Supreme Court

^C (UV ^3 02lo CV 00539

IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES ^ BETWEEN: INUVIALUIT REGIONAL CORPORATION - ' 1 1 i.' fc V and INUVIALUIT LAND CORPORATION ' * i " ~ " " ' ~ ''*^:«v / ; f 'iPfaintiffs and - / «•» . I AUte CANADIAN REINDEER (1978) LTD. ^-%g^""> '̂ Defendant

Motion to amend the s tatement of defence and add a counterclaim joining the Crown in right of Canada granted.

Heard at Ye l lowkn i fe on 15th March 1993 Judgment f i led: 14 th May 1993

REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE M . M . de WEERDT Counsel for the Plainti f fs (Respondents): Gordon S. Gri f f i ths, Esq. Counsel for the A t to rney General of Canada (Respondent): Brett Webber, Esq. Counsel for the Defendant (Applicant): Everett L. Bunnell, Q.C. i

i

I I

CV 00539 IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES BETWEEN:

INUVIALUIT REGIONAL CORPORATION and INUVIALUIT LAND CORPORATION

and

CANADIAN REINDEER (1978) LTD.

REASONS FOR JUDGMENT This is a crucial motion, not only because the defendant seeks leave to amend its statement of defence and add a counterclaim but also because it proposes to join a new party, the Crown in right of Canada ("the Crown"), as a co-defendant to the intended counterclaim in addition to the plaintiffs (defendants-to-be to that counterclaim).

The motion is opposed by the plaintiffs and by the Crown, to whom notice of the motion was duly given. They say that the claims proposed to be made in the intended counterclaim are statute barred and that the Court is without jurisdiction to relieve against the statutory bar in the circumstances of the case. Even if, on the contrary, the Court has jurisdiction to grant relief from the statutory bar, the plaintiffs and the Crown submit that the Court should decline to grant that relief given the circumstances.

Plaintiffs

Defendant

-2-I. The Issues Three issues have been argued, which I shall state as follows: 1. May a counterclaim now issue, whether by amendment of the statement of defence or otherwise?

2. If so, is the claim to be advanced in the intended counterclaim statute barred?

3. If so, may the order sought by the defendant nevertheless be granted in the Court's judicial discretion?

II. Background 4 In the 1920s, when the Crown entered into discussions with representatives of the Inuvialuit people then living on the Arctic Coast in the Mackenzie Delta region of the Northwest Territories, it became apparent that they were not interested in entering into any treaty along the lines of those between the Crown and various bands of Indians to the south, whether pursuant to or merely in the spirit of the Royal Proclamation of 1763, R.S.C. 1985 (Appendix II, No. 1). However, since caribou were apparently scarce there at that time, the Crown arranged, at the request of the Inuvialuit, to bring a herd of reindeer into the region by land from Alaska through the Yukon Territory. That was done, with the reindeer arriving in the early 1930s after a historic trek.

5 Since the reindeer were Crown property and the Crown's policy seems to have been to only promote agriculture (by herding and raising the animals for sale of their hides and meat), hunting them was prohibited subject to penalties. As may be imagined, local hunters being then altogether unfamiliar with the domestication of animals other than sled I

-3-dogs, and culturally unatuned to agricultural practices, the presence of the reindeer in the ^ region for ranching purposes has taken some getting used to by the Inuvialuit, even after all these years (during which a number of the Inuvialuit were employed as reindeer herders for the Crown and, more recently, have been so employed by the defendant).

It is not disputed for purposes of this motion that the reindeer herd has occupied a tract of land on the Tuktoyaktuk peninsula east of the Mackenzie Delta, extending over an area of some 18,000 square miles, since its arrival in the Northwest Territories in the 1930s. Until 1974, the herd (by then, many generations later in descent from the original herd) was owned and managed by the Crown. In that year, the Crown sold the herd to a private company known as Canadian Reindeer Limited.

In the meantime, the land had been withdrawn from disposal by the Crown under the Territorial Lands Act, R.S.C. 1952, c. 263 (now R.S.C. 1985 (3rd Supp.) c.7) pursuant to orders in council enacted in 1952 and 1955, whereby the land was designated a reindeer grazing reserve.

The agreement between the Crown and Canadian Reindeer Limited, as evidenced in the affidavit material on file, by which the herd was sold to that company in 1974, refers to the 1955 order in council and the reserve set aside thereby, stating that "it is Her Majesty's intent to continue to make such provision for the grazing of a reindeer herd". I In 1978 Canadian Reindeer Limited sold the herd and assigned its rights and

-4-interests under the 1974 agreement with the Crown to the defendant, the herd's present owner.

