2019 FC, 2019 FC 1288

Date: 20191010 Docket: T-24-18 Citation: 2019 FC 1288 Ottawa, Ontario, October 10, 2019 PRESENT: Mr. Justice Sébastien Grammond BETWEEN: OCHAPOWACE CREE NATION Plaintiff and HER MAJESTY THE QUEEN IN RIGHT OF SASKATCHEWAN, as represented by THE ATTORNEY GENERAL OF SASKATCHEWAN and HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by THE ATTORNEY GENERAL OF CANADA Defendants ORDER AND REASONS [ 1 ] The plaintiff, Ochapowace Cree Nation [Ochapowace], is a signatory to Treaty 4. To settle grievances regarding the implementation of the treaty, it entered into an agreement with Canada and Saskatchewan.

It now asserts that Canada and Saskatchewan have breached the latter agreement and has brought an action in this Court. [ 2 ] Saskatchewan brings a motion to strike Ochapowace’s statement of claim. Saskatchewan argues that this Court lacks jurisdiction to hear Ochapowace’s claim. It also says that the statement of claim discloses no reasonable cause of action and that it is an abuse of process. Moreover, Saskatchewan asks the Court to dismiss Ochapowace’s claim not only as against itself, but also as against Canada. [ 3 ] I am allowing Saskatchewan’s motion in part only.

I agree that this Court does not have jurisdiction with respect to Saskatchewan’s alleged breaches of constitutional, fiduciary and honourable duties. Saskatchewan, however, accepted this Court’s jurisdiction over purely contractual claims arising out of the agreement. Saskatchewan failed to show that Ochapowace’s claim discloses no reasonable cause of action in this regard. I am also dismissing Saskatchewan’s abuse of process argument and motion to strike as against Canada. I. Background A.

Treaty Land Entitlement [ 4 ] The promise to set reserves apart was one of the central promises made by Canada in the treaties concluded in Western Canada and Ontario in the late 19 th and early 20 th century. Ochapowace is a party to Treaty 4, pursuant to which one square mile would be set apart for each family of five. [ 5 ] Implementing that promise took time. Issues arose as to how the area of the reserves should be calculated. Disputes arose as to which level of government was responsible for fulfilling the promise. [ 6 ] These issues have constitutional significance.

Treaties are part of the constitution in the wider sense, as they expressed the Indigenous people’s consent to join Canada. In the Cree tradition, treaties were meant to establish a family relationship between treaty partners ( wahkohtowin ): Treaty Elders of Saskatchewan, Our Dream Is That Our Peoples Will One Day Be Clearly Recognized As Nations (Calgary: University of Calgary Press, 2000) at 33–36. Treaty rights are now " “recognized and affirmed” " by

section 35 of the Constitution Act, 1982 . [ 7 ] Specific constitutional provisions were also adopted to address the difficulties raised by the federal division of powers with respect to reserve creation. When the natural resources were transferred to the Prairie provinces, the latter undertook to provide lands necessary to fulfil Canada’s treaty obligations.

In Saskatchewan, this is set forth in clause 10 of the Saskatchewan Natural Resource Transfer Agreement [NRTA], which is given constitutional force by the Constitution Act, 1930 . [ 8 ] In 1992, a group of Saskatchewan First Nations, including Ochapowace, concluded a Framework Agreement with Canada and Saskatchewan for the settlement of grievances regarding the fulfilment of the treaty promises, or what has become known as " “treaty land entitlement” " or " “TLE.” " It is not necessary to describe that agreement in detail.

Suffice it to say that it provides, among other things, a process for the gradual acquisition of land and its transformation into reserves. It was anticipated that this process would take a number of years. [ 9 ] Each First Nation wishing to participate in that settlement had to sign a Settlement Agreement that incorporated the Framework Agreement and added provisions specific to that First Nation. Ochapowace entered into its Settlement Agreement in 1993. For ease of reference, I will use the term " “Agreements” " to refer to the Framework Agreement and the Settlement Agreement.

The provisions of the Agreements that are directly relevant to this matter are identical.

