[1]            On June 23, 2008, the Federation of Newfoundland Indians Inc. (the “FNI”) and the Government of Canada (“Canada”) executed an agreement (the “Settlement Agreement”) to establish the Qalipu Mi’kmaq First Nation Band (the “QMFNB”) as a non-reserve status band for the Mi’kmaq Group of Indians of Newfoundland. The Settlement Agreement had been ratified through a vote of the FNI membership.  The Plaintiffs were members of the FNI.

[2]            On September 22, 2011, the QMFNB was created by an Order-in-Council (the “Recognition Order”).  At that time, 23,877 members were registered as Founding Members of the QMFNB, according to the Canada Gazette, Part I, Volume 152, Number 20, (May 19, 2018): Order Amending the Qalipu Mi’kmaq First Nation Band Order (the “2018 Canada Gazette”).

[3]            Pursuant to the enrolment process undertaken in accordance with the Settlement Agreement, the Plaintiffs[1] had been approved to be included on the list of the Founding Members of the QMFNB.  As a result, the Plaintiffs were registered with status under section 6(1)(b) of the Indian Act, R.S.C. 1985, c. I-5.

[4]            Under the Settlement Agreement, the deadline for receipt and assessment of applications for membership was November 30, 2012.  By that date, in excess of 100,000 applications for Founding Membership had been received.  An extension of time was required to deal with the volume of applications.  As a result, on June 30, 2013 the FNI and Canada entered an agreement supplemental to the Settlement Agreement (the “Supplemental Agreement”). 

[5]            Pursuant to the Supplemental Agreement, all unassessed applications were to be assessed.  In addition, a process of reassessment was to be undertaken with respect to all those who had already been approved and granted Founding Member status.  The assessment and reassessment process involved the use of a new points system described in a directive to the Enrolment Committee; the directive was annexed to the Supplemental Agreement. 

[6]            As a result of the reassessment process under the points system, the Plaintiffs lost their status as Founding Members of the QMFNB; and they therefore lost their section 6(1)(b) status under the Indian Act.  The Plaintiffs’ loss of section 6(1)(b) status detrimentally affected the Plaintiffs’ ability to pass status onto their children.

[7]            The Plaintiffs claim oppression against the Defendants, and they seek a remedy pursuant to section 371 of the Corporations Act, RSNL 1990, c. C-36.  The Plaintiffs assert that the oppressive conduct arises from the process engaged by the FNI to truncate the FNI’s membership, and to then enter the Supplemental Agreement.  The primary remedy sought by the Plaintiffs is rescission of the Supplemental Agreement.

[8]            The Defendants deny oppression.  Further, the Defendants challenged the Plaintiffs’ claim by raising issues including:  jurisdiction, standing and the limitation period.

[9]            The parties proceeded to trial. The Plaintiffs testified at trial, along with several other witnesses called by the Plaintiffs. The Defendants did not call any witnesses.  Numerous documents were entered as exhibits.

[10]         The issues to be decided are, as follows:

[11]         When our province joined Canada in 1949, the Mi’kmaq on the Island of Newfoundland were omitted from status recognition.  Years of struggle for status recognition ultimately led to the creation of the FNI. 

[12]         On August 20, 1984 the FNI was incorporated as a not for profit corporation under The Companies Act, R.S.N. 1970, c. 54.  The FNI was incorporated primarily for the purpose of achieving status recognition for the Mi’kmaq of Newfoundland, and to pursue registration for the FNI’s members as Status Indians. 

[13]         In August of 1988, the FNI was continued under the Corporations Act.  The FNI’s purposes were listed in schedule A of the Articles of Continuance, as follows:

[14]         In 1989, the FNI commenced a Federal Court action against Canada, seeking status recognition for its members under the Indian Act.  The Federal Court action led to negotiations between the FNI and Canada.  The negotiations culminated in an agreement in principle entitled as an “Agreement for the Recognition of the Qalipu Mi’kmaq Band”.  This was the Settlement Agreement.

[15]         The Settlement Agreement ultimately established the QMFNB as a landless band for the Mi’kmaq of Newfoundland who had a current and substantial connection to one of the identified communities in Newfoundland, as listed on Annex B to the Settlement Agreement. The Settlement Agreement was subject to a ratification requirement.

[16]         Annie Randell was a member of the FNI’s negotiating committee for the Settlement Agreement.   Ms. Randell had been the corporate secretary and general manager of the FNI, and she eventually became the chief executive officer of the QMFNB. Ms. Randell’s testimony provided background context for the negotiations respecting the Settlement Agreement. 

[17]         Ms. Randell’s evidence was that Canada had wanted the Settlement Agreement to be inclusive of all the Mi’kmaq of Newfoundland, not just those who were FNI members.  Consequently, the Settlement Agreement was entered for the purpose of providing status recognition for all people with Mi’kmaq ancestry of Newfoundland who met certain criteria, not just FNI members. 

[18]         Ms. Randell explained that status recognition would enhance the social, economic and cultural conditions of the Mi’kmaq of Newfoundland.  Because the QMFNB was to be a landless band, benefits and programming would be off reserve.  As well, those enrolled as Founding Members could be registered under section 6(1)(b) of the Indian Act. 

[19]         The Settlement Agreement would not be in effect until ratified by the parties to the agreement. This ratification requirement was described in chapter 9 of the Settlement Agreement at clauses 9.1 to 9.3 which state, as follows:

[20]         As noted in clause 9.2 above, the FNI ratification required approval by a majority vote of the FNI members.  In addition, the FNI ratification required that the President of the FNI sign the agreement, as authorized by a resolution of the board of directors of the FNI.

[21]         The vote for ratification by the members of the FNI took place on March 30, 2008.  Ms. Randell explained how the voting process was conducted in a manner similar to a provincial election, including the use of polling stations and ballots.  Ultimately, more than 90 per cent of the FNI members who voted, voted in favour of the Settlement Agreement.

[22]         The minutes of the FNI board of director’s meeting on April 18, 2008 indicate that the result of the ratification vote was accepted by the board of the FNI.  A director’s resolution, also dated April 18, 2008 and signed by Ms. Randell, indicated that the ratification vote of FNI members was conducted in accordance with the Settlement Agreement, and the FNI members approved the Settlement Agreement; and also that the President of the FNI was authorized to sign the Settlement Agreement. 

[23]         On June 23, 2008, the Settlement Agreement was signed by the Chief of the FNI and the Minister of Indian Affairs and Northern Development.

[24]         At the time the Settlement Agreement was negotiated, it was not known how many persons would apply as Founding Members of the new band.  Based on a 2004 survey of FNI members, there was a suggestion of the potential for 12,500 applications for status recognition based on affiliated band membership.  However, Ms. Randell explained that that number was not relevant because one band had not provided a membership list; and also because Canada wanted the QMFNB to be inclusive of all Mi’kmaq persons meeting the criteria, not just FNI members. 

[25]         The Settlement Agreement set forth a two-stage enrolment process.  The first stage of enrolment was to be conducted from the period December 1, 2008 to November 30, 2009, with a possible six-month extension.  The second stage would be for the 36 months following the first stage, being December 1, 2009 to November 30, 2012.  

[26]         An Enrolment Committee was established to assess applications for membership in the QMFNB, and to determine if applicants met the eligibility criteria set forth in the Settlement Agreement.  The Enrolment Committee was comprised of two representatives from Canada, two Mi’kmaq representatives, and one independent Chair.  Decisions of the Enrolment Committee could be appealed to an Appeal Master.    

[27]         According to the Settlement Agreement, the First Founding Members’ list of the QMFNB was comprised of the applicants who were assessed during the first stage of enrolment, and who met the eligibility criteria.  If during the period of the first stage of enrolment the First Founding Members’ list achieved a number greater than, or equal to, 50% of the number of FNI members at the time the Settlement Agreement was initialed, then the Minister would recommend to the Governor-in-Council that there be a Recognition Order for the QMFNB.  The QMFNB would initially be comprised of the individuals on the First Founding Members’ list.  As indicated by Ms. Randell, that threshold was well achieved in the first stage of the enrolment period. 

[28]         The second stage of enrolment was to take place over a period of 36 months from December 1, 2009 to November 30, 2012, and a Second Founding Members’ list was to be presented by the Enrolment Committee.  According to the Settlement Agreement, the schedule to the Recognition Order would then be amended to include the Second Founding Members’ list as the Founding Members of the QMFNB.

[29]         In July of 2009, more than four months before the end of the first stage of the enrolment process, a legal opinion considering the future of the FNI was provided by the FNI’s legal counsel, Stephen May, to the FNI’s board of directors.  As confirmed by Ms. Randell’s evidence, at that point in time the FNI was well on track for achieving its primary purpose being status recognition of its members; and the FNI wanted to determine how it could continue once the QMFNB was formed.  Ms. Randell explained that funding for programs was to end when the QMFNB was formed; and that the FNI had to determine how it would meet its obligations, including its financial obligations to its employees, and what to do with the FNI’s assets. Consequently, the legal opinion dated July 6, 2009 canvassed four different scenarios respecting the future role of FNI.  These four options were stated in the legal opinion to be, as follows:

[30]         Legal counsel recommended the third option to the Board, being to continue the FNI as a “skeletal” organization solely to fulfill the FNI’s legal and financial obligations. According to the legal opinion, this option required changes to the governance structure, with amendments to the corporate articles and bylaws.  The proposed amendments were attached to the legal opinion, and that opinion stated as follows:

[31]         As noted by the legal opinion, the proposed amendment to the FNI’s existing by-laws would “dramatically” change the membership in the FNI.  Membership in the FNI had originally been determined by membership in one of the bands affiliated with the FNI.  The proposed new by-laws would have the effect of terminating the membership of almost all of the FNI’s several thousand members; and restricting FNI membership to the members of the Band Council of the QMFNB.  In his legal opinion, FNI’s counsel warned this option could lead to a claim for an oppression remedy. 

[32]         At the Annual General Assembly (the “AGA”) held on October 24, 2009, voting members of the FNI purported to pass a special resolution to achieve the third option recommended by legal counsel (the “Special Resolution”).  The Special Resolution resolved to transfer the undertakings of the FNI to QMFNB, when the QMFNB was established.  The Special Resolution further resolved to amend the articles of continuance and to replace the then existing by-laws with the new by-laws, once the QMFNB was established.   

[33]         I will refer to the by-laws in the form they existed immediately prior to the Special Resolution as the “Original By-Laws” – (recognizing that they had been previously amended in 2008).  I will refer to the amended new by-laws attached to the Special Resolution as the “Replacement By-Laws”. 

[34]         Once the Replacement By-Laws came into effect, the membership of the FNI would be truncated to be comprised solely of the Band Council of the QMFNB.  The members of the FNI were not provided with notice of termination of their membership.

