A-7-89
Her Majesty the Queen (Appellant)
v.
Glenn Williams (Respondent)
INDEXED AS: WILLIAMS v. CANADA (C.A.)
Court of Appeal, Pratte, Heald and Stone JJ.A.—
Ottawa, May 15 and June 13, 1990.
Income tax — Exemptions — Trial Judge holding regular
unemployment insurance benefits exempt under Indian Act, s.
87(b) (personal property of Indian situated on reserve)
Erred in applying "connecting factors" test instead of resi
dence of debtor test — Correctly holding enhanced benefits
paid under job creation agreement between Band and C.E.LC.
exempt under Indian Act, s. 90( I )(b).
Native peoples — Taxation — Regular unemployment in
surance benefits not income tax exempt under Indian Act, s.
87(b) — Application of residence of debtor test to determine
situs of benefits — As C.E.I.C. not having office on reserve nor
otherwise resident there, benefits not situated on reserve
Enhanced benefits paid under job creation agreement between
Band and C.E.I.C. exempt under s. 90(1)(b).
Unemployment insurance — Income Tax Act, s. 56(1)(a)(iv)
requiring unemployment insurance benefits to be included in
income — Regular benefits paid to Indian on reserve not
exempt under Indian Act, s. 87(b) as not benefits "situated on
reserve" — Residence of debtor test applied — Enhanced
benefits paid pursuant to job creation agreement between Band
and C.E.I.C. exempt under s. 90(1)(b).
Construction of statutes — Indian Act, s. 90(1)(b) providing
personal property "given" to Indians under "treaty or agree
ment" deemed to be situated on reserve — Enhanced unem
ployment insurance benefits "paid" under job creation agree
ment between Band and C.E.LC. considered "given" — Canons
of construction applicable to interpretation of other statutes
not to be applied to statute relating to Indians if can reason
ably be construed to confer tax exemption — If meaning
doubtful, to be resolved in favour of Indians.
Creditors and debtors — Sit us of simple debt — Trial
Judge erred in applying "connecting factors" test to find
regular unemployment insurance benefits paid to Indian on
reserve "situated on reserve" within Indian Act, s. 87(b)
Residence of debtor proper test.
This was an appeal from the judgment of Cullen J. that
regular unemployment insurance benefits received by the
respondent, an Indian living on a reserve, were exempt from
income tax by virtue of the Indian Act, paragraph 87(b). To
find that the benefits were "situated on a reserve", the Trial
Judge applied a "connecting factors" test, i.e. he considered the
place at which the benefits were payable or received, the place
at which the services were performed and the residence of the
recipient to determine the situs of the benefits, instead of
looking exclusively at the residence of the debtor. His Lordship
also held that enhanced benefits, paid pursuant to a job crea
tion project, resulting from a written agreement between the
Band and the Canada Employment and Immigration Commis
sion, were exempt under paragraph 90(1)(b), which provides
that personal property given to Indians under a treaty or
agreement between a band and the Queen shall be deemed
always to be situated on a reserve. The Commission had no
office on the Reserve and was not otherwise resident there. The
cheques were sent from Vancouver. The issues were whether
the Trial Judge erred in applying a "connecting factors" test
and in determining that the enhanced benefits were "given"
under an "agreement" between a band and the Queen.
Held, the appeal should be allowed in part.
The regular benefits are not exempt as they were not "situat-
ed on a reserve". The cases relied upon by Cullen J. had not
expanded the test for situs of a simple debt. In both cases the
same passage from Cheshire's Private International Law was
cited. That passage states that if the debtor resides in two or
more countries, the debt is situated where it is required to be
paid by an express or implied provision of the contract, but if
the debtor resides in only one country, the debt is situated
there. When read in this context the phrase "in the absence of
anything in the contract or elsewhere to indicate the contrary"
found in Thurlow A.C.J.'s judgment in National Indian Broth
erhood does not represent a departure from the rule that it is
the residence of the debtor that determines the situs of a simple
contract debt. What was intended was that other factors may
be considered in determining the situs of a debt where the
debtor is resident in more than one country or in a place where
the rules of practice permit enforcement of a debt even though
the debtor may no longer reside within the jurisdiction of a
court. The principle that a court may look to the place where a
debt is payable could not be applied unless shown that the
Commission was resident both elsewhere in Canada and on the
Reserve.