B. Ochapowace’s Claim [10] Since 1993, Ochapowace has acquired most, but not all, of the land it is entitled to acquire under the Agreements. There remains ashortfall. [11] In 2017, Saskatchewan offered public lands for sale through an online auction. This caused concern to Ochapowace and other FirstNations who are parties to TLE Agreements. For the purposes of this motion, it is not necessary to review in detail how the auctionoperates. While Saskatchewan invited First Nations to participate in the auction if they so wished, this would result in land beingacquired on terms different than those of the Agreements.

For instance, in the auction process, Saskatchewan reserves the mineral rightsover those lands, while the Agreements contemplate that First Nations would acquire those rights, and the sale price would not bedetermined according to the mechanism set forth in the Agreements. Ochapowace asked Saskatchewan to acquire certain parcels of landthat were to be auctioned under the provisions of the Agreements, but Saskatchewan declined.

Ochapowace argues that as a result ofSaskatchewan’s conduct, its ability to acquire land under the Agreements is compromised. [12] Ochapowace began an action in this Court against Saskatchewan and Canada. It alleges that Saskatchewan’s conduct results in abreach of Saskatchewan’s obligations under the Agreements and "“leaves unresolved”" the breach of Canada’s treaty promises. It alsoalleges that Saskatchewan breached its constitutional duty flowing from clause 10 of the NRTA, its fiduciary duty to act inOchapowace’s best interests and its duty to act in a manner compatible with the honour of the Crown.

Ochapowace seeks declarations tothat effect, as well as "“equitable compensation”" for Saskatchewan’s breaches. II.

Analysis [13] Rule 221 of the Federal Courts Rules, SOR/98-106, provides that, on motion, the Court may strike out a pleading, such asOchapowace’s statement of claim, if that pleading "“discloses no reasonable cause of action”" or "“is otherwise an abuse of the processof the Court.”" In R v Imperial Tobacco Ltd, 2011 SCC 42 at paragraph 17, [2011] 3 SCR 45 [Imperial Tobacco], the Supreme Court ofCanada described as follows the test to be applied on a motion to strike: A claim will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses noreasonable cause of action […].

Another way of putting the test is that the claim has no reasonable prospect of success.Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial […] [14] Moreover, according to Rule 221(2), no evidence shall be heard on a motion to strike. The party bringing such motion cannot file anaffidavit containing additional facts: NOV Downhole Eurasia Limited v TLL Oil Field Consulting, 2014 FC 889 at paragraph 21, aff’d2015 FCA 106.

Rather, as indicated in the above-quoted passage of Imperial Tobacco, a motion to strike must be decided on theassumption that the facts pleaded are true. A. Jurisdiction [15] Saskatchewan’s first ground for asking that Ochapowace’s claim be struck is that it is not within this Court’s jurisdiction. I agreewith Saskatchewan with respect to the claims that Ochapowace describes as "“constitutional, fiduciary and honourable.”" However, Ifind that this Court has jurisdiction over Ochapowace’s contractual claims. [16] The Federal Court’s jurisdiction must find its source in statute.

Legislation granting jurisdiction to the Federal Court must be givena generous and liberal, rather than a narrow,

interpretation: Canada (Human Rights Commission) v Canadian Liberty Net, (SCC), [1998] 1 SCR 626 at paragraph 34. Nevertheless, grants of jurisdiction to this Court must stay within the bounds of section101 of the Constitution Act, 1867. [17] This is not the first time this Court’s jurisdiction to deal with a dispute concerning the TLE Agreements has been challenged. Thesimple answer to this challenge is that Saskatchewan agreed to this Court’s exclusive jurisdiction over such disputes in

section 20.20 ofthe Framework Agreement. [18] The Federal Court of Appeal gave a more detailed answer in Pasqua First Nation v Canada (Attorney General), 2016 FCA 133,[2017] 3 FCR 3 [Pasqua], which I need only summarize here. The Court based its decision on section 17(3)(

b) of the Federal Courts Act,RSC 1985, c F-7, which grants jurisdiction to the Federal Court over "“any question of law, fact or mixed law and fact that the Crownand any person have agreed in writing shall be determined by the Federal Court.”" It noted that

section 20.20 of the FrameworkAgreement is an agreement contemplated in section 17(3)(b): Pasqua, at paragraphs 53, 57 and 58. Thus, the Federal Court hasjurisdiction over claims based on the TLE Agreements. However, the Federal Court does not have jurisdiction, as against a province,based on other causes of action.

