Daniels v. Daniels, 2011 MBCA 94

Citation: Daniels v. Daniels, 2011 MBCA 94 Date: 20111206 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Madam Justice Barbara M. Hamilton Mr. Justice Martin H. Freedman Docket: AI 10-30-07379 BETWEEN : LARRY PHILIP FONTAINE et al. ) ) (Plaintiffs) ) D. G. Guénette and ) C. L. McGibbon - and - ) for the Designated Officer ) THE ATTORNEY GENERAL OF CANADA ) ) K. L. Webb (Defendant) Appellant ) for David Daniels ) - and - ) ) L. Y. Creft and THE PRESBYTERIAN CHURCH IN ) C. D.

Clark CANADA et al. ) for the Attorney General ) of Canada (Defendants) ) ) - and - ) ) Appeals heard: Docket: AF 10-30-07380 ) February 4, 2011 BETWEEN : ) ) INGRID MARIE DANIELS ) Judgment delivered: ) December 6, 2011 (Petitioner) Respondent ) ) - and - ) ) DAVID DANIELS ) ) (Respondent) Appellant ) HAMILTON J.A. 1 The principal issue in these appeals is whether monies payable by the Federal Crown under the Indian residential school (IRS) class action settlement agreement can be the subject of an order appointing a receiver under The Family Maintenance Act , C.C.S.M., c. F20 (the FMA ).

It calls for, among other things, a consideration of the effect of federal Crown immunity. 2 David Daniels (Daniels), a member of the Long Plain First Nation, is a class member in the IRS class action, Fontaine et al. v. Canada (Attorney General) et al. ((15 December 2006), Winnipeg CI 05-01-43585 (Man. Q.B.)), and, as such, is the recipient of certain payments under the agreement that settled that action (the settlement agreement). In child support enforcement proceedings under the FMA , a master of the Court of Queen’s Bench ordered that these payments be attached.

The supervising judge in Manitoba of the IRS class action set aside the attaching order and replaced it with an order appointing the designated officer of the Maintenance Enforcement Program under the FMA receiver of certain property of Daniels (the receiver order). 3 The Attorney General of Canada (Canada or the Federal Crown) and Daniels both appeal and ask that the receiver order be set aside. 4 For the reasons that follow, I would not set aside the receiver order. However, I would alter it to address those provisions

that are coercive in nature against the Federal Crown and, as such, offend the principle of Crown immunity.

Background The Settlement Agreement 5 In May 2006, the Government of Canada, legal counsel for former students of Indian residential schools, several churches, and the Assembly of First Nations and other aboriginal organizations entered into the settlement agreement to resolve claims brought by former IRS students. 6 On December 15, 2006, Justice Schulman, the supervising judge in Manitoba of the IRS class action, pronounced the implementation order that incorporated by reference the settlement agreement. 7 The settlement agreement provides that three different payments may be made to a former IRS student: 1) a “Common Experience Payment” (CEP) for time spent residing at a residential school; 2) an award made under the “Independent Assessment Process” (IAP) for claims of physical and sexual assaults and other wrongful acts; and 3) in some cases, adjustments to IAP awards under the “Alternative Dispute Resolution” (DR) process, that was established in 2003 by Canada. 8 The settlement agreement provides for the creation of a trust to fund the CEPs.

While the church parties made certain contributions to fund payments for IRS abuse claims, there are provisions limiting their contributions and further liability. Stated simply, Canada has paid 100 per cent of all DR and IAP awards since the settlement agreement was implemented on September 19, 2007. 9 Both the CEP Trust Fund and the settlement allotment, from which DR and IAP awards are paid, were established as “special purpose” accounts under s. 21 of the Financial Administration Act and are housed in the Federal Government’s Consolidated Revenue Fund. 10

Section 18.01 of the settlement agreement provides: 18.01 No Assignments No amount payable under this Agreement can be assigned and such assignment is null and void except as expressly provided for in this Agreement. 11 As will be seen, Daniels received two payments under the settlement agreement: a CEP and a DR award. Daniels’ Support Obligations, The Attaching Order and Subsequent Court Proceedings 12 In 2005, a judge of the Ontario Superior Court of Justice, Family Court, ordered Daniels to pay child support (the support order). He has been in default under the support order for some time.

As at May 29, 2009, Daniels’ arrears were in the amount of $84,125.30. 13 The support order is enforceable through the Province of Manitoba’s Maintenance Enforcement Program under the FMA . The designated officer is statutorily responsible for collecting child support arrears pursuant to the program. 14 In July 2007, the designated officer issued Daniels a summons pursuant to s. 57(1) of the FMA , to appear before a master of the Court of Queen’s Bench to show cause why the Ontario support order should not be enforced. The summons was issued in proceedings commenced in 1998 entitled Ingrid Daniels v.

David Daniels (the Daniels proceeding). 15 At a court appearance on September 21, 2007, Daniels indicated on the record that he was entitled to receive a payment as a result of his attendance at an Indian residential school. 16 On October 19, 2007, the master, on his own initiative, pronounced the attaching order: … [P]ursuant to The Family Maintenance Act and The Court of Queen’s Bench Act and Rules that: 3.1 Any funds which may flow to DAVID DANIELS from settlement proceeds pursuant to the Indian Residential Schools Settlement Agreement are hereby attached on a provincial level.

3.2 A copy of this Order shall be served on Indian Residential Schools Resolution Canada by ordinary mail addressed to Indian Residential Schools Resolution Canada … Ottawa … within 10 days of the date of signing. 17 On October 30, 2007, prior to being served with the attaching order, Indian Residential Schools Canada issued a cheque for Daniels’s CEP in the amount of $22,000.

Daniels spent those funds and they are not at issue in this appeal. 18 On November 23, 2007, the designated officer served a copy of the attaching order on Indian Residential School Resolution Canada. 19 On December 20, 2007, Canada filed a motion seeking advice and direction as to the meaning of the attaching order and to have it set aside “[i]nsofar as the intent … of the Order is to attach … Settlement Agreement funds held or administered by Indian Residential Schools Resolution Canada.” 20 On February 4, 2008, counsel for Daniels and the designated officer consented, before the master, to having the attaching order set aside.

The master directed counsel for Canada to prepare the consent order. 21 Subsequent to that appearance, the designated officer, through her counsel, notified Canada and the master that she was withdrawing her consent and would be taking no position with respect to Canada’s motion. The master permitted the withdrawal of the consent, ordered substitutional service through the designated officer on Ingrid Daniels and the children named in the support order, and referred Canada’s motion to a judge for hearing.

The proceedings before the master were adjourned sine die pending the determination of Canada’s motion. 22 In September 2008, Menzies J. sought information from Canada as to the contribution by the church parties to the settlement agreement, including how the funds were administered and monitored. 23 On February 9, 2009, Canada made a further request for direction under the Fontaine implementation order to have its motion to set aside the attaching order heard by the supervising judge in Manitoba.

As a result, Monnin C.J. (as he then was) assigned Canada’s motion to Schulman J. to “determine the issue of whether the funds which may flow to David Daniels under the Settlement Agreement are immune from garnishment or attachment.” 24 At the end of March 2009, Canada inadvertently issued a cheque for Daniels’s DR award to his lawyer (not his counsel on appeal) simply in trust. Canada imposed no other trust conditions on the release of the funds.

Daniels has consented to his lawyer holding the DR award pending the outcome of these proceedings. 25 Notwithstanding that the payment of the DR award to Daniels’s lawyer rendered the issues raised by Canada moot, Canada chose to proceed with its motion, arguing that the issues raised were important, particularly in light of the pronouncement of other attaching orders in similar circumstances. 26 At a pre-motion hearing on May 4, 2009, Schulman J. (hereafter the judge) heard submissions as to whether both proceedings (that is, Canada’s motion and the Daniels proceeding) should be heard together.

