respect to the appellants' submission based on s. 89(1) of the Indian Act , it proceeds on the premise that the pre-payment of an "amount equal to the fuel tax" cannot be recovered, thus constituting a charge or levy on their personal property. As we have seen, this premise is erroneous. [ 93 ] In

summary, the trial judge did not err in rejecting the appellants' submission relating to the pre-payment of an "amount equal to the fuel tax" and the provisions of ss. 87 and 89(1) of the Indian Act . 3.5 The constitutionality of the 2011 budget measures [ 94 ] The appellants lean heavily on Parliament’s exclusive jurisdiction over Indians (s. 91(24) of the Constitution Act , 1867 ) to challenge the constitutional validity of measures enacted to manage the fuel tax exemption extended to Indians. They argue that these provincial “budget measures” apply only to Indians, in a manner that concerns only Indians.

The measures thus fall squarely within the federal competency over Indians and, according to the appellants, cannot be characterized as incidental to the provincial taxation power ( s. 92(2) of the Constitution Act, 1867 ). [ 95 ] These arguments do not withstand scrutiny.

[96] The criteria for analysing constitutional validity under the division of powers provisions of our federative constitution are well-known. Chief Justice McLachlin describes the first step as follows: [20] The first step is to characterize the main thrust, or “pith and substance”, of by-law No. 260: Swain, at p. 998. As LeBel J. explainedin Kitkatla, at para. 53, there are two aspects to the characterization of the pith and substance of a law: (1) the purpose of the legislationand (2) its effect.

The purpose of a law may be determined by examining intrinsic evidence, like purposive clauses and the generalstructure of the act. It may also be determined with reference to extrinsic evidence, such as Hansard or other accounts of the legislativeprocess: Kitkatla, at para. 53. The effect of a law is found in both the legal effect of the text and the practical consequences that flowfrom the application of the statute: R. v.

Morgentaler, (SCC), [1993] 3 S.C.R. 463, at pp. 482-83.[51] [97] Having characterized the provision at issue, courts must then ask whether it falls within the head of power invoked in support ofthe jurisdiction of the legislating body.[52] The analysis does not approach the two levels of government as “water-tight compartments”,but rather permits each to enact laws affecting matters outside of its jurisdiction, so long as this impact remains incidental to validoverarching objectives.[53] [98] In the present instance, the Regulation respecting the application of the Fuel Tax Act[54] requires retail fuel dealers to displaytwo fuel prices: one including taxes and another excluding taxes.[55] The Regulation also requires retailers to verify, at the time of asale, the identity of a purchaser claiming to be an Indian, a band, a tribal council or a band-empowered entity as well as the validity of thepurchaser’s certificate as a status Indian.[56] [99] Section 91(24) of the Constitution Act, 1867 grants Parliament exclusive legislative power over what the Supreme Court hascalled “a core of Indianness”.

Chief Justice Lamer described this core as follows: The core of Indianness encompasses the whole range of aboriginal rights that are protected by s. 35(1). Those rights include rights inrelation to land; that part of the core derives from s. 91(24)’s reference to “Lands reserved for the Indians”. But those rights alsoencompass practices, customs and traditions which are not tied to land as well; that part of the core can be traced to federal jurisdictionover “Indians”.

Provincial governments are prevented from legislating in relation to both types of aboriginal rights.[57] [Emphasis added] [100] The Supreme Court has taken a restrictive view of the “basic, minimum and unassailable content” which constitutes this federalpower.[58] Notwithstanding s. 91(24), provincial laws of general application apply proprio vigore to Indians and Indian lands.[59] Thus,s. 91(24) does not render reserves “enclaves of federal power in a sea of provincial jurisdiction” and “[t]he mere mention of the word“aboriginal” in a statutory provision does not render it ultra vires the province.” [60] [101] There is nothing amiss with the trial judge’s determination that, in pith and substance, the budget measures are provisions of ageneral tax nature.

While the provisions clearly affect Indians, they are legislation concerning a valid provincial matter. [102] Thus, while the appellants are correct that the provisions at issue apply only on a Reserve, they incorrectly assert that thoseprovisions constitute legislation in relation to Indians. The Court agrees with the trial judge that the appellants are impacted by thebudget measures not because they are Indians, but because they are retailers who sell fuel to Indian and non-Indian consumers.

