Westbank First Nation v. British Columbia Hydro and Power Authority

Supreme Court of Canada – [1999] 3 S.C.R. 134

British Columbia Lands reserved for IndiansTaxation

The Supreme Court gives criteria to determine whether a Band imposes “taxation” or “regulatory charge”, and whether it can charge a mandatory of the Crown.


Does section 125 of the Constitution Act, 1867 prevent an Indian band from assessing and taxing B.C. Hydro, an agent of the provincial Crown?


Yes. A Band cannot tax another government level for public interest reasons (unanimous decision).


Between: Westbank First Nation

And: British Columbia Hydro and Power Authority

Interveners: Quebec, Manitoba and British Columbia


Between 1951 and 1978, the Westbank First Nation consented to the federal Crown’s giving of eight permits to B.C. to use and occupy various tracts of land located on its reserves (Tsinstikeptum Indian Reserves No. 9 and No. 10) for the provision of an electricity service to the reserves’ residents. Electric power lines for transmission and distribution were built on the reserves’ lands.

In 1990, the Westbank Indian Band Assessment By-law and the Westbank Indian Band Taxation By-law were passed by the Band in accordance with section 83 (1) (a) of the Indian Act.  Other by-laws on the same matter were passed over a five-year period. All together, B.C. Hydro was assessed $124,527.25 in taxes, penalties and interest. It declined to pay and did not appeal the assessment notices.

In 1995, an action was brought by the Band. B.C. Hydro also made a counterclaim as it felt that it was not subject to taxation under section 125 of the Constitution Act, 1867, that states that “No Lands or Property belonging to Canada or any Province shall be liable to Taxation”.


B.C. Hydro: Section 125 of the Constitution Act, 1867 precluded the Band from taxing it since it was an agent of the provincial Crown.

The Band: Even though B.C. Hydro is an agent of the provincial Crown, it is not immune from taxation by an Indian band, but only from direct taxation by the federal Crown. Since B.C. Hydro had a right of way on the reserve land as given by its permits, it was under the obligation to agree to be assessed for taxes.

Decision of the lower courts

Supreme Court of British Columbia (1996): B.C. Hydro is exempt from taxation and rejected every argument made by the Band.

British Columbia Court of Appeal (1997): The lower court’s decision is maintained.

Reasons for Judgement


Lamer, Gonthier, McLachlin, Iacobucci, Major, Bastarache, Binnie


When an Indian band exercises its right to taxation under section 83 of the Indian Act, it is considered as another level of government in Canada and its exercising of this right must be done in respect of the Constitution, which expressively prohibits one level of government from taxing another in section 125 of the Constitution Act, 1867.

The charges levied by the Band are not levied through a simple regulation regime, but rather constitute taxation by virtue of section 91(3) of the Constitution Act, 1867. They are gathered by a public organization, for public interest purposes.

Since the charges levied by the Band are for a public purpose (in this case, increasing its revenues), section 125 makes them inapplicable to B.C. Hydro, an agent of the provincial Crown.


Neither fiscal properties of the government of Canada or those of the provinces are subject to taxation by another government. The proper functioning of the federal regime depends upon it since each level of government must respect the others’ immunity (Morin, 2013).

However, Justice Gonthier states that “Canada’s federal system is a flexible one, and the Constitution does not create “enclaves” around federal or provincial actors.” (par. 18 of the decision). These words were repeated in many subsequent decisions.

Westbank establishes that federalism is a constitutional principle, and that the Canadian Constitution is flexible and must adapt to change. Also, even if federalism requires a separation between every level of government, this rule is not absolute (Morin, 2005). In terms of jurisdiction, Gonthier is favourable to overlapping powers (Brouillet, 2009).

Related Cases

Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3


Brouillet, Eugénie and Tanguay, Yves. 2009. La légitimité de l’arbitrage constitutionnel en régime fédératif plurinational: Le cas de la Cour suprême du Canada. In Queen’s University Institute of Intergovernmental Relations School of Policy Studies – Working Paper. Online : http://www.queensu.ca/iigr/pub/archive/DemocraticDilemma/ReformingTheSCC/SCCpapers/BroullietFINAL.pdf. Consulted August 5 2013.

Gailus, John and Mason, Caitlin. 2013. Property Taxation as an Effective Tool of Self Government. In Federated Press Aboriginal Taxation Conference. Online : http://devlingailus.com/pdfs/Aboriginal_Taxation_Paper.pdf. Consulted August 5 2013.

Morin, André. 2010. Rôle du programme de paiements versés en remplacement d’impôts (PERI). In Travaux publiques et services gouvernementaux du Canada- Conférence – Association des évaluateurs municipaux du Québec. Online: http://www.aemq.qc.ca/documentation/conferences/2012-03_Andre_Morin.pdf . Consulted August 5 2013.

Morin, René. 2005. La gouvernance provinciale à l’épreuve des droits des peuples autochtones : pour un fédéralisme équilibré. In Droit, territoire et gouvernance des peuples autochtones. Les Presses de l’Université Laval, p.111.

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