After the designated officer advised him that she would not be taking a position on these matters, he ordered that an amicus curiae be appointed. He appointed Anita Southall and Wayne Leslie of the firm Fillmore Riley LLP as the amici curiae. 27 On July 14, 2009, the judge ordered that the two proceedings be heard together. In written reasons, he explained why he did so and why he appointed the amicus curiae (at paras. 2, 4, 7-8): … [T]here is no counsel before the court who will argue the position opposite that to the DOJ [Department of Justice (Canada)]. ….

There are complex issues involved in these proceedings, and the court, exercising its parens patriae jurisdiction, needs the assistance of an amicus in order to fairly assess the positions advanced by the DOJ and such further issues as may arise in its motion to set aside. On the face of the order [of Monnin C.J.], the Daniels proceeding has been referred to me for hearing.

The provision goes on to direct that a determination be made of “the issue of whether funds which may flow to David Daniels under the Settlement Agreement are immune from garnishment or attachment.” Obviously, it does not direct that the Daniels proceeding not be dealt with. The issue raised by the DOJ could not be addressed in a vacuum and requires a consideration of some of the materials filed in the Daniels action. Moreover, the issue delineated is not the only issue that arises in the motion to set aside filed in the Daniels action. Other issues that fairly arise are: (

i) the request for advice and directions set out in para. 1 of the DOJ’s motion; (ii) whether, in the circumstances, it is just that the order be set aside; and (iii) whether, if the order was incorrectly made, it is appropriate to make another order in its place.

…. It is, I find, unacceptable to go through this proceeding and leave some issues to be addressed in a separate proceeding. …. It is more than 18 months since the master made the order in question, and the maintenance enforcement proceeding is on hold pending resolution of these issues. It would be intolerable that this matter be delayed further. …. [emphasis added] 28 Counsel for Canada and Daniels and the amicus curiae prepared an agreed statement of facts and the judge heard their submissions on November 10, 2009. 29 On February 25, 2010, the judge issued his written decision.

The Order Pronounced February 25, 2010 30 The judge ordered that the attaching order be set aside and replaced with “an order of receivership upon the terms herein,” which included: 2. … [E]ffective immediately, the designated officer … be and is hereby appointed receiver (the “Receiver”), without security, pursuant to ss. 60(2) and (3) [of the FMA ], of the following: (

i) any debt or monies that are or become due and payable to David Daniels from the time of service of this order until further order of this Court, other than wages, including, without limitation, all monies held by Troniak Law Office and/or Burgess Law Office for the credit of or for the benefit of, directly or indirectly, David Daniels; (ii) all non-exempt wages that are or become due and payable to David Daniels from the time of service of this order until further order of this Court; and (iii) in accordance with the provisions of The Garnishment Act R.S.M. 1987, c.

G20 all pension benefits or pension benefit credits that are or become due and payable to David Daniels from the time of service of this order until further order of this Court; (collectively the “Property” of David Daniels). 3. … [T]he Receiver shall forthwith take control of the Property of David Daniels and shall pay it to the credit of Ingrid [Daniels] on account of the [Ontario support order] …. 4. … Daniels and any person having notice of this order shall grant access to and deliver possession of the Property to the Receiver , including , without limitation, all information including all documents related to the Property and all monies, cash in hand, cheques, post- dated cheques and remittances of any kind whatsoever related to the Property and to provide or permit the Receiver to make, retain and take away copies of all such information and documents. . . . . . 8.

THIS COURT ORDERS AND SEEKS the aid and recognition of any court or administrative, regulatory or government body in Canada or elsewhere to act in aid of or to become complimentary in the carrying out of the terms of this order. [emphasis added]

31 The judge also ordered costs of $22,996.20 be paid to the amicus curiae by “[t]he Province [of] Manitoba and/or TheDesignated Officer, Maintenance Enforcement Program, Province of Manitoba.” The Judge’s Reasons for the Receiver Order 32 The judge explained that he was “wearing two hats” (at para. 3), one as the supervising judge under the Fontaine class actionand the other under the Daniels proceeding.

He identified a number of issues to be addressed, including the following two that arepertinent to this appeal (see para. 4): 1. whether the attaching order is valid; and 2. whether this court should replace the attaching order with an order appointing a receiver by way of equitable execution or as astatutory receiver. 33 The judge understood that Canada’s motion was moot.

After considering the well-known factors articulated in Borowski v.Canada (Attorney General), (SCC), [1989] 1 S.C.R. 342, he agreed with Canada that this is an exceptional case andthat it should proceed. 34 The judge set out numerous provisions of the FMA related to the enforcement of support orders, including the power of thedesignated officer to garnish under The Garnishment Act, C.C.S.M., c. G20, and seek the appointment of a receiver under s. 60 of theFMA (see ss. 55(4)(a), (

e) and s. 57(3)). He also referred to the power of the court to appoint a receiver under s. 55 of The Court ofQueen’s Bench Act, C.C.S.M., c. C280, and the following federal legislation: Financial Administration Act, Crown Liability andProceedings Act, Garnishment, Attachment and Pension Diversion Act, Family Orders and Agreements Enforcement Assistance Act, andFamily Support Orders, and Agreements Garnishment Regulations.

He noted that the federal legislation allowed certain funds to begarnished, including pay, income tax refunds, Canada Pension Plan payments, but that they “do not include monies payable under the[settlement agreement]” (at para. 18). 35 Relying on the decision of the British Columbia Court of Appeal in Fontaine v. Canada (Attorney General), 2008 BCCA329, 258 B.C.A.C. 201 (Fontaine (BC)), the judge concluded that there was a creditor-debtor relationship between Daniels and Canadaonce his claims under the settlement agreement were approved and that they are Crown debts.

He accepted the position of Canada,supported by the amicus curiae and counsel for Daniels, that the attaching order was invalid as the court does not have the jurisdiction toattach a debt owing by the Federal Crown unless specifically permitted under federal legislation. However, he did not accept theargument of Canada and Daniels that the receiver order was no different than an attaching order (at paras. 25-26): At common law, the creditors of a person who was owed money by the Crown could not garnish the Crown: Canadian NationalRailway Co. v. Croteau and Cliché, (SCC), [1925] S.C.R. 384, [1925] S.C.J.

No. 16; Royal Bank of Canada v. Scott, (NWT TC), [1971] 4 W.W.R. 491 (N.W.T. Terr. Ct.); W.P. v. Canada (Attorney General) et al., [2006] S.J. No.789; 2006 SKCA 143 , 289 Sask.R. 67; 382 W.A.C. 67; 48 C.P.C. (6th) 66 (C.A.); Gumbs v. Grant, [2000] O.T.C. 491; (ON SC), 49 O.R. (3d) 649; [2000] O.J. No. 2601 (Sup. Ct.); Hogg, Liability of the Crown, 3rd Ed. (Toronto: Carswell,2000). The principle was based on several considerations, one of which was that, in the absence of a statute enabling it, no order orinjunction may be made against the Crown.

This principle was reinforced by the enactment in 1961 of s. 67 of the FinancialAdministration Act and in 1992 of s. 22(1) of the Crown Liability and Proceedings Act (¶18 above). While our courts were not ableto garnish the Crown, in an appropriate case they would appoint a receiver to stand in the shoes of the person who was owed money bythe Crown and empower the receiver to receive the money and discharge the Crown from further liability: Canadian National RailwayCo. v. Croteau, at p. 388; Martin v. Martin, (ON SC), [1981] O.J. No. 3020; 33 O.R. (2d) 164 (H.C.J.), at ¶15;Lavigne v. Robern, (ON SC), [1986] O.J.

No. 846; 56 O.R. (2d) 385 (H.C.); Roshdy v. Sultan, [2001] O.J. No.1130; (ON CA), 144 O.A.C. 258; (C.A.); Bennett, Bennett on Receiverships, 2nd Ed. (Toronto: Carswell, 1999), at p. 640 and 639; Dunlop, Creditor-Debtor Law in Canada, 2nd Ed. (Toronto: Carswell, 1995), at pp. 436-437. The law restricting the ability of the courts to garnish Crown debts was questioned (Hogg, p. 56).