In thisrespect, the appellants are no different than non-Indian merchants who sell and deliver goods to Indians living on reserve. [61] [103] The effect of the provisions is not to single out Indians for payment of a special tax. On the contrary, these measures are aimedat ensuring that the right to purchase fuel tax-exempt is protected but not abused.[62] The constitutional validity of similar measures hasbeen confirmed in British Columbia,[63] Ontario,[64] and Nova Scotia.[65] As such, there is simply no room for the appellants toinvoke the doctrines of constitutional

interpretation and the provisions are validly enacted.[66] 3.6 Did the trial judge err in finding that the budget measures are not undulyonerous and do not infringe upon any Aboriginal right? [104] First, there is no reason to invoke the doctrine of interjurisdictional immunity, as the appellants seem to suggest when they arguethat the budget measures “trench on the core of Indianness”.

Not only was this characterization rightly rejected by the trial judge, buteven had he recognized an Aboriginal right, the doctrine would be inapplicable here. [105] Here is why. [106] The Supreme Court has been unequivocal regarding the place of interjurisdictional immunity in analysing infringement ofAboriginal rights: What role then is left for the application of the doctrine of interjurisdictional immunity and the idea that Aboriginal rights are at the coreof the federal power over “Indians” under s. 91(24) of the Constitution Act, 1867?

The answer is none.[67] [Emphasis added] [107] Rather, the appropriate test for analyzing the infringement of an Aboriginal right is outlined in R v. Sparrow.[68] This test holdsthat provincial laws of general application should apply unless they are unreasonable or, without justification, impose hardship or denythe rights holders their preferred means of exercising their rights.[69] There is no need to apply that test here because the appellants havefailed to prove either an Aboriginal right or an unjustified hardship.

The lack of evidence with respect to the latter is striking. [108] At the hearing of the appeal, counsel for the appellants emphasized the negative economic consequences the appellants willsuffer if required to respect the budget measures. In short, they will lose a competitive advantage. While perhaps unfortunate for theindividuals concerned, the Supreme Court has long been clear on this matter. The purpose of the exemptions provided for at s. 87 of the

Indian Act is not to “confer a general economic advantage” [70] or “to remedy the economically disadvantaged position of Indians by ensuring that Indians may acquire, hold, and deal with property in the commercial mainstream on different terms than their fellow citizens.” [71] [ 109 ] More importantly, though the appellants characterize the procedures required by the budget measures as both burdensome and as a requirement to “police trade” , they fail to convince that the budget measures impose any hardship.

Among others, the procedures they contest include: • Confirming the identity and Indian status of the purchaser; • Verifying the validity of the customer’s Indian status documentation; • Recording the customer’s registry number; • Recording the quantity of fuel purchased; • Transmitting the information above to the Revenue Quebec; and • Conserving the information for future inspection and audit. [ 110 ] However, the appellants fail to take into account the fact that since 2012, Revenue Quebec has been offering to implement – at its own cost – a digital records system which eliminates much of the required documentation and expedites the reimbursement process for the retailer.

In light of this evidence, the appellants’ argument that the reporting requirements constitute a “shifting of the burden for the management of the non-Indian tax system” loses its force. [ 111 ] Moreover, at trial one of the appellants explained that some of the measures are already being voluntarily implemented. For example, a station belonging to appellant Scott Stacey features what he calls a “Native Pump”. Thanks to a computerized system, this pump automatically provides lower fuel prices to Indians. When asked by the Court how the station managed to identify Indian customers, Mr.

Stacey replied, “Well, like I said, we know everybody and if we don’t know everybody, we ask them for their card.” [ 112 ] Based on the evidence before him, it is difficult to disagree with the trial judge’s finding of fact that the appellants can manage the proposed system without excessive hardship. Indeed, the appellants’ failure to acknowledge or avail themselves of workable solutions does not render the budget measures unconstitutional.

It simply underscores that their refusal to participate more likely flows from a desire to preserve a competitive advantage than an inability to shoulder an excessive administrative burden.