[35]         The FNI concedes that the Special Resolution had not been circulated prior to the October 2009 AGA; and that this contravened the notice requirements of Original By-Law 8.07.  Nevertheless, at that AGA the voting members proceeded to vote to pass the Special Resolution.

[36]         To elaborate, as reflected in the evidence, including in the minutes of the AGA on October 24, 2009, there were two special resolutions purportedly passed by those members of the FNI entitled to vote at an AGA.  The Special Resolution was identified in the minutes as “Resolution #1” and stated, as follows:

[37]         At the same AGA, another special resolution was tabled.  This was “Resolution # 2” (the “Second Special Resolution”).  The Second Special Resolution cited Original By-Law 8.18, and accordingly sought to postpone consideration of the Special Resolution, in order to permit full discussion of it by the bands of the FNI with their members.  Original By-Law 8.18  stated, as follows:

[38]         The Second Special Resolution stated, as follows:

[39]         Despite the clear direction on process contained in Original By-Law 8.18, the Second Special Resolution was defeated at the AGA of October 24, 2009; and the voting members voted in favour of passing the Special Resolution.

[40]         As stated, prior to the Special Resolution being purportedly passed, membership in the FNI was determined by membership in an affiliated band of the FNI.  Clause 2.04.1 of FNI’s Original By-Laws stated, as follows:

[41]         The FNI was comprised of nine affiliated bands.  Clause 2.06 of the Original By-Laws described the criteria for membership in a band, as follows:

[42]         As explained by Ms. Randell, the above-described criteria for membership in a band was in keeping with the criteria required to register for status under the Indian Act.  I add that prior to the Replacement By-Laws, members of the FNI included not only members in an affiliated bands, but also non-band members whom the Board had accepted as having met the above criteria.

[43]         Clause 2 of the Replacement By-Laws fundamentally redefined membership in the FNI, as follows:

[44]         Pursuant to the Special Resolution and the Replacement By-Laws, the new membership of the FNI was to become the Band Council of the QMFNB, and no others.  The Replacement By-Laws would therefore have the effect of terminating the FNI membership status of the Plaintiffs, and thousands of the other FNI members who were not members of the Band Council of the QMFNB.  

[45]         Pursuant to Clause 6.5.1 of the 2008 Settlement Agreement, the original Band Council of the QMFNB would be comprised of the board of directors of the FNI  “existing as of the date of the establishment of the Band and until replaced through the electoral process”.  According to Original By-Law 11.01, the board of directors of the FNI was comprised of the President, an elected youth representative, and the Band Chiefs.

[46]         It was this “new” membership of the FNI (being the Band Council of the QMFNB), who approved the Supplemental Agreement.  As stated, the Supplemental Agreement not only permitted assessment of unassessed applications, but also required reassessment of previously approved applications for membership in the QMFNB.  Following reassessment, the Plaintiffs lost their status as Founding Members in the QMFNB; which meant that they lost their section 6(1)(b) status under the Indian Act. This loss of status detrimentally affected their ability to pass on status to their children. 

[47]         The Plaintiffs have alleged that the FNI did not follow due process when terminating the Plaintiffs’ membership in the FNI.  Further, the Plaintiffs alleged that the Replacement By-Laws were adopted by the FNI without proper corporate authority.  In turn, this brings into question whether the Supplemental Agreement was validly approved for execution by the FNI.  Consequently, there was extensive further evidence at trial regarding the corporate processes engaged when passing the Special Resolution and adopting the Replacement By-Laws, as well as the corporate processes leading up to execution of the Supplemental Agreement.

[48]         As stated, the evidence of Ms. Randell confirmed that the Special Resolution was not circulated in advance of the October 24, 2009 AGA; and that this contravened the notice requirements for special business as contained in the Original By-Laws.  Specifically, she explained that before an AGA, and in accordance with the FNI Original By-Laws, a board kit was supposed to be delivered to voting members with documents for an upcoming AGA.  Original By-Law 8.07 required 21 days’ notice be provided of “special business” (with sufficient details) to voting members.  Ms. Randell’s evidence was that the board kits were supposed to include the special resolutions.  In this case, however, for the AGA held on October 24, 2009, the Special Resolution (which caused the fundamental change to the membership of the FNI) was not included in the board kits sent out to the voting members.  The FNI acknowledged that this failure to provide notice and details of the Special Resolution was an act in contravention of Original By-Law 8.07, which stated in full, as follows:

[49]         Only voting members of the FNI could vote on resolutions at the AGAs, including proposed changes to by-laws.  Each Band Council (of the bands affiliated with the FNI) was permitted to have up to four voting members attend the FNI general meetings.  As Ms. Randell explained, the four voting members for each band included the Chief of each band. 

[50]         The AGA held on October 24, 2009 was attended by the voting members from the nine bands affiliated with the FNI.  As noted by Ms. Randell and as reflected in the minutes, not all the bands had four members there, although they were entitled to that number under Original By-Law 9.01.  Nevertheless, each of the nine bands was represented at that meeting.

[51]         With respect to the Special Resolution, and as reflected in the minutes from the October 24, 2009 AGA, it was clear that the voting members considered the failure by the FNI’s administration to comply with the notice requirements under Original By-Law 8.07.  This was evident by the fact that the Second Special Resolution was put forward at the AGA.  As stated, the Second Special Resolution was defeated.

[52]         Although the Special Resolution was not distributed to the voting members prior to the AGA, I accept Ms. Randell’s evidence that at least some of the voting members were aware of the contents of the proposed Replacement By-Laws, in advance of the October 2009 AGA.  Specifically, the Band Chiefs (who were voting members and on the board of directors) had been previously apprised of legal counsel’s opinion of July of 2009.  Nevertheless, the majority of the voting members did not have the opportunity to consider the Special Resolution on a timely basis, in accordance with the notice period contemplated by the Original By-Laws.  Further, the Special Resolution was not discussed by the bands, contrary to Original By-Law 8.18.

[53]         Based on Ms. Randell’s evidence, it is clear that the voting members were responsible for apprising the non-voting members of the FNI of the contents of the Special Resolution.  However, because the Special Resolution was not in the board kits, the voting members would likely not have informed the non-voting members of its contents, prior to its passage at the AGA.  Further, the “fullest possible discussion” by the bands contemplated by Original By-Law 8.18, did not occur.  In addition, the members were never provided with notice of termination of their membership.

[54]         According to the Special Resolution, the Replacement By-Laws of the FNI would not take effect until the formation of the QMFNB under the Recognition Order. In October of 2009, when the Special Resolution was purportedly passed, the band formation seemed imminent. However, the Recognition Order was not actually passed until September 22, 2011, nearly two years after the Special Resolution had been voted on.  Nevertheless, Ms. Randell’s evidence was that the adoption of the Special Resolution (in October of 2009) was necessary and time sensitive; and that there was some urgency to get the FNI’s operations in order.  Ms. Randell explained that she had expected the QMFNB to have been formed around 2010, so there was no time to have a second AGA in order to vote on the Special Resolution. 

[55]         However, there was another AGA held prior to the QMFNB being recognized.  Specifically, on September 18 and 19, 2010 an AGA was held by the FNI.  The minutes of that meeting suggest, and Ms. Randell’s evidence confirmed, that there were no discussions of the Replacement By-Laws at that AGA.  In other words, the FNI did not avail of that opportunity to rectify the flawed process of failing to provide notice when voting to pass the Special Resolution in October of 2009. 

[56]         In the meantime, there was a valid explanation for the delay in formation of the QMFNB.  Minutes from FNI meetings suggested that the delay was attributable to court proceedings seeking an injunction. That court decision was delivered on June 14, 2011 at Federation of Newfoundland Indians v. Canada, 2011 FC 683.  Shortly after expiration of the appeal period relating to that decision, the Recognition Order was passed by Canada on September 22, 2011. 

[57]         Subsequent to the QFMNB being formed, the FNI conducted its AGAs as if the Replacement By-Laws had been passed.  Specifically, after September 22, 2011, the members of the FNI in attendance at the AGAs were the members of the Band Council of the QMFNB.  This is first reflected in the minutes of the FNI’s AGA held December 9, 2011.  Annie Randell explained that this was because they were acting on the resolution of 2009.  In the meantime, however, the Replacement By-Laws were not actually formally passed by the FNI until its AGA held on September 12, 2012.  

[58]         On this point, the minutes from the AGA held December 9, 2011 refer to the Replacement By-Laws and state, as follows:

[59]         Next, the minutes from the FNI’s AGA held September 12, 2012 indicated that there was a resolution to amend the by-laws, and that the motion was carried. The evidence confirmed that such was a reference to the Replacement By-Laws.  This 2012 AGA was attended by the “new” membership of the FNI, being the Band Council of the QMFNB.  Therefore, that AGA was conducted as if the Replacement By-Laws were already in effect, even though the resolution to amend the by-laws was voted on at that meeting.

[60]         The evidence at trial further established that Canada developed concerns regarding the enrolment process undertaken pursuant to the Settlement Agreement, and particularly the large volume of applications.  Ultimately, the large volume of applications for Founding Membership precipitated the negotiations leading to the creation of the Supplemental Agreement.

[61]         Ms. Randell was on the Implementation Committee created under the Settlement Agreement.  As a result, she was able to provide insight into the unanticipated volume of applications received during the enrolment process.

[62]         According to Ms. Randell, as of May of 2012 she had estimated that there would be about 48,000 applications for membership in the QMFNB.  However, by November 30, 2012 there had been actually over 100,000 applications received.  Her evidence was that neither the FNI, nor Canada, had ever expected such a large number of applications. 

[63]         In the context of the unexpected large volume of applications, Canada raised concerns regarding the work of the Enrolment Committee. The trial testimony of Tom Rideout confirmed that Canada raised concerns directly with the Enrolment Committee, and sought to interfere with the independence of that committee. 

[64]         To elaborate, in the Fall of 2008, Mr. Rideout was appointed as independent Chair of the Enrolment Committee, in accordance with the Settlement Agreement. As stated, the Enrolment Committee consisted of the Chair, two representatives from the FNI, and two representatives from Canada.  The Enrolment Committee was responsible for assessing applications to determine eligibility for Founding Membership in the QMFNB

[65]         According to Mr. Rideout’s evidence, the information contained in the application packages was available to all five members of the Enrolment Committee.  Applications were assessed on their merits, and sometimes more information was requested if an application was not satisfactory. Adult applicants had to provide affidavits showing a substantial connection to one of the identified communities in Newfoundland. Canada’s representatives on the Committee retained a veto with respect to the ancestry criteria. There was no points system involved in the assessments conducted under the Settlement Agreement. 

