Supreme Court of Canada –  2 S.C.R. 678
When an issue regarding land transactions with Aboriginal peoples arises, it is important to look into the intention of the parties at the time of the transaction. It is important to look further than traditional common law rules.
In this case, a Band that cedes parts of its reserve in exchange for its market value cannot tax it anymore, even though the lands are to be retroceded if they cease to be used for public purposes.
Could the Band tax the City for lands ceded to the Crown in exchange for their market value, but subject to being retroceded to the Band if they cease to be used for public purposes?
It is important to consider the intention of the parties at the time of the transaction. Here, the Band could not tax the City, since the lands had been sold, and its intention was to dispose of it permanently (unanimous decision).
Between: St. Mary’s Indian Band and St. Mary’s Indian Band Council
And: The Corporation of the City of Cranbrook
In 1966, the St. Mary’s Indian Band (ʔaq’am) of the Ktunaxa Nation of British Columbia ceded a portion of its reserve to the federal Crown for full market value for the building of an airport for the City of Cranbrook. The agreement included a stipulation of the return of the land if it stopped being used for public purposes. Subsequently, the lands were transferred to Transport Canada, which leased them to the City.
Section 83 (1) of the Indian Act restricted the Band’s power of taxation to interests on lands “in the reserve”: hence, no property taxes were paid by the City for the leased lands.
In 1988, the Indian Act was modified. Among other changes, the notion of reserve was extended to encompass selected types of surrendered land (land surrendered “otherwise than absolutely”).
In 1992, the Band started to charge the City taxes, as the tract of land fell into the “designated lands category of the reserve” since the surrendered lands were ceded otherwise than absolutely. The City refused to pay.
The Band: The surrendered lands fall into the category of “designated lands” found in the Indian Act since the agreement reached in 1966 provided for the lands to return to the Band if they stopped being used for public purposes, thus making the surrender not absolute.
The City of Cranbrook: The 1966 land transfer can be interpreted as an absolute surrender by the Band since it received full compensation from the Crown. The clause which provided for the lands to return to the Band if they ceased being used by the public has to be constructed as a condition for the transfer to be absolute.
Supreme Court of British Columbia (1994): The trial judge concluded in favour of the Band.
British Columbia Court of Appeal (1995): The lower court’s ruling was overturned.
Lamer, La Forest, L’Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci, Major
The sui generis (unique) nature of Aboriginal rights (including their land rights) compels the Court to go beyond common law principles involving property to resolve the case at hand and to instead consider the parties’ real intentions when entering into the agreement.
Since the Band chose to sell (rather than lease) part of their lands to the Crown in 1966 for the construction of a facility with a long-term lifespan (an airport, in this case) and received in compensation the full market value of the lands, its intention was to cede the lands permanently.
When looking into parliamentary debates on the Kamloops Amendments, the Court concluded that the expression “otherwise than absolutely” only concerns the lease of surrendered lands, not the sale of them.
The Band could not tax the City of Cranbrook.
After the Court ruled in its favour, the City of Cranbrook sought a Court order from its Registrar of Land Titles registering the surrendered land in its name.
In 1999, the Supreme Court of British Columbia decided to allow the registration after the Registrar’s addition of a notation acknowledging St. Mary’s Indian Band’s interest in the land if the airport ceases to exist (Cranbrook (City) v. Cranbrook Registrar of Land Titles, 1999).
Cranbrook (City) v. Cranbrook Registrar of Land Titles,  B.C.J. No. 230 (B.C. S.C. [In Chambers])