The enhanced benefits were, however, exempt. They were
made available to the respondent because of the agreement
between the Band and the Crown. The agreement was central
to the operation of section 38 of the Unemployment Insurance
Act. Those benefits were property "given" to an Indian within
paragraph 90(1)(b) of the Indian Act, not paid under an Act of
Parliament. Acceptance of the argument that only an agree
ment that relates to Indians or Indian bands is intended
because the word "treaty" appears immediately before "agree-
ment" in paragraph 90(1)(b), would be to ignore the principle
that canons of construction applicable to the interpretation of
other statutes are not to be applied to the interpretation of a
statute relating to Indians if the language of such a statute can
reasonably be construed to confer tax exemption. The agree
ment was in furtherance of a national policy, but it remained
an "agreement" in a broad sense. At the very least its meaning
is doubtful and such doubt should be resolved in favour of the
Indians.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Employment and Immigration Reorganization Act, S.C.
1976-77, c. 54, ss. 10, 11.
Indian Act, R.S.C. 1970, c. 1-6, ss. 87(b) (as am. by S.C.
1980-81-82-83, c. 47, s. 25), 90(1)(6).
Income Tax Act, R.S.C. 1952, c. 148, ss. 56(1)(a) (as
am. by S.C. 1970-71-72, c. 63, s. 1; 1980-81-82-83, c.
140, s. 26), 81(1)(a) (as am. by S.C. 1980-81-82-83, c.
140, s. 46).
Unemployment Insurance Act, 1971, S.C. 1970-71-72, c.
48, s. 38 (as am. by S.C. 1976-77, c. 54, s. 41).
Unemployment Insurance Act, R.S.C., 1985, c. U-1, s.
117(2).
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. National Indian Brotherhood, [1979] 1 F.C. 103
(T.D.); Nowegijick v. The Queen, [1983] 1 S.C.R. 29;
(1983), 144 D.L.R. (3d) 193; [1983] 2 C.N.L.R. 89;
[1983] CTC 20; 83 DTC 5041; 46 N.R. 41.
REVERSED:
Williams v. Canada, [1989] 2 F.C. 318; (1988), 24
C.C.E.L. 119; [1989] 1 C.N.L.R. 184; [1989] 1 C.T.C.
117; 89 DTC 5032; 24 F.T.R. 169 (T.D.).
REFERRED TO:
R. v. Sparrow, [1990] 1 S.C.R. 1075; Commissioner of
Stamps v. Hope, [1891] A.C. 476 (P.C.); New York Life
Insurance Co. v. Public Trustee, [1924] 2 Ch. 101
(C.A.); Kwok v. Comr. of Estate Duty, [1988] 1 W.L.R.
1035 (P.C.); English, Scottish and Australian Bank, Ld.
v. Commissioners of Inland Revenue, [1932] A.C. 238
(H.L.); Alloway v Phillips (Inspector of Taxes), [1980] 3
All ER 138 (C.A.); Re Banque des Marchands de
Moscou (Koupetschesky), [1954] 2 All E.R. 746 (Ch.D.);
Bank of Nova Scotia v. Blood, Appeal #10275, judgmeqt
dated July 7, 1989, Alta. C.A., not yet reported; Saugeen
Indian Band v. Canada, [1990] 1 F.C. 403; (1989), 104
N.R. 201 (C.A.); Metlakatla Ferry Service Ltd. v. The
Queen in Right of British Columbia (1987), 37 D.L.R.
