Judgments

2004 FC 674

T-2203-00

T-2204-00

T-2134-00

Bruce Allan Beattie (Plaintiff)

v.

Her Majesty the Queen (Defendant)

Indexed as: Beattie v. Canada (F.C.)

Federal Court, Lafrenière P.--Vancouver, October 14 and 15, 2003; Toronto, May 6, 2004.

Crown -- Creditors and Debtors -- Whether assignors of Indian treaty annuity rights entitled to recover arrears, interest thereon -- Financial Administration Act (FAA), s. 67 prohibiting assignment of Crown debts subject to s. 68 exceptions -- Not Crown debt due or becoming due under contract -- Numerous reported cases, text authors cited as to whether Indian treaties to be equated to contracts -- Cases cited by plaintiff distinguished as not within FAA context -- In FAA, Parliament intended to differentiate between treaties, contracts -- Wording of French version considered -- Non-transferability of treaty annuities -- Whether assignments invalid for non-compliance with FAA, assignment of Crown Debt Regulations -- Whether treaty annuities are "Indian moneys" -- Whether Crown fiduciary with duty to invest or pay interest -- Liability of Crown to pay interest -- History of legislation, case law reviewed -- Statutory bar against compound interest -- Interest not awarded against Crown as equitable compensation -- Even if were payable, such award herein would be disproportionate to wrong committed.

Native Peoples -- Claim for treaty annuity arrears -- Assignors are descendants of original adherents to Treaty No. 6 (1876) or No. 11 (1921) -- Each assignor is registered Indian -- Under Treaties, each Indian entitled to $5 per year -- Neither text nor context of Treaties provided non-payment consequences -- Interest on arrears never paid -- Crown challenging validity of assignments under Financial Administration Act (FAA) -- Plaintiff claiming case within exception to general assignment prohibition as treaties analogous to contracts -- Cases relied on by plaintiff distinguished as outside FAA context -- Recent S.C.C. judgment holding contract principles inapplicable to treaties -- Treaty rights non-transferable due to special status -- Under Indian Act, s. 90, transaction re: title to property situated on reserve void if not consented to by Minister -- Court not considering Constitution Act, 1982 s. 35(1) argument, notice of constitutional challenge not having been given -- Whether amounts at issue "Indian moneys" under Indian Act, s. 61(2) -- Annuity payments made out of Consolidated Revenue Fund, not from sale of surrendered lands -- Not every Crown obligation to Indians is fiduciary in nature -- No fiduciary duty herein as no element of discretion -- S.C.C. holding in 1895 case regarding Indian treaty, interest not paid on unpaid annuities -- Use of statutory definition of "Indian" in determining annuity entitlement was, at worst, incorrect so to award compound interest on equitable principles disproportionate to wrong committed.

This was the latest in a series of actions brought by members of plaintiff's family claiming for treaty annuity arrears. Since all of the earlier cases were settled out of Court, the issue of interest on annuity arrears had not been determined. Plaintiff is assignee of the treaty annuity rights of some ten assignors, said to be descendants of treaty Indians. Plaintiff's position is that assignors are entitled to treaty annuities dating back to their birth. The Crown says that these assignors are entitled to neither annuities nor interest thereon. The issues raised include: whether the Crown owes a duty to assignors; whether the treaty obligations have been extinguished; whether the assignments held by plaintiff are valid under the Financial Administration Act (FAA); whether the claims were made out of time; the quantum of the claim; whether interest is payable and, if so, at what rate and whether it can be compounded.

Hargrave P. ordered that two of the issues be tried separately, as provided for by Federal Court Rules, 1998, rule 107. These were: (1) whether the FAA impacted upon the assignments' validity, and (2) whether interest was owing and, if so, at what rate, whether simple or compound, and how it should be calculated.

Held, the actions should be dismissed on the basis that the assignments were being invalid, and that no interest was be recoverable.

The assignors are all direct natural descendants of original adherents to either Treaty No. 6 of 1876 or Treaty No. 11 of 1921. Each assignor is a registered treaty Indian and all but one have at one time received treaty annuities. Under Treaty No. 6, each Indian was to be paid $5 per year while Treaty No. 11 also provided for annual payments of $5 to ordinary Indians and slightly larger amounts to Chiefs and Headmen. For purposes of these reasons, there was no necessity for making any factual distinctions between any assignor or the two treaties. Neither the text nor historical context of either treaty provided for any explicit consequences in case of non-payment or delayed payments or for interest on accumulated arrears. There was affidavit evidence that interest on arrears of Treaty annuities had never been paid.

The Crown submitted that the plaintiff's assignments were void on three grounds: (i) FAA section 67 provides that a Crown debt is not assignable and that no transaction purporting to assign a Crown debt can confer on anyone any right or remedy. Exceptions are made under section 68 for contractual debts and other debts of a prescribed class. The Crown submitted that the section 68 exceptions were to be strictly construed and that a treaty is not a contract. (ii) It is a condition of treaty rights that they are non-transferable. (iii) The assignments did not comply with the requirements of the FAA and the Assignment of Crown Debt Regulations.

(1)(i) The plaintiff argued that a statutory provision that impacts upon treaty rights must be liberally construed, with any ambiguity resolved in the Indians' favour. The treaties were contracts involving the payment of money by the Crown. Taking into account the case law and the opinions of authors on this subject, plaintiff submitted that a debt of treaty annuity arrears should be looked upon as a Crown debt due or becoming due under a contract and therefore assignable under subsection 68(1). It was further suggested that the only types of contract debt which Parliament intended to exclude from subsection 68(1) assignment were those identified in subsection 68(5).

The Court was, however, unable to agree with plaintiff's arguments. It was following the Exchequer Court of Canada decision in Bank of Nova Scotia v. The Queen, in which it was held that contract money claims against the Crown were assignable without the Crown's consent, that Parliament enacted FAA, section 67 reinstating the general prohibition against the assignment of Crown debts. Plaintiff could succeed only if the treaty annuities fell within the paragraph 68(1)(a) exemption. An exception should not be construed such that the broad purpose of the legislation is undermined. While there is an abundance of case law equating Indian treaties with contracts, none dealt with these treaties within the context of the FAA and, in a fairly recent case the S.C.C. held that contract principles do not apply to treaties. Furthermore, it would appear that Parliament differentiated between treaties and contracts in the FAA. In section 2, the words "contract" and "treaty" are referred to separately in the definition of "public money". Section 68 mentions "contract" but not "treaty". The French version of section 68 also supports an interpretation excluding treaties from "contract".

(ii) The Crown's second point was that treaty rights are non-transferable due to their special status in law. Plaintiff countered by suggesting that the assignments were not of treaty rights but of past due debts. But, under Indian Act, section 90, every transaction purporting to pass title to any property deemed to be situated on a reserve, or any interest in such property, is void unless the transaction is entered into with the consent of the Minister. Plaintiff argued that, to the extent the FAA infringed a core treaty right, that had to be justified by the Crown in accordance with Constitution Act, 1982, subsection 35(1). The Court was not prepared to even consider a constitutional challenge, the required notice not having been given. It had to be concluded that, absent Crown consent, treaty annuities cannot be transferred.

(iii) FAA, subsection 68(2) sets out the requirements for a valid assignment. While plaintiff had intended to comply with the FAA Part VII notice requirements, he was dissuaded from doing so when the initial notice of assignment sent by him was rejected by the Receiver General for the reason that treaty rights cannot be assigned. The Crown's technical objections were rejected.

(2) Assuming that plaintiff will ultimately succeed at trial in establishing that he is entitled to the payments claimed, the interest issue had to be determined. Neither Treaty provided for interest and the issue was not discussed when they were negotiated. Still, plaintiff asserted a statutory entitlement to interest on annuity arrears under Indian Act, subsection 61(2) which deals with interest on "Indian moneys". With reference to Act, section 2 (which defines that term), the Crown argued that these annuity payments are not "Indian moneys" since they are not "collected, received or held by Her Majesty" but come out of the Consolidated Revenue Fund and their payment is authorized by Act, section 72. The moneys here at issue are not derived from the sale of surrendered lands: see section 62 (which provides that such Indian moneys are to be treated as capital moneys of the band). There was nothing to support the proposition that annuity payments are "Indian moneys".

The next issue was whether the Crown was a fiduciary having an obligation to invest or pay interest. Plaintiff made reference to the case of Authorson v. Canada (Attorney General), in which the Ontario Court of Appeal followed the "famous judgment" of Dickson J. in Guerin in finding that the Crown, as represented by the Department of Veterans Affairs, had a fiduciary duty to "grow the funds by investing them or accruing interest on them". The instant case was however, distinguished on its facts. There was no evidence that the Crown retained annuity arrears for the assignors' benefit. Annuity arrears were returned to the Receiver General and not retained in a separate account. Not every obligation owed by the Crown to Aboriginal people is fiduciary in nature. A failure by the Crown to pay these annuities to all those entitled to their receipt could constitute a breach of the treaty but not breach of fiduciary duty since no element of discretion was involved. The determination by the Crown of who is an "Indian" for treaty purposes is an administrative function not involving any exercise of discretion and so cannot give rise to fiduciary duties.

As to the Crown's liability to pay interest, Federal Court Act, section 36 provided that interest would not be awarded in any claim against the Crown unless there was a statutory or contractual provision therefor. The Crown Liability and Proceedings Act, section 31, which came into force on February 1, 1992, did not waive Crown immunity so as to create liability to interest as common law damages or equitable compensation. The effect of subsection 31(6) was to limit interest that may be awarded to periods after it came into force, unless a statute or contract provides for the payment of interest prior to that date.

It was held in Ontario, Province of v. The Dominion of Canada and Province of Quebec (1895), 25 S.C.R. 434, that interest is not paid on unpaid annuities. That case concerned an 1850 treaty with the Ojibway Indians. There was no contractual, statutory or other basis herein for the payment of interest on annuity arrears prior to February 1, 1992.

With the exception of assignor Charles Harris, the causes of action arose in more than one province so that Crown Liability and Proceedings Act, subsection 31(2) applied and paragraph 31(4)(b) prohibited an award of interest on interest, or compound interest. In the case of Harris, since the cause of action arose in Alberta, interest was governed by the Judgment Interest Act, S.A. 1984 and it too did not allow an award of interest on interest awarded under the Act. There was a statutory bar against the payment of compound interest in all of the cases at bar. Nor could interest be awarded against the Crown by way of equitable compensation. And, in any event, the Court's equitable jurisdiction to award interest arises only where there has been fraud, breach of fiduciary duty or wrongful retention of money, none of which was here made out. An award of compound interest was not necessary as a deterrent or to encourage the Crown to honour its treaty promises.