Unfortunate though this may be for the appellants, intervention in such matters is not the role of the courts. [ 113 ] The trial judge did not err in finding that the budget measures are not unduly onerous and do not infringe upon any Aboriginal right. 3.7 The appellants' standing [ 114 ] During oral argument at trial, counsel for the Attorney General of Canada pleaded, in effect, that the appellants lacked standing since the rights they were invoking were not individual rights, but rather collective ancestral rights that belonged to the Aboriginal community at large.

In this respect, a distinction was made with criminal proceedings, in which an accused status Indian could properly assert an Aboriginal right as a ground of defence. [72] [ 115 ] The appellants are all status Indians under the Indian Act who operated or continue to operate refuelling stations on the Kahnawake Reserve. The record shows that they purchase gasoline from wholesalers who deliver it to them on the Reserve. They do not pay GST/QST on such purchases, although they do pay an amount equal to the fuel tax.

When they sell gasoline to customers, they do not collect GST/QST from any of them, whether or not they are status Indians, nor do they generally remit any such tax to the ARQ.

The majority of their customers are not status Indians, who, unlike the latter, do not enjoy any exemption from the payment of these taxes. [ 116 ] It is not disputed that the appellants' declaratory proceedings are a direct response to tax enforcement measures undertaken by the Quebec Ministry of Revenue dating back to 1994. [ 117 ] At trial, Pearl-Ann Diome, a witness with knowledge of the political structure on the Reserve, testified during the rebuttal phase that the Kahnawake Band Council did not want to get involved with their proceedings, that it "refused to cooperate at all with this particular trial", that it "wanted nothing to do with us or what we're doing", and that "they have distanced themselves for some reason". [ 118 ] In the context of discussing the appellants' contention that the federal government had failed in its duty to consult grounded in the honour of the Crown, [73] the trial judge wrote this: [405] […] The testimony and arguments show that the Petitioners reproach the governments for not having consulted them as Aboriginal merchants when adopting the Bachand budget and the legislation implementing it.

In that regard, these merchants do not represent either the Kahnawake Band Council or, more generally, the members of their community, and nothing indicates that they were duly mandated to argue the invalidity of the legislative and administrative provisions based on the absence of valid consultation. [406] In its recent ruling in Behn , the Supreme Court of Canada stressed the following: The duty to consult exists to protect the collective rights of Aboriginal peoples .

For this reason, it is owed to the Aboriginal group that holds the s. 35 rights, which are collective in nature: But an Aboriginal group can authorize an individual or an organization to represent it for the purpose of asserting its s. 35 rights. [74]

[407] In the case at bar, although the Petitioners are all Aboriginal merchants, their grievances, as we have seen, have nothing to dowith their ancestral rights, treaty rights or collective rights as Aboriginal peoples. These merchants do not represent their community andnothing in their proceedings indicates that they received a mandate from the members of their group to represent them concerning thesupposed violation of their Aboriginal rights. In fact, Ms. Dome's testimony at the hearing showed the contrary.

The Petitioners were notmandated by the Kahnawake Band Council, nor did the Council intervene in their case to support them in their pleadings, although, in thelatter days of the trial, the Council sent an attorney to the courtroom as an "observer". Even if there had been an obligation to consult,which there was not, it would have been with the community in general, not with a few merchants in particular. [119] In this Court, the Attorney General of Canada reiterated the same position in its factum, but did not argue the point at thehearing.

The Attorney General of Quebec made no submissions on this issue, whether in writing or orally. [120] With respect, the Court is of the view that the appellants did have the necessary standing to claim the declaratory relief theyasserted in their proceedings. The starting point for any discussion of standing begins with

article 55 of the Code of Civil Procedure thatwas in force when these proceedings were undertaken in 1994: 55. Whoever brings an action at law, whether forthe enforcement of a right which is notrecognized or is jeopardized or denied, orotherwise to obtain a pronouncement upon theexistence of a legal situation, must have asufficient interest therein.[75] 55.