(4th) 322; 12 B.C.L.R. (2d) 308; [1987] 2 C.N.L.R. 95
(B.C.C.A.); Mitchell v. Sandy Bay Indian Band, [1983]
5 W.W.R. 117; (1983), 22 Man. R. (2d) 286; [1983] 4
C.N.L.R. 50 (Man. Q.B.).
AUTHORS CITED
Castel, J.-G. Conflict of Laws: cases, notes and ma
terials, 2nd ed., Toronto: Butterworths, 1968.
Cheshire, Geoffrey Chevalier Private International Law,
7th ed. London: Butterworths, 1965.
Cheshire and North Private International Law 10th ed.
by P.M. North, London: Butterworths, 1979.
COUNSEL:
Ian MacGregor, Q.C. and Sandra E. Phillips
for appellant.
Gary S. Snarch and Tara Wintjes for
respondent.
SOLICITORS:
Deputy Attorney General of Canada for
appellant.
Snarch & Allen, Vancouver, for respondent.
The following are the reasons for judgment
rendered in English by
STONE J.A.: This is an appeal from a judgment
of the Trial Division rendered December 15,
1988,' whereby the respondent's appeal from an
assessment of income tax was allowed with costs.
The issue before the Trial Judge was whether the
Minister of National Revenue had properly includ
ed in the computation of the respondent's income
amounts of regular and enhanced unemployment
insurance benefits received by him in the 1984
taxation year, pursuant to paragraph 56(1)(a) of
the Income Tax Act, R.S.C. 1952, c. 148, as
amended [by S.C. 1970-71-72, c. 63, s. 1; 1980-81-
82-83, c. 140, s. 261. 2 In allowing the appeal, the
learned Trial Judge concluded that these amounts
were exempt from income tax by virtue of the
' Williams v. Canada, [1989] 2 F.C. 318 (T.D.).
2 56. (1) Without restricting the generality of section 3,
there shall be included in computing the income of a taxpayer
for a taxation year,
(a) any amount received by the taxpayer in the year as, on
account or in lieu of payment of, or in satisfaction of,
(iv) a benefit under the Unemployment Insurance Act,
1971,
•
provisions of paragraph 81(1)(a) [as am. idem, s.
46] of the Act 3 and paragraphs 87(b) [as am. by
S.C. 1980-81-82-83, c. 47, s. 25] and 90(1)(b) of
the Indian Act, R.S.C. 1970, c. 1-6. 4
' 81. (I) There shall not be included in computing the
income of a taxapyer for a taxation year,
(a) an amount that is declared to be exempt from income
tax by any other enactment of the Parliament of Canada,
other than an amount received or receivable by an indivudal
that is exempt by virtue of a provision contained in a tax
convention or agreement with another country that has the
force of law in Canada;
4 These sections read:
87. Notwithstanding any other Act of the Parliament of
Canada or any Act of the legislature of a province, but
subject to section 83, the following property is exempt from
taxation, namely:
(a) the interest of an Indian or a band in reserve or
surrendered lands; and
(b) the personal property of an Indian or band situated on
a reserve;
and no Indian or band is subject to taxation in respect of the
ownership, occupation, possession or use of any property
mentioned in paragraph (a) or (b) or is otherwise subject to
taxation in respect of any such property; and no succession
duty, inheritance tax or estate duty is payable on the death of
any Indian in respect of such property or the succession
thereto if the property passes to an Indian, nor shall any such
property be taken into account in determining the duty
payable under the Dominion Succession Duty Act, being
chapter 89 of the Revised Statutes of Canada, 1952, or the
tax payable under the Estate Tax Act, on or in respect of
other property passing to an Indian.
• • •
90. (1) For the purposes of section 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.
(2) Every transaction purporting to pass title to any prop
erty 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 Minis
ter, destroys personal property that is by this section deemed
to be situated on a reserve, is guilty of an offence.
