



COURT OF APPEAL FOR ONTARIO

CITATION: Sands v. Walpole Island First Nations Band, 2018
    ONCA 188

DATE: 20180226

DOCKET: C63269

Sharpe, Rouleau and Benotto JJ.A.

BETWEEN

Rocky Robert Sands

Plaintiff (Respondent)

and

Walpole Island First Nations Band Council

Defendant (Appellant)

John Peters, for the appellant

Lucas Lung and Joyce Thomas, for the respondent

Heard: February 12, 2018

On appeal from the judgment of Justice Pamela L. Hebner
    of the Superior Court of Justice dated December 23, 2016, with reasons reported
    at 2016 ONSC 7983.

REASONS FOR DECISION

[1]

This appeal arises from a series of leases
    granted to the respondent band member, Rocky Sands, by the appellant Walpole
    Island First Nations Band Council. Sands operated a hunting camp on the leased
    lands and made extensive improvements, constructing a lodge and performing
    other work. The central issue is whether Sands is entitled to credit against
    the outstanding rental payments on the leases for the cost of the improvements
    he made. The trial judge held that Sands was entitled to credit in the amount
    of $532,500 for the improvements, plus his deposit of $40,000, less rent owing
    in the amount of $430,000, and accordingly awarded Sands judgment for $142,500.

[2]

The Bands appeal turns on
the
Indian Act
,
    R.S.C. 1985, c. I-5, s. 2(3):

Unless the context otherwise requires
    or this Act otherwise provides,

(a)
a power conferred on a band shall be deemed not to be exercised
    unless it is exercised pursuant to the consent of a majority of the electors of
    the band; and

(b)
a power conferred on the council of a band shall be deemed not to
    be exercised unless it is exercised pursuant to the consent of a majority of
    the councillors of the band present at a meeting of the council duly convened.

[3]

In the Bands submission, the trial judge erred
    by failing to apply s. 2(3) with respect to two issues:

1.

Sands assertion that rent specified in the
    lease for 2000-2005 was reduced as a result of an oral commitment given to him
    by Chief Donna Day; and

2.

Sands claim that an arrangement had been made
    whereby he would be given a credit for improvements to the leased property
    against rent.

[4]

The Band argues that as neither arrangement was
    formally approved by resolution of the Band Council, neither is binding on the
    Band. On behalf of the Band, Mr. Peters pointed out that there are two lines of
    authority interpreting s. 2(3), one insisting on strict adherence to the rule
    that a Band Council resolution is required and the other allowing for binding
    arrangements to be made by agents under actual or ostensible authority. He did
    not ask us to follow the strict line but argued that even if we follow the
    second line of authority, there is no basis in the evidence to find that anyone
    had actual or ostensible authority to bind the Band on either matter.

[5]

The Band also argues that the trial judge erred
    in awarding Sands $30,000 in aggravated damages.

Analysis

(1)

Rent reduction

[6]

The trial judge accepted Sands evidence that
    Chief Donna Day orally agreed to reduce the annual rent for the years 2001 to
    2005 to $84,000. Days evidence was that she could not recall the conversation.
    Sands evidence was supported by an exchange of correspondence between him, Indigenous
    and Northern Affairs Canada (INAC) and the Band. When INAC wrote to Sands
    asking him to pay the rent specified in the lease, he responded with a letter
    explaining that he had spoken to Day, who assured him that the lease had been
    amended to reflect the reduced rent. INAC forwarded a copy of Sands letter to
    the Band and the Band did not respond.

[7]

In our view, it was open to the trial judge on
    this record to find that Day had assured Sands that the rent was reduced and
    that the lease would be amended. When told of this arrangement, the Band made
    no response and, rather than insisting on the terms of the written lease,
    acquiesced to the amendment asserted by Sands. However one interprets s. 2(3)
    of the Act, there is no basis for us to interfere with the trial judges
    finding that the Band was bound by Chief Donna Days agreement to reduce the
    rent.

(2)

Credit for Leasehold Improvements

[8]

On behalf of Sands, Mr. Lung points to two
    crucial documents in relation to the leasehold improvements. The first is an
    Action Memo To File dated April 20, 2005 recording a resolution of the Band
    Council. The memo records that Sands made a presentation regarding the
    construction he was carrying out and that Rocky Sands is given approval by the
    Council to continue construction. The memo also records that the Council
    directed Administration in conjunction with the Lands and Membership Department
    to report back to Council on the current status of Sands lease and to identify
    impacts to revenue generation regarding the issue of lease reduction costs at
    half the amount for 1 and 2 years.