In recently enacted legislation,Parliament granted relief against the rigors of the principle in a limited number of cases, permitting all creditors to garnish the wages ofmost federal employees and permitting all dependent persons and provincial enforcement branches to attach a specified variety of assetsof delinquent payors. These recently enacted provisions did not curtail the jurisdiction of the court to appoint a receiver for IRSS [IndianResidential Schools Settlement] in an appropriate case.

It is clear from the review of legislation summarized in ¶18 and ¶25 that Parliament has broadened the reach of the process ofgarnishment, but has not, as alleged by counsel for the DOJ, codified all the remedies open to enforce child support orders. It would takean express provision to curtail the jurisdiction of this court to appoint a receiver. ….

…. Accordingly, the above-mentioned provisions effectively bar any effort to garnish IRSS funds, but do not close the door to theappointment of a receiver unless there is something in the court-ordered agreement that would compel such a result. [emphasis added] 36 The judge then considered s. 18.01 of the settlement agreement and Fontaine (BC), in which the British Columbia Court ofAppeal had considered its effect (at paras. 28-30): .... This provision resembles s. 67 of the Financial Administration Act (¶18 above).

Section 18.01 prohibits assignment of the proceeds ofan IRSS claim. Further, s. 3.05 of the court-ordered agreement expresses a desire that payment of a claim should not be taken intoaccount in calculation of the amount of social benefits paid to a claimant. That desire was implemented by an agreement made betweenCanada and all Provinces and Territories, ensuring that social assistance and other benefit payments would not be reduced by IRSSpayments received, nor would the payments be subject to income tax. The [settlement agreement] does not expressly state that paymentof a claim shall not be taken into account in determining an appropriate remedy in enforcing an order for child support.

Section 18.01 of the [settlement agreement] was interpreted by the British Columbia Court of Appeal in Fontaine v. Canada (AttorneyGeneral), 2008 BCCA 329 , [2008] 12 W.W.R. 621; 258 B.C.A.C. 201; 434 W.A.C. 201; 2008 BCCA 329, [2008] B.C.J. No.1575. The court upheld a finding by Brenner, C.J.S.C., a supervising judge under the court-ordered IRSS agreement, that s. 18.01 of theagreement prevented a claimant from giving an effective direction to pay to a lender who had given the claimant interim financing. Saunders, J.A., stated in her judgment: 36. ...

I think it may be safely said that one purpose of s. 18.01 was to limit the potential for the class members to be fleeced of theirfunds, or any portion of them, before they were received by the individual. That it was intended they should receive the entire paymentis apparent from the restriction in the Settlement Agreement to their counsel charging fees in respect to these payments. In other words,an end run around the Settlement Agreement ought not to be countenanced. ..... I agree with the

interpretation given to s. 18.01 by Saunders, J.A., and, for the sake of giving the clause the same

interpretation in eachProvince, will apply that given by Brenner, C.J.S.C. .... 37 The judge distinguished between the circumstances in Fontaine (BC) and those where a receiver stands in the shoes of thedebtor. Relying on Roshdy v.

Sultan (2001), (ON CA), 144 O.A.C. 258, and Canadian National Railway Co. v.Croteau and Cliché, (SCC), [1925] S.C.R. 384, he concluded that (at para. 29): …. … [T]here is nothing contained in the B.C. judgments to prevent this court from appointing a receiver of funds that are the proceeds ofCEP and D.R. payments under the court-ordered [settlement agreement]. 38 Even though the FMA “does not prescribe grounds for the granting of a receiving order” (at para. 31), the judge was of theview that the “just or equitable” (ibid.) criteria under s. 55(1) of The Court of Queen’s Bench Act should apply. 39 With respect to arguments specifically relied upon by Daniels, he wrote (at para. 32):

Section 89 of the Indian Act has no application to this case because both Daniels and his former wife, the petitioner in the divorceproceeding, are status Indians. Whether the master should have waited until he made a formal finding of default or of wilfulness isimmaterial on this motion by the DOJ. Daniels did not appeal the making of the garnishing order or move to set it aside. He merelysupported the position of the DOJ on the ground of jurisdiction to attach the funds.

40 After setting aside the attaching order, the judge determined that, in all of the circumstances, it was appropriate to appoint a receiver notwithstanding that the DR funds held in trust could now be garnished (at para. 34): .... ... I set aside the garnishing order and replace it with an order that is just. At this stage, this court could garnish the funds in Daniels’ lawyer’s trust account and, after the monies are paid into court, pay them out to the Enforcement Branch. The problem with that is that the Enforcement Branch does not yet accept that it has a responsibility to deal with such funds.

I think it appropriate to make an order appointing a receiver to make sure that the funds are applied to the benefit of Daniels’ children. Moreover, I agree with the amicus curiae that it is appropriate to appoint a receiver in connection with Daniels’ pension funds. 41 As for costs, the judge noted that Canada was not seeking costs, declined to make any award in favour of Daniels, and awarded costs in favour of the amicus curiae , as noted earlier.

In his reasons for ordering that the costs of the amicus curiae be paid by the Province of Manitoba and/or the designated officer, he was very critical of the designated officer’s decision to not take a position (at paras. 42-44): Daniels owes his children more than $80,000 in child support. The Government of Canada created a trust fund of $1.9 billion to fund CEP claims by 80,000 class members across Canada, and this court has found that Daniels’ CEP and D.R. are accessible for child support.

A small percentage of the members of the class are in Manitoba and, of them, we know of three who are delinquent in payment of child support. There must be more in Canada, say, several hundred. The province of Manitoba says that it will not touch this issue with a ten-foot pole, so it expects these needy, unsophisticated people, perhaps hundreds across Canada, to fund an application. The applications for the appointment of a receiver would have to be made in this court or in another superior court, since only the D.O. has access to the

summary procedure under the Family Maintenance Act . The position of the D.O. on this point is far below the standard that the dependant children are entitled to expect. The Role Of The Crown Attorney Who Appears For The D.O. I agree that Crown counsel who appears at an enforcement hearing is not counsel for the dependant child. However, counsel is an officer of the court and fills a role analogous to a Crown attorney in a criminal prosecution.

As such, when the master raised the question of garnishing the [settlement agreement] payments, as an officer of the court, Crown counsel should have brought to his attention the provisions of s. 60 of the Family Maintenance Act with an explanation of the guidelines to be applied. The Role Of The D.O. Is To Remain Neutral And Fair As Between The Payor And Payee In my view, the D.O. sided with Daniels by standing by and doing nothing to seek the appointment of a receiver instead of letting the master go off on the wrong course. If the D.O. was in doubt on the subject, it could have obtained a court determination.

Instead, it sent a copy of the DOJ motion to the dependants, giving them no information about the availability of a receiving order or how or where to obtain one. When the issue was raised in this court, they declined to participate other than to facilitate the gathering of facts for the agreed statement. The D.O. and Province have a higher standard to meet. Positions of the Parties Canada 42 Canada argues that the judge’s reasons demonstrate that he intended the receiver order to apply to the Federal Crown, even though the order does not specifically say so and that its effect is the same as the attaching order.

Therefore, it offends the common-law principle of Crown immunity and s. 29 of the Crown Liability and Proceedings Act . 43 It also asserts that the receiver order offends the principle that provincial legislation (the FMA in this case) cannot bind, or apply to the Federal Crown, and is contrary to the spirit and intent of

Article 18.01 of the settlement agreement. As well, it argues that the judge exceeded his jurisdiction when he combined Canada’s motion with the Daniels proceeding and replaced the attaching order with the receiver order. Daniels 44 Daniels expands on Canada’s arguments, asserting that

Article 18.01 of the settlement agreement prohibits any attachment of funds payable under the settlement agreement, even after payment to the recipient. Thus, he says that the funds held in trust for Daniels cannot be attached in any way, including under the receiver order.