THE FACTS
The pertinent facts are fully set forth by the
Trial Judge. I shall merely summarize them. The
respondent is an Indian within the meaning of the
Indian Act. In 1984, while he was a member of the
Penticton Indian Band (the "Band") residing on
the Penticton Indian Reserve No. 1 (the
"Reserve"), he received the following unemploy
ment insurance benefits:
(a) regular unemployment insurance benefits at
a rate of $225 per week for a period of 13 weeks
commencing January 1, aggregating $2,925.
The respondent qualified to receive these ben
efits by being employed with Greenwood Forest
Products Ltd., a company situate on the
Reserve, during the years 1982 and 1983;
(b) regular unemployment insurance benefits at
a rate of $158 per week for 2 weeks commencing
June 17, 1984 aggregating $316. The respond
ent qualified to receive these benefits by being
employed on a "NEED Project" on the Reserve
for the period from March 23 to June 1, 1984;
(c) enhanced unemployment insurance benefits
at the rate of $157 per week for 25 weeks
commencing July 2, the said sum being in addi
tion to regular benefits of $158 per week
received in the same period. These benefits were
received under a job creation project adminis
tered on the Reserve by the Band pursuant to
the provisions of section 38 of the Unemploy
ment Insurance Act, 1971, S.C. 1970-71-72, c.
48, as amended [by S.C. 1976-77, c. 54, s. 41]. 5
As an unemployment insurance claimant the
respondent was eligible to work on the job crea
tion project.
38. (1) For the purposes of this section, a job creation
project means a project that is approved by the Commission for
the purposes of this section under a program designed primarily
to create employment and conducted by the Government of
Canada pursuant to any Act of Parliament.
(2) Benefit otherwise payable under this Part to a claimant
who takes employment on a job creation project may, at the
discretion of the Commission and subject to subsection (10), be
paid in the manner prescribed.
(3) For the purposes of this Part, a week during which the
claimant is employed on a job creation project and is paid
benefit under subsection (2), shall be deemed to be a week of
unemployment and for the purposes of this Part, Part IV, the
Income Tax Act and the Canada Pension Plan, any benefit
paid to a claimant under subsection (2) shall be deemed not to
be remuneration from employment.
The circumstances surrounding the receipt of
the enhanced benefits require a further word of
explanation. By a written agreement dated March
28, 1984 between the Band and the Canada
Employment and Immigration Commission it was
agreed that a job creation project, within the
meaning of section 38 of the Unemployment In
surance Act, 1971, would be carried out on the
Reserve. The project was to run from March 30
until December 21, 1984. The Commission had no
office on the Reserve and was not otherwise resi
dent there. According to the record, the cheques
representing all benefits were mailed from the
Commission's Regional Computer Centre in
Vancouver.
THE ISSUES
The appellant asserts that the Trial Judge erred
in two ways, namely, by applying a "connecting
factors" test in determining whether the regular
unemployment insurance benefits constituted
"property ... situated on a reserve" within the
meaning of paragraph 87(b) of the Indian Act
and, secondly, in determining that the enhanced
unemployment insurance benefits were given
"under" an "agreement" between a band and Her
Majesty within the meaning of paragraph 90(1)(b)
of that Act.
DISCUSSION
These issues require separate treatment and I
shall deal with them in turn.
Are the regular unemployment insurance benefits
exempt from income tax by virtue of paragraph
87(b) of the Indian Act?
The learned Trial Judge was of the opinion that
the regular unemployment insurance benefits were
exempt from taxation because they fell within the
words "personal property ... situated on a
reserve" 6 in paragraph 87(b) of the Indian Act. In
so concluding, he appears to have been much
influenced by certain views expressed by Thurlow
A.C.J. (as he then was) in R. v. National Indian
Brotherhood, [1979] 1 F.C. 103 (T.D.), where the
6 No question arises that the benefits received, both regular
and enhanced, are "personal property" within the meaning of
paragraph 87(b) (see Nowegijick v. The Queen, [1983] 1
S.C.R. 29, at p. 38).