Celui qui forme une demande en justice, soitpour obtenir la sanction d'un droit méconnu,menacé ou dénié, soit pour faire autrementprononcer sur l'existence d'une situationjuridique, doit y avoir un intérêt suffisant. [121] If anything, an analogy exists with respect to the right of an accused to invoke collective rights as a ground of defence to acriminal charge. These appellants are or have been called upon to apply the impugned provisions, not the other status Indians who liveon the Reserve and for whom the Band Council speaks.

The appellants are also the ones who may become subject to the financialconsequences of non-compliance with those provisions, a factor that makes the analogy with criminal proceedings all the more apt. [122] Moreover, the very text of

article 55 C.C.P. contemplates the right of someone to bring an action "for the enforcement of a rightwhich is not recognized or is denied", which is precisely the case of the appellants. They do not claim an individual right, but theexistence of a collective right that applies only to them in the particular circumstances of this case. [123] To decide a question of standing in this respect, it is somewhat of a circular argument to contend that seeking a determination ofwhether the right they claim exists in their favour can be negated on a preliminary basis by denying the existence of the right itself.

Todo so is to confuse the right to have the merits determined one way or the other with whether the right being claimed exists. [124] Manifestly, the appellants are not officious bystanders injecting themselves into a matter that is of no concern to them. They arenot total strangers to the relief being claimed in their proceedings.

On the contrary, they would derive an identifiable benefit in the eventof a favourable outcome. [125] Independently of the foregoing, in the Supreme Court of Canada's recent unanimous judgment in Behn,[76] on which the trialjudge relied, LeBel, J. specifically acknowledged that collective rights may have individual aspects to them. Here is what he said: [33] The Crown argues that claims in relation to treaty rights must be brought by, or on behalf of, the Aboriginal community. Thisgeneral proposition is too narrow. It is true that Aboriginal and treaty rights are collective in nature: see R. v.

Sparrow, (SCC), [1990] 1 S.C.R. 1075, at p. 1112; Delgamuukw, at para. 115; R. v. Sundown, (SCC), [1999] 1 S.C.R. 393, atpara. 36; R. v. Marshall, (SCC), [1999] 3 S.C.R. 533, at paras. 17 and 37; R. v. Sappier, 2006 SCC 54, [2006] 2 S.C.R.686, at para. 31; Beckman, at para. 35. However, certain rights, despite being held by the Aboriginal community, are nonethelessexercised by individual members or assigned to them. These rights may therefore have both collective and individual aspects. Individualmembers of a community may have a vested interest in the protection of these rights.

It may well be that, in appropriate circumstances,individual members can assert certain Aboriginal or treaty rights, as some of the interveners have proposed. [34] Some interesting suggestions have been made in respect of the classification of Aboriginal and treaty rights. For example, theinterveners Grand Council of the Crees and Cree Regional Authority propose in their factum, at para. 14, that a distinction be madebetween three types of Aboriginal and treaty rights: (

a) rights that are exclusively collective; (

b) rights that are mixed; and (

c) rights thatare predominantly individual. These interveners also attempt to classify a variety of rights on the basis of these three categories. [35] These suggestions bear witness to the diversity of Aboriginal and treaty rights. But I would not, on the occasion of this appealand at this stage of the development of the law, try to develop broad categories for these rights and to slot each right in the appropriateone.

It will suffice to acknowledge that, despite the critical importance of the collective aspect of Aboriginal and treaty rights, rights maysometimes be assigned to or exercised by individual members of Aboriginal communities, and entitlements may sometimes be created intheir favour. In a broad sense, it could be said that these rights might belong to them or that they have an individual aspect regardless oftheir collective nature. Nothing more need be said at this time. [Emphasis added] [126] So it is with the appellants – the rights they assert "have an individual aspect regardless of their collective nature".