Finally, even if compound interest could, under equitable principles, be awarded, to do so would be disproportionate to the wrong committed. The use of the statutory definition of "Indian" in determining entitlement to treaty annuities was, in the circumstances, reasonable and--at worst--incorrect. There was no evidence of bad faith.

statutes and regulations judicially

considered

An Act to amend "The Supreme and Exchequer Courts Act," and to make better provision for the Trial of Claims against the Crown, S.C. 1887, c. 16, s. 33.

Assignment of Crown Debt Regulations, C.R.C., c. 675.

Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], s. 35(1).

Crown Liability and Proceedings Act, R.S.C., 1985, c. C-50, ss. 1 (as am. by S.C. 1990, c. 8, s. 21), 31 (as am. idem, s. 31).

Exchequer Court Act, R.S.C. 1970, c. E-11.

Federal Court Act, R.S.C., 1985, c. F-7, s. 36.

Federal Court Rules, 1998, SOR/98-106, rr. 50(2), 107.

Financial Administration Act, R.S.C., 1985, c. F-11, ss. 2 "public money", 66, 67, 68 (as am. by S.C. 1991, c. 24, s. 49, Sch. I, item 2), 69.

Indian Act, R.S.C., 1985, c. I-5, ss. 2 "Indian moneys", 61, 62, 69, 72, 90.

Indian Bands Revenue Moneys Regulations, C.R.C., c. 953.

Judgment Interest Act, S.A. 1984, c. J-0.5, s. 2.

Supreme and Exchequer Court Act (The), S.C. 1875, c. 11, s. 33.

Supreme Court Act 1981 (U.K.), 1981, c. 54, s. 35A.

Treaty No. 6 (1876).

Treaty No. 11 (1921).

cases judicially considered

followed:

Mon-Oil Ltd. v. Canada (1992), 50 F.T.R. 260 (F.C.T.D.); affd (1993), 152 N.R. 210 (F.C.A.); Ontario, Province of v. The Dominion of Canada and Province of Quebec (1895), 25 S.C.R. 434; affd [1897] A.C. 199 (P.C.); Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534; (1991), 85 D.L.R. (4th) 129; [1992] 1 W.W.R. 245; 61 B.C.L.R. (2d) 1; 6 B.C.A.C. 1; 9 C.C.L.T. (2d) 1; 39 C.P.R. (3d) 449; 43 E.T.R. 201; 131 N.R. 321; 13 W.A.C. 1.

not followed:

Bank of Nova Scotia v. The Queen (1961), 27 D.L.R. (2d) 120 (Ex. Ct.).

applied:

Canada v. Kakfwi, [2000] 2 F.C. 241; (1999), 178 D.L.R. (4th) 424; [2000] 1 C.N.L.R. 140; [1999] 4 C.T.C. 264; 99 DTC 5639; 247 N.R. 274 (C.A.); Wewaykum Indian Band v. Canada, [2002] 4 S.C.R. 245; (2002), 220 D.L.R. (4th) 1; [2003] 1 C.N.L.R. 341; 297 N.R. 1; Guerin et al. v. The Queen et al., [1984] 2 S.C.R. 335; (1984), 13 D.L.R. (4th) 321; [1984] 6 W.W.R. 481; 59 B.C.L.R. 301; [1985] 1 C.N.L.R. 120; 20 E.T.R. 6; 55 N.R. 161; 36 R.P.R. 1; Rudolf Wolff & Co. v. Canada, [1990] 1 S.C.R. 695; (1990), 69 D.L.R. (4th) 329; 43 Admin. L.R. 1; 41 C.P.R. (2d) 1; 46 C.R.R. 263; 106 N.R. 1; 39 O.A.C. 1; Guerin v. R., [1982] 2 F.C. 445; (1981), 127 D.L.R. (3d) 170 (T.D.); Leighton v. Canada, [1989] 1 F.C. 75; (1988), 21 F.T.R. 27 (T.D.); Westdeutsche Landesbank Girozentrale v. Islington London Borough Council, [1996] A.C. 699 (H.L.); Felix v. Patrick, 145 U.S. 317 (1892).

distinguished:

R. v. Badger, [1996] 1 S.C.R. 771; (1996), 133 D.L.R. (4th) 324; [1996] 4 W.W.R. 457; 181 A.R. 321; 37 Alta. L.R. (3d) 153; 105 C.C.C. (3d) 289; [1996] 2 C.N.L.R. 77; 195 N.R. 1; 116 W.A.C. 321; R. v. Tennisco (1981), 131 D.L.R. (3d) 96; 64 C.C.C. (2d) 315; [1981] 4 C.N.L.R. 138 (Ont. H.C.); R. v. Dennis and Dennis (1974), 56 D.L.R. (3d) 379; [1975] 2 W.W.R. 630; 22 C.C.C. (2d) 152; 8 C.N.L.C. 476; 28 C.R.N.S. 268 (B.C. Prov. Ct.); Pawis v. R., [1980] 2 F.C. 18; (1979), 102 D.L.R. (3d) 602; [1979] 2 C.N.L.R. 52 (F.C.T.D.); Rex v. Wesley, [1932] 4 D.L.R. 774; [1932] 2 W.W.R. 337; (1932), 26 Alta. L.R. 433; [1932] 58 C.C.C. 269 (Alta. App. Div.); R. v. Sioui, [1990] 1 S.C.R. 1025; (1990), 30 Q.A.C. 287; 70 D.L.R. (4th) 427; 56 C.C.C. (3d) 225; [1990] 3 C.N.L.R. 127; 109 N.R. 22; Sawridge Band v. Canada, [1996] 1 F.C. 3; [1995] 4 C.N.L.R. 121 (T.D.); Attorney General for the Dominion of Canada v. Attorney-General for Ontario, [1897] A.C. 199 (P.C.); St. Catherine's Milling and Lumber Company v. Reg. (1888), 14 A.C. 46 (P.C.); Authorson v. Canada (Attorney General) (2002), 58 O.R. (3d) 417; 215 D.L.R. (4th) 496; 33 C.C.P.B. 1; 92 C.R.R. (2d) 224; 157 O.A.C. 278 (C.A.); revd [2003] 2 S.C.R. 10; (2003) 227 D.L.R. (4th) 385; 4 Admin. L.R. (4th) 167; 36 C.C.P.B. 29; 109 C.R.R. (2d) 220; 306 N.R. 335.

referred to:

Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3; (1994), 63 Q.A.C. 161; 95 DTC 5017; 171 N.R. 161; Macdonell v. Quebec (Commission d'accès à l'information), [2002] 3 S.C.R. 661; (2002), 219 D.L.R. (4th) 193; 44 Admin. L.R. (3d) 165; 22 C.P.R. (4th) 129; 294 N.R. 238; R. v. Sundown, [1999] 1 S.C.R. 393; (1999), 170 D.L.R. (4th) 385; [1999] 6 W.W.R. 278; 177 Sask. R. 1; 132 C.C.C. (3d) 353; [1999] 2 C.N.L.R. 389; 236 N.R. 251; Benoit v. Canada, [2002] 2 C.N.L.R. 1; 2002 DTC 6896; 217 F.T.R. 1 (F.C.T.D.); revd (2003), 228 D.L.R. (4th) 1; [2003] 3 C.N.L.R. 20; 242 F.T.R. 159; 2003 DTC 5366; 307 N.R. 1 (F.C.A.); Hay River (Town of) v. R., [1980] 1 F.C. 262; (1979), 101 D.L.R. (3d) 184; [1979] 2 C.N.L.R. 101 (T.D.); Schreiber v. Canada (Attorney General), [2002] 3 S.C.R. 269; (2002), 216 D.L.R. (4th) 513; 167 C.C.C. (3d) 51; 22 C.P.C. (5th) 207; 292 N.R. 250; 164 O.A.C. 354; Anishinaabeg of Kabapikotawangag Resource Council Inc. v. Canada (Attorney General) (1998), 53 C.R.R. (2d) 183; [1998] 4 C.N.L.R. 1; 66 O.T.C. 378 (Ont. Gen. Div.); R. v. Stubbington, [1999] 4 C.N.L.R. 222 (B.C. Prov. Ct.); R. v. Pike, [1994] 1 C.N.L.R. 160 (B.C.S.C.); The Pas Merchants Ltd. v. The Queen, [1974] 2 F.C. 376; (1974), 50 D.L.R. (3d) 154; 8 C.N.L.C. 600 (T.D.); Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85; (1990), 71 D.L.R. (4th) 193; [1990] 5 W.W.R. 97; 67 Man. R. (2d) 81; [1990] 3 C.N.L.R. 46; 110 N.R. 241; 3 T.C.T. 5219; EdperBrascan Corporation v. 177373 Canada Ltd. (2001), 53 O.R. (3d) 331; [2000] O.T.C. 722 (Sup. Ct.); affd by (2002), 22 B.L.R. (3d) 42 (Ont. C.A.).

authors cited

Côté, Pierre-André. Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.

Cumming, Peter A. and Neil H. Mickenberg. Native Rights in Canada, 2nd ed. Toronto: Indian-Eskimo Association of Canada, 1972.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

Petit Larousse illustré. Paris: Larousse, 2000 "marché".

Petit Robert Dictionnaire de la langue française. Paris: Le Robert 2002. "marché".

Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Toronto: Butterworths, 2002.

Woodward, Jack. Native Law, Toronto: Carswell, 1990.

ACTIONS to recover yearly annuity arrears by the assignee of various treaty annuity rights. Actions dismissed on the basis that the treaty annuities were not assignable and no interest was owed on the arrears.

appearances:

Bruce Allan Beattie on his own behalf.

Karl Burdak and Rosanne M. Kyle for defendant.

solicitors of record:

Deputy Attorney General of Canada and Miller Thomson LLP, Vancouver, for defendant.

The following are the reasons for judgment rendered in English by

[1]Lafrenière P.: The plaintiff, Bruce Beattie is the assignee of various treaty annuity rights of ten assignors, who are said to be descendants of treaty Indians. The plaintiff claims that the assignors are entitled to treaty annuities dating back to their birth. As assignee, the plaintiff has brought three separate actions to recover the yearly annuity arrears, including interest. Her Majesty the Queen in right of Canada (the Crown) denies that the assignors are entitled to treaty annuities for the periods claimed, or to any interest thereon.