question was whether salaries payable to Indian
employees by the corporate respondent, resident in
Ottawa, by cheque drawn on an Ottawa bank was
"property . . . situated on a reserve" under para
graph 87(b). At page 109 the learned Associate
Chief Justice said:
A chose in action such as the right to a salary in fact has no
situs. But where for some purpose the law has found it neces
sary to attribute a situs, in the absence of anything in the
contract or elsewhere to indicate the contrary, the situs of a
simple contract debt has been held to be the residence or place
where the debtor is found. See Cheshire, Private International
Law, seventh edition, pp. 420 et seg.
Although the point was not argued in Nowegijick
v. The Queen, [1983] 1 S.C.R. 29, the views of the
Associate Chief Justice were approved by Dickson
J. (as he then was) in the following passage, at
page 34:
One point might have given rise to argument. Was the fact
that the services were performed off the reserve relevant to the
situs? The Crown conceded in argument, correctly in my view,
that the situs of the salary which Mr. Nowegijick received was
sited on the reserve because it was there that the residence or
place of the debtor, the Gull Bay Development Corporation,
was to be found and it was there the wages were payable. See
Cheshire and North, Private International Law (10th ed.,
1979) at pp. 536 et seq. and also the judgment of Thurlow
A.C.J. in R. v. National Indian Brotherhood, [1979] 1 F.C.
103 particularly at pp. 109 et seq.
The question in that case was whether wages
payable to an Indian residing on a reserve by a
corporation also resident on the reserve for work
performed off the reserve was "property . . . situat
ed on a reserve" within the meaning of paragraph
87(b) of the Indian Act.
Another source of guidance for the learned Trial
Judge was the approach taken by Dickson J. in
Nowegijick for the interpretation of treaties and
statutes relating to Indians. He said, at page 36:
It is legal lore that, to be valid, exemptions to tax laws should
be clearly expressed. It seems to me, however, that treaties and
statutes relating to Indians should be liberally construed and
doubtful expressions resolved in favour of the Indians. If the
statute contains language which can reasonably be construed to
confer tax exemptions that construction, in my view, is to be
favoured over a more technical construction which might be
available to deny exemption. 7
The Trial Judge was able to conclude that the
situs of the regular unemployment insurance ben
efits ought not to be determined exclusively by
reference to the residence of the debtor' but,
rather, by considering a number of "connecting
factors", namely, (a) the place at which the ben
efits were payable or received, (b) the place at
which the services were performed and (c) the
residence of the recipient. He found support for so
approaching the question in National Indian
Brotherhood where Thurlow A.C.J. stated [at
page 109] that the residence of the debtor test was
to apply "in the absence of anything in the con
tract or elsewhere to indicate the contrary" and in
Nowegijick where Dickson J. stated [at page 34]
that the situs of certain wages was on the reserve
because the debtor resided there and "it was there
the wages were payable".
The respondent urges that, in any event, the
residence of the debtor test ought not to be applied
because it is essentially a rule of conflict of laws
that ill-fits the determination of whether the ben
efits in question are "property .. . situated on a
reserve" within the meaning of paragraph 87(b) of
the Indian Act.
In examining these questions, I begin with the
principle of construction enunciated by the
Supreme Court of Canada in Nowegijick, and also
by recalling the observations of Dickson J., at page
36, that Indians, in affairs of life that are not
governed by treaties or the Indian Act, "are sub
ject to all of the responsibilities, including payment
of taxes, of other Canadian citizens" and, at page
41, that the exemption contained in paragraph
87(b) is concerned with "personal property situat-
See also R. v. Sparrow, [1990] I S.C.R. 1075, at
pp. 1106-1109.