[9]

The second Action Memo To File, dated May 20,
    2005, records a Band Council decision instructing the Lands & Membership
    Departmentto monitor and arrive at appraised value of construction work being
    done by the lessee Rocky Sands at St. Annes Lodge; further, the final
    assessment will include receipts for material and labour costs for the
    renovations with a final report forwarded to the Lands Department.

[10]

The trial judge found that the Lands and
    Membership Department dropped the ball and failed to monitor the construction
    or to obtain an appraised value of the construction work conducted by Sands.

[11]

A year later, in May 2006, the Band established
    a Hunt Club Task Force to monitor the Bands various hunt club properties and
    to deal with improvements and outstanding rent. In May 2008, the Hunt Club Task
    Force made a recommendation indicating: The total expected amount in
    consideration [of Sands improvements] is $532,500, to be used to offset
    arrears and disbursed yearly for the remainder of the lease with reference to
    Action Memo dated May 20, 2005. There is no evidence as to whether that
    recommendation was submitted to or dealt with by the Band Council.

[12]

In June 2008, there was a Band Council election
    resulting in a complete turnover in membership and the election of a new Chief
    who did not get along with Sands. The newly constituted Hunt Club Task Force
    met in June and July of 2009 and recommended that Sands be credited with half
    of the $532,000. The trial judge found, at para. 78, that Sands cannot be
    faulted for refusing to accept the offer as the statement upon which it was
    based was manifestly inaccurate.

[13]

At a Band Council meeting held October 4, 2010,
    following a procedure found by the trial judge to be completely improper, one
    Council members vote in favour of Sands was not counted, leading to the defeat
    of a motion to present another offer to Sands. The member whose vote was not
    counted left the meeting and, by a vote of 5 to 4, the Council made the decision
    to evict Sands for non-payment of rent.

[14]

At para. 65 or her reasons, the trial judge
    found:

Rocky was given the clear message from Band
    Council to proceed with his construction renovations. He was also given the
    clear message that the cost of those improvements would be paid for by the Band
    by way of a credit against his rent.

At para. 74, she found:

In 2005, Rocky and the Band, through Council,
    agreed that Rocky could proceed with construction and renovations at St. Annes
    Hunt Club. I find that the Band agreed to reimburse Rocky for the improvements
    by way of a capital improvement credit to his rent. This finding is supported
    by the evidence that the Band gave Rocky approval to continue construction and
    instructed the Lands and Membership Department to arrive at an appraised value
    of the construction work. Over the next two years, the Band was aware of the
    work being done on its property and did not object. Rocky attended at Council
    meetings to provide reports on the work. When the Hunt Club Task Force was
    struck, Rocky attended at task force meetings to provide reports on the work.
    Rocky did so because he expected to be reimbursed for the improvements to the
    Bands lands. It is inconceivable that the Band would not have known of the
    work being done. It is inconceivable that the Band would not have known of
    Rockys expectation of reimbursement. At the time, other band members
    leasing hunt clubs on lands owned by the Band had an expectation of
    reimbursement for improvements. Rocky was no exception. Accordingly, the Band
    allowed and encouraged the work to be completed knowing Rocky expected to be
    reimbursed for same.

[15]

In our view, these findings are fully supported
    by the record. It was open to the trial judge to find that the Band Council had
    undertaken to credit Sands for the leasehold improvements he made. The finding
    was supported by the two Action to File memos, the fact that Sands continued
    to make improvements in reliance on the position taken by the Band Council and
    the evidence that other band members were given credit for the cost of
    leasehold improvements. As these findings rested on decisions made by the Band
    Council, the argument that Sands claim is defeated by s. 2(3) of the Act
    cannot be sustained.

[16]

We do not agree that because the precise amount
    of the credit Sands was to receive was never resolved by the Band Council,
    Sands lost his entitlement to claim a credit. The Band could not avoid the
    obligation it had undertaken by failing to resolve the precise amount of the
    credit to which he was entitled. It was open to the trial judge to determine
    the appropriate amount and the record before her fully supported the
    calculation she made.

Aggravated Damages

[17]

We see no error on the part of the trial judge
    in awarding compensatory aggravated damages. Sands was evicted in a sudden and
    peremptory manner on the day before the opening of the hunting season. The
    eviction caused Sands significant distress and humiliation. He lost customers,
    guides and the opportunity to earn income during the hunting season. An award
    of $30,000 as compensation for his loss was fully justified.

Disposition

[18]

Accordingly, the appeal is dismissed with costs
    to the respondent Sands fixed at $15,000 inclusive of taxes and disbursements.

Robert
    J. Sharpe J.A.

Paul
    Rouleau J.A.


M.L.
    Benotto J.A.