[2]Subsection 50(2) [of the Federal Court Rules, 1998, SOR/98-106] provides that a prothonotary may hear an action exclusively for monetary relief, provided the amount claimed in each action does not exceed $50,000, exclusive of interest and costs. The payments at issue are nominal, and the actions are therefore within a prothonotary's jurisdiction. Once the plaintiff's claim for simple and compounded interest is added however, the amounts involved can be quite substantial.

[3]These actions are the latest in a series of similar actions brought over the past decade by several of the plaintiff's family members against the Crown for treaty annuity arrears. Since all previous actions were settled before trial, the application of interest to annuity arrears has not been finally determined.

[4]Among the issues raised in the actions are: whether the assignors are entitled to the annuity payments; whether the Crown owes a duty to the assignors; whether the treaty obligations have been extinguished, or otherwise limited; whether the assignments held by the plaintiff are valid pursuant to the Financial Administration Act, R.S.C., 1985, c. F-11 (FAA); whether the claims are time-barred; the amount of the claim; and whether interest is payable, and if so, what is the applicable rate and whether it can be compounded.

[5]On April 1, 2003, following a pre-trial conference, Prothonotary Hargrave ordered that the trial of two issues be determined separately pursuant to rule 107 of the Federal Court Rules, 1998, in order to reduce the cost of trial, to encourage settlement, and to expedite matters.

[6]The two issues for separate determination are as follows:

(a) the effect, if any, of the FAA on the validity of the assignments to the plaintiff; and

(b) whether interest is owing on any annuity arrears that may be found to be owing and, if so, what the interest rate is, whether it is simple or compound interest, and how it is to be calculated.

[7]The hearing of the bifurcated issues proceeded on the basis of an agreed statements of facts specific to each action, affidavit evidence of Nicholas Mitchell and Michael McGinty, documentary evidence contained in a joint book of documents, and evidence from examinations for discovery of the plaintiff and the assignors. The materials filed by the parties are voluminous, and extensive legal submissions were made, both orally and in writing. These reasons set out only a summary of the relevant facts and legal arguments of the parties.

[8]For the reasons that follow, I conclude that the assignment of treaty annuities are invalid and void, and that the three actions should accordingly be dismissed. In the event that my conclusion regarding the validity of the assignments is incorrect, I conclude that no interest can be recovered by the plaintiff for any of the annuity arrears at issue.

The facts

[9]The assignors in the three actions are all direct natural descendants of original treaty adherents to either Treaty No. 6 (1876) or Treaty No. 11 (1921). In all cases, the applicable treaty pre-dates the births of the respective assignors. Each of the assignors is a registered treaty Indian pursuant to the Indian Act, R.S.C., 1985, c. I-5 and all but one of them have been paid treaty annuities at some point in their lives.

[10]Treaty No. 6 provides in part, as follows:

. . . with a view to show the satisfactio n of Her Majesty with the behavior and good conduct of her Indians, she hereby, through her Commissioners, makes them a present of twelve dollars for each man, woman and child belonging to the bands here represented, in extinguishment of all claims heretofore preferred;

. . .

And further, that Her Majesty's Commissioners shall, as soon as possible after the execution of this treaty, cause to be taken an accurate census of all the Indians inhabiting the tract above described, distributing them in families , and shall, in every year ensuing the date hereof, at some period in each year, to be duly notified to the Indians, and at a place or places to be appointed for that purpose within the territory ceded, pay to each Indian person the sum of five dollars per head yearly;

Treaty No. 11 contains similar wording, as follows:

And in order to show the satisfaction of His Majesty with the behaviour and good conduct of His Indian subjects, and in extinguishment of all their past claims hereinabove mentioned, He hereby, through his Commissioner, agrees to give to each Chief a present of thirty-two dollars in cash, to each Headman, twenty-two dollars, and to every other Indian of whatever age of the families represented, at the time and place of payment, twelve dollars.

HIS MAJESTY, also agrees that during the coming year, and annually thereafter, He will cause to be paid to the said Indians in cash, at suitable places and dates, of which the said Indians shall be duly notified, to each Chief twenty-five dollars, to each Headman fifteen dollars, and to every other Indian of whatever age five dollars, to be paid only to heads of families for the members thereof, it being provided for the purposes of this Treaty that each band having at least thirty members may have a Chief, and that in addition to a Chief, each band may have Councillors or Headmen in the proportion of two to each two hundred members of the band.

[11]In Court No. T-2204-00, the assignors, James Delap Harris, William Thomas Harris, Nora Eileen Matchatis (Nora Matchatis), and Bridget Angela Volden, are siblings and grandchildren of original Treaty No. 6 adherents. They are all currently registered as Indians pursuant to the Indian Act. The Department of Indian Affairs and Northern Development (DIAND) has recognized the siblings, other than Nora Matchatis, as being entitled to receive annuities pursuant to Treaty No. 6 since the dates of their respective applications for registration as status Indians under the Indian Act, but not prior to those dates. DIAND has recognized Nora Matchatis as being entitled to annuities since the year following her marriage to a Treaty No. 6 Indian.

[12]In Court No. T-2134-00, the assignor, Charles Edward Harris (Charles Harris) is a grandchild of original Treaty No. 6 adherents and is currently registered as an Indian pursuant to the Indian Act. DIAND has recognized Charles Harris as being entitled to receive annuities pursuant to Treaty No. 6 since the date of his application for registration as a status Indian under the Indian Act, but not prior to that date. Any cause of action for breach of treaty obligations by the Crown to make payment of annuities to Charles Harris arose within the Province of Alberta.

[13]Reproduced below is the agreed statement of facts in Court No. T-2203-00, which is representative of the statements agreed to in the other two proceedings.

AGREED STATEMENT OF FACTS

1. The assignors, Philip George Harris, Mary Martha Harris, Margaret Mary Napora, Kevin Kimberley Napora, and Shannon Trevor Napora, (the Assignors) are children or grandchildren of original Treaty 11 adherents and are all currently registered as Indians pursuant to the Indian Act, R.S.C. 1985, c. I

2. The signing of Treaty 11 pre-dates the births of all the Assignors.

3. The Plaintiff, Bruce Beattie, is not a Treaty 11 Indian, nor is he registered as an Indian under the Indian Act, but he is a family member to each of the Assignors through marriage.

4. The Department of Indian Affairs and Northern Development ("DIAND") has recognized each of the Assignors as being entitled to receive annuities pursuant to Treaty No. 11 ("Annuities") since the dates of their respe ctive applications for registration as status Indians under the Indian Act, but not prior to those dates.

5. Treaty paylist records indicate when payment to any individual Indian entitled to receive treaty annuity was not made.

6. The Plaintiff sent the Receiver General a Notice of Assignment of Crown Debt in respect to the assignment of the Assignor, Charles Edward Harris, in related Action No. T-2134-00. However, the assignment was not approved by the Receiver General.

7. As a result of the Receiver General's response to the Notice of Assignment of Crown Debt of Charles Edward Harris, the Plaintiff has not sent the Receiver General any further Notices of Assignment of Crown Debt in respect to the assignments of the other Assignors.

8. Treaty 11 does not contain express terms with respect to payment of interest on annuity arrears.

9. The historical documents listed by the parties to the actions before the Court disclose no reference to discussions of interest on annuity arrears during negotiations leading to the signing of Treaty 11.

10. Any cause of action herein in respect of any debts arising from breach of treaty obligations by the Crown to pay annuity arrears, and to pay interest thereon, arose in more than one province or outside a province.

[14]For the purposes of these reasons, no factual distinctions need be drawn between any of the individual assignors or between the two treaties at issue. While the wording and historical context of each of the treaties at issue are unique, there is sufficient similarity between the two treaties, at least with respect to the specific issues in this hearing, that the intent and legal effect of the two annuity provisions can be taken to be essentially the same.

[15]First, neither the text, nor the historical context, of either treaty provides any explicit consequences for non-payment or delayed payment of annuities, or for the payment of interest on accumulated arrears.

[16]Second, both Treaty No. 6 and Treaty No. 11 promise annual payments by the Crown of $5 to each of the original adherents of the respective treaties and their natural descendants. In his affidavit, Mr. Mitchell sets out the procedure for payment of annuities:

1. Treaty annuity payments were provided by the Department of Indian Affairs on an annual basis, using funds voted by Parliament each year. The funds used to pay annuities were voted on the basis of Departmental Estimates.

2. Annuities were paid to Treaty Indians at pre-determined times and places, and these payments were recorded in Treaty paylists for each Band.

3. When the payment process had been completed each year, unused Treaty annuity moneys were returned to the Receiver General. No annuity payments were retained for use in subsequent years.

4. The same procedure was repeated every fiscal year.

5. The annual Estimates prepared by the Department of Indian Affairs each year included moneys to pay arrears of annuities to Treaty Indians who had missed previous payments.

6. Arrears were paid from the annuity moneys for the same fiscal year in which the request for arrears was made.

7. No interest was paid on arrears of Treaty annuities.

[17]I will deal first with the effect, if any, of the Financial Administration Act on the validity of the assignments to the plaintiff, and then turn to the question whether interest is owed on any annuity arrears.

VALIDITY OF THE ASSIGNMENTS

[18]By notices of assignment, the assignors purport to assign to the plaintiff all "unpaid arrears of per head yearly (annuity) payments, plus interest thereon which are lawfully due and payable . . . pursuant to the terms of Treaty . . . up to the date of this assignment, and all causes of action related to such debt." The Crown submits that the plaintiff's assignments are void based on three separate grounds.

[19]First, the Crown submits, treaty annuities cannot be assigned based on the prohibition contained in section 67 of the FAA, which governs assignments of Crown debts. Section 67 provides as follows:

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.

[20]The exceptions to this general prohibition against assignments of Crown debts are found in section 68 [as am. by S.C. 1991, c. 24, s. 49, Sch. I, item 2], which provides as follows:

68. (1) Subject to this section, an assignment may be made of

(a) a Crown debt that is an amount due or becoming due under a contract; and

(b) any other Crown debt of a prescribed class.

[21]The Crown submits that treaty annuities do not fall within any of the exceptions contained in section 68 of the FAA, and more particularly, within the meaning of the term "Crown debt due or becoming due under a contract". Since the said provision is an exception to the general prohibition against the assignability of Crown debts set out in the FAA, it should be strictly construed, particularly given that the underlying purpose of this part of the FAA is to restrict the assignability of Crown debts. The Crown suggests that a strict construction of the meaning of the term "contract" does not include a treaty.