It seems clear that Her Majesty as represented by the
Canada Employment and Immigration Commission was not
resident on the Reserve. By subsection 117(2) of the Unem
ployment Insurance Act [R.S.C., 1985, c. U-1] all amounts
paid as benefits are to be paid "by special warrants drawn on
the Receiver General, issued by the Commission". The Com
mission is a body corporate and for all purposes an agent of
Her Majesty in right of Canada, and has its head office in the
National Capital Region (Employment and Immigration
Reorganization Act, S.C. 1976-77, c. 54, ss. 10, 11). It had no
office on the Reserve.
ed on a reserve and only with property situated on
a reserve".
It was not argued that, merely because the
property here took the form of unemployment
insurance benefits rather than wages, the rule for
determination of situs should be different. That
rule is discussed in the editions of Cheshire [Pri-
vate International Law] and Cheshire and North
[Private International Law] cited by Thurlow
A.C.J. in National Indian Brotherhood and Dick-
son J. in Nowegijick, respectively. At page 538 of
the 10th edition, the learned editors stated:
Although the place of residence is chosen because it is there
that recovery by action is possible, it has been suggested that a
debt is situated in the country where it is payable even though
this does not represent the residence of the debtor. The courts,
however, have not taken this view. They have insisted that the
residence of the debtor is "an essential element in deciding the
situs of the debt" (Deutsche Bank and Gesellschaft v. Banque
des Marchands de Moscou (unreported), C.A. 1930, cited in
Re Claim by Helbert Wagg & Co. Ltd., [1959] Ch. 323, at p.
343; [1956] 1 All E.R. 129, at p. 136.). If the debtor resides in
two or more countries, then, indeed, the debt is situated in the
one in which
"it is required to be paid by an express or implied provision
of the contract or, if there is no such provision, where it
would be paid according to the ordinary course of business"
(Jabbour (F. and K.) v. Custodian of Israeli Absentee Prop
erty, [1954] 1 All E.R. 145, at p. 152; [1954] 1 W.L.R. 139,
at p. 146; Re Russo-Asiatic Bank, [1934] Ch. 720; Rossano
v. Manufacturers' Life Insurance Co., [1963] 2 Q.B. 352, at
pp. 378-380. A debt due from a bank to a customer, for
instance, is deemed by the general law to be situated at the
branch where the account is kept, Clare & Co. v. Dresdner
Bank, [1915] 2 K.B. 576; Joachimson v. Swiss Bank Corpo
ration, [1921] 3 K.B. 110, at p. 127; Richardson v. Richard-
son, [1927] P. 228.)
If, however, the debtor resides only in one country, it is there
alone that the debt is situated notwithstanding that it may be
expressly or implicitly payable elsewhere (Re Claim by Helbert
Wagg & Co. Ltd., [1956] Ch. 323; [19561 1 All E.R. 129.)
The identical passage, which was relied upon by
Thurlow A.C.J., appears in the 7th edition.
When the judgment of Thurlow A.C.J. is read
in light of this passage it can be seen that the
qualifying words he used, i.e. "in the absence of
anything in the contract or elsewhere to indicate
the contrary", do not represent a departure from
the views expressed in Cheshire that, fundamental
ly, it is the residence of the debtor that determines
the situs of a simple contract debt, that being the
place where it is properly enforceable. Moreover,
the decisions of the English Courts which he dis
cussed, Commissioner of Stamps v. Hope, [1891]
A.C. 476 (P.C.); and New York Life Insurance
Co. v. Public Trustee, [1924] 2 Ch. 101 (C.A.),
are among the many cases cited by the learned
editors of that work for that proposition. 9
I am of the view, therefore, that what Thurlow
A.C.J. had in mind was the situation recognized in
Cheshire that the terms of a contract creating a
simple debt, or the place where a debt is payable in
the ordinary course of business, may be looked at
for guidance in determining the situs of that debt
in a case where the debtor is resident in more than
one country or, as pointed out by Atkin L.J. in
New York Life at pages 119-120, possibly in the
place where rules of practice permit enforcement
of such a debt even though the debtor may no
longer reside within the jurisdiction of a court. '°
No contract term of the kind above referred to
exists in the case at bar. Assuming, for the
moment, that the Canada Employment and Immi
gration Commission resided both in Ottawa and
Vancouver and that the benefits were payable on
the Reserve, I cannot see how the respondent can
be assisted by the principle that a court may look
to the place where a debt is payable in the ordi
nary course of business in selecting which of two
residences of a debtor should determine the situs
of that debt. In my view, for that principle to apply
9 See also Castel, J.-G. Conflict of Laws: cases, notes and
materials, 2nd ed., Butterworths (Toronto), at pp. 401-402.