[66]         After a decision was made by the Committee, a letter was sent to the applicant signed by Mr. Rideout.  The applicant was informed as to whether or not their application for founding membership had been approved, or rejected.  The applicant was also informed of the 30 day appeal period.  If the applicant, the FNI and Canada did not appeal, then the decision of the Enrolment Committee would be final and binding. Decisions of the Enrolment Committee were sent to the Registrar of the Indian Registry.

[67]         Mr. Rideout confirmed that he would report to the Implementation Committee on the numbers of applications received, how many applications had been dealt with, how many had been approved, and how many were rejected.  

[68]         Mr. Rideout testified that later in the process, Canada requested to review the work of the Enrolment Committee.  Files were provided for Canada’s review, and his understanding was that the files were found to be in good order.  Nevertheless, there was some concern expressed on behalf of Canada regarding the form of the affidavits, and the lack of content.  Specifically, Canada’s concerns were that the affidavits may have lacked sufficient information for the purpose of establishing substantial connection, and that the affidavits were on templates.  Mr. Rideout’s evidence was that the Enrolment Committee accepted Canada’s concerns as legitimate, and undertook to tighten up the process. 

[69]         On this, Mr. Rideout was referred to correspondence addressed to him dated March 22, 2011 from Martin Reiher, senior counsel for the Federal Department of Justice.  In that correspondence, Mr. Reiher expressed Canada’s concerns regarding the lack of detail contained in the affidavits filed with the applications.  Mr. Reiher stated at page 2 of the correspondence, as follows:

[70]         Mr. Rideout’s evidence was that he accepted Canada’s concerns as legitimate.  However, he did not feel that the process was impaired, and he noted that the affidavits had been available to all members of the committee.

[71]         Mr. Rideout was also referred to correspondence dated July 26, 2012, again from Mr. Reiher, in which Mr. Reiher referred to his previous correspondence, and expressed further concerns regarding the work of the Enrolment Committee.  Mr. Reiher stated at page 2 of that correspondence, as follows:

[72]         With respect to this July 26, 2012 correspondence, Mr. Rideout indicated that it would appear that Canada was first saying that they were pleased with the committee’s adjustments, and then saying otherwise.  At page 3 of the same correspondence, Mr. Reiher further stated, as follows:

[73]         Mr. Rideout noted that at this particular point in time (July of 2012) there had been a huge uptake in applications.  He also noted that the parameters for community connection did indeed change post-recognition, based upon what had been pointed out in one of the appeals. 

[74]         Subsequent to the July 26, 2012 correspondence, Mr. Rideout indicated that representatives of the Federal Government requested that Canada be provided with 100 per cent of the non-resident files for review, and 20 per cent of the resident files.  Mr. Rideout indicated that he had agreed to provide 10 per cent of the files, and that the request by Canada was encroaching on the Enrolment Committee’s independence.  He noted that if Canada did not like the outcomes of the Enrolment Committee’s determinations, then they were at liberty to appeal the decisions. 

[75]         Further correspondence was forwarded to Mr. Rideout dated September 28, 2012 from Mr. Reiher.  In that correspondence, Mr. Reiher referred to two appeals filed by Canada to the appeal master, and he stated at page 2 of this correspondence, as follows:

[76]         Mr. Rideout indicated his understanding of the September 28, 2012 correspondence was that Canada wanted access to every single decision the Enrolment Committee made.  As stated, Mr. Rideout had previously agreed to 10 per cent of batches of applications being reassessed.  He felt that the request to review all of the decisions again impaired the independence of the Enrolment Committee, and he did not agree to it.  Mr. Rideout again pointed out that there was an appeal process available to Canada.

[77]         Mr. Rideout’s evidence was that his work as Chair was completed by December 30, 2012.  He was referred to correspondence from the Assistant Deputy Minister of Aboriginal Affairs and Northern Development Canada dated December 21, 2012, which provided the Enrolment Committee with details on how to clue up their processes.  Mr. Rideout did not consider any further applications after December 30, 2012.

[78]         After the Supplemental Agreement was in effect, Mr. Rideout was not involved in the process of further assessment of applications.  Mr. Rideout was aware that several thousand persons had lost their status cards after having been initially approved as Founding Members by the Enrolment Committee.  He could not explain why.  His evidence was that the Enrolment Committee worked within the interpretation of the Settlement Agreement as they saw it. The people that he reported to seemed to be satisfied with the work that they had done.  He said that the Enrolment Committee did not act fraudulently or negligently.  Mr. Rideout said that the Enrolment Committee upheld their obligations under the Settlement Agreement.  I accept Mr. Rideout’s credible evidence, which was not challenged by cross-examination.

[79]         As indicated by Ms. Randell, as the end of phase 2 of the enrolment process approached, it was clear that there was no way that the large volume of applications for Founding Membership were going to get processed in time.  Ms. Randell indicated that correspondence had been received from the Federal Minister expressing concern regarding the number of applications exceeding that which was anticipated.  Ms. Randell suggested that the FNI had also not expected the large volume of applications.  Further, according to Ms. Randell, the FNI (like Canada) was concerned about the validity of the contents of the applications.

[80]         At that time, the FNI understood that the federal government was not willing to extend the time beyond November 30, 2012, to process the remaining applications.  This was confirmed by the evidence of Marilyn Butland.

[81]         In August of 2012, Ms. Butland, a business communications consultant, was initially retained for the purposes of providing communications support to deal with the issue pertaining to the volume of applications.  She met with Ms. Randell, Chief Sheppard and Stephen May to collect information.  There were no federal representatives at this meeting, and Ms. Butland was informed of the federal government’s position by Ms. Randell and Chief Sheppard. Based on the information she collected, Ms. Butland prepared a communications planning document. 

[82]         At the beginning of Ms. Butland’s communication planning document, she stated as follows:

[83]         In that same document, Ms. Butland identified the issues as follows:

[84]         Further in her communications planning document, Ms. Butland indicated under the heading “Position”, as follows:

[85]         Ultimately, a federal representative was appointed to explore appropriate measures with the FNI, and a negotiating committee was formed. Ms. Randell was on the negotiating committee along with Chief Brendan Sheppard, legal counsel, and representatives for Canada.  The end result was the Supplemental Agreement was negotiated, and it was signed on June 30, 2013. 

[86]         As stated, the Supplemental Agreement introduced a points system to assess the large volume of remaining applications; and further required a review and reassessment of all the applicants who had already been assessed and registered as Founding Members.

[87]         Ms. Randell provided the FNI’s rationale for agreeing to reassess (using the points system) the applications of those who had already been approved.  She said it was not appropriate to apply lesser assessment criteria to those who were already in the system.  As well, Ms. Randell’s understanding was that Canada would have had to go back to Cabinet if the numbers or dollar amount received reached a certain level.

[88]         Ms. Butland’s evidence also provided insight with respect to discussions held at FNI board meetings leading up to the execution of the Supplemental Agreement. 

[89]         Ms. Butland was referred to the FNI board of directors’ meeting minutes for March 26, 2013.  She attended that meeting, which she described as a meeting with the Qalipu Band Council.  She took detailed notes at the meetings.

[90]         Ms. Butland’s detailed notes from that meeting suggested that there were FNI Board discussions regarding the number of applications, the fact of reassessment, and the criteria for enrolment.  According to her notes, the Board recognized that there would be challenges for applicants who resided outside the Province.  Her notes also suggested the Board discussed that if there was no agreement, then Canada would legislate. 

[91]         Ms. Butland’s notes further suggested that the FNI Board was aware of the potential impact of reassessment, and that thousands could lose their status.  Specifically, Ms. Butland’s notes reflect some of the numbers contained in an undated report prepared by Ms. Randell (“Ms. Randell’s report”). Ms. Randell’s report provided estimates of the number of Qalipu members following assessment under the directive of the Supplemental Agreement.

[92]         According to Ms. Randell’s report, the enrolment process received 101,574 applications as of November 30, 2012.  Of these applications, 17,377 applications were deemed invalid.  Consequently, 84,197 complete applications were to be considered under the Supplemental Agreement.  By the end of stage 1 of the process, 23,876 applicants had received their status cards.  However, according to the numbers in Ms. Randell’s report, approximately 11,000 of those applicants were anticipated to lose their status after being reassessed pursuant to the Supplemental Agreement.  In Ms. Randell’s report, she provided an estimate of 26,461 as the number of members of the QMFNB after assessment under the criteria pursuant to the Supplemental Agreement. 

[93]         More detailed excerpts from Ms. Randell’s report stated, as follows:

[94]         Based on the evidence at trial, I am satisfied that Ms. Randell was part of the directing mind of the FNI.  Based on Ms. Randell’s report, she clearly knew that there would be a significant number of Founding Members who would lose their status following reassessment.  Further, in light of Ms. Butland’s notes, I am satisfied that some of the numbers in Ms. Randell’s report were put before the Board of the FNI at the meeting on March 26, 2013.  In my view, based on the evidence it is reasonable to infer that the Board of the FNI knew that the reassessment process undertaken pursuant to the Supplemental Agreement would potentially result in the loss of status for several thousand applicants. The Board knew this prior to approving the execution of the Supplemental Agreement.  At the very least, by agreeing to a reassessment, the Board must have known that they were placing the status of many, including the Plaintiffs, at risk.

[95]         On June 24, 2013, the board of directors of the FNI met, and through unanimous resolution, the board authorized Chief Brendan Sheppard to sign the Supplemental Agreement.  Again, this meeting was attended by the “new” membership as defined under the Replacement By-Laws. 

[96]         The minutes from the FNI meeting on June 24, 2013 indicate, as follows: 

[97]         The Supplemental Agreement did extend the time for assessment of the applications and the enrolment process.  It was not ratified by the FNI membership.

[98]         According to the 2018 Canada Gazette, following assessment and reassessment of over 100,000 applications under the points system of the Supplemental Agreement, the final results of the enrolment process established 18,875 eligible for the Founding Members’ list.  Further, the 2018 Canada Gazette indicated that of the 23,875 persons who had originally been granted Founding Member status following assessment under the Settlement Agreement, 10,396 were to be removed from the Founding Members’ list.  The Plaintiffs were included in those who were removed as Founding Members.

[99]         The Plaintiffs had all been members of the FNI.  Following assessment under the Settlement Agreement, the Plaintiffs had been accepted as Founding Members of the QMFNB.  As a result, they were granted section 6(1)(b) status under the Indian Act. 

[100]   Following reassessment under the Supplemental Agreement, the Plaintiffs lost their section 6(1)(b) status. The Plaintiffs’ evidence established the hurt and devastation they suffered because of this loss of status.  They considered the loss of status to be a denial of ancestry, a denial of heritage, and a denial of identity. As well, the Plaintiffs’ evidence established that inequities arose from the reassessment process.  