10 Years of negotiation (between the Inuvialuit, through the Committee for Original Peoples' Entitlement, a corporation acting on their behalf, and the Crown) culminated in 1985 in the settlement of the Inuvialuit land claim pursuant to the Western Arctic (Inuvialuit) Claims Settlement Act, 1984, c. 24. By the settlement, as approved and given effect by that Act, tracts of land in fee simple were granted by the Crown to the Inuvialuit, including the land within the reindeer grazing reserve above mentioned. No mention of reindeer or that reserve is made in the settlement agreement or the Act.

11 The plaintiffs are Inuvialuit corporations as defined in the settlement agreement. It is not necessary for present purposes to say more about their roles than that the plaintiff Inuvialuit Regional Corporation has management responsibilities in respect of the lands subject to that agreement and the Western Arctic (Inuvialuit) Claims Settlement Act; the plaintiff Inuvialuit Land Corporation, a wholly-owned subsidiary of its co-plaintiff, is vested with title to and ownership of the Inuvialuit interests in those lands.

III. The Grazing Rights Dispute 12 The plaintiffs in this action are seeking both declaratory and injunctive relief against the defendant together with damages for trespass upon the land comprising the reindeer grazing reserve, including grazing fees and other charges claimed by the plaintiffs against the defendant. As the plaintiffs' action is framed, they say that the defendant has I

-5-no right to graze its reindeer on their land without permission from them. In consequence, ^ they ask for a declaration that the defendant has been and is trespassing on their land together wi th an injunction requiring the defendant to remove its reindeer from that land.

The defendant denies that it has been or is trespassing on the land in question. It claims to be entitled to continue grazing its reindeer herd on that land by virtue of the 1974 agreement by which the Crown sold the herd to the defendant's assignor, Canadian Reindeer Limited, and the terms of that company's agreement with the defendant in 1978. The defendant claims that it is exercising its lawful rights under those agreements which, it says, were not in any way affected or diminished by the settlement agreement or, I presume, the Western Arctic (Inuvialuit) Claims Settlement Act.

^ ^ It is not necessary, for present purposes, to discuss the specifics of this dispute.

IV. History of Proceedings The plaintiffs issued their statement of claim in May 1987. The defendant filed its statement of defence together with a third party notice to the Crown in September 1987. At the same time, the defendant commenced an action against the Crown in the Federal Court of Canada, claiming contribution, indemnity, compensation and damages for inclusion by the Crown of the reindeer grazing reserve in the lands granted by the Crown to the Inuvialuit. i The plaintiffs' claim for interim injunctive relief in the present action was heard

-6-on motion but was adjourned, without any further hearing date being fixed, in September 1987.

17 The defendant discontinued its third party proceedings in this action, against the Crown, in September 1990. And, in August 1992, the defendant obtained leave from the Federal Court to discontinue its action against the Crown in that Court without prejudice to its rights to bring a further proceeding in that Court if leave is not granted by this Court to permit the defendant to bring its claim against the Crown in this Court.

18 Following discontinuance of the third party proceedings against the Crown in this action, the plaintiffs have filed their statement as to documents and the parties have conducted mutual examinations for discovery. Further examinations of the plaintiffs are scheduled to be held in June 1993. Answers by the defendant on the undertakings it gave on examination for discovery had yet to be delivered when this motion was heard earlier this year.

V. The ProDOsed Amendment 19 As I understand the plaintiffs' position, the principal objection which they take is to the proposed counterclaim. They do not oppose any mere detailing of the statement of defence by the addition of various particulars. The Crown is concerned only to oppose its joinder in the counterclaim.

20 The proposed counterclaim includes still further allegations of fact as against the Crown only. And it makes claims for declaratory relief against both the plaintiffs and I

-7-the Crown as well as further claims against the Crown alone for contribution, indemnity I and compensation for its alleged expropriation of the defendant's grazing rights together with damages for breach of contract among other things (in the event that the plaintiffs should succeed in their present action against the defendant).

As yet there is nothing in the pleadings filed to date or in the proposed counterclaim referring to any statutory bar, under the Limitations of Action Act, R.S.N.W.T. 1988, c. L-8 or otherwise.

VI . Discussion 1. Mav a counterclaim now issue? Rule 5 of the Rules of Court states: 5. The object of these Rules is to secure the just, speedy and inexpensive determination of every proceeding.

Rules 126 and 127 of the Rules of Court read as follows: 126. The court may at any stage of the proceedings allow any party to alter or amend his pleadings or other proceedings in such manner and on such terms as may be necessary for the purpose of determining the real question in issue between the parties.

127. The court may at any time, on terms as to costs or otherwise, amend any defect or error in any proceedings, and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on the proceedings.

In addition, note may be made of Rule 518: 518. No pleading or other proceedings shall be defeated on the ground of an alleged defect of form.