The proposition was quite recently reaffirmed by the Privy
Council in circumstances involving the situs of a chose in action
created by a non-negotiable promissory note. To the general
rule that choses in action are situated where they are properly
recoverable (that is, where the debtor resides) are the excep
tions of specialty debts and negotiable instruments (Kwok v.
Comr. of Estate Duty, [1988] 1 W.L.R. 1035 (P.C.), at pp.
1040-1041). See also English, Scottish and Australian Bank,
Ld. v. Commissioners of Inland Revenue, [1932] A.C. 238
(H.L.) and Alloway v Phillips (Inspector of Taxes), [1980] 3
All ER 138 (C.A.), per Dunn L.J., at pp. 146-147 for further
discussion as to where a simple debt is locally situated in the
eyes of the common law.
'° But compare Re Banque des Marchands de Moscou (Kou-
petschesky), [1954] 2 All E.R. 746 (Ch.D.).
it would have to be shown as a minimum that the
Commission was resident both elsewhere in
Canada and on the Reserve. That is simply not the
case.
It is also suggested that the intention to
introduce the place where a debt is payable as the
basis of a new test for determining the situs of a
chose in action falling under paragraph 87(b) of
the Indian Act emerges from the language of
Dickson J. in Nowegijick, when he stated that the
wages there in question were situated on a reserve
because the debtor resided there "and it was there
the wages were payable". I find the respondent's
assertion difficult to accept. Dickson J., like the
learned Associate Chief Justice, based himself on
an edition of Cheshire where such a test is simply
not espoused. Also, the debtor-employer in
Nowegijick had its office on a reserve where, in
point of fact, the wages were payable. I do not find
in that case a manifest intention to expand the test
for determining the situs of a simple debt falling
within paragraph 87(b).
Finally, I am unable to accept that.the residence
of the debtor test above discussed ought not to be
applied for the reason that it is a conflict of laws
test. In National Indian Brotherhood the test was
applied in determining the situs of property falling
within paragraph 87(b) of the Indian Act, and this
was approved in Nowegijick. Although the origin
of the principle derives from ecclesiastical law," it
has also been applied in the law of probate and
administration and of assignment of debts. 12
I conclude that the benefits received by the
respondent in 1984 were not "property ... situated
on a reserve" within the meaning of paragraph
87(b) of the Indian Act and, therefore, are not
exempt from income tax.
" See New York Life Insurance Co. v. Public Trustee,
[1924] 2 Ch. 101 (C.A.), per Atkin L.J. at p. 119.
12 See Bank of Nova Scotia v. Blood (Appeal #10275, judg
ment rendered July 7, 1989, (Alta. C.A.)), not reported. See
also the discussion in English, Scottish and Australian Bank,
Ld. v. Commissioners of Inland Revenue, [1932] A.C. 238
(H.L.).
Are the enhanced unemployment insurance ben
efits exempt from income tax by virtue of para
graph 90(1)(b) of the Indian Act?
The appellant contends that the Trial Judge
erred in deciding that the enhanced benefits are
exempt from income tax because they are "person-
al property that was ... given to Indians or to a
band under a treaty or agreement between a band
and Her Majesty" and, therefore, by virtue of
paragraph 90(1)(b) of the Indian Act, are
"deemed always to be situated on a reserve" for
the purposes of section 87 of that Act. The Judge
was here willing to construe the word "agreement"
to embrace the agreement of March 28, 1984
between the Band and the Canada Employment
and Immigration Commission.