[101]   Further on this, as stated, the Plaintiffs’ loss of section 6(1)(b) status detrimentally affected the Plaintiffs’ ability to pass on eligibility for status to their children.  The distinction between section 6(1) status and section 6(2) status was described by the Supreme Court of Canada in Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31. They stated at paragraph 7, as follows:

[102]   The Plaintiff, Matthew Anderson, lives in Ontario.  He confirmed that he was a member of the FNI, and he had originally been accepted as a Founding Member of the QMFNB.  However, as a result of the Supplemental Agreement, he was required to reapply for reassessment; and he was then denied Founding Member status. 

[103]   Mr. Anderson appealed that decision, but by letter dated December 29, 2017 he was informed that his appeal was denied.  By letter dated August 31, 2018 from the Indian Registrar, he was advised that he was no longer entitled for registration under section 6(1)(b) of the Indian Act.  His registration status was changed to a section 6(2) category under the Indian Act.  Mr. Anderson described the main consequence of this as being the impact on his children, whom he described as no longer being allowed to identify as members of the QMFNB.

[104]   Mr. Anderson considered the denial of Founding Member status to be a denial of his identity and his heritage.  He had been raised in, and he maintains, the cultural way of life as a Qalipu.  Mr. Anderson’s siblings were permitted to retain status.

[105]   The Plaintiff, Jennifer Sue Le Roux, lives in Ontario.  She is currently a member of the St. George’s Band, and had been a member of the FNI since 2005.  Jennifer Sue Le Roux confirmed that she had been accepted as a Founding Member of the QMFNB under the Settlement Agreement.  When she had to reapply for membership in the QMFNB pursuant to the Supplemental Agreement, she was denied membership.  She appealed, and the appeal was denied by the appeal master by letter dated December 29, 2017. By letter dated August 31, 2018, she was informed by the Indian Registrar that she was no longer entitled to section 6(1)(b) status; and that she would be registered with section 6(2) status. 

[106]   Jennifer Sue Le Roux described the confusion, hurt, pain and stress of being denied section 6(1)(b) status under the Indian Act.  She had expected that the FNI would protect her heritage and advocate for her; however, this did not happen. 

[107]   Jennifer Sue Le Roux spoke to the inequity arising from the reassessment process.  Specifically, her identical twin has spent the same amount of time in the Province as she has.  Her twin was recognized as a Founding Member of the QMFNB, while Ms. Le Roux was not.  She further described the inequity of her son’s first cousins being Founding Members, but her son is not entitled to the same eligibility for status as his cousins.  She is registered under section 6(2) of the Indian Act; however, she felt that she should be on the Founding Members’ list, and that her son should have section 6(2) status under the Indian Act. 

[108]   The Plaintiff, Bobbie Tapp Goosney, lives on the Northern Peninsula.  She is a member of the Northern Peninsula Band, and had been a member of the Corner Brook Band.  Ms. Goosney was a member of the FNI, and she is currently a member of the Qalipu Band.  Like all the Plaintiffs, Ms. Goosney was a Founding Member of the QMFNB, but in 2018 she lost her section 6(1)(b) status following reassessment.  By letter dated August 31, 2018 from the Indian Registrar, she was informed that she was registered with section 6(2) status. 

[109]   With respect to her loss of status, Ms. Goosney indicated that her section 6(2) status under the Indian Act arises from her being a child of a parent who had section 6(1) status under the Indian Act.  However, this parent was her father, who died in 2010, prior to the Band being formed in 2011.  Consequently, it was unclear to Ms. Goosney why she did not retain her status under section 6(1) of the Indian Act.  In any event, as Ms. Goosney indicated, having status under section 6(2) of the Indian Act meant that she could not pass status onto her children. 

[110]   With respect to her loss of status, Ms. Goosney had expected protection from the Chief of her band, but she felt that she did not receive this protection.

[111]   The Plaintiff, Marie Tapp Melanson, lives in Moncton, New Brunswick.  Ms. Melanson described her Mi’kmaq ancestry which goes back prior to confederation.  Ms. Melanson had been in the Corner Brook Band.  She maintained a connection with her Band through family and friends.

[112]   When Ms. Melanson became a member of the FNI, she understood that the FNI would seek the recognition and status which her ancestors had been denied.  Recognition would preserve her heritage, and honour her ancestry. 

[113]   Ms. Melanson had expected the FNI to protect her, and that she and all members of the FNI would be recognized and in the QMFNB.  As a Founding Member of the QMFNB, she had received her status card (for status under section 6(1)(b) of the Indian Act), but she subsequently received a letter indicating that she, and her children, had to resubmit their applications and apply under the points system. She could not understand why this was happening when she had already been accepted, and the appeal period had passed.

[114]   Ms. Melanson characterized the information required to be submitted with the new application as “ridiculous”.  She had to find receipts from years ago.  She found whatever she could, and reapplied.  However, like the other Plaintiffs, she lost her section 6(1)(b) status under the Indian Act.

[115]   Ms. Melanson was informed of this change in status in 2018.  She was informed that she could reapply under a parent; however, her father had died in 2010 so she could not see how she could reapply. 

[116]   The loss of her section 6(1)(b) status was devastating to Ms. Melanson.  She considered it a loss of her line of heritage for herself, her children and grandchildren.  She further described families being split as a result of the process undertaken.  Ms. Melanson suggested that the FNI had to know that bringing in the requirements under the Supplemental Agreement would destroy people and families in the reassessment process. 

[117]   The Plaintiff, Shawn Benoit, is an RCMP officer who resides in Nova Scotia. Mr. Benoit has been part of the Indian Head First Nation Band since he was 18 years of age.  

[118]   When Mr. Benoit became a member of the FNI, he thought that the purpose of the FNI was to fix the wrong that had occurred when Newfoundland joined confederation, and to ensure that FNI members had a voice regarding their ancestry and heritage.  He described the stigma attached to his heritage, and the discrimination suffered by his family.

[119]   Mr. Benoit considered the Settlement Agreement to have been negotiated by the FNI on his behalf, and on behalf of all members of the FNI, and he applied to be a Founding Member of the QMFNB.  It was a proud moment for Mr. Benoit, and his family, when he was accepted.  Mr. Benoit received a letter dated April 1, 2011 from the Chair of the Enrolment Committee (Mr. Rideout) indicating that his application had been approved.  The letter referred to a 30 day appeal, after which the Enrolment Committee decision was stated as being “final and binding”.  Mr. Benoit and his children became Founding Members of the QMFNB; and they received their status under section 6(1) of the Indian Act.  Mr. Benoit had no expectation that they could ever lose the status once it was final and binding.

[120]   Subsequently, Mr. Benoit received a package indicating that he and his children all had to reapply with more strict requirements.  He had no concern about being accepted because he had already met the criteria.  Mr. Benoit assumed that the new process engaged by the Supplemental Agreement was a way to weed out invalid applications.  Consequently, he did not provide additional information.  He received a letter dated January 31, 2017 rejecting him, and informing him that he did not meet the requirements for Founding Member status.  He and his children lost their status.  He appealed the decision, but the appeal was dismissed.  By letter dated August 31, 2018 from the Indian Registrar, Mr. Benoit was informed that he was removed from the Indian Register.

[121]   Mr. Benoit described the shock, upset and disbelief at being rejected. He could not understand how this happened; and how his heritage had become subject to a points system.  In his view, the FNI was charged with fighting for he and others who were members of the FNI.  As a member of the FNI, he assumed that the FNI would protect its members.  He blamed the FNI for failing in its duty to protect Mr. Benoit, and other members, in its negotiations with Canada.  He also was of the view that Canada had a responsibility to ensure that there was no discrimination in the process. 

[122]   Mr. Benoit also described the inequities arising from the application of the Supplemental Agreement’s points system criteria.  He said that many members of his large extended family retained their status, but others did not.  Mr. Benoit said this has caused a separation in his family, and he stated in his testimony that the result was “most of us are Indian, some are not”. 

[123]   Shawn Benoit expressed that because the new QMFNB was a landless band, anyone who had to leave the Province should not be discriminated against. In his view, the landless band ended up having a land requirement as a result of the points system. Mr. Benoit’s evidence was that he was working on a First Nations reservation in Nova Scotia.  He was in frequent contact with his family; and he was immersed in the culture.  However, because he did not live in the Province, he expressed the view and stated in his testimony that he was deemed not “Indian enough”.

[124]   Mr. Benoit wanted the Supplemental Agreement to be scrapped, and for those originally accepted to be reinstated.  He was of the view that a personal remedy would not be sufficient.

[125]   John Oliver was not a Plaintiff, but his testimony supported the Plaintiffs’ assertions regarding the inequities following reassessment under the Supplemental Agreement.

[126]   Mr. Oliver had been involved with the FNI from its inception.  He was a former president of the FNI.  Mr. Oliver was also a founding member of the movement for recognition, preceding the establishment of the FNI. 

[127]   Mr. Oliver testified that he was initially accepted as a member of the QMFNB in 2011.  However, in 2017 he was rejected following reassessment under the points system.  He described this rejection as being hurtful. He added that it was inexplicable how some persons were rejected, and some were accepted under the points system.  He described families as having been torn apart.  His evidence was that this was not what was envisioned when Mr. Oliver was involved with the pursuit of recognition in the 1970’s.

[128]   Canada submitted that this matter falls within the boundaries of the Federal Court’s jurisdiction. 

[129]   More specifically, Canada submitted that the Plaintiffs are seeking to rescind the Supplemental Agreement, which was an agreement constructed to clarify the evidentiary requirements to be considered by the Enrolment Committee for the purpose of determining membership in the QMFNB.  The Governor-in-Council has the discretion to establish new Indian Bands and their membership, not the Courts:  Davis v. Canada (Attorney General), 2008 NLCA 49, at paragraphs 35 to 38.  Consequently, Canada submitted that this Court cannot interfere with the process by which the QMFNB was established. 

[130]   Canada also submitted that although the Plaintiffs’ claim was brought under our Province’s Corporations Act, the true substance of the Plaintiffs’ claim is not based in the Corporations Act.  Rather, the true nature of the Plaintiffs’ claim is based in public law because the remedy sought would interfere with the establishment of the QMFNB.  Public law claims are appropriately dealt with by way of judicial review.   Decisions relating to the registration of a band and status under the Indian Act may be appropriate for judicial review in Federal Court; however, such decisions do not create private law rights giving rise to a cause of action in this forum.  Further, no individual rights were created by the subject agreements.

[131]   Canada also referred to the Federal Court’s judicial review decision in Wells v. Canada (Attorney General), 2018 FC 483.  In the Wells decision, at paragraph 46, the Federal Court indicated that “the decision made to enter into the Supplemental Agreement, and the decision made as to its terms”, were reviewable by the Federal Court, pursuant to section 18.1 of the Federal Courts Act, RSC 1985, c. F-7.

