Supreme Court of Canada –  2 S.C.R. 85
This case confirms that the Indian Act prevents the sums transferred to Indian bands by the province or the federal from being seized
Were the sums transferred to the Indian Bands by the government of Manitoba personal property that could not be seized under the Indian Act?
Yes – the sums transferred by the province to the band cannot be seized (unanimous decision, for different reasons).
Between: Donald George Mitchell and Milton Management Ltd.
And: Peguis Indian Band, Louis J. Stevenson, Albert Thompson, Oliver Sutherland, Ronald Williams and Robert Sutherland, as the Chief and Councillors, respectively, of the Band
In 1982, the First Nations Confederacy Inc., representing Manitoba’s 54 bands, mandated Mitchell through his company, Milton Management Ltd., to negotiate on its behalf with the government of Manitoba. The subject of the negotiations was the recovery of Hydro sales taxes paid during the period 1964 to 1980. The agreement was that Mitchell would receive 20% of the sum that he would retrieve. This amount was to be paid by each band, pro rata. The government of Manitoba agreed to settle on the amount of $953,432, giving Mitchell a fee of $190,668.
In 1983, the order-in-council allowing the settlement was passed and the amount confirmed. The Department of Indian Affairs contributed $5,493 to pay for Mitchell’s fees, so that the amount due from the Confederacy was $185,175. The Peguis Indian Band refused to pay its part because it felt that the settlement was due to the government of Manitoba’s own initiative and not to Mitchell’s efforts. Mitchell and Milton Management Ltd. then sued the Band for the balance. As a preliminary exception, he asked for a garnishing order against the sums recovered by the Band. The Band then applied to have this order set aside.
Section 89(1) of the Indian Act says that “the real and personal property of an Indian or a band situated on a reserve is not subject to … seizure”. Section 90 (1) explains that personal 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”.
Mitchell and his company: The Nowegijick principle, namely, that ambiguity in treaties and statutes relating to Aboriginal people have to be construed in favour of Indians, should only be applied in cases involving the Crown and Aboriginal people. Since this case involved two private parties, Mitchell and his company, and an Indian band, sect. 89 (1) of the Indian Act should not be construed in the Band’s favour. The derogations from the civil rights of a creditor mentioned in the Indian Act should be strictly construed. Therefore, the garnishment order against the Band should be allowed.
The Peguis Indian Band: The Garnishment Act of Manitoba is not applicable to them, because it is not a provincial law of general application according to sect. 88 of the Indian Act. Also, the sums recovered constitute personal property given as part of an agreement with the provincial Crown, under sect. 90 (1) (b) of the Indian Act, and are deemed to be situated on a reserve and are therefore not subject to garnishment.
Manitoba Queen’s Bench (1983): At trial, it was decided that the amounts in litigation fell within the meaning of “personal property” in sect. 90 (1) (b) of the Indian Act. The monies are assumed to be situated on a reserve, and are therefore not subject to a garnishment order under sect. 89 (1). Mitchell and his company were given 30 days to find funds not situated on the reserve to be garnished; otherwise, the order would be set aside.
Manitoba Court of Appeal (1986): On appeal, the Court came to the same conclusion.
Dickson, Lamer, Wilson, La Forest, L’Heureux-Dubé, Sopinka, Gonthier
The amounts recovered by the Peguis Indian Band could not be garnished
La Forest (Sopinka, Gonthier, Wilson, Lamer and L’Heureux-Dubé): The tax exemption found in sect. 90 (1) (b) of the Indian Act is part of the fiduciary obligations of the Crown. It has to protect Indian bands’ benefits given by the federal government from taxation by the provincial government, and from garnishment orders obtained by non-Native private parties affecting those benefits (Othuis, Kleer and Townshend, 2008).
Dickson: The sum could not be garnished because the term “Her Majesty” in sect. 90 (1) (b) is not limited to the federal Crown, but also includes the provincial Crown.
See McDiarmid Lumber Ltd. v. God’s Lake First Nation.
Nowegijick v. La Reine,  1 S.C.R. 29
McDiarmid Lumber Ltd. v. Première nation de God’s Lake,  2 S.C.R. 846
Olthuis John, Kleer Nancy and Roger Townshend. 2008. Aboriginal Law Handbook, 3rd ed. Toronto: Carswell.