The appellant takes the position that the word
"agreement" must be read in association with the
word "treaty" and, as so read, that it may be seen
as contemplating only an agreement which focuses
specifically on the special relationship between the
federal government and Indians or Indian bands
and not one by virtue of which a band merely
participates in a national program such as that
recognized by section 38 of the Unemployment
Insurance Act, 1971. The submission is also made
that the enhanced benefits were not given under
the agreement of March 28, 1984 but were paid
under an Act of Parliament because, by the terms
of the agreement (clause 1), the Commission
undertook and agreed "to pay benefits in accord
ance with section 38 of the Unemployment Insur
ance Act, 1971 and the regulations made pursuant
thereto".
What must be borne in mind, I think, is that the
enhanced benefits were made available to the
respondent because of the agreement between the
Band and Her Majesty. It could not have been
otherwise for, in the absence of that agreement, no
benefits could have been paid. The agreement was,
thus, central to the operation of section 38 of the
Unemployment Insurance Act, 1971.1 also do not
find it unreasonable to describe those benefits as
property "given" to an Indian in the sense that
word is used in paragraph 90(1)(b) of the Indian
Act. To so interpret it would, it seems to me,
accord with what was envisioned by the Nowegi-
jick principle of construction.
It remains to decide whether these benefits may
properly be viewed as given under an "agreement"
within the meaning of that paragraph. It is argued
that they were made available in pursuance of a
national policy to alleviate unemployment recog
nized in section 38 of the Unemployment Insur
ance Act, 1971 and, therefore, were not given
under an "agreement" with the Band qua Band at
all. While the word "treaty", appearing as it does
immediately before the word "agreement" in para
graph 90(1)(b), may offer some support for the
argument that only an agreement that relates to
Indians or Indian bands per se is intended, I am
not inclined to limit the word in that fashion.
Acceptance of this argument would, I think,
require us to pay insufficient attention to what I
take to be the true import of the Nowegijick
principle of construction which, if I have under
stood it correctly, is that canons of construction
applicable to the interpretation of other statutes
are not to be applied to the interpretation of a
statute relating to Indians if the language of such
a statute can reasonably be construed to confer tax
exemption. 13 The agreement here in question was
made in furtherance of a national policy, but it
remained an "agreement" between the Band and
Her Majesty in a broad sense. At very least its
meaning is doubtful and, as required by Nowegi-
jick, such doubt should be resolved in favour of the
Indians." I find nothing in the evidence to suggest
that persons other than members of the Band were
engaged in the job creation project, which, as
Schedule E of the agreement thereto provides, had
as its objective "to improve the commercial value
of Band timber areas".
Having already concluded that the regular
unemployment insurance benefits are not exempt
from income tax, it follows that only the enhanced
portion of the benefits here under discussion are so
exempt.
" See also Saugeen Indian Band v. Canada, [1990] 1 F.C.
403 (C.A.), per MacGuigan J.A., at pp. 416-417; Metlakatla
Ferry Service Ltd. v. The Queen in right of British Columbia
(1987), 37 D.L.R. (4th) 322 (B.C.C.A.), per McLachlin J.A.,
at p. 324.
14 Compare Mitchell v. Sandy Bay Indian Band, [1983] 5
W.W.R. 117 (Man. Q.B.), per Morse J., at p. 127.
DISPOSITION
I would therefore allow the appeal, set aside the
judgment of the Trial Division dated December
15, 1988 and refer the matter back to the Minister
for reassessment on the basis that the regular
unemployment insurance benefits received by the
respondent during the 1984 taxation year are not
exempt from income tax but that the enhanced
portion of unemployment insurance benefits
received by the respondent during that year is
exempt from income tax. Success being fairly
evenly divided, I would make no order as to costs.
PRATTE J.A.: I agree.
HEALD J.A.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.