-8-24 I refer to Rule 518 since it strengthens my view that Rule 127 is not concerned solely with defects or errors in form only. Had that been the intention. Rule 127 would surely have so stated, bearing in mind the reference to such defects in Rule 518. Indeed, Rule 518 enables the Court to ignore mere defects in form only.

25 An examination of the record of the Federal Court proceedings above mentioned supports the defendant's submission that, in substance, its claims in that action were entirely dependent on the ultimate outcome of the plaintiffs' claims against the defendant in this Court. That action having been discontinued, as already described, it is plain that the proposed counterclaim (incorporating the claims made previously in the Federal Court action) is now sought to be brought before this Court to avoid a multiplicity of courts and of actions.

26 Prior to February 1 st 1992 the defendant could not proceed wi th the proposed counterclaim in this Court, by reason of the exclusive jurisdiction, in proceedings against the Crown, then vested in the Federal Court. That exclusivity of jurisdiction was only removed, so as to confer concurrent jurisdiction on this Court, on February 1st 1992 pursuant to An Act to Amend the Federal Court Act, the Crown Liability Act, the Supreme Court Act and other Acts in consequence thereof, 1990, c.8.

27 What is in contention here is not the proposed amendments to the statement of defence, but the addition of a further distinct pleading. Yet it would. I think, be mere mindless formalism to insist on that distinction of pleading where the Rules require, as they do, that a counterclaim be conjoined, as a matter of form, to the statement of

-9-defence. That conjunction can surely always be effected by leave to amend, in keeping I with the spirit and intent expressed in Rule 5 and by analogy to Rules 126 and 127. Subrule 4(2) so provides:

4. (2) As to all matters not provided for in these Rules the practice as far as may be shall be regulated by analogy thereto.

The circumstances of the case plainly call for a grant of leave to amend the statement of defence as sought by the defendant and to allow the addition of a counterclaim, having regard to the above mentioned amendment last year of the Federal Court Act and the discontinuance by the defendant then of its Federal Court action. See Basarsky V. Quinlan, [1972] S.C.R. 380, [1972] 1 W.W.R. 303, 24 D.L.R. (3d) 720; Porbak v. Gibb et al., [1983] 2 W.W.R. 339, 32 C.P.C. 121, 44 A.R. 18, 23 Alta. L.R. (2d) 363 (C.A.); and Stevenson & Cot6, Civil Procedure Guide (1989), at page 360.

The questions which follow will first have to be considered, of course, before a decision is made on whether that addition is to be permitted in this instance.

2. Is the oroDOsed counterclaim statute barred? Only the proposed joinder of the Crown and the allegations and claims against the Crown in the intended counterclaim are in contention. The amended statement of defence is itself not in dispute. Nor is the proposed addition of the counterclaim in issue, to the extent that it impleads the plaintiffs. It is only in so far as the defendant claims relief against the Crown that issuance of the intended counterclaim is opposed by the plaintiffs and, of course, the Crown.

-10. 31 It is submitted on behalf of the plaintiffs that since the matters giving rise to the proposed counterclaim are the execution of the settlement agreement between the t Committee for Original Peoples' Entitlement (on behalf of the Inuvialuit) and the Crown, on June 5th 1984, and the proclamation in force of the Western Arctic (Inuvialuit) Claims Settlement Act on July 25th 1984, the limitation periods set out in Part I of the Limitations of Action Act have all expired; and those periods apply by virtue of section 10 of the latter Act: 10. This Part applies to any claim of the nature mentioned in this Part alleged by way of counterclaim or set-off on the part of any defendant.

32 Counsel for the plaintiffs points out that there is a special provision in s.60 of the Alberta equivalent of our Limitations of Action Act which expressly relieves against the application of its limitations to "proceedings by counterclaim, including the adding of I a new party as a defendant by counterclaim". There is no such provision in our Act.

33 It is also submitted on behalf of the plaintiffs that the present case is distinguishable from that of Basarsky v. Quinlan since there the court merely modified an existing statement of claim as a matter of practice, no prejudice arising to the defendants; whereas, in the present case, the court is asked to allow a new action, in effect, to be brought by the addition of the proposed counterclaim and that, it is said, is expressly prohibited by Part I of the Limitations of Action Act, as mentioned in section 10 of that Act.

34 Crown counsel reminds the Court that the Crown ceased to be a party to the m

. 1 1 ­present action in 1990, when the defendant discontinued its third party proceedings. At I that t ime, however, the Federal Court had exclusive jurisdiction over the subject matter of those proceedings. That is no longer so. Parliament has amended that Act to give this Court concurrent jurisdiction over that subject matter, with effect as of February 1st 1992. In doing so. Parliament removed the need for the defendants to proceed against the Crown in the Federal Court in reference to that subject matter. And it is apparent that Parliament did so for reasons which include the heavy burden placed upon litigants before February 1st 1992 when they were required to proceed before two different courts at both trial and appeal levels where, in cases not involving the Crown, that was not necessary.