[132]   However, the Wells decision was distinguished by Justice Butler in the 2018 decision of Benoit v. Federation of Newfoundland Indians, 2018 NLSC 141 (the “2018 Benoit v. FNI decision”). Justice Butler considered the Plaintiffs’ interlocutory application seeking an injunction against the Defendants, and an order enjoining the Minister from recommending a new Founding Members’ list in substitution of the then existing schedule to the Recognition Order, pending a determination of the Plaintiffs’ claim in oppression.  Justice Butler granted the Plaintiffs’ interim relief against the FNI in the form of a declaratory order (see paragraph 135 of the 2018 Benoit v. FNI decision).  At paragraph 85, Justice Butler distinguished the Wells decision and she stated, as follows:

[133]   Justice Butler further suggested that the Wells decision did not consider the same issues raised by the Plaintiffs.  At paragraph 99 she stated, as follows:

[134]   I agree that the Wells decision is distinguishable on the basis as described by Justice Butler. 

[135]   Further, the concurrency of jurisdiction between the Federal Court and provincial superior courts is described in section 21(1) of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, as follows:

[136]   In Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62 (CanLII), 2010 S.C.C. 62 the Supreme Court of Canada confirmed the concurrency of jurisdiction between the Superior Court and the Federal Court regarding TeleZone’s causes of action in contract, tort and equity.  At paragraph 77, the Supreme Court of Canada stated that “so long as private rights are legitimately engaged by the action”, then a plaintiff is not required to bring an application for judicial review.

[137]   In this matter, I am satisfied that the Plaintiffs “private rights are legitimately engaged by the action” (paragraph 77 of Telezone).  In my view, as submitted by the Plaintiffs, the true nature of the Plaintiffs’ claim is that of oppression pursuant to the Corporations Act. A claim in oppression is not a claim for judicial review.  Rather, it is a claim to enforce the private rights of complainants under the Corporations Act.  Whether rescission of the Supplemental Agreement is an appropriate remedy can only be considered after a determination is made as to whether the Plaintiffs are entitled to a remedy in oppression.  In any event, if the Plaintiffs establish entitlement to a remedy, then setting aside the Supplemental Agreement is not the only remedy to be considered.  There are numerous remedies for oppression available falling within this Court’s jurisdiction, in accordance with section 371(3) of the Corporations Act (see also paragraph 74 of the 2018 Benoit v. FNI decision).

[138]   I therefore find that this Court has jurisdiction over the Plaintiffs’ claim in this matter.

[139]   Canada submitted that the Plaintiffs lacked standing to bring this action.  Specifically, Canada submitted that the Plaintiffs were seeking to advance “collective rights” on behalf of the Mi’kmaq Group of Indians of Newfoundland; but that the Plaintiffs could not claim for collective rights without having the support and authority of the collective entity which holds those rights.  In the context of the agreements, the collective entity holding the rights of the Mi’kmaq Group of Indians of Newfoundland is the FNI, or the QMFNB as the successor to the FNI:  Howse v. Canada (Attorney General), 2015 FC 1063, at paragraph 44. 

[140]   Further on this, Canada pointed to the pleadings and the Plaintiffs’ evidence that they were not seeking individual remedies; rather, they were seeking a remedy on behalf of themselves, and others.  The Plaintiffs seek to rescind the Supplemental Agreement, and such a remedy would impact all of the Mi’kmaq of Newfoundland.    

[141]   Canada also submitted that the FNI exercised its collective authority when entering the Supplemental Agreement.  However, as stated the Plaintiffs do not act on behalf of the FNI in advancing this claim.  

[142]   Canada further submitted that if the Plaintiffs’ claim could be interpreted as a claim for breach of fiduciary duty by Canada, then no such duty is personally owed to the Plaintiffs.  Rather, any such duty is owed to the Mi’kmaq Group of Indians of Newfoundland, as represented by the FNI or QMFNB.  Indeed, in Howse, the Federal Court (at paragraph 44) indicated that in the context of the Settlement Agreement and the Supplemental Agreement, any fiduciary duty owed by the Crown would be to the aboriginal collective, being the Mi’kmaq Group of Indians of Newfoundland (as represented by the FNI or the QMFNB).   

[143]   As well, Canada submitted that if the Plaintiffs’ allegation is that Canada and the FNI did not contract in good faith, then such allegation is speculative.  I will later discuss this submission when considering whether the Plaintiffs have established any claim against Canada.

[144]   In the 2018 Benoit v. FNI decision, at paragraphs 56 to 58, Justice Butler indicated that the claims of the Plaintiffs are individual claims; and that the Plaintiffs had standing to pursue only private claims and remedies.  She stated at paragraph 56, as follows:

[145]   Subsequent to Justice Butler’s decision, amendments were made to the statement of claim filed by the Plaintiffs.  However, even with the amendments to their pleadings, in my view the Plaintiffs continue to lack collective authority to represent the First Founding Members of the QMFNB; and specifically those Founding Members whose status was lost following reassessment under the points system of the Supplemental Agreement.  The Plaintiffs lack the authority to advance a claim on behalf of the Mi’kmaq Group of Indians of Newfoundland.  I agree that the Plaintiffs do not have standing to advance collective rights. 

[146]   Nevertheless, I find that the Plaintiffs do continue to have standing to pursue individual claims and remedies.  In their amended statement of claim, the Plaintiffs claim that the oppressive acts resulting in the adoption of the Supplemental Agreement have directly affected their rights as members.  If the Plaintiffs have established oppression, then the private remedies in oppression available under the Corporations Act permit the Court to consider the Plaintiffs’ request to seek to have the Supplemental Agreement set aside.  I conclude that the Plaintiffs do have standing to seek to establish entitlement to a remedy in oppression, pursuant to the Corporations Act. 

[147]   The statement of claim was issued on February 13, 2018.  The FNI submitted that the Plaintiffs’ claim is barred by operation of the Limitations Act because the cause of action “crystallized” on September 22, 2011.  

[148]   To elaborate, the Plaintiffs claim that their oppression emanates from the FNI’s failure to comply with the Original By-Laws when passing the Special Resolution.  To recap, the Special Resolution was “passed” at the FNI’s AGA held on October 24, 2009. However, with respect to that Special Resolution, the FNI had not complied with the notice requirement of Original By-Law 8.07, and the voting members rejected the premise of Original By-Law 8.18 (when rejecting the Second Special Resolution). The Special Resolution included amendments to the FNI’s by-laws, being the Replacement By-Laws, which were to take effect upon the formation of the QMFNB and the recognition of the First Founding Members’ List pursuant to Order-In-Council.  The Recognition Order was passed by the Governor-In-Council on September 22, 2011, and the FNI submitted that the limitation period started to run on that date.

[149]   Further on this, the FNI submitted that a 6 year limitation period applied in accordance with section 6(1)(f) and/or section 9 of the Limitations Act, which state as follows:

[150]   The FNI also referred to section 170 of the Corporations Act to support its position that the Plaintiffs’ limitation period had already expired when the Plaintiffs issued their statement of claim.  Section 170 of the Corporations Act states, as follows:

[151]   The FNI specifically referred to section 170(3) which indicates that an amendment to a by-law is effective from the date of the board of directors’ resolution.  In this case, the date of the Special Resolution was October 24, 2009.

[152]   The Plaintiffs countered by stating that section 170(3) of the Corporations Act presupposes the validity of the resolution to amend the by-laws; however, in this matter the Special Resolution was ultra vires, and therefore invalid.  I agree and find that section 170(3) of the Corporations Act does not apply.  I will explain later in this decision why I agree that the Special Resolution was indeed ultra vires due to noncompliance with FNI’s Original By-Laws. 

[153]   The Plaintiffs further submitted that Original By-Law 8.18 required that the Special Resolution not be passed until the first duly called meeting next held after the resolution was first introduced.  The FNI endeavoured to circumvent Original By-Law 8.18, and voted to pass the Special Resolution at the AGA in October of 2009, which was when that resolution was first introduced.  Subsequently, the FNI endeavoured to again pass the Replacement By-Laws; but not until the FNI’s AGA held on September 12, 2012.  Consequently, the Plaintiffs submitted that September 12, 2012 would be the earliest date that the limitation period would start to run; and if the limitation period is indeed 6 years, then the statement of claim was issued within the appropriate timeframe.

[154]   Further on this, the Plaintiffs submitted that the FNI’s purported adoption of the Replacement By-Laws, as reflected in the September of 2012 AGA minutes, was an attempt by the FNI to cure the defective passing of the Special Resolution in October of 2009.  Nevertheless, the motion to formally adopt the Replacement By-Laws in September of 2012 was made without proper corporate authority. This is because the September 2012 AGA was attended only by the QMFNB Band Council; and therefore, that AGA was conducted as if the Replacement By-Laws had already been in effect. 

[155]   Alternatively, the Plaintiffs advanced arguments of discoverability; and submitted that oppression is ongoing, thereby eliminating the requirement to consider any limitation period. 

[156]   On this latter point, the Plaintiffs referred to Fillatre Estate v. Fillatre, 2016 NLCA 69, in which our Court of Appeal indicated that oppression is “usually considered to be ongoing until remedied”.  They stated this at paragraph 35, as follows:

[157]   In the above excerpt, our Court of Appeal referred to Jaska v. Jaska (1996), 1996 CanLII 2926 (MB CA), 141 D.L.R. (4th) 385 (Man. C.A.), as well as Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 O.A.C. 201 (C.A.).  I note that in Jaska v. Jaska the limitations legislation contained a general limitation period of six years, which was referred to in that case as a “basket clause”.  Section 9 of our limitations legislation is a “basket clause” similar to the clause considered in Jaska.  In the Waxman case, there was no such general limitation period (see paragraph 535 of Waxman). 

[158]   If the limitation period is 6 years for oppression, I accept the Plaintiffs’ submission that the time did not start running until September 12, 2012, at the earliest.  This is when the FNI attempted to formally adopt the Replacement By-Laws, and cure the defective passing of the Special Resolution. 

[159]   In any event, in my view the Plaintiffs’ claim in oppression is based on a continuing course of conduct, beginning with the passing of the Special Resolution (which was invalidly passed in contravention of the Original By-Laws), and continuing with the purported adoption of the Replacement By-Laws (on September 12, 2012) without proper corporate authority; and then culminating in the FNI’s entering the Supplemental Agreement on June 30, 2013, which ultimately resulted in the loss of the Plaintiffs’ section 6(1)(b) status under the Indian Act. 

[160]   I find that the Plaintiffs’ claim is not statute barred under the Limitations Act.

