Ontario court eyes Indian Act in matter of receiver’s seizure of on-reserve property

By Terry Davidson

Law360 Canada (September 30, 2022, 5:07 PM EDT) -- Ontario’s Appeal Court has overturned a decision allowing a court-appointed receiver to seize and recoup money from an Indigenous man’s on-reserve businesses, finding Canada’s Indian Act protects such properties from receivership by those who are not Indigenous.

The Sept. 29 written decision in Bogue v. Miracle, 2022 ONCA 672 — dated the day before Canada’s National Day for Truth and Reconciliation — involves Andrew Miracle, a Mohawk of the Bay of Quinte, and his two businesses, Smokin’ Joes and Canna Kure — both located within the Tyendinaga Mohawk Territory.

Miracle's current lawyer, Toronto's Ian Collins, confirmed to The Lawyer's Daily that Smokin' Joes is a gas station that also sells confectioneries and tobacco and cigarettes, and that Canna Kure is a marijuana store located on the same piece of property.

The appeal started with a dispute between Miracle and his son over “the rights to profits and ownership” over Smokin’ Joes. Miracle retained lawyer Glenn Bogue on a contingency fee basis to act for him in the arbitration. Their agreement was that Bogue would receive 25 per cent of any amount awarded to Miracle.

(Collins also said he took over Miracle's case after Boque was suspended sometime after the arbitration.)

The arbitrator awarded Miracle $11 million, as well as the right to take over Smokin’ Joes from his son.

However, the Appeal Court Notes that, to date, Miracle has only paid Bogue $12,500 — “an amount much less than what Mr. Bogue would be owed if his interpretation of the contingency agreement is correct.”

As a result, Ontario’s Superior Court appointed Schwartz Levitsky Feldman Inc. as receiver and manager over Miracle’s properties, including Smokin’ Joes and Canna Kure, and that the receiver would collect profits from the businesses until the debt to Bogue was paid.

Miracle appealed, arguing the order was contrary to the Indian Act, which prohibits anyone not an “Indian or band” from seizing the on-reserve assets of an Indigenous person.

The matter was sent back to the application judge to determine if the appointing receiver was outlawed by the Act — specifically by s. 89, which states that “the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band.”

The applications judge, in turning to case law involving the Indian Act and funds in off-reserve accounts, found the appointment of a receiver in the Miracle case was an allowed “commercial mainstream” exception to s. 89.

It was then Miracle turned to the Ontario Appeal Court.

At appeal, Bogue argued that the actions of the receiver are not covered by s. 89, as the receiver is neither “a creditor nor the Crown.”

But Appeal Court Justice Michael Tulloch, with Justices David Doherty and Bradley Miller concurring, disagreed with that assessment.

“While s. 89 [of the Indian Act] does not expressly refer to receiverships, it does cover a wide variety of procedures involving execution by creditors on the property of debtors,” wrote Justice Tulloch. “Notably, s. 89 references seizures and restraints of property, which, in my view, captures the substance of the current order under appeal. The Superior Court had appointed a receiver to take control of the appellant’s businesses located on reserve. Furthermore, the receiver was to recoup the proceeds from the operation of these businesses for the benefit of Mr. Bogue, a creditor. Overall, the appointment of a receiver in this case is closely akin to an order for the seizure or restraint of the debtor’s property, which brings it into the scope of s. 89.”

Justice Tulloch noted that “the purpose of s. 89 is not to confer a general economic benefit upon Indians.”

“Rather, it aims to preserve the entitlements of Indians to their reserve lands and ensure that the use of their property would not be eroded by the ability of governments to tax, or creditors to seize…”

He also took issue with how the applications judge interpreted findings in the Supreme Court of Canada’s McDiarmid Lumber Ltd. v. God’s Lake First Nation, 2006 SCC 58.

“The application judge interpreted McDiarmid Lumber to find that s. 89 did not extend to ‘contractual arrangements in the commercial mainstream that amount to normal business transactions’ …  Consequently, since Mr. Miracle’s on-reserve businesses … operated in the commercial mainstream, they were not protected by s. 89. It was therefore open to the receiver to take control of, and recoup profits from, both businesses.”

Justice Tulloch called this a “reversible error,” and that he saw “nothing in the language of s. 89 that offers any support for a broad ‘commercial mainstream exception.’”

“As I read the language, s. 89 draws distinctions between: (1) the property of an Indian or band, and the property of others; (2) property located on, and off, reserve; and (3) execution-type measures taken by Indians or Indian bands, and those taken by everyone else. Foreclosing commercial property located on reserve from s. 89 would undermine both the text and purpose of the provision.”

Justice Tulloch overturned the application judge’s order with respect to the receiver’s right to recoup profits from Miracle’s on-reserve businesses, but did find the receiver was entitled to seize any property of Miracle’s located off-reserve.

Miracle's lawyer, Collins, said the Court of Appeal “confirmed that a non-native may not seize property of an Indian held by him on the reserve.” Victory notwithstanding, Collins remains critical of the Appeal Court’s decision. 

“Nevertheless, the decision of the Court of Appeal was lazy and showed a total lack of care for the rights of Indians in Canada,” said Collins. “The court had many important other issues before it, including the bias and unfairness and ignorance of the Application judge, Stanley Kershman, whose decision they overturned. The court should have told the truth about Kershman’s actions which were laid out in detail for the court. The court protected him by their silence. The Court of Appeal also refrained from addressing other issues of major importance to the Indigenous people which were raised in the appeal.”

Collins also said that the loser of the arbitration, Miracle's son, went bankrupt and, as a result, Miracle was not able to collect the money awarded to him. 

Greg Roberts, who acted for respondent Glenn Bogue, was also critical of the decision, albeit for different reasons. 

“The ONCA decision enforced an out-dated law that was meant to preserve the entitlements of Indians (as that term is defined in the Indian Act) to their reserve lands and to ensure that the use of their property on their reserve lands was not eroded by the ability of governments to tax or creditors to seize. The government justified giving this ‘advantage’ to Indians to protect what the Indian band was ‘given’ in return for the surrender of Indian lands. … In this case, Mr. Miracle, an Indian, used this law to shield himself from paying Mr. Bogue’s … legal fees that Mr. Bogue earned in representing Mr. Miracle … I do not believe that when s. 89(1) was first enacted (in the last century) it was intended to prevent an Indian from entering into normal financing agreements in conjunction with the operation of a commercial business.”

If you have any information, story ideas or news tips for The Lawyer’s Daily, please contact Terry Davidson at t.davidson@lexisnexis.ca or call 905-415-5899.

LexisNexis® Research Solutions