On behalf of the Crown it was also argued, or so I understand, that there is a • \ potential advantage to the defendant in proceeding before the Federal Court in relation to the subject matter of the defendant's proposed counterclaim, rather than in this Court, because the defendant need not be concerned with any statutory bar under the Limitations of Action Act except when proceeding before this Court. But this submission (assuming I have correctly understood it) overlooks the recent amendment to section 24 of the Crown Liability Act, R.S.C. 1985, c. C-50, by the Act of 1990 already referred to. The 1990 Act amends the Federal Court Act and other federal Acts so as to give concurrent jurisdiction to this Court, among others of the provinces and territories, in matters such as the defendant proposes to pursue against the Crown in the proposed counterclaim.

I Section 24 of the Crown Liability Act, as thus amended, now states:

-12-37 24. In any proceedings against the Crown, the Crown may raise (a) any defence that would be available if the proceedings were a suit or an action in a competent court between subject and subject; and

(b) any defence that would be available if the proceedings were by way of statement of claim in the Federal Court.

38 Before the amendment came into effect, this section applied only to proceedings before the provincial and territorial courts and not the Federal Court. That has now been changed to include proceedings in that Court.

39 The defendant submits that Part I of the Limitations of Action Act is inapplicable to its claims against the Crown. If that is so, section 10 of the Act has no application with respect to the intended counterclaim. In advancing this submission, the defendant says that, in particular, neither paragraph 2(1 )(f) nor 2(1 )(j) of the Act, both of which are within Part I, is applicable. Paragraph 2(1 )(f) reads as follows: 2. (1) The following actions must be commenced within and not after the following times: ...

(f) actions for the recovery of money, except in respect of a debt charged on land, whether recoverable as a debt or damages or otherwise, and whether on a recognizance, bond, covenant or other specialty or on a simple contract, express or implied, and actions for an account or for not accounting, within six years after the cause of actions arose; ...

40 I am in agreement with that last submission, since it is not every claim for damages to which that paragraph applies and the defendant's claims against the Crown do not fall within the parameters of the paragraph. As for paragraph 2(1 )(j), it is only fl

-13-applicable where no other specific provision is made in the Act. Paragraph 2(1 ){j) states: > 2. (1) The following actions must be commenced within and not after the following times: ...

(j) any other action not specifically provided for in this Act or any other Act, within six years after the cause of action arose.

The defendant's position is that sections 18 and 19, in Part III of the Act, do specifically provide a longer limitation period than that provided for generally in paragraph 2(1 )(f), so that the longer limitation period must apply. Those sections are as follows: 18. No person shall take proceedings to recover any land except (a) within 10 years after the time at which the right to do so first accrued to the person through whom he or she claims; or

(b) if the right did not accrue to such a predecessor, then within 10 years after the time at which the right first accrued to the person taking the proceedings.

^ 19. Where (a) a claimant or a predecessor has in respect of the estate or interest claimed been in possession of the land or in receipt of the profits of the land, and

(b) while entitled to the possession or receipts has been dispossessed or has discontinued the possession or receipt,

the right to take proceedings to recover the land shall be deemed to have first accrued at the time of the dispossession or discontinuance of possession or at the last time at which any such profits were so received.

If, for purposes of the present motion, the plaintiffs and the Crown are assumed to be correct in their reliance on either June 5th 1984 or July 25th 1984 as the dates triggering the defendant's cause of action against the Crown (or against the plaintiffs and the Crown together) in respect of a dispossession of the defendant of its B alleged interest in the reindeer grazing reserve land, then the defendant is not barred from

-14-commencing action, by counterclaim or otherwise, under section 18. And if the defendant in fact remains in possession and proves in the end to be liable to be removed f from the land, the time to commence action will only begin to run when it is thus dispossessed, under section 19, if I correctly comprehend the argument of the defendant.

43 It is the defendant's submission, furthermore, that its claim against the Crown for damages is entirely contingent upon the plaintiffs being successful against the defendant in this action, by which I understand the defendant is saying that any limitation of action in respect of that claim will only begin to run from the date of judgment being rendered against it in favour of the plaintiffs in the present action. I fail to follow that argument since the defendant's cause of action against the Crown, for damages, arises from the events of 1985 if it arises at all, and will not arise from the rendering of a judgment in this action in favour of the plaintiffs. It is only the defendant's claim against the Crown for contribution and indemnity which arises on the rendering of such a judgment: Peterson Steels Inc. v. Arctic Steamship Line et al., [1981] 2 F.C. 192 (T.D.).