[22]Second, the Crown submits that even if treaty annuities fall within the exception to the general prohibition against assignments of Crown debts in the FAA, they are nonetheless not assignable because it is a condition of treaty rights that they are non-transferable.

[23]Third, the Crown contends that the assignments are invalid for failing to comply with the requirements of the FAA and Assignment of Crown Debt Regulations [C.R.C., c. 675] (the Regulations).

[24]The three grounds for invalidity of the assignments advanced by the Crown are addressed below in the same order.

Prohibition against assignment of Crown debt

[25]The Crown submits that the general prohibition against assignments set out in section 67 of the FAA applies, and that the treaty annuities at issue are not assignable.

[26]The plaintiff takes issue with the Crown's position, arguing that statutory provisions that have an impact on treaty rights must be liberally construed, and that any uncertainties or ambiguities should be resolved in favour of the Indians. The plaintiff submits that each of the treaties at issue in these actions is a "contract involving the payment of money by the Crown", as contemplated by section 66 of the FAA, and that no valid reason has been provided by the defendant for disregarding the definition of "contract", which has been expressly provided for the purposes of Part VII of the FAA. In support of his contention, the plaintiff makes reference to the following extracts from case law and other legal authorities that he claims affirm the contractual nature of treaties (the emphasis was added by the plaintiff):

Treaties are analogous to contracts, albeit of a very solemn and special, public nature. They create enforceable obligations based on the mutual consent of the parties. It follows that the scope of treaty rights will be determined by their wording, which must be interpreted in accordance with the principles enunciated by this Court. R. v. Badger, [1996] 1 S.C.R. 771, at para. 76.

. . . a treaty is the product of bargaining between two contracting parties. . . . Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, at p. 143.

In its simplest form the treaty must of necessity consist of an agreement or settlement arrived at between two or more parties with all of the elements of a valid contract. R. v. Tennisco, (1981), 131 D.L.R. (3d) 96 (Ont. H.C.), at p. 105.

The treaty is similar to an agreement or contract. R. v. Dennis and Dennis (1974), 56 D.L.R. (3d) 379 (B.C. Prov. Ct.), at p. 382.

The issue of breach of contractual obligation

. . .

It is obvious that the Lake-Huron Treaty, like all Indian treaties, was not a treaty in the international law sense. The Ojibways did not then constitute an "independent power", they were subjects of the Queen. Although very special in nature and difficult to precisely define, the Treaty has to be taken as an agreement entered into by the Sovereign and a group of her subjects with the intention to create special legal relations between them. The promises made therein by Robinson on behalf of Her Majesty and the "principal men of the Ojibway Indians" were undoubtedly designed and intended to have effect in a legal sense and a legal context. The agreement can therefore be said to be tantamount to a contract, and it may be admitted that a breach of the promises contained therein may give rise to an action in the nature of an action for breach of contract. Pawis v. R., [1980] 2 F.C. 18 (T.D.), at pp. 24-25.

In Canada the Indian treaties appear to have been judicially interpreted as being mere promises and agreements. Rex v. Wesley, [1932] 4 D.L.R. 774 (Alta App. Div.), at p. 788.

From these extracts it is clear that what characterizes a treaty is the intention to create obligations, the presence of mutually binding obligations and a certain measure of solemnity. In the Court of Appeal Bisson J.A. in fact adopted a similar approach when he wrote (at p. 1726):

(translation) I feel that in order to determine whether document D-7 (the document of September 5, 1760) is a treaty within the meaning of s. 88 of the Indian Act, the fundamental question is as follows: is it an agreement in which the contracting parties . . . intended to create mutual obligations which they intended to observe solemnly? (R. v. Sioui, [1990] 1 S.C.R. 1025, at p. 1044.)

The haste of the Treaty Commissioner in securing Indian signatures on a piece of paper removes any illusions that the Treaty was a contract signed by equal partners. Sawridge Band v. Canada, [1996] 1 F.C. 3 (T.D.), at p. 82.

Their Lordships have had no difficulty in coming to the conclusion that, under the treaties, the Indians obtained no right to their annuities, whether original or augmented, beyond a promise and agreement, . . . . Seeing that the substantial question involved in these appeals is that of contract liability for a pecuniary obligation, they are of opinion that the rule followed by them in some really international questions between Canadian Governments ought not to apply here. Attorney-General for the Dominion of Canada v. Attorney-General for Ontario, [1897] A.C. 199 (P.C.), at p. 213.

The judgement of their Lordships was delivered by Lord Watson:--

On the 3rd of October, 1873, a formal treaty or contract was concluded between commissioners appointed by the Government of the Dominion of Canada, on behalf of Her Majesty the Queen, of the one part, and a number of chiefs and headmen duly chosen to represent the Salteaux tribe of Ojibbeway Indians, of the other part. . . .

. . .

The policy of these administrations has been all along the same in this respect, that the Indian inhabitants have been precluded from entering into any transaction with a subject for the sale or transfer of their interest in the land, and have only been permitted to surrender their rights to the Crown by a formal contract, duly ratified in a meeting of their chiefs or head men convened for the purpose. St. Catherine's Milling and Lumber Company v. Reg. (1888), 14 A.C. 46 (P.C.), at pp. 51 and 54.

That treaties are contracts has been affirmed in a number of Canadian cases. Woodward, Jack, Native Law, Toronto: Carswell, 1990, at p. 205.

An Indian treaty is a contract in a class of its own. Ibid., at p. 405.

An Indian treaty in Canada is not the same type of agreement as an international treaty between two sovereign states, but neither is it merely a contract in the ordinary sense. Ibid., at p. 404.

The numbered treaties were agreements by which the Indians obtained a contractual right to the conveyance of certain lands. Ibid., at p. 236.

The contractual rights are the very minimum rights of Indians under treaties, since the rights are also constitutionally protected. Ibid., at p. 205.

In certain situations, the courts have viewed Indian treaties as analogous to private agreements or contracts. Indeed, the available, but admittedly limited, judicial authority implicitly supports the application of the contractual model to the Indian treaties. Cumming, Peter A. and Neil H. Mickenberg Native Rights in Canada, 2nd ed. Toronto: Indian-Eskimo Association of Canada, 1972, at p. 56

The Government of Canada has also indicated that it considers Indian treaties to be analogous to contracts. In a speech given in Vancouver, British Columbia, Prime Minister Trudeau made the following comments:

. . .We will recognize treaty rights. We will recognize forms of contract which have been made with the Indian people by the Crown and we will try to bring justice to that area and this will mean that perhaps the treaties shouldn't go on forever. Ibid., at p. 57.

[27]The plaintiff submits that a treaty is a unique type of contract to which special principles of interpretation should apply. The plaintiff suggests that a debt of treaty annuity arrears should accordingly be treated as "a Crown debt that is an amount due or becoming due under a contract" that may be assigned pursuant to subsection 68(1) of the FAA.

[28]The plaintiff further submits that the word "contract" should be interpreted as it has already been defined in section 66, which simply permits assignment of any Crown debts which involve the payment of money, are derived from some type of contract, and have not been specifically excluded from assignment by subsection 68(5). According to the plaintiff, the only types of contract debts which Parliament specifically intended to exclude from subsection 68(1) assignment, are those identified in subsection 68(5), because no provision was made for extending exclusion to other types of contract debts by regulation.

[29]I come to a different conclusion regarding the interplay and applicability of the provisions of the FAA.

[30]Prior to the decision of the Exchequer Court of Canada in Bank of Nova Scotia v. The Queen (1961), 27 D.L.R. (2d) 120, the general position in Canada was that Crown debts were not assignable. In the Bank of Nova Scotia case, the Court held that contract money claims against the Federal Crown were assignable without the Crown's consent. Subsequent to that decision, Parliament enacted section 67 of the FAA, presumably to reinstate the general prohibition against assignment of Crown debts.

[31]The plaintiff conceded at the hearing that the right to receive treaty annuities is not within any "prescribed class" in the regulations to the FAA. Consequently, in order to succeed, the plaintiff was required to establish that the treaty annuities fell within the exemption in paragraph 68(1)(a) of the FAA.

[32]The modern principle of statutory interpretation requires the words of an Act to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament: E. Driedger, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at page 87 (Driedger).

[33]In keeping with the modern principle, when the legislature makes a general rule and lists certain exceptions, the latter must be strictly construed. An exception should not be construed in such a manner that the broad purpose of the legislation is undermined: Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3, at page 18; Macdonell v. Quebec (Commission d'accès à l'information), [2002] 3 S.C.R. 661, at paragraph 18; R. Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Toronto: Butterworths, 2002), at pages 396-397 (Sullivan); Côté, P.-A. Interpretation of Legislation in Canada, 3rd ed. (Scarborough, Ont.: Carswell, 2000), at pages 502-503.

[34]Section 68 of the FAA exempts a "Crown debt due or becoming due under a contract" from the general prohibition against the assignability of Crown debts contained at section 67. Since it is an exception to the general rule, it must be strictly construed, particularly given that the underlying purpose of this part of the FAA is to restrict the assignability of Crown debts.

[35]Indian treaties have often been equated to contracts. However, the jurisprudence and authorities cited by the plaintiff do not deal with treaties within the context of the FAA. They are therefore of little assistance.

[36]In fact, the Supreme Court of Canada has held that a treaty is not a commercial contract, and that contract principles do not apply to treaties: R. v. Sundown, [1999] 1 S.C.R. 393, at paragrah 24; Benoit v. Canada, [2002] 2 C.N.L.R. 1 (F.C.T.D.), at paragraphs 10 and 12; reversed on other grounds (2003), 228 D.L.R. (4th) 1 (F.C.A.); Hay River (Town of) v. R., [1980] 1 F.C. 262 (T.D.), at pages 264-265.

[37]Moreover, Parliament appears to have intended to differentiate between treaties and contracts in the FAA. In section 2, the words "contract" and "treaty" are referred to separately in the definition of "public money":

2. . . .

"public money" means all money belonging to Canada received or collected by the Receiver General or any other public officer in his official capacity or any person authorized to receive or collect such money, and includes

. . .

(d) all money that is paid to or received or collected by a public officer under or pursuant to any Act, trust, treaty, undertaking or contract, and is to be disbursed for a purpose specified in or pursuant to that Act, trust, treaty, undertaking or contract.