Thus, in Pasqua, the Federal Court of Appeal struck parts of the statement of claim based on aconstitutional duty to consult, which were asserted as a separate cause of action, independently from the Agreements. [19] At the hearing of this motion, Ochapowace conceded that claims based on constitutional and fiduciary obligations would not fallwithin this Court’s jurisdiction and consented to the striking of mentions of such causes of action.

This concession is entirely proper andin line with the decision of the Federal Court of Appeal in Pasqua. [20] In my view, however, the same logic extends to claims based on the honour of the Crown, if they are meant to assert a cause ofaction independent from the Agreements. The agreement to refer disputes to the Federal Court concerns only disputes arising under theAgreements – in other words, contractual claims. It cannot extend to claims that have a different source.

In this respect, claims based onthe honour of the Crown are not different from claims based on constitutional obligations or fiduciary duties, which Ochapowacerecognizes it cannot assert against a province in this Court. [21] Of course, Ochapowace may still argue that the concept of honour of the Crown must inform the

interpretation of the Agreements:

Pasqua, at paragraphs 63–64. Indeed, as I will explain below, this may be akin to importing a duty of good faith in the

interpretation andperformance of contracts. [22] Even though Saskatchewan recognizes that this Court has jurisdiction to hear a dispute regarding the

interpretation of theAgreements, it argues that this Court does not have the power, when exercising that jurisdiction, to award damages. It asserts that section17(3)(

b) is merely a "“reference jurisdiction,”" under which the Court can only answer the question, or issue a declaration, but cannotaward any consequential remedy. With respect, I find no basis for this argument. While Saskatchewan pointed to a number of cases inwhich this Court issued only a declaration, there is at least another case in which it granted other remedies or ordered the payment ofmoney: Bosa v Canada (Attorney General), 2013 FC 793. Saskatchewan did not bring any case to my attention that says that the Courtcannot award damages under section 17(3)(b).

I note that the statement of claim in Pasqua contained prayers for relief related todamages (see Pasqua, at paragraph 45). The Federal Court of Appeal did not consider this to be outside the Federal Court’s jurisdiction. [23] Thus, I will allow Saskatchewan’s motion with respect to constitutional, fiduciary and honourable claims only. B. Reasonable Cause of Action [24] Saskatchewan does not deny that this Court has jurisdiction over contractual claims based on the Agreements. What it says, though,is that Ochapowace’s statement of claim shows no reasonable contractual cause of action.

This is Saskatchewan’s main ground forasking the claim to be struck. In a nutshell, it says that Ochapowace is asking this Court to rewrite the Agreements or to supplement themwith terms that have not been agreed to. [25] Ochapowace, however, denies that it is attempting to change the Agreements. Rather, it invokes well-known doctrines orprinciples that help determine the scope of the parties’ obligations under a contract – the rules of contractual

interpretation, the doctrineof implied terms and the duty to act in good faith. [26] Because they rely on more than the mere wording of the contract to discern its scope, these doctrines do not always lend themselvesto a decision on a motion to strike. Let us review them one by one. [27] First, it is now well established that Canadian courts apply the "“modern”" method of legal

interpretation to the determination ofthe meaning and scope of contracts. In Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, [2014] 2 SCR 633 [Sattva], theSupreme Court of Canada stated that the

interpretation of a contract must take into account the "“factual matrix,”" which includesanything that was known to the parties at the time of contracting and that would bear upon the meaning to be ascribed to the contract:Sattva, at paragraph 58; Canada (Attorney General) v Fontaine, 2017 SCC 47 at paragraph 37, [2017] 2 SCR 205 [Fontaine]. [28] Second, it is also beyond dispute that a contract can include implied terms. One of the bases for implying terms is the presumedintent of the parties: MJB Enterprises Ltd v Defence Construction

(1951) Ltd, (SCC), [1999] 1 SCR 619 at paragraph27; see also Attorney General of Belize v Belize Telecom Ltd, [2009] UKPC 10, [2009] 2 All ER 1127. A term may be implied where it isnecessary to give business efficacy to the contract. [29] Third, the Supreme Court of Canada recently recognized that good faith is an "“organizing principle”" that underpins severaldoctrines of contract law and that may, in appropriate circumstances, give rise to specific legal duties: Bhasin v Hrynew, 2014 SCC 71,[2014] 3 SCR 494.