[161]   The Plaintiffs claim that the actions taken by the FNI leadership and Canada constitute member oppression under section 371 of the Corporations Act, thereby entitling the Plaintiffs to a remedy.  Section 371 of the Corporations Act states, as follows:

[162]   The Plaintiffs, as complainants, assert that the oppressive acts include the attempted truncation of the FNI membership to the members of the Band Council of the QMFNB, pursuant to the Special Resolution; and the execution of the Supplemental Agreement, which ultimately resulted in revocation of the Plaintiffs’ status as Founding Members of the QMFNB.  The alleged oppression is further detailed at paragraph 45 of the amended statement of claim, as follows:

[163]   The remedies sought by the Plaintiffs include rescission of the Supplemental Agreement.  Paragraph 49 of the amended statement of claim described the relief sought, as follows:

[164]   BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 (“BCE”) is the leading case providing a framework for analysis of claims in oppression.  At paragraph 56 of BCE, the Supreme Court of Canada described the “twin prongs” of the oppression analysis as first requiring consideration of the “principles underlying the oppression remedy, and in particular the concept of reasonable expectations”; and second, if  “a breach of a reasonable expectation is established, one must go on to consider whether the conduct complained of amounts to “oppression”, “unfair prejudice” or “unfair disregard” ” as set out in the legislation.

[165]   The Supreme Court of Canada describe oppression as an equitable remedy, which is fact-specific.  They make the following two observations at paragraphs 58 and 59 of BCE, as follows:

[166]   When considering whether a reasonable expectation has been established by a claimant, the Supreme Court of Canada in BCE listed several objective factors to consider, including: “general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders” (at paragraph 72 of BCE). 

[167]   At paragraph 89 of BCE, the Supreme Court of Canada stated that if a claimant establishes a reasonable expectation regarding a certain way the claimant should have been treated, the claimant must next “show that the failure to meet this expectation involved unfair conduct and prejudicial consequences”. 

[168]   Further at paragraph 89 of BCE, the Supreme Court of Canada stated that:  “Not every failure to meet a reasonable expectation will give rise to the equitable considerations that ground actions for oppression”.  At paragraph 90 they also stated that “… as in any action in equity, wrongful conduct, causation and compensable injury must be established in a claim for oppression”.

[169]   Applying the framework for analysis from BCE, I will determine whether the Plaintiffs have established oppression, and whether they have established entitlement to a remedy.

[170]   First, I must determine whether the Plaintiffs’ reasonable expectations were breached by the manner in which the FNI conducted its affairs. This analysis will be undertaken by considering each of the factors set forth by the Supreme Court of Canada in BCE.

[171]   In BCE the Supreme Court of Canada stated at paragraph 73 that “Commercial practice plays a significant role in forming the reasonable expectation of the parties”; and that a “departure from normal business practices that has the effect of undermining or frustrating the complainant’s exercise of his or her legal rights will generally (although not inevitably) give rise to a remedy”.

[172]   With respect to this factor, the FNI acknowledged that it would be reasonable for the Plaintiffs to expect that the FNI would follow its corporate procedures under the by-laws, and not veer from such without the consent or approval of the “voting members”.  As stated, with respect to the purported passing of the Special Resolution at the AGA in October of 2009, the FNI acknowledged there had been non-compliance with the notice requirements of Original By-Law 8.07.  The FNI characterized this as a minor procedural irregularity, and suggested that this was remedied by the voting members at the AGA.  The voting members approved the irregular process, and proceeded to vote in favour of the Special Resolution.

[173]   In contrast, the Plaintiffs submitted that the Special Resolution was an invalid and ultra vires resolution, and that the Replacement By-Laws were never adopted with proper corporate authority.  I agree with this submission.  This supports a finding that the FNI conducted its affairs in a manner which breached the reasonable expectations of the Plaintiffs.

[174]   To begin with, as submitted by the Plaintiffs, the “pith and substance” of the Special Resolution was to terminate the membership of substantially all of the several thousand members of the FNI.  On this, the Plaintiffs referred to article 2.08 of the Original By-Laws of the FNI, which identified the manner in which the membership in the corporation may cease, as follows:

[175]   As submitted by the Plaintiffs, there was nothing in the conduct or activities of the members of the FNI which would justify termination of membership under Original By-Law 2.08. 

[176]   Further, Original By-Law 2.09 provided an appeal period for terminated members, following notice of termination.  Original By-Law 2.09 stated, as follows:

[177]   In this case, the FNI did not provide notice of termination of membership, and no opportunity for appeal. 

[178]   I recognize that section 428(a) of the Corporations Act permits directors to make by-laws respecting membership; and that the by-laws may be amended by directors’ resolution, pursuant to section 170 of the Corporations Act.  Nevertheless, as submitted by the Plaintiffs, any power of the directors to make amendments to the by-laws must be exercised in accordance with the by-laws in existence prior to the amendment.  By failing to provide notice of termination of membership, the FNI did not comply with its existing by-laws when amending them. 

[179]   Further on this, the FNI referred the Court to case law, including Farrish v. Delta Hospice Society, 2020 BCCA 312 to support its contention that the relationship between members and an organization may change, and that by-laws may be changed to reflect such.  The FNI submitted that when the Special Resolution was voted on in October of 2009, the FNI was well on course with achieving its original purpose, being status recognition for the Mi’kmaq of Newfoundland.  Consequently, at that point in time, the FNI was justified to change the relationship between the FNI and its members, which the Replacement By-Laws would accomplish.

[180]   On this point, I agree that by-laws may indeed be amended to change the relationship between members and an organization; again however, such must be done in a manner which complies with the procedures in the by-laws in existence prior to such amendment.  The Special Resolution (through the Replacement By-Laws), purported to effect a mass termination of the membership of the majority of the members of the FNI.  It was a fundamental change to the membership of the FNI.  Compliance with the by-law requirements respecting termination of membership was of the utmost importance. The FNI did not comply with its Original By-Laws respecting termination of membership. The FNI never provided notice of termination, or the opportunity for appeal. This, in itself, renders the Special Resolution ultra vires.

[181]   Not only was there noncompliance with the Original By-Laws respecting termination of membership in the FNI, there was also noncompliance with the procedural requirements for special resolutions.

[182]   To recap, and as acknowledged by the FNI, when the Special Resolution was “passed” in October of 2009, there had been non-compliance with the notice provisions of Original By-Law 8.07 regarding the requirement of pre-meeting distribution of the Special Resolution to the voting members.  Further, the purported passing of the Special Resolution at the October 24, 2009 AGA contravened Original By-Law 8.18 which stated that:  “Notwithstanding anything herein contained, a proposed resolution which directly affects a Band can only be passed at the first duly called meeting next held after the meeting at which the proposed resolution is first introduced…”.  The Second Special Resolution sought compliance with Original By-Law 8.18, but was defeated at the October 2009 AGA.

[183]   The defeat of the Second Special Resolution was an attempt by the FNI Board to circumvent Original By-Law 8.18, as well as the notice requirement of Original By-Law 8.07.  In my view, defeating the Second Special Resolution did not validate the otherwise invalid passing of the ultra vires Special Resolution at the October of 2009 AGA. Original By-Law 8.18 could not be circumvented by the voting members.  Failure to abide by the procedural requirements under Original By-Law 8.18 contravened its clearly stated intention, being that “such resolution shall have the fullest possible discussion by the Band which may be affected by the passage of the proposed resolution”. Consequently, prior to voting to pass the Special Resolution, discussion of the Special Resolution (and the Replacement By-Laws) did not occur amongst Band members. The membership did not have the opportunity to review and consider the Special Resolution.  Again, the FNI’s failure to abide by the proper processes in the Original By-Laws renders the Special Resolution ultra vires, and therefore invalid.

[184]   I add that I recognize that Original By-Law 8.07 does state that “non-receipt of any notice by any Voting Member or Alternate Voting Member shall not invalidate the proceeding at any general meeting”.  However, as noted by the Plaintiffs, Original By-Law 1.01(g) also states:

[185]   Based on Original By-Law 1.01(g), I agree with the Plaintiffs’ submission that a resolution is not a valid special resolution unless notice has been duly given.  It stands to reason that the non-receipt of notice referenced in Original By-Law 8.07 refers to a circumstance where a small number of voting members had not received notice; not a circumstance where all voting members did not receive proper notice (and when there was noncompliance with Original By-Law 8.18), as was the case here.

[186]   The FNI characterized its failure to give notice of the Special Resolution as a mere technical misstep.  I do not accept the characterization of what transpired as a mere technical misstep.  In my view, given the significant impact of the Special Resolution, and the ensuing termination of membership under the Replacement By-Laws, it was reasonable for the Plaintiffs to expect compliance with the notice requirements of Original By-Law 8.07, compliance with Original By-Law 8.18, and notice of termination of membership.  It was also reasonable to expect that special resolutions be passed in compliance with the by-laws; and that any amendments to by-laws be adopted in the manner proposed by the by-laws in existence prior to such amendment.  As stated, I agree that the Special Resolution was ultra vires and invalid.

[187]   Further on this, I find that the FNI compounded its errors by “passing” the Replacement By-Laws without proper corporate authority.  To recap again, the “new” membership (being the Band Council of the QMFNB) conducted the FNI’s AGA meeting on September 12, 2012.  At that meeting, it would appear that the FNI attempted to cure the defective “passing” of the Special Resolution by voting again in favour of a resolution to amend the by-laws.  Nevertheless, this “formal adoption” of the Replacement By-Laws was an invalid act by the FNI, because the meeting was attended by the QMFNB Band Council.  In other words, the formal adoption of the Replacement By-Laws was voted on by the Band Council of the QMFNB, not by the voting members from each of the bands of the FNI as required by the Original By-Laws. Consequently, the Replacement By-Laws were adopted by the FNI without proper corporate authority; as the FNI conducted that meeting (and the vote) as if the Replacement By-Laws were already in effect. 

[188]   I add that the Replacement By-Laws were also referenced in the minutes of the AGA held December 9, 2011, which was another AGA conducted as if the Replacement By-Laws were in effect.  Those minutes reference the Replacement By-Laws as being “tabled for the next meeting of the FNI”.

[189]   I note that the legal opinion dated July of 2009 alerted the FNI Board to a potential claim in oppression arising from the corporate restructuring due to the Special Resolution.  In my view, the knowledge of a potential claim in oppression should have heightened the FNI’s awareness of the need for strict compliance with its by-laws, which did not occur.

[190]   I add that I considered that the purpose of restructuring and truncating the FNI’s membership was to maintain the FNI in a “skeletal” form for the purpose of facilitating the orderly conclusion of the FNI, to allow the FNI to satisfy its contractual and financial obligations. However, it would appear that the FNI conducted its business outside of what would reasonably be anticipated as what had been intended by the “skeletal form”.  Specifically, the FNI proceeded to execute the Supplemental Agreement, which resulted in the revocation of the Plaintiffs’ section 6(1)(b) status, and the section 6(1)(b) status of more than ten thousand other FNI members. 