[38]By contrast, section 68 of the FAA only includes the term "contract" and does not refer to "treaty".

[39]Although the plaintiff maintains that the word "treaty", as used in section 2 of the FAA, should be restricted to treaties in the international sense, no authorities are cited in support of such a proposition. To the contrary, the use of the indefinite pronoun "any" to modify the terms "Act, trust, treaty, undertaking or contract", suggests that "treaty" should be given a broader, rather than limited, interpretation.

[40]It is a principle of statutory construction, according to Sullivan, at page 187, that:

When a provision specifically mentions one or more items but is silent with respect to other items that are comparable, it is presumed that the silence is deliberate and reflects an intention to exclude the items that are not mentioned. The reasoning goes as follows: if the legislature had intended to include comparable items, it would have mentioned them or described them using general terms; it would not have mentioned some while saying nothing of the others because to do so would violate a convention of communication.

[41]As a result, the inclusion of both the terms "treaty" and "contract" in section 2, and the use of only the term "contract" in section 68 of the FAA, suggests that Parliament intended for the word "contract" to be construed differently from a treaty.

[42]The French version of section 68 of the FAA also supports an interpretation which excludes treaties from the meaning of "contract". Under the "shared meaning" rule of statutory interpretation, the meaning that is shared by both the French and English versions is presumed to be the meaning intended by the legislature. Where the two versions of legislation do not say the same thing, the meaning that is shared by both ought to be adopted unless this meaning is for some reason unacceptable. Similarly, where one of the two versions is broader than the other, the common meaning rule favours the more restricted meaning: Schreiber v. Canada (Attorney General), [2002] 3 S.C.R. 269, at paragraphs 54-57; Authorson v. Canada (Attorney General), [2003] 2 S.C.R. 40, at paragraph 60; Sullivan, at page 81; Driedger, supra, at pages 165-181.

[43]In interpreting the meaning of the phrase, "Crown debt due or becoming due under a contract", the French version, "celles qui correspondent à un montant échu ou à échoir aux termes d'un marché", must also be considered, with the meaning which is common to both phrases being adopted. In the French dictionary, Le Petit Larousse illustré (Paris: Larousse, 2000), the term "marché" is defined as "transaction, accord impliquant un échange à titre onéreux de biens ou de services; convention d'achat et de vente." This is translated into English as "transaction, agreement involving a trade of goods or services in exchange for consideration; buying or selling agreement".

[44]Similarly, in the French dictionary, Le Petit Robert, Dictionnaire de la langue française (Paris: Le Robert, 2002), "marché" is defined as "convention portant sur la fourniture de marchandises, de services et de valeurs" which can be literally translated as "agreement for the provision of goods, services and valuables".

[45]The term "marché" is therefore restricted to commercial transactions. This more restricted meaning is the meaning which is common to both the English term "contract" and the French term "marché". Since a treaty is far broader than a mere commercial transaction, Parliament evidently did not intend to include treaties in section 68 of the FAA.

[46]It follows that any Crown debt owing under a treaty does not fall within the exception set out in section 68. I therefore conclude that the general prohibition against assignments set out in section 67 of the FAA applies, and that the treaty annuities at issue are not assignable.

Transferability of treaty annuities

[47]The Crown submits that treaty annuities cannot be assigned, even if they fall within the exception set out in subsection 68(1) of the FAA, since treaty rights are non-transferable due to their special status in law: Anishinaabeg of Kabapikotawangag Resource Council Inc. v. Canada (Attorney General) (1998), 53 C.R.R. (2d) 183 (Ont. Gen. Div.), at paragraphs 12-14; R. v. Stubbington, [1999] 4 C.N.L.R. 222 (B.C. Prov. Ct.), at paragraphs 31-45; R. v. Pike, [1994] 1 C.N.L.R. 160 (B.C.S.C.), at paragraphs 4-6; The Pas Merchants Ltd. v. The Queen, [1974] 2 F.C. 376 (T.D.), at pages 377-378. The plaintiff counters that the assignments do not purport to assign any entitlement to any treaty rights, but are confined to debts which are past due and any causes of action in respect of those debts.

[48]Subsection 68(4) of the FAA provides that an assignment is "subject to all conditions and restrictions in respect of the right of transfer that relate to the original Crown debt or that attach to or are contained in the original contract." Consideration must therefore be given to section 90 of the Indian Act, which deals with personal property of Indians. Section 90 provides as follows:

90. (1) For the purposes of sections 87 and 89, personal property that was

. . .

(b) given to Indians or to a band under a treaty or agreement between a band and Her Majesty,

shall be deemed always to be situated on a reserve.

(2) Every transaction purporting to pass title to any property that is by this section deemed to be situated on a reserve, or any interest in such property, is void unless the transaction is entered into with the consent of the Minister or is entered into between members of a band or between the band and a member thereof.

(3) Every person who enters into any transaction that is void by virtue of subsection (2) is guilty of an offence, and every person who, without the written consent of the Minister, destroys personal property that is by this section deemed to be situated on a reserve is guilty of an offence.

[49]In Canada v. Kakfwi, [2000] 2 F.C. 241, the Federal Court of Appeal held that the term "personal property" in section 90 of the Indian Act includes money and debts: see also Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, at pages 134-135, per La Forest J. and at page 113, per Dickson C.J. On the plain reading of section 90, therefore, treaty annuities, and any claims to such annuities, are deemed to be situated on a reserve, and their assignment is prohibited without the consent of the Minister of Indian Affairs.

[50]The plaintiff submits that enforcement of a core treaty right, and any lawful action reasonably necessary to that end, including the assignment of a Crown debt, are activities which are reasonably incidental to a core treaty right, and are therefore protected from infringement to the same extent as the core treaty right. He claims that the assignments at issue show that assignment to the plaintiff was the preferred means by each of the Indian assignors of exercising their incidental right to enforce payment of Crown debts of treaty annuity arrears. According to the plaintiff, to the extent that provisions of the FAA infringe that incidental right, those provisions must be justified by the defendant in accordance with subsection 35(1) of the Constitution Act, 1982 [Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]].

[51]I am not prepared to entertain a constitutional challenge in the absence of any proper or sufficient notice. In any event, I fail to see how the assignors' rights, which could be enforced individually, can be said to have been infringed by any provisions of the FAA.

[52]On the evidence before me, it appears that, as a matter of general policy, the Crown does not consent to the assignment of annuities to third parties. Although there is evidence that payments were occasionally made to a person other than to the treaty Indian on the pay list, such arrangements were made solely with close relatives of the Indian person, a Chief, or an Indian agent in order to facilitate payment.

[53]I conclude, therefore, that absent the Crown's consent, treaty annuities cannot be transferred.

Validity of the notices of assignment

[54]The Crown submits that even if treaty annuities are generally assignable, the assignments are invalid for failing to comply with the requirements of the FAA and Assignment of Crown Debt Regulations (the Regulations). Subsection 68(2) of the FAA sets out the requirements for a valid assignment as follows:

68. . . .

(2) The assignment referred to in subsection (1) is valid only if

(a) it is absolute, in writing and made under the hand of the assignor;

(b) it does not purport to be by way of charge only; and

(c) notice of the assignment has been given to the Crown as provided in section 69.

. . .

69. (1) The notice referred to in paragraph 68(2)(c) shall be given to the Crown by serving on or sending by registered mail to the Receiver General or a paying officer, in prescribed form, notice of the assignment, together with a copy of the assignment accompanied by such other documents completed in such a manner as may be prescribed.

(2) Service of the notice referred to in subsection (1) shall be deemed not to have been effected until acknowledgement of the notice, in prescribed form, is sent to the assignee, by registered mail, under the hand of the appropriate paying officer.

[55]The plaintiff does not dispute that the strict requirements of the FAA have not been complied with in the present case. The plaintiff forwarded the notice of assignment of Charles Harris to the Receiver General, however the Receiver General did not acknowledge the assignment, and returned it to the plaintiff on the basis that treaty rights are not assignable. In the face of this rejection, the plaintiff did not forward notices of the other assignments to the Receiver General.

[56]Notwithstanding that the requirements of the FAA have not been strictly adhered to, it appears that the plaintiff fully intended to comply with the notice requirements of Part VII of the FAA and the Regulations, but was dissuaded from doing so following the refusal by the Receiver General to acknowledge service of Charles Harris' notice of assignment. One can understand the plaintiff's reluctance to simply pose futile gestures.

[57]Although the plaintiff failed to strictly comply with the requirements of subsection 68(2), no useful purpose would be served from requiring the plaintiff to now comply with the notice requirements in the FAA and Regulations. On the evidence before me, the Crown has since received sufficient and proper notice of all ten assignments. Consequently, the Crown objections on technical grounds are rejected.

WHETHER INTEREST IS OWED ON ANNUITY ARREARS

[58]The second question for separate determination is whether interest is owing on any annuity arrears that may be found to be owing and, if so, what the interest rate is, whether it is simple or compound interest, and how it is to be calculated? Each sub-issue shall be dealt with in turn. For the purpose of a determination of the interest issue as a whole, I must proceed on the premise that the plaintiff will ultimately succeed at trial in establishing that he is entitled to the payments claimed.

Entitlement to interest

[59]At common law, the general rule is that interest is not payable on a debt or loan in the absence of express agreement or some course of dealing or custom to that effect.

[60]The parties agree that neither Treaty No. 6 nor Treaty No. 11 provides for the payment of interest. In addition, the parties have agreed that the payment of interest was not discussed when Treaty No. 6 and Treaty No. 11 were negotiated. Based on the historical documents on the record, it appears that after the signing of Treaty 6 and Treaty 11, the Crown did not pay interest on annuity arrears, except in circumstances where annuities were placed in individual savings accounts at the behest of the annuity recipients.

Whether treaty annuities are "Indian moneys"

[61]The plaintiff submits that, notwithstanding that interest is not expressly provided for in the treaty documents, and that there is no record of interest ever being raised in discussions of the parties leading to the signing of either of the treaties in issue here, a statutory entitlement to be paid interest on annuity arrears exists pursuant to subsection 61(2) of the Indian Act (and predecessor provisions).

[62]Section 61 provides as follows:

61. (1) Indian moneys shall be expended only for the benefit of the Indians or bands for whose use and benefit in common the moneys are received or held, and subject to this Act and to the terms of any treaty or surrender, the Governor in Council may determine whether any purpose for which Indian moneys are used or are to be used is for the use and benefit of the band.