The Court did not draw an explicit parallel with the principles that have been developed over the years to govern theinterpretation of agreements between Indigenous peoples and the Crown. Yet, there is an obvious resemblance between principles suchas the honour of the Crown and the duty to act in good faith. It is not necessary, for the purposes of these reasons, to analyse thoseprinciples in more detail. It is enough to show that Ochapowace may rely on a rich body of principles to guide the

interpretation andapplication of the Agreements. [30] Those doctrines may become intertwined in their application to a specific case. Moreover, issues of

interpretation cannot becompletely divorced from the factual context of the case. It is not always possible to extricate a question of law from that kind of dispute:Sattva, at paragraph 54. [31] Courts have been reluctant to dismiss claims raising issues of contractual

interpretation, implication of terms or good faith on amotion to strike: Valenti v The Equitable Trust Company, 2012 ONCA 93; Hamburger v Fung, 2014 BCSC 1625 at paragraph 28, aff’d2015 BCCA 444; Venture Construction Inc v Saskatchewan (Highways and Infrastructure), 2015 SKQB 70 at paragraphs 38–44;Comstock Canada v Potash Corporation of Saskatchewan, 2015 NBQB 80 at paragraphs 39–46; McDowell v Fortress Real Capital Inc,2019 ONCA 71 at paragraph 83.

In refusing to strike claims raising such issues, courts have recognized that an evidentiary background isoften necessary to determine how a contract applies to a specific fact situation. [32] These principles lead me to dismiss Saskatchewan’s motion to strike. Like in Fontaine, "“the factual matrix looms large inascertaining the meaning of this particular contract”" (at paragraph 35). The Agreements provide for a complex scheme aimed atenabling First Nations to acquire land in fulfilment of treaty promises. Ochapowace’s claim is based on the

interpretation of two sectionsof the Agreements, sections 4.05 and 4.06, as well as an implied term to the effect that Saskatchewan must give notice and a reasonableopportunity to purchase land that it intends to sell to third parties. On a motion to strike, I am unable to say that Ochapowace’s claim isbound to fail. Whether Saskatchewan’s

interpretation "“eviscerates”" the Agreements or thwarts the achievement of their purpose is afactual issue that cannot be determined on a bare reading of the Agreements. These issues can only be resolved at trial. [33] Saskatchewan nevertheless argues that Ochapowace is attempting to rewrite the Agreements by adding a right of first refusal thatthe parties consciously omitted.

It adds that the Manitoba TLE agreements contain such a right of refusal and that such a right cannot beimplied in Saskatchewan’s without upsetting the bargain reached by the parties. [34] A charge of contract rewriting makes for good rhetoric, but does not allow a party to side-step the process of contractualinterpretation or to avoid the rules regarding implication of terms or good faith. Saskatchewan’s argument is nothing but an invocation ofthe discredited "“plain meaning rule,”" in spite of the Supreme Court’s warning that one cannot merely look at "“words on their own”"

and must consider surrounding circumstances: Sattva , at paragraph 47 . Likewise, the omission of a term in a contract is not a bar to implication. As the Ontario Court of Appeal noted, " “[o]ften terms are implied to fill gaps to which the parties did not turn their minds:” " Energy Fundamentals Group Inc v Veresen Inc , 2015 ONCA 514 at paragraph 35 . Of course,

interpretation and implication cannot overwhelm the words of a contract, but only the trial judge, after hearing the evidence, will be in a position to decide whether Ochapowace is attempting to rewrite the Agreements. [ 35 ] Saskatchewan also relied on Canada v Peigan , 2018 FCA 141 , at paragraph 12 , for the proposition that the TLE Agreements cannot be " “re-written.” " That case deals with the same claim as in Pasqua .