45 He says that the judge improperly usurped the show cause hearing before the master and that the proper course was to return the issue of the appointment of a receiver to the master for determination. 46 He also argues that the judge erred by relying on s. 55 of The Court of Queen’s Bench Act , and by including his pension benefits in the receiver order when there was no evidence before the judge that he was entitled to any pension benefits. 47 Although not raised in his notice of appeal or his factum, at the appeal hearing, he argued that the judge did not adequately address s. 88 and s. 89 of the Indian Act , nor could he, given the lack of an evidentiary basis to do so.

Designated Officer 48 The designated officer took a limited position on the appeal, both in her role as principal administrator of the maintenance enforcement regime under the FMA , and as the receiver appointed under the receiver order. 49 She does not agree with Canada that the principles of Crown immunity are at issue, arguing that the receiver order does not purport to bind, attach or otherwise direct the Federal Crown. She says that the receiver order does not relate to federal pension benefits given the wording of the order.

She acknowledges that a provincial statute alone cannot permit garnishment of federal pensions. 50 She does not agree with Daniels that

Article 18.01 of the settlement agreement precludes the appointment of a receiver and distinguishes Fontaine (BC) from the circumstances here. 51 She also disagrees with Daniels that the hearing before the judge was a show cause hearing pursuant to s. 57 of the FMA .

The issue of whether Daniels was in wilful default remained before the master, as evidenced by the master’s decision of December 20, 2010, 2010 MBQB 264 , in which he fined Daniels one dollar for being in wilful default for the “removal of the common experience funds … and their distribution, partially to himself, partially to his children, partially to his grandchildren” (at para. 18). 52 She points out that given that the funds for Daniels’s DR award are no longer in the hands of the Federal Crown, she is in a position to garnish those funds under the FMA , subject to a determination of Daniels’s arguments on appeal. 53 Finally, the designated officer requests time, after the release of this decision, to serve Daniels’s lawyer with the receiver order, should it be upheld, or a garnishing order, should it be set aside.

Questions Raised: Mootness and Standard of Review 54 Canada raises the following questions: 1. Did the judge err by making the receiver order because it violates Federal Crown immunity? 2. Did the judge err by making the receiver order under the FMA because provincial legislation cannot bind the Federal Crown? 3. Did the judge err by making the receiver order because it is contrary to the spirit and intent of

Article 18.01 of the settlement agreement? 4. Did the judge exceed his jurisdiction when he replaced the garnishing order with the receiver order? 55 Daniels raises three additional questions: 5. Did the judge err when he concluded that

Article 18.01 of the settlement agreement does not preclude any attachment of funds, whether by receiving order or otherwise, and whether, in the hands of the Federal Crown, or after payment to the recipient? 6. Did the judge err in appointing a receiver for the pension benefits due or payable to Daniels without an evidentiary basis for doing so?

7. Did the judge err when he concluded that s. 88 and/or s. 89 of the Indian Act does not preclude the attachment of Daniels’s funds,whether by receiving order or otherwise, and whether in the hands of the Federal Crown or after payment to him? 56 Given that Daniels’s DR award is no longer in the hands of the Federal Crown and is held in his lawyer’s trust account,Canada’s appeal is moot and its motion was moot at the time of the hearing before the judge.

As did the judge, I agree with Canada andthe designated officer that the issues raised by Canada should be resolved given their importance to others beyond Daniels. I point outthat the issues raised exclusively by Daniels are not moot. Standard of Review 57 The standard of review for these questions is not, for the most part, controversial. 58 A judge’s decision to appoint a receiver is a matter of discretion. As such, deference is owed unless the judge applied anincorrect principle of law, made a palpable and overriding error with respect to the facts, or a question of mixed fact and law or the resultis unjust.

See Elsom v. Elsom, (SCC), [1989] 1 S.C.R. 1367, and Towers Ltd. v. Quinton’s Cleaners Ltd. et al., 2009MBCA 81, 245 Man.R. (2d) 70. 59 While questions 1 and 2 concern the judge’s decision to appoint a receiver, they are questions of law and therefore thestandard of review is correctness. 60 Question 3 raised by Canada and question 5 raised by Daniels put in issue the judge’s conclusion that

Article 18.01 of thesettlement agreement did not preclude him from making the receiver order. In my view, these questions demand two enquiries. The firstis, what is the meaning of

Article 18.01 of the settlement agreement, which is a question of contractual

interpretation. Given that thejudge was not called upon to make findings of fact, it is question of law, and not mixed fact and law, and the standard of review iscorrectness. See King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80. The second enquiry is what is theimpact, if any, of

Article 18.01 on the judge’s decision to appoint a receiver. That enquiry puts at issue the legal effect of such anappointment. As that is a question of law, the standard of review is correctness. 61 Question 4 is characterized by Canada as a question of jurisdiction, for which the standard of review is correctness.

While Iagree that there is a jurisdictional component to this question, the real issue raised by question 4 concerns a matter of discretion, to whichdeference is owed unless error can be shown, as explained above in para. 58. 62 Question 6 raises a question of fact for which the standard of review is palpable and overriding error. 63 Question 7 raises questions of law concerning the application of the Indian Act. Thus, the standard of review is correctness. Statutory Provisions 64 I set out now the pertinent portions of the statutory provisions that are referred to in my analysis that follows.

See theattached appendix for the full text of these sections. From the FMA: Designated officer may initiate action 55(4) Whether or not any other enforcement proceedings are being taken, the designated officer may take one or more of thefollowing actions in respect of the person required to make payments under an order (

a) Proceedings to obtain a garnishing order under The Garnishment Act. . . . . . (

c) Proceedings to obtain a writ of execution under The Executions Act. . . . . .

(

g) Proceedings to bring the person in default before a judge or master for a hearing under

section 57 . Enforcement proceedings before judge or master 57(1) Whether or not any other enforcement proceedings have been taken or could be taken, the designated officer may issue a summons, to be served personally or in any other manner a judge or master may direct, requiring a person in default to (

a) appear at a hearing before a judge or master at a time and place specified in the summons to show cause why the order should not be enforced under this

section or to be examined in respect of his or her financial means and other circumstances, or both; and (

b) file with the court, either before or at the time of the hearing, a financial statement in a form satisfactory to the judge or master. Powers of judge or master 57(3) At a hearing under this section, the judge or master shall consider the evidence adduced and may make one or more of the following orders in respect of the person required to pay maintenance: (

a) where the judge or master finds that the person is wilfully in default, fining the person not more than $3,000. or imprisoning the person for not more than 90 days, or both; (a.1) determining whether the person required to pay maintenance is in default of a payment, and if so, fix the amount of arrears owing for the purpose of enforcement under this Part; (

b) requiring payment of the arrears in full by a specified date; (

c) requiring periodic payments on the arrears; …. Appointment of receiver 60(1) Where there is default in respect of an order, a judge or master, upon an application made by or on behalf of the person in whose favour the order was made, may appoint a receiver, to the extent of any payments due or accruing due under the order, for any of the following purposes: (

a) to collect any moneys due, owing or payable to, or to become due, owing or payable to, or earned or to be earned by, the person in default; (

b) to take all steps necessary to apply for and receive any benefit, credit, interest or entitlement available to the person in default; (

c) to take all steps necessary to take possession of and realize upon property in which the person in default has an interest or entitlement; (

d) to take all steps necessary to pursue any action that is available to the person in default; (

e) to take any other steps or be given any other authority that the judge or master considers necessary or advisable.

Appointment of receiver without formal application 60(2) Where a person is before a judge or master for any purpose under this Act but other than under subsection (1), the judge or master, if satisfied that the person is in default in respect of an order, may there and then appoint a receiver under subsection (1) without prior application.