(2) Interest on Indian moneys held in the Consolidated Revenue Fund shall be allowed at a rate to be fixed from time to time by the Governor in Council.

[63]The Crown denies that annuity payments are "Indian moneys" which is defined as follows in section 2 of the Indian Act :

2. (1) . . .

"Indian moneys" means all moneys collected, received or held by Her Majesty for the use and benefit of Indians or bands.

[64]According to the Crown, annuity payments are not "Indian moneys" as they are not "collected, received or held by Her Majesty". The Crown submits that moneys used for the payment of treaty annuities come out of the Consolidated Revenue Fund (CRF), and are payable pursuant to a separate and distinct provision of the Indian Act. Section 72 specifically provides:

72. Moneys that are payable to Indians or to Indian bands under a treaty between Her Majesty and a band and for the payment of which the Government of Canada is responsible may be paid out of the Consolidated Revenue Fund.

[65]For the reasons that follow, I conclude that annuity payments are "moneys that are payable to Indians or Indian ba nds under a treaty" under section 72, and not the sections which relate to "Indian moneys".

[66]Section 62 of the Indian Act provides some guidance regarding the meaning of the term "Indian moneys". Section 62 provides:

62. All Indian moneys derived from the sale of surrendered lands or the sale of capital assets of a band shall be deemed to be capital moneys of the band and all Indian moneys other than capital moneys shall be deemed to be revenue moneys of the band.

[67]Treaty annuity moneys are clearly not moneys derived from the sale of surrendered lands. Section 62 provides that another type of Indian moneys are revenue moneys of a band. "Revenue moneys" is not defined in the Indian Act , but it is clear from the provisions in the Indian Act that these types of moneys are band moneys, and not moneys of individual Indians.

[68]Section 69 provides:

69. (1) The Governor in Council may by order permit a band to control, manage and expend in whole or in part its revenue moneys and may amend or revoke any such order.

(2) The Governor in Council may make regulations to give effect to subsection (1) and may declare therein the extent to which this Act and the Financial Administration Act shall not apply to a band to which an order made under subsection (1) applies.

[69]The Indian Bands Revenue Moneys Regulations, C.R.C., c. 953, as amended, address issues relating to the ability of certain bands to control, manage and expend their revenue moneys. It is clear from this context that treaty annuity moneys cannot be construed to be revenue moneys and, as a result, do not fall within the definition of "Indian moneys".

[70]In addition, section 90 of the Indian Act distinguishes between revenue moneys and Indian moneys. Section 90 provides:

90. (1) For the purposes of sections 87 and 89, personal property that was

(a) purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for the use and benefit of Indians or bands, or

(b) given to Indians or to a band under a treaty or agreement between a band and Her Majesty,

shall be deemed always to be situated on a reserve.

[71]The separate references to "Indian moneys" and personal property "given to Indians . . . under a treaty" in section 90 of the Indian Act suggests that Parliament did not intend the term "Indian moneys" to refer to treaty moneys. If it had so intended, there would be no reason for Parliament to separately refer in section 90 to property given under a treaty.

[72]As a result, there is no support for the proposition that annuity payments constitute "Indi an moneys" pursuant to the Indian Act .

Whether the Crown was a fiduciary with an obligation to invest or pay interest

[73]The plaintiff submits that it is necessary to proceed on the presumption that the Treaty No. 6 and Treaty No. 11 annuity provisions were never lawfully extinguished at any time prior to 1982, and have therefore existed with legal force at all material times. Any entitlement to receive payment of annuities pursuant to either of the two treaties must therefore be taken to be a treaty right which is guaranteed to aboriginal persons pursuant to section 35 of the Constitution Act, 1982.

[74]The plaintiff submits that the Crown must be held to the standards and duties of a fiduciary in relation to any annuity arrears held, invested or otherwise administered for the benefit of treaty Indians. In support of this proposition, the plaintiff refers to the decision of the Ontario Court of Appeal in Authorson v. Canada (Attorney General) (2002), 58 O.R. (3d) 417, a case involving the administration of pension income of disabled veterans by the Department of Veteran Affairs, which raised the issue whether the Crown was a fiduciary with an obligation to invest or pay interest arose [at paragraphs 61 and 77-80].

Nor can these cases be said to require that the express terms of "trust" or "fiduciary" appear in the relevant legislation before such an obligation will be found to bind the Crown. The seminal case of Guerin , supra, demonstrates as much. In his famous judgment in that case, Dickson J. (as he then was) found that a fiduciary obligation rested on the Crown although the statutory framework which was in part the source of that obligation, namely the Indian Act, did not explicitly say so.

. . .

In the circumstances of this case, the Crown as administrator is directed to manage the veteran's fund for his benefit since he is incapable of doing so himself. The Crown thus undertakes to do with his money what he would do for himself if he were able to. That surely requires that the funds not sit idle but rather that the Crown grow the funds by investing them or accruing interest on them. Such an obligation is coordinate with the undertaking of the Crown to administer the funds for the veteran's benefit. It is also consistent with the trust-like nature of this fiduciary relationship, as we have described it. The appellant concedes that the obligation to invest or pay interest on the funds held in trust for another is fundamenta l to the law governing trustees. In the particular circumstances of this fiduciary relationship, the result should be no different.

Moreover, we can find nothing in the legislation governing the Consolidated Revenue Fund that would prevent the fiduciary duty on the Crown as administrator from encompassing the obligation to accrue interest on the funds it administers.

The Crown accounted for the funds it administered by crediting them to a special purpose account held in the name of each veteran within the Consolidated Revenue Fund. From 1951 onwards, the Financial Administration Act explicitly allowed the payment of interest in respect of monies held in any special purpose account in the Consolidated Revenue Fund. Prior to that, in the first half of the 20^th century, although not numerous, there were clearly examples of cases where, by order in council, interest was allowed on funds held on deposit in the Consolidated Revenue Fund for a special purpose. Finally, from the very beginning, the legislative scheme relating specifically to the payment of treatment allowances authorized the payment of interest on them while being administered for the veteran by the DVA (see Order in Council P.C. 2301 (November 21, 1919)).

Hence, there is nothing in the legislative framework providing for these payments and their administration that would undercut the reasonable expectation of the incapacitated veteran that the Crown, in administering his funds in his best interests, would accrue interest on them. In our view, to have the effect of curtailing the Crown's fiduciary duty short of this obligation the legislation would have to clearly indicate that there was no such obligation. This is consistent with the fundamental principle articulated by Major J. in Wells v. Newfoundland , [1999] 3 S.C.R. 199 at p. 218:

In a nation governed by the rule of law, we assume that the government will honour its obligations unless it explicitly exercises its power not to. In the absence of a clear express intent to abrogate rights and obligations-- rights of the highest importance to the individual--those rights remain in force. To argue the opposite is to say that the government is bound only by its whim, not its word.

[75]On appeal to the Supreme Court of Canada, the Crown withdrew its denial that it had a fiduciary duty to pay interest on the veteran's accounts. The decision of the Ontario Court of Appeal was, however, overturned on other grounds which would not apply to treaty rights. See: Authorson v. Canada (Attorney General) , [2003] 2 S.C.R. 40.

[76]The facts in the present actions can be distinguished from those in Authorson decision. First, there is no evidence that the Crown retained, or were required to retain, any annuity arrears for the benefit of the assignors. Second, the affidavit evidence of Mr. Mitchell establishes that annuity arrears were not retained by the Crown in any separate account, but rather returned to the Receiver General as a matter of general practice.

[77]Moreover, although the Crown is generally in a fiduciary relationship with aboriginal people, this does not mean that all obligations owed by the Crown to aboriginal people are fiduciary in nature. In Wewaykum Indian Band v. Canada, [2002] 4 S.C.R. 245, the Supreme Court of Canada stated the following [at paragraphs 81 and 83]:

The appellants seemed at times to invoke the "fiduciary duty" as a source of plenary Crown liability covering all aspects of the Crown-Indian band relationship. This overshoots the mark. The fiduciary duty imposed on the Crown does not exist at large but in relation to specific Indian interests.

. . .

. . . I think it desirable for the Court to affirm the principle, already mentioned, that not all obligations existing between the parties to a fiduciary relationship are themselves fiduciary in nature . . . and that this principle applies to the relationship between the Crown and aboriginal peoples. It is necessary, then, to focus on the particular obligation or interest that is the subject matter of the particular dispute and whether or not the Crown had assumed discretionary control in relation thereto sufficient to ground a fiduciary obligation.

[78]In Guerin et al. v. The Queen et al., [1984] 2 S.C.R. 335, the Supreme Court of Canada noted that one of the hallmarks of a fiduciary relationship is that one of the parties is at the mercy of the other's discretion. In the present actions, the Crown was obliged to pay annuities to all persons who were entitled to annuities pursuant to the terms of Treaty No. 6 and Treaty No. 11 respectively. If it failed to do so, its failure could constitute a breach of treaty. However, its failure cannot constitute a breach of fiduciary duty since there is no element of discretion involved. Dickson J. [as he then was] noted that the Crown is not normally viewed as a fiduciary in the exercise of its legislative or administrative functions.

[79]In my view, even if the assignors were entitled to receive annuities from their respective dates of birth, as the plaintiff alleges, the Crown's failure to pay annuities because of the statutory definition of "Indian" does not amount to a breach of fiduciary duty. A determination by the Crown as to who is an "Indian" for treaty purposes is an administrative function which does not involve any exercise of discretion and, therefore, cannot give rise to fiduciary duties.

Liability of the Crown to pay interest

[80]The plaintiff has conceded that there is no basis for an award of interest as common law damages for breach of contract. Even if there was a basis for interest at common law, it would be prohibited by the doctrine of Crown immunity for the period prior to February 1, 1992.

[81]At common law, "the Crown could do no wrong". The history of Crown immunity was summarized by Cory J. in Rudolf Wolff & Co. v. Canada , [1990] 1 S.C.R. 695, at pages 699-700:

At common law there was no jurisdiction in the courts to hear an action against the Crown. The ability to bring such an action was derived solely from statute. It is unnecessary to delve too deeply into the history of these actions. It is sufficient to observe that in the United Kingdom the Petitions of Right Act, 1860 (U.K.), 23 & 24 Vict., c. 34, provided a statutory basis for bringing actions against the Crown. In Canada, the Petition of Right Act, Canada, appears in the Statutes of Canada 1875, c. 12. That Act conferred jurisdiction on provincial superior courts to hear cases against the Federal Government subject to the enactment of enabling legislation in the province. The Petition of Right Act, Canada, 1875, was repealed the following year by the Petition of Right Act, 1876, S.C. 1876, c. 27, which granted exclusive jurisdiction to the Exchequer Court to hear petitions of right against the Crown in right of Canada. There can be no doubt that without the passage of these provisions no jurisdiction existed in any court to entertain an action claiming damages against the Crown in right of Canada.

