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Benoit Loses at Federal Court of Appeal

Charles Benoit, a truck driver from Fort McMurray, Alberta, launched a tax challenge against the Government of Canada in 1992. He argued that even though Treaty 8 does not include a tax exemption provision, there was an oral promise that Treaty 8 First Nations would never pay taxes. Any taxes, he argued, violate the Constitution, which protects First Nations’ treaty rights.

Although he won at trial, Benoit’s success was short-lived. On June 11, 2003, the Federal Court of Appeal decided that First Nations under Treaty 8 had not been promised that they would never pay taxes. Taxation of Treaty 8 First Nations is therefore not unconstitutional.

Treaty 8

Gold was discovered in Alaska in 1896, sparking the Klondike Gold Rush. The Canadian government had to scramble to clear the way for settlers and prospectors into northwestern regions of the country, and Treaty 8 was one result. Signed on June 21, 1899, the Treaty provides for education, health care, hunting and fishing, land, and other benefits, but does not include an exemption from taxation. Treaty 8 encompasses parts of northern Alberta, northwest Saskatchewan, northeastern B.C., and southern portions of the Northwest Territories. Forty First Nations fall under the Treaty, over half of which are in Alberta. About half of the people covered by the Treaty, somewhere around 25,000 people, live and work off-reserve.

Once the Treaty was signed, the Treaty Commissioners reported back to Ottawa that they had “assured [the First Nations] that the treaty would not lead to any forced interference with their mode of life, that it did not open the way to the imposition of any tax, and that there was no fear of enforced military service.”

Victory at Trial

The Federal Court trial began on May 7, 2001, with closing arguments heard on January 22, 2002. Benoit based his case on the oral history of the Treaty 8 people, the testimony of experts on Canadian history and anthropology, and historical documentary evidence. His argument was that tax exemption promises were made to the Treaty 8 signatories that were never recorded in the Treaty document itself. He maintained that the oral promises were as good as written terms, and that all Treaty 8 beneficiaries, even those working and living off-reserve, were exempt from federal taxes. 

On March 7, 2002, Justice Campbell decided in favour of Benoit, saying that although the Treaty Commissioners did not intend to grant a blanket tax exemption for Treaty 8 signatories, the First Nations understood that such a promise had been made. As a result, because treaties must be liberally interpreted in a way that maintains the Honour of the Crown, Justice Campbell held that federal tax laws infringed treaty rights, and were unconstitutional. Federal tax laws therefore did not apply to Treaty 8 First Nations.

Defeat on Appeal

Writing for the Federal Court of Appeal, Justice Nadon delivered a very critical judgment, holding that there was no basis for the finding that Treaty 8 signatories believed that a tax exemption promise had been made. The appeal attracted a lot of attention, and the Attorneys General of Alberta, Saskatchewan, and British Columbia, as well as the Canadian Taxpayers Federation, put in arguments as interveners.

Particular attention was paid to oral history evidence and its reliability. Justice Nadon recognized that oral history evidence should not be undervalued merely because it is unconventional. However, he recognized there is a line that must not be crossed between a sensitive application and complete abandonment of the laws of evidence. He compared the oral history in this case, which he described as being “passed on from individual to individual in an informal manner,” to the oral history evidence put to the Court in the historic Delgamuukw decision, which by comparison was a “recital of the most important laws, history, traditions and traditional territory” of the people.

Justice Nadon characterized Benoit’s oral history evidence as “sparse, doubtful and equivocal.” He held that the Trial Judge made serious errors in relying on the testimony of three First Nations witnesses. In doing so, the Trial Judge gave the oral history evidence more weight than it deserved. As a result, the Trial Judge’s decision was overturned.

Further Appeal?

This case will undoubtedly be appealed to the Supreme Court of Canada, as it is the first case of its kind challenging the applicability of federal tax laws to treaty First Nations living and working off-reserve. The Supreme Court will have to decide whether the Court of Appeal erred in finding that the Trial Judge made factual errors of the kind that could be overturned. The Supreme Court’s decision will likely go beyond taxation issues, touching on the reliability of oral history evidence, and by extension the very nature of First Nations litigation.