From The Court of Queen’s Bench Act : Injunctions and receivers 55(1) The court may grant a restrictive or mandatory interlocutory injunction or may appoint a receiver or receiver and manager by an interlocutory order where it appears to the judge to be just or convenient to do so. Terms on injunction or appointment 55(2) An order under subsection (1) may include such terms as are considered just. From the Financial Administration Act : 67. Except as provided in this Act or any other Act of Parliament, (

a) a Crown debt is not assignable; and (

b) no transaction purporting to be an assignment of a Crown debt is effective so as to confer on any person any rights or remedies in respect of that debt. From the Crown Liability and Proceedings Act : No execution against Crown 29. No execution shall issue on a judgment against the Crown. Analysis and Decision 65 There is no appeal from the judge’s order setting aside the attaching order, and rightly so. As will be explained, the law with respect to Crown immunity is clear that funds in the hands of the Federal Crown cannot be attached unless there is specific federal legislation permitting it.

As there is no federal legislation permitting the attachment of payments under the settlement agreement, the judge was correct to set aside the attaching order. What must be addressed on this appeal, among other things, is whether the receiver order also offends, at least in part, the law with respect to Crown immunity. Before addressing that, I turn to the questions about the judge’ s jurisdiction and the procedure he directed.

Jurisdiction and Procedure - Questions 4 and 6 66 Question 4 raised by Canada and question 6 raised by Daniels put in issue the judge’s decision to expand the issues before him and to “[wear] two hats” (at para. 3).

67 Canada and Daniels take exception to how the hearing expanded beyond the issue of the legality of the attaching order into aproceeding with new issues identified by the judge and with the judge appointing amicus curiae to address these issues. 68 They say that the judge mischaracterized the issue referred to him as a maintenance enforcement issue. They say that theproper approach, as required under the FMA, was for the judge to return the enforcement issues to the master.

By not doing so, they saythat he exceeded his jurisdiction. 69 In our adversarial system, the parties to a proceeding normally identify the issues that they wish the court to address and takepositions on them. A judge’s role is not limited by this normal process. To ensure that the proper questions are addressed and thatjustice is served, a judge has the discretion to expand the issues, subject to the parties receiving appropriate notice and the opportunity tobe heard.

This is consistent with s. 94 of The Court of Queen’s Bench Act that “[a]s far as possible, a multiplicity of proceedings shall beavoided” and the general principle articulated in Queen’s Bench Rule 1.04(1) that the rules are to be “liberally construed to secure thejust, most expeditious and least expensive determination of every civil proceeding on its merits.” 70 The Chief Justice assigned the judge, in his capacity as the supervising judge of the Fontaine class action in Manitoba, todetermine the legality of the attaching order made by the master in the Daniels proceeding.

Once assigned, the judge was confrontedwith a situation where extensive child support arrears were outstanding and accumulating and enforcement proceedings had beenadjourned pending the determination of the legal issue assigned to him. In addition, he was faced with the designated officer’s refusal totake a position on this legal issue and the questions that he raised.

The judge, rightly in my view, took great exception to the lack ofparticipation of the designated officer in the process. 71 I do not agree with Canada and Daniels that the judge exceeded his jurisdiction because the FMA precluded him fromproceeding as he did. Sections 60(1) and (2) of the FMA specifically provide for the appointment of a receiver by a “judge or master,”even “without prior application” when a person is before a judge “for any purpose under [the FMA].” Daniels was before the judge for a“purpose” under the FMA.

The legal question referred to the judge by the Chief Justice arose because Daniels was in arrears of payinghis child support, which were being enforced under the FMA. In my view, this provides a full response to the assertion that the judgeexceeded his jurisdiction in how he proceeded. 72 Further, I do not agree that the judge improperly turned the proceeding into a default show cause hearing under s. 57(1) ofthe FMA. The show cause hearing pending before the master was to determine whether Daniels should be subject to a fine,imprisonment or examination.

While enforcement and show cause hearings are often under one proceeding, they need not be. The FMAprovides broad powers of enforcement to the designated officer and the court which may be exercised at various times. For example,under the FMA, garnishment and the appointment of receivers may be ordered at any time that it is appropriate to do so, not just withinthe context of a show cause hearing. 73 The judge did not exercise his discretion in a manner that was inconsistent with the FMA or any Queen’s Bench Rule, and theparties had a full opportunity to be heard.

In these complex and difficult circumstances, the judge exercised his discretion judicially andfor the purpose of securing a just and expeditious resolution of the issues related to the enforcement of Daniels’s arrears of child support. While other judges may not have exercised their discretion as the judge did here, I see no reversible error in how the judge conducted theproceedings. Does the Receiver Order Violate Crown Immunity; Can It Bind the Federal Crown - Questions 1 and 2 74 Questions 1 and 2 raised by Canada are appropriately considered together.

They raise questions of law as to whether thereceiver order offends the common law principle of Crown immunity as well as the law with respect to when the Federal Crown can bebound by provincial legislation. 75 I agree with Canada and Daniels that the judge intended that the receiver order would be a valid means of addressing theFederal Crown’s immunity from the attaching order and ensuring that Daniels’s DR award would be available to pay down the supportarrears, assuming the award was still in the hands of Canada at the time the order was made.

The receiver order does not say thatexplicitly, but the reasons of the judge, particularly in the context of ruling on this issue when moot, make that clear. 76 Canada acknowledges that Parliament can modify or amend Federal Crown immunity and that the federal statutory regimehas modified Federal Crown immunity for certain purposes. It says, however, Parliament has not done so for payments under thesettlement agreement. 77 Among other cases, Canada relies on Beattie v.

Ladouceur (1995), (ON SC), 23 O.R. (3d) 225 (S.C.)where the judge struck out provisions of an order which empowered a receiver to intercept pension monies to which the payor spousemay become entitled from the federal government. The judge found that the order amounted to indirect attachment or extra-legislativegarnishment, which was an attempt to do indirectly what the court could not do directly. Canada says that is the same effect as thereceiver order here. 78 There are two sources of Crown immunity: the common law and statutes.

Canada asserts that the receiver order violatesboth. 79 Common law Crown immunity is founded on the concept of sovereign authority whereby the Crown is not subject to anysuperior authority. As such, the Crown is immune from orders that are coercive in nature. Peter W. Hogg, Patrick Monahan & Wade K.Wright, Liability of the Crown, 4th ed. (Toronto: Thomson Reuters Canada Limited, 2011) (Hogg), identify some of these orders andfurther explain the reasons underlying the immunity (at p. 46):

…. The common law refused to allow a coercive order to be made against the Crown. The orders of injunction, specific performance,mandamus and discovery were all unavailable against the Crown. The reasons for the immunity were twofold: the incongruity of theQueen’s Courts issuing an order against the Queen, and the impossibility of punishing the Queen for contempt of court. …. 80 It is because the Crown is immune from a coercive process against it that the Crown is immune from execution at commonlaw. See Hogg at pp. 75-76, and The King v. Central Railway Signal Co., (SCC), [1933] S.C.R. 555 at 562.

Thisfoundational principle explains why the Crown is immune from attachment unless legislation expressly permits it. See Hogg at p. 80,Mitchell v. Peguis Indian Band, (SCC), [1990] 2 S.C.R. 85 at 101, and Choken et al. v. Lake St. Martin Indian Band,2003 FC 1273 at para. 23, 241 F.T.R. 269. 81 To answer whether the receiver order offends federal Crown immunity, it is necessary to consider the nature of the receiverorder. Is it an execution, or form thereof, as argued by Canada and Daniels?

Is it different in nature from an attaching order? 82 Historically, the appointment of a receiver was considered to be a form of equitable execution, as explained by the Hon. Mr.Justice Marvin A. Catzman, “Post-Judgment Remedies” in Special Lectures of the Law Society of Upper Canada, 1988 (Don Mills:Richard DeBoo Publishers, 1988) 47 (at p. 53): Historically, the appointment of a receiver was a form of equitable execution with roots in the Court of Chancery before the fusion of lawand equity.