It is beyond question that only the Parliament of Canada could enact statutes to provide that actions could be brought against the Crown in right of Canada. It is only that body which can legislate as to the court in which those claims can be brought. The impugned sections of the Federal Court Act were enacted in 1970. They made provision for the bringing of such actions exclusively in the Federal Court rather than the provincial superior courts. The impugned provisions do not seek to limit or restrict rights in any way, rather they confer rights which did not exist at common law and designate the court in which these rights may be exercised. That is the historical context in which the impugned sections of the Acts must be considered.

[82]While Rudolf Wolff was concerned with the exclusive jurisdiction of the Federal Court, and the Crown's constitutional authority to require the plaintiff to proceed in that Court, the principle of Crown immunity applies equally to claims for interest against the Crown.

[83]The Crown initially accepted liability for payment of interest in section 33 of An Act to amend —The Supreme and Exchequer Courts Act— and to make better provision for the Trial of Claims against the Crown, S.C. 1887, c. 16, amending S.C. 1875, c. 11, section 33:

33. In adjudicating upon any claim arising out of any contract in writing, the court shall decide in accordance with the stipulations in such contract, and shall not allow compensation to any claimant on the ground that he expended a larger sum of money in the performance of his contract than the amount stipulated for therein, nor shall it allow interest on any sum of money which it considers to be due to such claimant, in the absence of any contract in writing stipulating for payment of such interest or of a statute providing in such a case for the payment of interest by the Crown.

[84]The restriction against interest set out in section 33 of The Supreme and Exchequer Court Act remained in subsequent versions of the Exchequer Court Act [R.S.C. 1970, c. E-11] and the Federal Court Act [R.S.C., 1985, c. F-7] of 1985, with only minor modifications.

[85]Section 36 of the Federal Court Act provided:

36. In adjudicating on any claim against the Crown, the Court shall not allow interest on any sum of money that the Court considers to be due to the claimant, in the absence of any contract stipulating for payment of that interest or of a statute providing in such a case for the payment of interest by the Crown.

[86]Section 36 was replaced by section 31 [as am. by S.C. 1990, c. 8 s. 31] of the Crown Liability and Proceedings Act, R.S.C., 1985, C-50 [s. 1, as am. idem, s. 21], but this section did not come into force until February 1, 1992 (SI/92-6). In the result, entitlement to interest until February 1, 1992 was governed by section 36 set out above. Section 31 of the Crown Liability and Proceedings Act provided:

31. (1) Except as otherwise provided in any other Act of Parliament and subject to subsection (2), the laws relating to prejudgment interest in proceedings between subject and subject that are in force in a province apply to any proceedings against the Crown in any court in respect of any cause of action arising in that province.

(2) A person who is entitled to an order for the payment of money in respect of a cause of action against the Crown arising outside any province or in respect of causes of action against the Crown arising in more than one province is entitled to claim and have included in the order an award of interest thereon at such rate as the Court considers reasonable in the circumstances, calculated

(a) where the order is made on a liquidated claim, from the date or dates the cause of action or causes of action arose to the date of the order; or.

(b) where the order is made on an unliquidated claim, from the date the person entitled gave notice in writing of the claim to the Crown to the date of the order.

(3) Where an order referred to in subsection (2) includes an amount for special damages, the interest shall be calculated under that subsection on the balance of special damages incurred as totalled at the end of each six month period following the notice in writing referred to in paragraph (2)(b) and at the date of the order.

(4) Interest shall not be awarded under subsection (2)

(a) on exemplary or punitive damages;

(b) on interest accruing under this section;

(c) on an award of costs in the proceedings;

(d) on that part of the order that represents pecuniary loss arising after the date of the order and that is identified by a finding of the court;

(e) where the order is made on consent, except by consent of the Crown; or

(f) where interest is payable by a right other than under this section.

(5) A court may, where it considers it just to do so, having regard to changes in market interests rates, the conduct of the proceedings or any other relevant consideration, disallow interest or allow interest for a period other than that provided for in subsection (2) in respect of the whole or any part of the amount on which interest is payable under this section.

(6) This section applies in respect of the payment of money under judgment delivered on or after the day on which this section comes into force, but no interest shall be awarded for a period before that day.

(7) This section does not apply in respect of any case in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law within the meaning of the Federal Court Act.

[87]Paragraph 31(4)(f) excludes an award under subsection (2) where interest is payable under another right which, as against the Crown, would include a right arising under a contract or statute providing for the payment of interest by the Crown (i.e. rights to interest previously provided for in section 36 of the Federal Court Act). It does not waive Crown immunity so as to create liability to interest as common law damages or equitable compensation.

[88]The effect of subsection 31(6) is to limit interest that may be awarded to periods after February 1, 1992, unless a contract or statute provides for the payment of interest prior to that date, as was held by Collier J. in Guerin v. R., [1982] 2 F.C. 445 (T.D.), at pages 448- 449:

The plaintiffs brought their action in this Court. It is true they had no other choice of forum. But this is a statutory Court. Its jurisdiction, in respect of the subject-matter of claims, and over persons, and its jurisdiction in respect of the remedies and other relief it can grant, must be found in existing federal statute or federal common law (McNamara Construction (Western) Ltd. v. The Queen, [1977] 2 S.C.R. 654 at p. 658.

Here the jurisdiction of the Court, in respect of interest, is specifically spelled out, and limited, by section 35.

Even if the plaintiffs' submission as to section 35 were sound, they are confronted with the Canadian common law principle as laid down by the Supreme Court of Canada:

It is settled jurisprudence that interest may not be allowed against the Crown, unless there is a statute or a contract providing for it. The King v. Carroll [1948] S.C.R. 126, per Taschereau J. at p. 132, where earlier decisions of the Supreme Court of Canada were cited: The King v. Roger Miller & Sons Ltd., [1930] S.C.R. 293, Hochelaga Shipping & Towing Co. Ltd. v. The King [1944] S.C.R. 138, The King v. Racette [1948] S.C.R. 28.

Counsel for the plaintiffs contended there was no such rule; the Supreme Court of Canada decisions were either incorrectly decided or distinguishable.

The principle laid down by the Supreme Court of Canada, whether it be correct or incorrect, is clear. As a Trial Judge I am bound to follow the decisions of the Supreme Court.

[89]In Leighton v. Canada, [1989] 1 F.C. 75 (T.D.), Muldoon J. confirmed that interest could not be awarded against the Crown, absent a contractual or statutory obligation. He stated [at page 78]:

Mr. Justice Collier's judgment was entirely upheld by the Supreme Court of Canada, ([1984] 2 S.C.R. 335) which was unanimous in the result. Three of the eight judges who participated in the Supreme Court's judgment, speaking through Madam Justice Wilson, specifically and directly (at page 364) approved of the denial of pre-judgment inter est effected by Collier J. A fourth judge, Estey J., agreed (at page 391) with the disposition of the facts and issues stated by Wilson J. The other four judges whose opinion was expressed by Mr. Justice Dickson (the present Chief Justice) found, as reported on page 391, that Mr. Justice Collier's judgment "discloses no error in principle". It was thereupon reinstated without variation.

[90]The question of the Crown obligation to pay interest as damages was squarely before the Federal Court in Mon-Oil Ltd. v. Canada (1992), 50 F.T.R. 260 (F.C.T.D.), at page 292; affirmed by (1993), 152 NR 210 (F.C.A.), that involved plaintiffs claiming payment of incentives under a Petroleum Incentives Program. The Trial Division found for the plaintiffs on its claim, but only allowed pre-judgment interest from February 1, 1992. In response to a submission that the plaintiff should have damages equivalent to interest at 10 percent, the Court said this:

The claim to damages equivalent to pre-judgment interest is not associated with a claim in contract; as I have found there was no contract between the plaintiff and the defendant. Nor is it based in tort or in admiralty where the court has awarded pre-judgment interest. The plaintiff's claim I uphold solely on th e basis of entitlement under the Act. The Act itself makes no provision for interest on claims against the Crown, though by sections 24 and 30 it does provide for interest to be recovered on debts due to Her Majesty, and section 19 of the Regulations sets out the rate at which interest on any debt to the Crown is to be calculated. Damages equivalent to pre-judgment interest are, in my view, precluded in this case since there is no basis for a claim in damages and since a claim to interest of this sort is barred for most of the period until judgment under section 36 of the Federal Court Act, R.S.C., 1985, c. F-7, as it was applicable until January 31, 1992, which provided:

36. In adjudicating on any claim against the Crown, the Court shall not allow interest on any sum of money that the Court considers to be due to the claimant, in the absence of any contract stipulating for payment of that interest or of a statute providing in such a case for the payment of interest by the Crown.

[91]The Federal Court of Appeal expressly upheld the Trial Judge's decision and reasoning in relation to the interest issue.

[92]In Ontario, Province of v. The Dominion of Canada and Province of Quebec (1895), 25 S.C.R. 434; affirmed by [1897] A.C. 199 (P.C.), the Supreme Court of Canada dealt specifically with the payment of annuities and held that interest was not paid on unpaid annuities. The case concerned the Robinson Huron treaties made between the Province of Canada and the Ojibway Indians in 1850. These treaties provided for annuities which could be increased up to certain amounts if the land ceded enabled the Province to pay additional funds over time. When the Province became Ontario and Quebec, a dispute arose between Ontario, Quebec and the Dominion of Canada as to what each party should pay. This dispute was referred to arbitrators who decided that Ontario should pick up the payment of annuities. The ruling was reversed by the Supreme Court of Canada on the basis that the ceded lands passed absolutely and were not subject to any charge in respect of annuities, and thus the obligation fell to both Ontario and Quebec. The Privy Council affirmed the decision of the Supreme Court of Canada.