After the first decision of the Federal Court of Appeal, the plaintiffs sought to amend their statement of claim in a manner that somehow incorporated their constitutional and fiduciary claims, which were struck, into their contractual claims. It is in that context that the comments about " “re-writing” " in the Federal Court of Appeal’s second decision must be read. I do not understand the Court to have said that the principles of contractual

interpretation or implication of terms are inapplicable to the Agreements. In any event, Ochapowace concedes that constitutional or fiduciary claims must be struck and does not seek to amend its statement of claim to reintroduce those claims in a disguised form. [ 36 ] With respect to the presence of a right of first refusal in the Manitoba TLE Agreement, which was signed in 1997, it is inherently problematic to interpret one contract on the basis of a subsequent contract: Caron v Alberta , 2015 SCC 56 at paragraph 73 , [2015] 3 SCR 511. This is especially so where the two contracts are not between the same parties. While the exclusion of subsequent conduct in the

interpretation of a contract has recently been relaxed, courts have been careful to note the difficulties associated with the use of that kind of evidence: Shewchuk v Blackmont Capital Inc , 2016 ONCA 912 at paragraphs 39–50 . Moreover, the right to notice and a reasonable opportunity to purchase claimed by Ochapowace may or may not amount to a right of first refusal. It is also possible that Ochapowace will be partly successful in having such a term implied. Thus, it is difficult, at this stage, to reach a firm decision as to the relevance of the comparison with the Manitoba TLE Agreement.

Again, this will be decided by the trial judge. [ 37 ] In sum, Saskatchewan has not shown that Ochapowace’s contractual claims disclose no reasonable cause of action. C. Abuse of Process [ 38 ] Saskatchewan’s motion to strike is also based on an alleged abuse of process. While it did not press the issue at the hearing, I will explain briefly why I am unable to give effect to those submissions. [ 39 ] The allegation of abuse of process was mainly directed at Ochapowace’s constitutional claims.

It was based on the provisions of the Agreements by which Ochapowace released Saskatchewan’s from any claims based on the NRTA. [ 40 ] As I am striking Ochapowace’s claims based on the NRTA for lack of jurisdiction, the allegations of abuse of process become moot. D. Striking the Statement of Claim as Against Canada [ 41 ] Saskatchewan also seeks to have the statement of claim struck as against Canada. Canada, however, is not seeking such a

summary dismissal of the action, even though it filed a defence denying any liability towards Ochapowace. [ 42 ] There are three reasons why I cannot strike the statement of claim as against Canada. First, Canada has chosen not to seek such an order and Saskatchewan cannot override Canada’s choice. Parties to a lawsuit are entitled to make their own decisions as to the conduct of the case, in particular with respect to which motions to bring: Corporation des pilotes du Saint-Laurent Central inc v Laurentian Pilotage Authority , 2018 FC 333 at paragraph 32 , aff’d 2019 FCA 83 .

Save in exceptional circumstances, a defendant cannot bring a motion to strike the statement of claim as against another defendant. Bear v Muskoday Convenience Store , 2013 SKQB 279 , a case cited by Saskatchewan, appears to be an exceptional case, as it was obvious that the plaintiff and one of the defendants were colluding and were not really parties adverse in interest. No collusion is alleged in this case. Moreover, Ochapowace and Canada have adverse interests, because Ochapowace argues that a breach of the Agreements by Saskatchewan results in a breach of Canada’s obligations under Treaty 4.

The fact that Canada, in its defence, appears to agree with Ochapowace’s

interpretation of the Agreements does not negate the fact that, according to the statement of claim, it would be liable to Ochapowace if that

interpretation prevails and Saskatchewan did not comply with it. [ 43 ] Second, while Rule 104 makes it possible to remove a party who has been improperly joined, it is not possible for me to say that this is the case. Canada is a party to the Agreements, and Ochapowace argues that the situation described in the statement of claims results in a breach of Canada’s obligations. Saskatchewan may well disagree with that assertion, but Ochapowace is entitled to try to prove it at trial. [ 44 ] Third, different causes of action are pleaded against Canada and Saskatchewan.