It arose as a means of assisting judgment creditors unable to reach their debtors’ property or interests in property with thecommon law writs of fieri facias or elegit, which extended only to legal, but not to equitable, property interests. In such circumstances,the courts of equity intervened to assist the judgment creditor to reach the debtor’s non-legal, or equitable, property interests to satisfy thejudgment. See also Frank Bennett, Bennett on Receiverships 3d ed. (Toronto: Thomson Reuters Canada Limited, 2011) at 789, and C.R.B.

Dunlop,Creditor-Debtor Law in Canada, 2d ed. (Scarborough: Thomson Canada Limited, 1995) at 81, 85. 83 While there are many cases that refer to receivership as a form of equitable execution, other authority describes it asequitable relief. Sir Raymond Waltons, Muir Hunter eds., Kerr on The Law and Practice as to Receivers and Administrators, 17th ed.(London: Sweet & Maxwell Limited, 1989) draws the distinction between equitable execution and equitable relief (at p. 34): Equitable relief distinguished from equitable execution.

In appointing a receiver in aid of a legal judgment for a legal debt, the Courtof Chancery, it has been very commonly said, granted equitable execution; but the expression is not correct. The appointment of areceiver is not execution, but equitable relief, granted under circumstances which make it right that legal difficulties should be removedout of the creditor’s way.

What a judgment creditor gets by the appointment of a receiver is not execution but equitable relief, which isgranted on the ground that there is no remedy by execution at law. 84 This distinction was recognized in the early Manitoba authority Goodbun v. Mitchell, (MB CA), [1930] 1D.L.R. 580 (C.A.), which concerned a judgment debtor’s equity of redemption in shares that had been pledged to a bank as collateralsecurity. Fullerton J.A., wrote for the court (at pp. 581-82): If there could be no legal execution in this case if the shares had stood in the plaintiff’s name there can be no equitable execution.

In Re Shepherd (1889), 43 Ch. D. 131, Cotton, L.J., said, at pp. 135-6: Confusion of ideas has arisen from the use of the term ‘equitable execution.’ The expression tends to error. It has often been used byjudges, and occurs in some orders, as a short expression indicating that the person who obtains the order gets the same benefit as hewould have got from legal execution.

But what he gets by the appointment of a receiver is not execution, but equitable relief, which isgranted on the ground that there is no remedy by execution at law; it is a taking out of the way a hindrance which prevents execution atcommon law. [emphasis added] 85 From this historical perspective, the effect of the appointment of a receiver was simply to have that receiver step into the

shoes of the debtor and take delivery of the property specified in the order. Importantly for this analysis, the powers of the receiver were limited and did not include the ability to compel payment by a third party to the debtor. See Halsbury’s Law of Canada – Civil Procedure; Enforcement of Judgment and Orders online: (2010) s. XIV (at para. HCV-301): …. The appointment of a receiver is not a form of execution itself, but rather is a species of equitable relief, granted where circumstances justify removing obstacles, that are barring normal means of execution, from the creditor’s way.

If so received, then that amount would be liable to be paid in satisfaction of the judgment debt. Until received by the judgment debtor, there is no right to compel its payment . In such a case, equitable execution may be provided. In contrast to garnishment, the order does not compel the named obligee to make a payment but, rather, intercepts the payment when it is made. [emphasis added] See also Bennett at p. 639. 86 In light of the foregoing, I disagree with Canada’s assertion that the appointment of a receiver is a form of execution. Rather, it is, as just explained, a form of equitable relief.

However, that conclusion does not end the enquiry. What must be addressed is whether the powers of the receiver under the receiver order are coercive in nature against the Federal Crown. In my view, this is the key issue to be addressed in this appeal and it requires that particular attention be given to the language of the receiver order. 87 Statutes now grant powers to appoint receivers. Pertinent to this appeal are s. 55 of The Court of Queen’s Bench Act and s. 60 of the FMA .

Section 55 provides that a receiver may be appointed when it appears to be “just or convenient” and that the order “may include such terms as are considered just.” Section 60(1) of the FMA has five subsections describing the powers of a receiver, including the power to “take any other steps or be given other authority that the judge or master considers necessary or advisable.” See s. 60(1) (e). 88 Here, the judge appointed the designated officer as receiver under the FMA , as explicitly stated in the receiver order.

In coming to his decision, he was guided by the “just or convenient’ criteria under s. 55 of The Court of Queen’s Bench Act . The judge did not err in doing so. 89 Judges can, and often do, give receivers very generous powers. Here, the judge granted several broadly worded powers to the designated officer under the receiver order.

Paragraphs 4 and 8 bear repeating: … Daniels and any person having notice of this order shall grant access to and deliver possession of the Property to the Receiver , including, without limitation, all information including all documents related to the Property and all monies, cash in hand, cheques, post- dated cheques and remittances of any kind whatsoever related to the Property and to provide or permit the Receiver to make, retain and take away copies of all such information and documents.

THIS COURT ORDERS AND SEEKS the aid and recognition of any court or administrative, regulatory or governmental body in Canada or elsewhere to act in aid of or to become complementary in the carrying out of the terms of this order. [emphasis added] 90 When I read these two paragraphs along with the definition of “Property” in the receiver order, I conclude that, if served, Canada, including Indian Residential Schools Canada, would be obliged to grant access to or deliver possession of any debt or monies due or payable under para. 4 and aid in the carrying out of the receiver order under para. 8.

As a result, these provisions are coercive in nature against the Federal Crown and offend its Crown immunity. 91 Over the years, some judges have navigated around Crown immunity by limiting the powers of the receiver to “receiving.” This approach has come to be known as a “ Willcock ” order, after Willcock v. Terrell , [1879] 3 Ex. D. (C.A.). This case concerned an order of sequestration after a judgment issued against a retired judge.

The issue was whether the paymaster general, who paid the judge’s retirement salary, could refuse to pay the named sequestrators after being served with the notice of sequestration. 92 Lord Coleridge C.J., of the lower appeal court, held that an order could not be made on the paymaster general that directed payment to the sequestrators (at p. 328): …. I fail to see how this Court can make an order upon the paymaster general, who is a mere subordinate officer of the Treasury, to pay to the sequestrators any portion of the pension payable to the defendant as it may from time to time accrue due. ….

I therefore think that to the order in the form in which it is asked for … there is an insuperable legal objection, inasmuch as, whatever I may think of the moral duties of the lords of the Treasury, I see no mode of enforcing it. ….

93 However, the Court did affirm a form of order which only restrained the defendant judge from receiving the pension (andauthorized the sequestrators to receive it), rather than directing the paymaster not to pay the pension to the defendant and to pay thesequestrators. Lord Coleridge C.J. wrote (at p. 329): Now, I do not see that that violates any principles of law; and it enables us to do that which is manifestly just, without committingourselves to any conflict with any other power or jurisdiction. We are therefore willing to grant the sequestrators in this case an order inthe general form suggested.

Care must be taken in framing the order, because I apprehend it can only authorize the sequestrators toreceive the money as and when the payments accrue; and they will probably have to apply to a judge at chambers from time to time for afresh order, which no doubt will be granted without difficulty. [emphasis added] 94 In affirming the lower court judgment, Cotton L.J. opined (at p. 334): It was urged on behalf of the defendant, that the order of April, 1878, ought not to have been made, because this Court could not enforceit, by which was meant, could not compel the paymaster general to pay to the sequestrators.

It cannot. But the Court can prevent thedefendant from receiving, and authorize the sequestrators to receive the sum mentioned. The order is in a form, which is usual in caseswhere a receiver or other officer of the court is authorized to receive a sum due from any one not before the Court. [emphasis added] 95 In Canadian National Railways v. Croteau, (SCC), [1925] S.C.R. 384, the Supreme Court of Canadareferred to Willcock with apparent approval. In that case, CN’s objection to being served with a garnishment order was dismissed in lightof the wording in the Canadian National Railways Act.