[191]   In any event, even if the Special Resolution terminating substantially all of the membership of the FNI had been passed and adopted with proper corporate authority, and in compliance with the Original By-Laws (which was not the case), it would still be reasonable for the Plaintiffs to expect that the affairs of the FNI would continue to be conducted in a manner consistent with preserving their section 6(1)(b) status (as Founding Members of the QMFNB). It was incongruous with that reasonable expectation for the FNI to agree to execute the Supplemental Agreement, with the knowledge that reassessment would risk revocation of the Founding Members’ status of thousands of FNI members. 

[192]   The Plaintiffs’ had already been granted their section 6(1)(b) status as Founding Members of the QMFNB. The Plaintiffs asserted that the reasonable expectation of the Plaintiffs, as FNI members, was that their right to inclusion as Founding Members would have been protected by the administration of the FNI during the process of negotiation, and conclusion, of any supplemental agreement.  I agree with this assertion.

[193]   More specifically, I agree with the Plaintiffs’ assertion that there was an affirmative obligation on the FNI to ensure that any change to the Settlement Agreement would not be prejudicial to the interests of the original FNI members, including the Plaintiffs.  It is clear that the Supplemental Agreement was prejudicial to the interests of the Plaintiffs, as their status was ultimately reassessed and changed as a result of the FNI entering the Supplemental Agreement. By agreeing to a reassessment process, the FNI knowingly put the Plaintiffs’ status, and the status of other members, at risk.  Based on the evidence of Ms. Randell and Ms. Butland, I am satisfied that this risk was known by the FNI prior to executing the Supplemental Agreement.

[194]   More specifically and as stated, Ms. Randell’s report provided estimates of the number of Qalipu members following assessment and reassessment under the directive annexed to the Supplemental Agreement.  The report predicted a loss of section 6(1)(b) status for over 11,000 members following reassessment.  Further, as suggested by Ms. Butland’s evidence, numbers from Ms. Randell’s report were clearly referenced at a QMFNB/FNI Board Meeting held prior to execution of the Supplemental Agreement.  As stated, I am satisfied that the FNI Board knew it was risking loss of Founding Member status for several thousand Founding Members, prior to executing the Supplemental Agreement. 

[195]   Further on this, the Plaintiffs submitted that article 2.15 of the Settlement Agreement, in itself, created a reasonable expectation that any change to the Settlement Agreement would be brought back to the FNI membership for ratification in the same manner as had been undertaken for the Settlement Agreement.  Such ratification did not occur for the Supplemental Agreement.  Specifically, the Plaintiffs suggested that the Supplemental Agreement required ratification, in accordance with article 2.15 of the Settlement Agreement, which states as follows:

[196]   Although this is a persuasive submission, it appears to be inconsistent with the decision in Abbott v. Canada (Attorney General), 2019 FC 1302.  The Abbott decision was upheld by the Federal Court of Appeal at 2021 FCA 109, with leave to appeal to the Supreme Court of Canada being dismissed without reasons at [2021] S.C.C.A. No. 300. In Abbott, Justice Lafrenière determined that section 10.4 of the 2008 Settlement Agreement gave authority to the parties to enter the Supplemental Agreement, and to issue the directive attached. 

[197]   Based on the Abbott decision, it is arguable that ratification of the Supplemental Agreement was not a requirement, and not a reasonable expectation, because the directive annexed to it was authorized by section 10.4 of the Settlement Agreement.  That directive was the points system under which the Plaintiffs were reassessed. 

[198]   Having said this, however, it is also arguable that any decisions made by the “new” membership of the FNI (being the QMFNB Band Council) were without the appropriate underlying corporate authority; because the Special Resolution was ultra vires and the Replacement By-Laws were passed without proper corporate authority.  In turn, it was reasonable for the Plaintiffs to have expected that the FNI’s decision to enter the Supplemental Agreement be made in consultation and discussion with the bands of the FNI, as had been contemplated by Original By-Law 8.18.

[199]   Based on the foregoing, I conclude that consideration of “commercial practice” weighs heavily in favour of a finding that the Plaintiffs’ reasonable expectations were violated by the FNI’s conduct of passing and acting on the Special Resolution, and by entering the Supplemental Agreement.

[200]   In BCE, at paragraph 74, the Supreme Court of Canada indicated that “the size, nature and structure of the corporation” are also relevant factors to consider when assessing reasonable expectations; and that more latitude may be accorded “to the directors of a small closely held corporation to deviate from strict formalities than to the directors of a larger public company”. 

[201]   In this case, the FNI was not a large public company.  At the same time, however, it was also not a small closely held corporation.  I have considered the large size of the membership of the FNI, and the significant objects and purpose for which the corporation was established as set forth in the articles of continuance.  Based on this, latitude should not be accorded to the FNI respecting its conduct of failing to comply with its own by-laws when passing the Special Resolution, its conduct of adopting the Replacement By-Laws without proper corporate authority, and its conduct of terminating substantially all of its membership without notice.  It was this conduct which enabled the FNI to enter the Supplemental Agreement, putting the Plaintiffs’ section 6(1)(b) status at risk; without consulting with the members of the bands affiliated with the FNI. 

[202]   In BCE, at paragraph 75, the Supreme Court of Canada indicated that relationships which were “based on ties of family or friendship may be governed by different standards than relationships between arm’s length shareholders in a widely held corporation”. 

[203]   The FNI submitted that relationships between members of a non-profit may be governed by different standards than relationships between arm’s length shareholders.  However, in my view, different standards are not appropriate to consider in this matter. 

[204]   The FNI was a non-profit corporation with several thousand members at the time the Special Resolution was passed.  The FNI’s members’ relationships were based on a common goal of attainment of the FNI’s objects, particularly status recognition.  Given the historical significance of this object, the members would reasonably expect the FNI to, at the very least, adhere to the same standards as if they were arm’s length shareholders.  This would include the reasonable expectation of adherence to the by-laws, particularly when attempting to fundamentally alter the membership.  It would most certainly also include the reasonable expectation of protection and preservation of members’ section 6(1)(b) status.

[205]   In BCE, at paragraph 76, the Supreme Court of Canada indicated that past practice could create reasonable expectations, particularly “among shareholders of a closely held corporation on matters relating to participation of shareholders in the corporation’s profits and governance… ”.

[206]   At paragraph 77, the Supreme Court of Canada further stated that “practices and expectations can change over time”, particularly in circumstances where “valid commercial reasons exist for the change and the change does not undermine the complainant’s rights”.

[207]   In my view, based on the evidence at trial, there was no valid commercial reason for the FNI’s conduct of entering the Supplemental Agreement through the “new” governance of the FNI (being the QMFNB Band Council), without engaging the “old” membership of the FNI.  Such was conduct which can be characterized as undermining the Plaintiffs’ right to status recognition.  The Plaintiffs’ “right” arises from the FNI’s original objective, being status recognition for its membership; and the fact that the Plaintiffs had already been granted section 6(1)(b) status under the Settlement Agreement.

[208]   In BCE, at paragraph 78, the Supreme Court of Canada indicated that in assessing whether or not a complainant’s expectation is reasonable, “the court may consider whether the claimant could have taken steps to protect itself against the prejudice it claims to have suffered”.

[209]   On this, the FNI submitted that as members of the FNI, the Plaintiffs knew or ought to have known that the Special Resolution would change their status as members; yet the Plaintiffs did nothing after the Special Resolution was passed.  The FNI further submitted that the opportunity to apply for inclusion as Founding Members of the QMFNB was not contingent on being a member of the FNI; and, therefore the change in membership in no way impacted the ability of any Mi’kmaq of Newfoundland to apply for membership in QMFNB.  Rather, the FNI submitted that the Plaintiffs’ claim for relief is due to their disappointment which followed their rejection from the Founding Members’ list in 2018, and it does not lie in the passage of the Special Resolution at the October of 2009 AGA.

[210]   In my view, these submissions unreasonably downplay the relationship between the passing of the Special Resolution, and the execution of the Supplemental Agreement.  The Special Resolution permitted the Supplemental Agreement to be entered into by the “new” membership of the FNI, without consulting with the Plaintiffs  and those who had already attained their section 6(1)(b) status from the enrolment process.  But for the purported passing of the Special Resolution and the Replacement By-Laws, the voting members would have had to consult with the FNI membership through discussions with the bands of the FNI (pursuant to Original By-Law 8.18) before approving the execution of the Supplemental Agreement.  But for the execution of the Supplemental Agreement, the Plaintiffs would not have been reassessed under the points system. 

[211]   Furthermore, even with the prospect of reassessment it was reasonable for the Plaintiffs to have expected to retain their section 6(1)(b) status, as such had already been granted to them.  It was granted to them through the process engaged by the Settlement Agreement; and I have accepted that the Enrolment Committee satisfactorily performed its obligations under the Settlement Agreement.  Also, the QMFNB was a landless band, therefore the Plaintiffs who resided outside the Province reasonably expected to retain their Founding Membership in the QMFNB.  It was reasonable for the Plaintiffs to expect that the FNI would act to continue to preserve their status, and not knowingly put such at risk. 

[212]   Having said this however, I agree that the Plaintiffs did not act on the fact of reassessment, but rather on the fact of rejection.

[213]   At paragraphs 79 and 80 of BCE, the Supreme Court of Canada indicated that shareholder agreements and representations may affect reasonable expectations.

[214]   In this case, article 2.15 of the Settlement Agreement did suggest that ratification would be considered for particular amendments; however, the Abbott decision tempers the reasonableness of such expectations in this case. 

[215]   Nevertheless, in my view the stated objects of the FNI affected the reasonable expectations of the Plaintiffs regarding the FNI’s conduct. The original stated purpose of the FNI, as contained in its articles of continuance, included status recognition for the membership of the FNI.  This was a representation creating a reasonable expectation that the FNI would conduct its business in a manner so as to preserve the Plaintiffs’ Founding Member status.  The articles of amendment contain as an objective “to aid and assist all people of Canadian Indian ancestry to determine their eligibility” for membership in the QMFNB.  In my view, this amendment in no way diminishes the reasonable expectation that the FNI would conduct its business in a manner that preserved the Founding Member status of the Plaintiffs, and of all who had originally attained section 6(1)(b) status under the Settlement Agreement.

[216]   At paragraph 81 of BCE, the Supreme Court of Canada indicated that “conflicts may arise between the interests of corporate stakeholders inter se and between stakeholders and the corporation”.  When resolving such conflicts, the directors’ obligation is to act in the best interests of the corporation, in accordance with their fiduciary duty. 

[217]   On this, I reiterate that status recognition was the reason for the creation of the FNI.  In my view, it was therefore reasonable for the Plaintiffs to expect that the FNI would act to preserve the Plaintiffs’ section 6(1)(b) status; the Plaintiffs’ section 6(1)(b) status was in keeping with the original objects of the FNI.  I find that there was no apparent conflict between the interests of the FNI, and the interests of the Plaintiffs.  Rather, their interests align.