Ochapowace asserts that Canada has breached its obligations under Treaty 4 as a result of Saskatchewan’s conduct and asks for a declaration to that effect. As against Canada, such a claim is squarely within our Court’s jurisdiction, under section 17(1) of the Federal Courts Act . Other than bald statements to the effect that Canada has no knowledge of Saskatchewan’s conduct and that the dispute is really between Ochapowace and Saskatchewan, I have not been told why Ochapowace’s causes of action against Canada would have no chance of success.

I note that in Bear v Government of Saskatchewan , 2010 SKQB 342 , a case relied upon by Saskatchewan, no relief was claimed against Canada. Thus, that case does not support Saskatchewan’s argument. III. Disposition [ 45 ] For these reasons, the parts of Ochapowace’s statement of claim that assert a cause of action that is outside this Court’s jurisdiction will be struck. In all other respects, Saskatchewan’s motion will be dismissed.

[ 46 ] Thus, references to constitutional, fiduciary and honourable duties will be excised from paragraph 1 of the statement of claim, which sets out the relief requested. The same is true of paragraphs 29 and 44. [ 47 ] Paragraphs 37 to 40 will also be struck, as they describe the constitutional and fiduciary obligations that Saskatchewan is alleged to have breached. [ 48 ] Paragraphs 41 to 43 deal with the honour of the Crown. As I mentioned above, Ochapowace cannot assert an independent cause of action based on the honour of the Crown. The concept, however, remains relevant to the

interpretation and application of the Agreement, as the Federal Court of Appeal noted in Pasqua , at paragraphs 63–64 . Thus, I will let these paragraphs stand, on the understanding that they do not assert an independent cause of action. [ 49 ] As success is divided, no costs will be awarded. ORDER in T-24-18 THIS COURT ORDERS that : 1 . Saskatchewan’s motion to strike is allowed in part. 2 . The words “constitutional” and “fiduciary, and honourable” in paragraph 1(

b) of the statement of claim are struck. 3 . The words “constitutional and” and “as well as its fiduciary and honourable duties to the Plaintiff” in paragraphs 1(d), and 1(

e) of the statement of claim are struck. 4 . The words “constitutional, fiduciary, and honourable” in paragraph 1(

f) of the statement of claim are struck. 5 . The words “fiduciary, constitutional, and honourable” in paragraph 1(

g) of the statement of claim are struck. 6 . The words “constitutional” and “fiduciary, and honourable” in paragraph 29 of the statement of claim are struck. 7 . Paragraphs 37 to 40 of the statement of claim are struck. 8 . The words “constitutional, fiduciary, and honourable” in paragraph 44 of the statement of claim are struck. 9 .

No award of costs is made. “Sébastien Grammond” Judge FEDERAL COURT SOLICITORS OF RECORD Docket: T-24-18 STYLE OF CAUSE: OCHAPOWACE CREE NATION v HER MAJESTY THE QUEEN IN RIGHT OF SASKATCHEWAN, as represented by THE ATTORNEY GENERAL OF SASKATCHEWAN and HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by THE ATTORNEY GENERAL OF CANADA PLACE OF HEARING: REGINA, SASKATCHEWAN DATE OF HEARING: OCTOBER 1, 2019 JUDGMENT AND REASONS: GRAMMOND J. DATED: OCTOBER 10, 2019 APPEARANCES : Dana Martin Aron Taylor For The PLAINTIFF

R. James Fyfe For The DEFENDANT H.M. THE QUEEN IN RIGHT OF SASKATCHEWAN Karen Jones For The DEFENDANT HER MAJESTY THE QUEEN IN RIGHT OF CANADA SOLICITORS OF RECORD : Maurice Law Barristers and Solicitors Calgary, Alberta For The PLAINTIFF Saskatchewan Ministry of Justice Regina, Saskatchewan For The DEFENDANT H.M. THE QUEEN IN RIGHT OF SASKATCHEWAN Attorney General of Canada Ottawa, Ontario For The DEFENDANT HER MAJESTY THE QUEEN IN RIGHT OF canada