In commenting on the inability of the court to make an order against the Crown,Duff J. (as he then was), for the majority, likened this to the sequestration issue in Willcock (at p. 388): .… The position may be illustrated by reference to sequestration. Sequestration will lie to attach moneys payable by the Crown, subjectto this, that no order against the Crown can be made. Willcock v. Terrell [[1878] 3 Ex. D. 323].

Here, again, the process operates onlyindirectly, by precluding the judgment debtor from receiving payment. [emphasis added] 96 There is always the practical issue of whether the Crown will cooperate with a Willcock-type order. While not mentioningthe decision in Willcock, Grange J. (as he then was), made such an order when he appointed a receiver/manager in Martin v. Martin(1981), (ON SC), 24 R.F.L. (2d) 211 (Ont. H.C.). In that case, the parties were divorced and the wife took steps torecover maintenance arrears from the husband who was employed by the Canadian Transport Commission.

The following comments ofGrange J. highlight that cooperation will be necessary to make a Willcock-type order meaningful, and that attention must be paid to thewording of that order (at pp. 216-17): And that brings me to the position of the Crown. I am not by this order indirectly ordering garnishment against the Crown. A receiverhas no power but that given him by the court and I give him no power to enforce any payment against the Crown. All the order does isto make valid any payment the Crown makes to the receiver and entitle the receiver to give a valid receipt on behalf of the husband.

I amtold that the Crown will cooperate, but that is a decision for it and its officials to make. . . . . . I have endorsed a fiat upon the draft order changing only “attach and seize” to “receive” where reference is made to the debts owing fromthe Crown. [emphasis added]

97 To repeat, the appointment of a receiver does not, in and of itself, offend Crown immunity from coercive orders. As statedby Smith J. in Lavigne v. Robern; Attorney-General of Canada, Intervenor (1986), (ON SC), 56 O.R. (2d) 385(H.C.J.) (at p. 388): …. It is now well established that an order appointing a receiver is not an order against the Crown. It is more in the nature of aninjunction prohibiting a debtor from receiving the moneys to which he would otherwise be entitled and it has the effect of making validany payment of funds made by the Crown to the receiver. See, as well, Roshdy v.

Sultan (2001), (ON CA), 200 D.L.R. (4th) 161 (Ont. C.A.), in which the Court upheld theappointment of a receiver with respect to a payment the debtor was to receive from the United Nations Compensation Commission(UNCC) via the federal government because “the receiver will stand in the place of the judgment debtor to receive money payable to thedebtor” (at para. 21). 98 However, as stated in Willcock, “[c]are must be taken in framing the order” to avoid including a coercive order against theCrown within the order appointing a receiver.

Here, the judge’s error was failing to distinguish between the power to appoint a receiverfrom the powers of that receiver once appointed. As already explained in para. 90, upon service, Canada would be required to complywith paras. 4 and 8 of the receiver order and it is that obligation that contravenes Canada’s immunity from being subject to a coerciveorder. 99 To summarize, the appointment of the designated officer as receiver of Daniels’s DR award under the settlement agreement,in and of itself, does not offend federal Crown immunity.

This is so because the law recognizes the possibility of appointing a receiverwhere such an appointment creates the power to receive and does not constitute an order against the Crown (i.e., it is not coercive). However, because paras. 4 and 8 of the receiver order are coercive against the Federal Crown, they offend its Crown immunity. 100 I do not accept that the receiver order need be set aside in its entirety, as argued by Canada and Daniels. The offendingprovisions can be excised, or otherwise addressed, by clarifying in the receiver order that the offending provisions do not apply toCanada.

Having said that, whether Canada wishes to cooperate with the designated officer as receiver is for Canada to decide. 101 One final point with respect to Crown immunity. Canada also relied on s. 29 of the Crown Liability and Proceedings Act,which states: “No execution shall issue on a judgment against the Crown.” This wording seems problematic. Does the phrase “againstthe Crown” refer to an “execution” or a “judgment”?

In other words, is s. 29 precluding execution on a judgment rendered against theCrown as a defendant (i.e., when the Crown is the judgment debtor), or does it preclude execution against the Crown on a judgmentagainst someone else (in this case, Ingrid Daniels attempting to enforce her support order against Daniels), as argued by Canada?

Givenmy conclusion already as to the application of common law Crown immunity, I simply highlight the question and leave the answer foranother day. 102 Because the receiver order was issued under the FMA, Canada also relies on the principle that provincial legislation cannotbind the Federal Crown. See, for example, Her Majesty in right of the Province of Alberta v. Canadian Transport Commission, (SCC), [1978] 1 S.C.R. 61. Canada acknowledges that there are exceptions to this principle, but says that none of themapply here.

For example, the Federal Crown did not use the FMA to its benefit and, therefore, it cannot be said to have accepted theburdens of that legislation and to have waived immunity. See Sparling v. Québec (Caisse de dépôt et placement du Québec), (SCC), [1988] 2 S.C.R. 1015.

Further, this is not a case where there is a federal statute that has provided limited jurisdictionto intercept federal wages and federal Crown debts for maintenance enforcement purposes, as explained by the judge in his reasons. 103 My conclusion with respect to Crown immunity is a full answer to this alternative argument by the Crown because thecoercive aspects of the receiver order will be addressed. As a result, the Crown is not embraced by compulsory provincial legislation. See Her Majesty in right of the Province of Alberta v. Canadian Transport Commission at p.

Article 18.01 of the Settlement Agreement 104 Canada says that the judge ignored the spirit and intent of

Article 18.01 of the settlement agreement when he made thereceiver order. It says that

Article 18.01 bans the assignment of monies payable under the settlement agreement and that is a clearindication that the parties to the settlement agreement intended that any payments or awards to which a class member is entitled wouldgo directly to him or her, and not to a third party. 105 Daniels goes further and argues that

Article 18.01 prohibits any attachment of funds, whether by a receiver order orotherwise, even after payment to the recipient. He says that the receiver order offends the unique nature of the settlement agreement andthat the purpose of

Article 18.01 is to protect the vulnerable from making bad decisions about those funds. Therefore, he says that if thepayment cannot be assigned, then it cannot be garnished through the indirect mechanism of the appointment of a receiver. 106 Both Canada and Daniels rely on Fontaine (BC) in which some of the class members borrowed monies in anticipation ofreceiving CEP proceeds. The borrowing terms were onerous, carrying interest rates as high as 28.8 per cent, and contained directions topay that were delivered to the Federal Crown, through Indian Residential Schools Resolution Canada.

107 The issue before the British Columbia Court of Appeal was whether the lower court judge erred in finding that the direction to pay was contrary to both the settlement agreement and s. 67 of the Financial Administration Act , which prohibits the assignment of a Crown debt. 108 In concluding that the lower court judge did not err in his conclusion that the direction to pay was, at its core, an assignment, Saunders J.A. wrote (at paras. 35-36): …. It is clear that the transaction to which Canada was alerted was more than a Direction to Pay to the claimant’s counsel.

It was an integral part of a transaction that was intended to fetter the class member’s settlement proceeds the instant they became payable. The effect of the transaction was to assign wholly the amounts payable under the Settlement Agreement to lenders, contrary to the intent of s. 18.01 of the Settlement Agreement. It is not beyond human experience that a compensation scheme broadcast widely (as was this one) would attract people seeking a share of the proceeds in arrangements such as these.

I think it may be safely said that one purpose of s. 18.01 was to limit the potential for the class members to be fleeced of their funds, or any portion of them, before they were received by the individual. That it was intended they should receive the entire payment is apparent from the restriction in the Settlement Agreement to their counsel charging fees in respect to these payments.

In other words, an end run around the Settlement Agreement ought not to be countenanced. 109 The decision in Fontaine (BC) is distinguishable from the circumstances here because it deals with an assignment of settlement funds, which is not what is at issue here. Daniels did not assign his entitlement under the settlement agreement. I am of the view that the word “assignment” in

Article 18.01 means what it says; an assignment of proceeds under the settlement agreement by a recipient.