[93]While neither Court considered the obligation to pay interest directly, the Supreme Court quoted extensively from the decision of the arbitrators (comprising the Chancellor of Ontario, the Chief Justice of the Superior Court of Quebec, and a judge of the Exchequer Court of Canada) referring in particular to the following determinations [at pages 445-446]:

4. That any liability to pay the increased annuity in any year before the union was a debt or liability which devolved upon Canada under the 111th section of the British North America Act, 1867, and that this is one of the matters to be taken into account in ascertaining the excess of debt for which Ontario and Quebec are conjointly liable to Canada under the 112th section of the Act; and that Ontario and Quebec have not, in respect of any such liability, been discharged by reason of the capitalization of the fixed annuities, or because of anything in the Act of 1873, 36 Vic. c. 30.

5. That interest is not recoverable upon any arrears of such annuities.

6. That the ceded territory mentioned became the property of Ontario under the 109th section of section of the British North America Act, 1867, subject to a trust to pay the increased annuities on the happening after the union, of the event on which such payment depended, and to the interest of the Indians therein to be so paid. That the ultimate burden of making provision for the payment of the increased annuities in question in such an event falls upon the province of Ontario; and that this burden has not been in any way affected or discharged.

7. That interest is not recoverable on the arrears of such annuities accruing after the union, and not paid by the Dominion to the tribes of Indians entitled.

8. That in respect to the matters hereinbefore dealt with the arbitrators have proceeded upon their view of disputed questions of law.

[94]The Court also referred to the arbitration award [at page 461]:

The question as to whether or not interest should be computed on any arrears of such annuities is another matter depending upon the right in law or equity of the Indians to interest as against the Crown, and it seems to me that they have no case either at law or in equity. I regret that I cannot see my way to a different conclusion. But I have no doubt that the debts and liabilities for which Canada became liable under the 111th section of the British North America Act are legal debts and liabilities, and that the excess of debt for which, under the 112th section, Ontario and Quebec became conjointly liable to the Dominion, cannot, without the conjoint consent of Ontario and Quebec, be increased by any debt or liability not enforceable in law or equity.

If there is to be any consideration of any claim of the Indians to interest on any arrears of annuities payable before the union in recognition of any moral obligation or as a matter of good conscience, it is for Ontario and Quebec to consider the matter and admit or deny the claim as they see fit. The Dominion can collect from them only what they legally owe, and cannot by discharging moral obligations make Ontario and Quebec liable; and there is, if I may express an opinion on that point, obviously no obligation, legal or moral, on the Dominion to do more than collect for the Indians from Ontario and Quebec whatever amount of arrears the province of Canada owed to them, and to pay it over to the tribes entitled.

Unless Ontario and Quebec will consent that in computing the amount of arrears due to the Indians at the union, such arrears shall be computed with interest, they must, it seems to me, be made up without interest.

[95]The parties to Treaty No. 6 and Treaty No. 11 did not address compensation for late payments, either implicitly or explicitly. Had they done so, funding would have taken interest into account and arrears would have been paid with interest. Questions concerning the rate and kind of interest would have arisen and been addressed. Arrangements to reduce interest payments by creating accounts which themselves bore interest would have been considered. The conduct of the parties in relation to the payment of annuities shows that it was seen as a fixed payment of $5 each year only.

[96]In addition, it could not have been implied that the Crown would pay interest on annuity arrears because to do so, the Federal Crown would have had to waive her immunity from the payment of interest. In the absence of an express obligation imposed on the Crown, and an express waiver of her immunity, it cannot be concluded that the right to receive interest was an incidental or implied right under Treaty No. 6 or Treaty No. 11.

[97]I conclude, therefore, that there is no contractual, statutory or other basis for the payment of interest on annuity arrears prior to February 1, 1992.

Compound interest

[98]The parties have agreed that the causes of action arose, for all of the assignors except Charles Harris, in more than one province. As a result, subsection 31(2) of the Crown Liability and Proceedings Act applies and the plaintiff is only entitled to interest in accordance with subsections 31(2) to (7) of the Act. Paragraph 31(4)(b) expressly prohibits the award of interest on interest, or compound interest.

[99]With respect to Charles Harris, the parties have agreed that the cause of action arose in Alberta. As a result, his entitlement to interest is governed by the Judgment Interest Act, S.A. 1984, c. J-0.5. Section 2 provides:

2(1) Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest in accordance with this Part from the date the cause of action arose to the date of the judgment.

(2) The court shall not award interest under this Part

. . .

(b) on interest awarded under this Act;

. . .

(i) where the payment of pre-judgment interest is otherwise provided by law.

[100]The application of the Judgment Interest Act places Charles Harris in the same position as the other claimants. He may not receive compound interest (paragraph 2(2)(b)), he may receive prejudgment interest where payment is otherwise provided by law, i.e., by virtue of a contract or statute which provides for payment of interest against the Crown (paragraph 2(2)(i)), and his award of interest is limited to the period after February 1, 1992. The time limitation is not provided for in the Judgment Interest Act, but when the Alberta Act is incorporated into federal law by section 31 of the Crown Liability and Proceedings Act, it becomes part of section 31 and any payment under the section is subject to subsection 31(6).

[101]As a result, there is a statutory bar against the payment of compound interest in all of the cases at bar.

[102]The plaintiff submits that equity provides for the charging of compound interest against persons in a fiduciary position if the fiduciary has, or ought to have, earned compound interest on the money held. Equitable compound interest will also apply where a breach of trust or serious misconduct in relation to a fiduciary duty has occurred. According to the plaintiff, when the Crown holds annuity arrears as a debt or in trust but refuses, without lawful justification, to pay out annuity arrears upon demand of the Indians entitled to them, that refusal to pay is a complete abandonment of the Crown's treaty and fiduciary obligations, and constitutes a breach of trust and/or serious m isconduct in relation to a fiduciary duty.

[103]However, as Collier J. said in Guerin, supra, in the context of a breach of fiduciary claim, the jurisdiction of the Federal Court to award interest is "specifically spelled out and limited by section 35." Implicit in that finding, which was accepted by the Supreme Court of Canada, is that interest is not available against the Crown as equitable compensation.

[104]In any event, the equitable jurisdiction of this Court to award interest, if any, would only apply in situations where there has been fraud, breach of fiduciary duty or trust, or a knowingly wrongful retention of money: EdperBrascan Corporation v. 177373 Canada Ltd. (2001), 53 O.R. (3d) 331 (Sup. Ct.), at paragraph 11; appeal dismissed at (2002), 22 B.L.R. (3d) 42 (Ont. C.A.). There is no evidence that the Crown knowingly converted monies for its own use, or made any profit from the retention of monies which would otherwise have been used for annuity payments. Nor is there any evidence which supports the plaintiff's claim that the Crown "deliberately" evaded its treaty promises to the assignors, or was otherwise guilty of "serious misconduct". An award of compound interest is therefore not necessary in these circumstances as a deterrent, or to encourage the Crown to honour its treaty promises.

[105]Moreover, the House of Lords, in Westdeutsche Landesbank Girozentrale v. Islington London Borough Council, [1996] A.C. 699 (H.L.), considered whether the Court could award compound interest given the language of section 35A of the Supreme Court Act 1981 [(U.K.) 1981, c. 54]. The Court determined that it would not award compound interest. Lord Lloyd made the following comment at pages 740-741:

To extend the equitable jurisdiction for the first time to cover a residual injustice at common law, which Parliament chose not to remedy, would, I think, be as great an usurpation of the role of the legislature, and as clear an example of judicial law-making, as it would have been in La Pintada. If it is thought desirable that the courts should have a power to award compound interest in common law claims for money had and received, then such a result can now only be brought about by Parliament.

[106]These views were echoed by Lord Slynn of Hadley, at pages 718-719:

But for the legislation I would have accepted that it was open to your lordships to hold that, in the light of the development of the law of restitution, the courts could award compound interest, either by modifying the common law rule or by resorting to equity to act in aid of the common law right to recover moneys paid under a void transaction. As to whether it would have been right to do so in general terms, or whether it would have been right to limit the cases in which compound interest should be awarded, or whether compound interest should be awarded at all I am not, on the restricted arguments advanced in this case, prepared to comment.

I do not, however, consider that it would be right on this appeal to enlarge the cases in which compound interest can be awarded when Parliament has twice in relatively recent times limited statutory interest to simple interest. This is a matter which should be considered by Parliament when the merits or disadvantages of giving the courts power to award compound interest could be examined in a context wider than the present case.

[107]In the result, even if the plaintiff could establish liability, any interest payable on unpaid annuities would be limited to simple interest for the period after February 1, 1992.

[108]Finally, even if compound interest were payable under equitable principles, I consider such an award to be disproportionate to the wrong committed. In Felix v. Patrick, 145 U.S. 317 (1892), at page 333, the United States Supreme Court made the following statement:

The real question is, whether equity demands that a party, who, 28 years ago, was unlawfully deprived of a certificate of muniment of title of the value of $150, shall now be put in the possession of property admitted to be worth over a million. The disproportion is so great that the conscience is startled, and the inquiry is at once suggested, whether it can be possible that the defendant has been guilty of fraud so gross as to involve consequences so disastrous. In a court of equity, at least, the punishment should not be disproportionate to the offence, and the very magnitude of the consequences in this case demands of us that we should consider carefully the nature of the wrong done by the defendant in acquiring title to these lands.

[109]The Supreme Court of Canada adopted this same principle in Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534, holding that a modified approach may be required to avoid a harsh damage award out of all proportion to the defendant's behaviour. The use of the statutory definitio n of "Indian" in determining entitlement to treaty annuities was reasonable in the circumstances, and at worst incorrect. In the absence of any evidence of bad faith, an award of compound interest would not be appropriate.

CONCLUSION

[110]For the above reasons, I conclude that:

(a) the general prohibition against assignments set out in section 67 of the FAA applies, and that the treaty annuities at issue are not assignable;

(b) in the absence of the Crown's consent, the treaty annuities at issue cannot be transferred;

(c) the notices of assignments are not invalid on the grounds that they fail to comply with the requirements of the FAA and Assignment of Crown Debt Regulations; and

(d) assuming liability for payment of treaty annuities, no interest is owed on the arrears.

[111]The issuance of a formal judgment will be deferred to permit written submissions with respect to costs, if the parties are unable to agree. Within 14 days of the issuance of these reasons, the Crown shall submit a draft judgment giving effect to these reasons, and serve and file written submissions on costs, not exceeding three pages, double-spaced. Within seven days of service of the Crown's submissions, the plaintiff may submit responding submissions n ot exceeding three pages.