Buffalo Point Cottagers Assn v. Buffalo Point First Nation

Judicial review - First Nations Tax Commission - First Nations Fiscal and Statistical Management Act - Taxation laws - Duty of fairness

The Federal Court of Canada released a decision on December 5, 2014 in Buffalo Point Cottagers Association Inc. v. Buffalo Point First Nation, dismissing an application for judicial review of a decision of the First Nations Tax Commission to approve six tax laws proposed by the Buffalo Point First Nation ("BPFN"). 

BPFN has its reserve lands located in the southeast corner of Manitoba along the shores of the Lake of the Woods where various full time and recreational non-Aboriginal cottagers lease land. Since 1999, BPFN's development corporation had been entering into agreements to share annual operating costs with the non-Aboriginal cottagers residing on reserve. After the First Nations Fiscal and Statistical Management Act was passed in 2005, the BPFN signalled its intention to replace the cost-sharing regime with a statutory land tax regime under the Act. By 2010, the cottagers were consulting with the First Nations Tax Commission that administers the Act about the potentially disruptive effect a land tax regime could have on them. After what the Federal Court found to be "a high degree of consultation", on June 25, 2012, the Commission approved six taxation laws that had been proposed by BPFN. The cottagers felt that this approval had unjustly deprived them of financial control over their lease rates and the financial stability they had enjoyed under the previous cost-sharing regime. In reaction to the change, the cottagers brought both this Federal Court application and an action before the Manitoba Court of Queen's Bench in which they are seeking to enforce an arbitration clause from their last cost-sharing agreement with BPFN. 

The Court rejected the cottagers' argument that the Commission had failed to take their concerns into consideration in approving the taxation laws. It was clear on the record that Commission staff was well aware of these concerns and the cottagers failed to provide evidence to rebut the presumption that this knowledge was also attributable to the Commissioners themselves. In any event, the only issue before the Commission was whether BPFN's taxation laws met standards that were set under the Act; there was no legal basis for the Commission to accommodate the cottagers' expectations. 

The cottagers also challenged the taxation rate set by BPFN, arguing that since the rate was based on a nearby "reference jurisdiction" that included a school tax in its rate, the BPFN ought to have made an adjustment to this rate to acknowledge the fact that it did not provide any school service. However, BPFN was constrained by the standards set under the Act in this regard. Their first taxation year needed to be set at the same rate as the reference jurisdiction and there was no basis for any reduction equivalent to the amount of that rate attributable to a school tax. The Court also noted that the BPFN had made a strong effort to mitigate the costs borne by the cottagers and had given them a substantial credit on their first tax bill that resulted in an effective tax rate less than half what would otherwise be payable. Furthermore, the strict requirements of the Act required that this discounted rate increase by no more than the rate of national inflation in each subsequent year, meaning that the discounted rate continued to apply to the cottagers in subsequent tax years and it would be several years before they were paying an effective rate comparable to even the initial rate of the "reference jurisdiction". The Court noted that this significantly reduced the weight that could be placed on the cottagers' claim that they had been prejudiced by the imposition of the tax regime.

The Court further rejected the cottagers' argument that the Commission had breached its duty of fairness to them through incorrect representations made by its staff. Aside from the cottagers' deflated expectations, the Court found no evidence that the cottagers had relied on staff's incorrect representations to their detriment. Without detriment there was no remedy available. The Court rejected other arguments from the cottagers that the Commission had made a reviewable error in the process it followed or breached a duty of fairness in not acceding to their requests for a rate freeze and delay of the tax regime's implementation. The Court found the Commission's decision was reasonable in all respects and the cottagers' expectations were "inconsequential when considered against realistic and reasonable expectations arising from the Act".