As we know from my earlier commentary, the appointment of the designated officer as receiver under the receiver order is clearly not an assignment by Daniels. 110 In addition to the purpose to protect vulnerable class members, as explained by Saunders J.A. in Fontaine (BC) , it seems to me that Article18.01 is a provision that is consistent with the principles underlying Crown immunity in that it prohibits a mechanism by which a third party would be able to direct, albeit not by way of court order, Canada to do something.

It is consistent, as well, with s. 67 of the Financial Administration Act . 111 The judge made no error of law when he concluded that

Article 18.01 did not prevent him from appointing a receiver or making the receiver order. Other Arguments on Appeal 112 At the appeal hearing, Daniels argued that issues under s. 88 and s. 89 of the Indian Act must be addressed because the funds payable under the settlement agreement are unique in nature and are payable to unique people for their unique experiences. Further, he said that these issues were not, nor could they be, addressed adequately by the judge given the lack of evidentiary underpinning for such an analysis. I am of the view that the record is sufficient to be able to conclude that neither s. 88 nor s. 89 is engaged here. 113

Section 88 raises division of powers and inter-jurisdictional immunity issues in the context of laws of general application. Peter W. Hogg, Constitutional Law of Canada , looseleaf (Toronto: Thomson Reuters Canada Limited, 2007) vol. 1 (at p. 28-16): (

b) Laws of general application What is meant by the phrase “laws of general application” in s. 88 of the Indian Act? The phrase certainly excludes provincial laws that single out Indians for special treatment. As noted earlier, such laws are likely to be classified as being in relation to Indians and therefore as invalid.

Section 88 does not invigorate such laws. Does the phrase “laws of general application” also exclude laws that, while not singling out Indians for special treatment, have a specially severe effect on Indians by affecting Indianness? As noted earlier, such laws cannot apply to Indians of their own force. The Supreme Court of Canada in 1978 held that s. 88 did not make provincial laws affecting Indianness applicable to Indians. Since other provincial laws of general application would apply to Indians of their own force anyway, this

interpretation made s. 88 merely declaratory of the general constitutional position.

Section 88 did not expand the body of provincial law that applied to Indians. 114 The FMA is a provincial law of general application. However, no federal legislation is at issue. The DR award was made pursuant to a court-approved settlement agreement, not federal legislation. 115 Section 89(1) prohibits certain proceedings against property situate on a reserve, other than at the instance of “an Indian or a band.” I agree with the judge that this

section is not engaged for the reason that both Daniels and Ingrid Daniels are status Indians.

Enforcement through the designated officer does not change the fact that the enforcement is for Ms Daniels’s benefit. See Agapi v.Youngpine et al. (1994), (AB KB), 164 A.R. 145 (Q.B.), and Bellegarde v. Walker (1987), (SKKB), 57 Sask.R. 197 (Q.B.).

As a result, it is not necessary to consider whether the funds paid to Daniels are “personal property of anIndian … on a reserve,” as provided for in s. 89, or whether the appointment of a receiver falls under this section. 116 As for the inclusion of pension benefits in the receiver order, the judge was careful to refer to pension benefits onlygarnishable under The Garnishment Act, C.C.S.M., c. G20. I see no palpable and overriding error in his including this reference. In anyevent, I understand that there are no benefits payable at this time, and so the issue is moot and there is no prejudice to Daniels.

Conclusion 117 The judge had the jurisdiction to expand the issues before him in the manner that he did. In doing so, he exercised hisdiscretion in a manner that is entitled to deference. He also had the jurisdiction, under s. 60 of the FMA, to appoint a receiver to receivefunds payable under the settlement agreement. Given the applicability of common law Crown immunity, he did not have the jurisdictionto empower the receiver to coerce Canada to do something with respect to those payments. As a result, I would excise para. 8 of thereceiver order.

I note that other paragraphs provide the receiver with broad powers to seek aid and assistance which would not engagethe Federal Crown. As for para. 4 of the receiver order, I would add the following to that paragraph: “the word ‘person’ does notinclude the Federal Crown, including Indian Residential Schools Resolution Canada.” In all other respects, I would sustain the receiverorder. 118 The designated officer made the unusual request that the implementation of this decision be delayed in the event that thereceiver order was upheld.

This will, she says, give her time to serve Daniels’s lawyer who holds the DR funds in trust. I am notprepared to agree to that request for two reasons. Firstly, I see no reason to believe that the funds will not continue to be held in trustuntil service is made or is waived. Secondly, the receiver order was not the subject of a stay order.

As such, in my view, the designatedofficer should have served the lawyer with the receiver order at any time after it was signed by the judge, or with a garnishing order,subject to the same trust arrangements as exist now. 119 Finally, even though Daniels is not successful, he seeks costs given how the issues in the case expanded and because hiscounsel represented him on a pro bono basis.

While I very much appreciate his counsel’s commitment, participation and assistance, thisis not one of those cases where I would order costs in favour of the unsuccessful litigant, particularly in light of his adoption of Canada’sarguments. Appropriately, neither Canada nor the designated officer seeks costs. 120 I would allow the appeal of Canada to the limited extent noted above. I would dismiss Daniels’s appeal to set aside thereceiver order in its entirety. J.A. I agree: J.A. I agree: J.A.

Appendix Designated officer may initiate action 55(4) Whether or not any other enforcement proceedings are being taken, the designated officer may take one or more of thefollowing actions in respect of the person required to make payments under an order (

a) Proceedings to obtain a garnishing order under The Garnishment Act. (

b) Registration of the order in a land titles office under

section 59 and proceedings under The Judgments Act in pursuance of theregistration.

(

c) Proceedings to obtain a writ of execution under The Executions Act . (

d) Proceedings to realize upon any bond or security deposited under subsection 57(4). (

e) Proceedings to obtain the appointment of a receiver under

section 60. (

f) Proceedings to bring the person in default before a deputy registrar for an examination under

section 56. (

g) Proceedings to bring the person in default before a judge or master for a hearing under

section 57 . (

h) Proceedings for the imposition of a penalty under

section 50. (

i) Providing a personal reporting agency, as defined under The Personal Investigations Act , with a computer print-out showing that the person is in default under the order, but the designated officer shall not provide, notwithstanding clause 4(

e) of that Act, the address of the person entitled to receive the maintenance. (

j) Giving notice under

section 59.1 to the person in default of possible action under The Highway Traffic Act ; (

k) Proceedings under

section 59.3 to obtain an order with respect to assets; (

l) Registration of a financing statement in the Personal Property Registry under

section 59.4 in accordance with The Personal Property Security Act . Powers of judge or master 57(3) At a hearing under this section, the judge or master shall consider the evidence adduced and may make one or more of the following orders in respect of the person required to pay maintenance: (

a) where the judge or master finds that the person is wilfully in default, fining the person not more than $3,000. or imprisoning the person for not more than 90 days, or both; (a.1) determining whether the person required to pay maintenance is in default of a payment, and if so, fix the amount of arrears owing for the purpose of enforcement under this Part; (

b) requiring payment of the arrears in full by a specified date; (

c) requiring periodic payments on the arrears; (

d) adjourning the hearing with or without conditions where the judge or master is satisfied that the person (

i) cannot at that time make payments on the arrears, or

(ii) reasonably requires time to obtain counsel, provide additional financial or other information to the court, or make specified payments on the arrears; (

e) requiring the deposit of a specified amount of money in the court or with a person the judge or master considers appropriate, to be held as security and for use in the event of a default in payment under the order of maintenance or an increase in the payment under a later order; (

f) requiring the deposit of security in a form other than money to ensure that payments are made under the order of maintenance; (

g) dismissing the proceedings. Continuation of adjourned hearing 57(4.1) A hearing that is adjourned by a judge or master under clause (3)(

d) after evidence has been adduced shall be continued before the same judge or master.