Such aspectsgive them the necessary interest to enjoy standing. Indeed, as gasoline retailers they come from amongst the principal traders on theReserve. Accordingly, they have a greater interest, juridical or otherwise, than other members of the community or the community as awhole. The Court therefore concludes that the appellants had the necessary standing to initiate their declaratory proceedings in order todetermine whether the Aboriginal rights they asserted applied to them in the particular circumstances they alleged. FOR THESE REASONS, THE COURT:

[ 127 ] DISMISSES the appeal, with costs. NICOLE DUVAL HESLER, C.J.Q. JACQUES CHAMBERLAND, J.A. FRANCE THIBAULT, J.A. ALLAN R. HILTON, J.A. JEAN BOUCHARD, J.A. Mtre Timothé R. Huot Mtre Angela Markakis Mtre Carolyn McCarthy Spiegel Sohmer inc. For the appellants Mtre Patrice Peltier-Rivest Mtre Micolas Ammerlaan Larivière Meunier For l’Agence du Revenu du Québec, the Attorney General of Quebec Mtre Nancy Bonsaint Mtre Stéphanie Dépeault Ministère de la Justice Canada For the Attorney General of Canada Date of hearing: November 9, 2015

SCHEDULE 1 Original version […] And whereas it is just and reasonable, and essential to our Interest, and the Security of our Colonies, that the several Nations or Tribes of Indians with whom We are connected, and who live under our Protection, should not be molested or disturbed in the Possession of such Parts of Our Dominions and Territories as, not having been ceded to or purchased by Us, are reserved to them, or any of them, as their Hunting Grounds. -- We do therefore, with the Advice of our Privy Council, declare it to be our Royal Will and Pleasure, that no Governor or Commander in Chief in any of our Colonies of Quebec, East Florida, or West Florida, do presume, upon any Pretence whatever, to grant Warrants of Survey, or pass any Patents for Lands beyond the Bounds of their respective Governments, as described in their Commissions; as also that no Governor or Commander in Chief in any of our other Colonies or Plantations in America do presume for the present, and until our further Pleasure be known, to grant Warrants of Survey, or pass Patents for any Lands beyond the Heads or Sources of any of the Rivers which fall into the Atlantic Ocean from the West and North West, or upon any Lands whatever, which, not having been ceded to or purchased by Us as aforesaid, are reserved to the said Indians, or any of them.

And We do further declare it to be Our Royal Will and Pleasure, for the present as aforesaid, to reserve under our Sovereignty, Protection, and Dominion, for the use of the said Indians, all the Lands and Territories not included within the Limits of Our said Three new Governments, or within the Limits of the Territory granted to the Hudson's Bay Company, as also all the Lands and Territories lying to the Westward of the Sources of the Rivers which fall into the Sea from the West and North West as aforesaid.

And We do hereby strictly forbid, on Pain of our Displeasure, all our loving Subjects from making any Purchases or Settlements whatever, or taking Possession of any of the Lands above reserved, without our especial leave and Licence for that Purpose first

obtained. And, We do further strictly enjoin and require all Persons whatever who have either wilfully or inadvertently seated themselves upon any Lands within the Countries above described, or upon any other Lands which, not having been ceded to or purchased by Us, are still reserved to the said Indians as aforesaid, forthwith to remove themselves from such Settlements.

And whereas great Frauds and Abuses have been committed in purchasing Lands of the Indians, to the great Prejudice of our Interests, and to the great Dissatisfaction of the said Indians; In order, therefore, to prevent such Irregularities for the future, and to the end that the Indians may be convinced of our Justice and determined Resolution to remove all reasonable Cause of Discontent, We do, with the Advice of our Privy Council strictly enjoin and require, that no private Person do presume to make any purchase from the said Indians of any Lands reserved to the said Indians, within those parts of our Colonies where, We have thought proper to allow Settlement; but that, if at any Time any of the Said Indians should be inclined to dispose of the said Lands, the same shall be Purchased only for Us, in our Name, at some public Meeting or Assembly of the said Indians, to be held for that Purpose by the Governor or Commander in Chief of our Colony respectively within which they shall lie; and in case they shall lie within the limits of any Proprietary Government, they shall be purchased only for the Use and in the name of such Proprietaries, conformable to such Directions and Instructions as We or they shall think proper to give for that Purpose; And we do, by the Advice of our Privy Council, declare and enjoin, that the Trade with the said Indians shall be free and open to all our Subjects whatever, provided that every Person who may incline to Trade with the said Indians do take out a Licence for carrying on such Tra

[…]