Creditors can seize band funds-court

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The Manitoba Court of Appeals has thrown a huge monkey wrench into the First Nation govearnance machinery.

Some say it's a decision that must be overturned by the Supreme Court of Canada immediately; others say it's the greatest breakthrough in the history of Canada/First Nations' relations.

On Feb. 14, the Manitoba Court of Appeals issued a 59-page decision that opened the door for a company owed money by a First Nation to slap a garnishment on the nation's off-reserve bank account.

McDiarmid Lumber, a long-established Winnipeg-based firm, had appealed to the courts for a decision that would allow it to seize money in the God's Lake First Nation's account at the Winnipeg branch of Peace Hills Trust.

In a complex judgement that cited more than a dozen Supreme Court of Canada decisions, the appeal judges ruled that $550,000 that had been transferred to the band's off-reserve bank account by the department of Indian and Northern Affairs Canada (INAC) could be seized by the lumber company.

The company had successfully sued the band in 2003 for payment of an outstanding debt. After attempts to work out a payment plan failed, the company took steps to garnish the money in January 2004. The band went to court where a motion's judge granted the band's request to stop the garnishment based on Sections 89 and 90 of the Indian Act. That judge ruled the Indian Act protected against the seizure of on-reserve assets.

But the appellate court ruled that the assets were not on a reserve and therefore not subject to Indian Act protection against seizure. The court also ruled that the monies were not protected by Section 90-1-A of the Indian Act that states that property "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."

Manitoba chiefs are now scrambling to come to terms with the decision.

Windspeaker obtained a copy of a memorandum to the chiefs signed by Assembly of Manitoba Chiefs (AMC) Grand Chief Dennis Whitebird on March 17 which reveals that its executive council passed a resolution supporting an appeal of the decision to the Supreme Court of Canada. The resolution, moved by Chief Jerry Primrose of the Nisichawayasihk First Nation and seconded by Rolling River First Nation Chief Morris Shannacapppo, also directed the grand chief to solicit donations for the legal challenge.

In a separate memo, AMC legal counsel Louis Harper advised the chiefs that the law firm Orle, Davidson, Giesbrecht, Bargen will require a retainer of $10,000 by April 2 if the appeal is to proceed.

Sandy Bay First Nation Chief Irvin McIvor is a member of the AMC executive.

"I don't like the decision that the courts made because it's slowly, slowly chipping away at our treaty rights. I support that resolution. We're losing too many rights piece by piece. After this, when are we actually tax exempt?"

Some say the AMC resolution calls for First Nations to spend money to protect bands that don't pay their bills and wonder if that's the responsible or ethical thing to do.

"It's not just the case of God's Lake. It's the precedent," he said.

McIvor, who moved his band out of third party management with unprecedented quickness after he was elected in September 2003, admitted he found ways to avoid the trouble God's Lake First Nation now finds itself in. But he refused to criticize his counterparts in that community, saying he didn't know the history of the situation.

"No First Nation speaks for another First Nation. It's supposed to be nation-to-nation. What happens over there shouldn't affect what happens in my community and vice-versa," he said.

McIvor said under-funding by the federal government forces First Nations into debt. Now that they can be subjected to garnishment orders, it will be that much harder for band councils to cope.

It all comes down to the federal government trying to get the chiefs and councils to say no" when grassroots people ask for basic services, he said.

At least one Manitoba First Nation member was delighted with the court's decision. Alan Isfeld, a Waywayseecappo First Nation member, has been fighting against the growing problem of First Nations in the province not paying their bills. He welcomed the development.

"The judge that wrote the decision needs to be commended. He's done a great service for our people. I believe that fair is fair and this is going to bring about many opportunities for First Nations people. It's going to bring about the transparency and accountability that grassroots people have always been crying for. It's going to bring about the level playing field that chiefs have always wanted. Businesses will no longer have an excuse, will no longer be afraid to do business with our communities," he said.

The section of the decision where the court ruled that First Nations who enter the "commercial mainstream" must be bound by the mainstream rules was especially significant, he added.

"That's fair. There can't be two sets of rules," Isfeld said. "If the bands are going to enter into these corporate contracts they have to be bound by corporate law."