[218]   Based on the foregoing analysis of the BCE factors, the majority of the factors weigh in favour of finding that the Plaintiffs’ reasonable expectations were violated by the manner in which the FNI conducted its affairs.  Specifically, the Plaintiffs’ reasonable expectations were violated by the FNI’s failure to comply with its Original By-Laws when purportedly passing the Special Resolution, and terminating substantially all of the FNI’s membership without proper notice; and by then voting to adopt the Replacement By-Laws, without proper corporate authority. The Plaintiffs’ reasonable expectations were further violated by the FNI’s approval of the execution of the Supplemental Agreement, without full discussion with the members of the bands of the FNI.  

[219]   Having determined that the Plaintiffs’ reasonable expectations were violated by the conduct of the FNI, it is necessary to next consider whether the conduct complained of was oppressive in the circumstances.

[220]   According to BCE, the second prong of the analysis requires a determination as to whether the FNI’s conduct was oppressive, unfairly prejudicial or whether it unfairly disregarded the Plaintiffs’ interests.  This includes a determination as to whether the FNI’s conduct was unfair in the circumstances, and whether the Plaintiffs’ suffered prejudicial consequences as a result of the FNI’s conduct.

[221]   At paragraphs 89 to 94 of BCE, the Supreme Court of Canada elaborated on this second step of the analysis for oppression, as follows:

[222]   As stated above at paragraph 90 of BCE, in most cases proof of the two prongs merge.  In the discussion of the Plaintiffs’ reasonable expectations, I have already canvassed why the conduct of the FNI was unfair.  For ease of reference, I reiterate that it was reasonable for the Plaintiffs to have expected the FNI to conduct its business in compliance with its Original By-Laws when passing the Special Resolution and Replacement By-Laws, and when terminating the memberships without notice.  However, the FNI did not conduct its business in compliance with its Original By-Laws. This was unfair, and enabled the FNI to enter the Supplemental Agreement without adequately consulting with the members of the bands which had been affiliated with the FNI.    

[223]   Indeed, it was reasonable for the Plaintiffs to have expected to be consulted by the FNI (through their bands) regarding the risks and potential consequences of reassessment, prior to the FNI’s deciding to execute the Supplemental Agreement.  It was reasonable for the Plaintiffs to have expected to be consulted in accordance with Original By-Law 8.18, because the Special Resolution was ultra vires and the Replacement By-Laws were passed without proper corporate authority.  Without consultation, the FNI unfairly placed the Plaintiffs’ section 6(1)(b) status at risk of loss.

[224]   It was also reasonable for the Plaintiffs to expect the FNI to protect and preserve the Plaintiffs’ section 6(1)(b) status, after their Founding Member status had been attained following assessment under the Settlement Agreement.  Instead, the FNI acted unfairly by failing to protect and preserve the Plaintiffs’ section 6(1)(b) status. The FNI knew that the loss of status was the potential outcome for thousands, following reassessment under the points system of the Supplemental Agreement. Yet, the FNI proceeded to vote to enter the Supplemental Agreement without first engaging those who could be affected by the reassessment.

[225]   Accordingly, I find that the FNI’s above-described conduct was unfair to the Plaintiffs.  In my view, the Plaintiffs have established that the conduct of the FNI was “burdensome, harsh and wrongful” (BCE, at paragraph 92).  The FNI conducted its affairs in a manner which resulted in highly prejudicial consequences suffered by the Plaintiffs, being their loss of section 6(1)(b) status under the Indian Act.  As such, the FNI knowingly conducted its affairs in this manner, and knowingly risked the Plaintiffs’ loss of section 6(1)(b) status. 

[226]   After considering all the submissions of Counsel, I find that the Plaintiffs have established an entitlement to a remedy in oppression against the FNI. 

[227]   To be clear, prior to finding oppression, I considered the evidence and all submissions, including the the FNI’s explanation for its conduct.  When the FNI passed the Special Resolution in October of 2009, it understood that the formation of the QMFNB was imminent; and the intent of the Special Resolution was to restructure the FNI in a manner so as to permit the FNI to continue to deal with its financial and legal obligations.  However, the rationale and intent does not justify the flawed manner by which the FNI passed the Special Resolution; particularly considering that the Special Resolution amended the by-laws so as to terminate the membership of substantially all of the FNI members, without notice. 

[228]   Further on this, the ensuing delay in band formation provided the FNI with the opportunity to re-table the Special Resolution in a manner to cure its noncompliance with the notice requirement under Original By-Law 8.07, with the notice requirement respecting termination of membership, and with the requirement to permit consultation under Original By-Law 8.18.  The evidence established that a further AGA was held in September of 2010 prior to band formation.  However, the FNI did not avail of that opportunity to re-table and attempt to cure the defective passing of the Special Resolution.

[229]   Further, I considered the circumstances leading to the FNI entering the Supplemental Agreement. The FNI leadership was clearly under significant pressure due to the large volume of applications remaining to be assessed, as of November 30, 2012.  The FNI’s understanding was that Canada was not willing to extend the time for assessment under the Settlement Agreement.  The evidence suggested this would leave at least 40,000 applicants without being considered for status.  The FNI understood that there was a concern from Canada regarding the financial extent of the obligation arising from the unexpected large volume of applications.   There was also a suggestion in the evidence that Canada may legislate to address those concerns.  Ultimately, the Supplemental Agreement was negotiated, with the requirement of assessment, and reassessment, under a points system. 

[230]   Ms. Randell indicated that the reason the FNI agreed to reassess those who already had status, was because it was appropriate that all applicants be subject to the same standard, being the points system.  The FNI agreed to reassessments, even knowing that such could result in a loss of section 6(1)(b) status for thousands, like the Plaintiffs.  In my view, the potential risks associated with reassessment and the consequences of loss of section 6(1)(b) status, far outweighed any alleged benefit associated with subjecting all applicants to the same standard.  At the very least, prior to entering the Supplemental Agreement, the Plaintiffs and all those who were subject to the reassessment and the risk of loss of status, should have been consulted by the FNI Board, through their bands, to the same extent that would have occurred under Original By-Law 8.18.

[231]   Further on this, I considered Ms. Randell’s suggestion that the FNI, like Canada, had concerns with the validity of the applications and the assessment process of the Enrolment Committee.  However, I reject these concerns as providing any basis for justifying reassessment.  Rather, I accept and prefer Mr. Rideout’s credible and unchallenged evidence that the Enrolment Committee conducted its assessments in a competent manner, and in accordance with its obligations under the Settlement Agreement.  I accept his evidence that from time to time, adjustments in the assessment process were required, and that the Enrolment Committee acted accordingly.  As he stated, Canada had rights of appeal, and did so appeal in many cases.      

[232]   Canada did not call any witnesses at trial.  Based on the evidence at trial, in my view, the true reason Canada wanted the Supplemental Agreement was likely due to financial concerns arising from the unexpected volume of applications.  The Plaintiffs have established that there was no compelling reason to question the validity of the assessments of the Plaintiffs’ applications by the Enrolment Committee.

[233]   Finally, it is necessary to comment on the causal connection between the passing of the Special Resolution, and the Plaintiffs’ loss of status.  The Special Resolution was the underlying basis for the manner in which the FNI conducted its business when deciding to enter the Supplemental Agreement.  But for the Special Resolution and the Replacement By-Laws, the FNI  would have consulted with the membership of the bands which had been affiliated with the FNI (under Original By-Law 8.18), before voting to pass the resolution authorizing the execution of the Supplemental Agreement.  Instead, the FNI board voted to execute the Supplemental Agreement without consultation. They did this knowing that reassessment under the Supplemental Agreement could revoke the status of thousands of FNI members. 

[234]   I have found that the Special Resolution was ultra vires, and that the Replacement By-Laws were adopted without proper corporate authority.  Therefore, all subsequent business decisions by the board of the FNI were made in the context of the flawed underlying processes associated with the passing of the Special Resolution and the Replacement By-Laws.  This includes the decision to enter the Supplemental Agreement.  As a result, I find that the decision to enter the Supplemental Agreement was made without proper corporate authority.  I add that by entering the Supplemental Agreement, the FNI acted beyond the scope of the purpose for which the “skeletal” structure was purportedly established.  In any event, the Plaintiffs’ loss of status was a consequence of the FNI’s decision to enter the Supplemental Agreement; it was a consequence of reassessment under the directive of the points system of the Supplemental Agreement.

[235]   Based on the foregoing, I have concluded that the FNI conducted its business in a manner which was unfair, and which caused prejudicial consequences to the Plaintiffs.  I conclude that the Plaintiffs are entitled to a remedy in oppression against the FNI.

[236]   As stated, I have determined that the Plaintiffs are entitled to a remedy in oppression against the FNI.  At the same time, however, based on the evidence at trial, I find that the Plaintiffs have not established entitlement to any remedy against Canada.  I will now explain my reasons for this finding.

[237]   To begin with, the Plaintiffs’ are seeking a remedy in oppression pursuant to section 371 of the Corporations Act. In my view, the nature of an action in oppression is an action taken by a shareholder or member, against the corporation to which the member belongs, or belonged.  The corporation in this case is the FNI, not Canada. Further, the oppressive conduct established by the Plaintiffs was the conduct of the FNI, not of Canada. 

[238]   Specifically, it was the FNI, not Canada, who passed the ultra vires Special Resolution which caused the termination of the Plaintiffs’ membership in the FNI, without notice.  It was the FNI who conducted its business without proper corporate authority.  It was the FNI who negotiated the Supplemental Agreement on behalf of the Plaintiffs, without providing the Plaintiffs’ with the opportunity for input.  It was the FNI who abrogated its responsibility to preserve and protect the Plaintiffs’ status as Founding Members of the QMFNB.

[239]   Canada does owe a fiduciary duty to the aboriginal collective, and it would be reasonable for the Plaintiffs to expect Canada to abide by this.  However, as stated by Canada, the Plaintiffs’ action was neither authorized to be taken on behalf of the FNI, nor on behalf of the QMFNB.  Further, the Plaintiffs’ action was not authorized to be taken on behalf of those who lost their Founding Member status following reassessment. Rather, the Plaintiffs only had standing to advance individual claims.  Canada’s fiduciary duty was not individually owed to the Plaintiffs.

[240]   In the meantime, based on the evidence, I am satisfied that Canada likely pressured the FNI to enter negotiations for the Supplemental Agreement.  I am satisfied that this was due to the unanticipated huge volume of applications, and the financial obligations that could ensue.  Further, it is reasonable to conclude that Canada likely also knew that reassessment under the Supplemental Agreement would result in a revocation of the section 6(1)(b) status for thousands of those who had already attained section 6(1)(b) status.  Nevertheless, I am not satisfied that the Plaintiffs established bad faith on the part of Canada.  Rather, I agree with Canada’s submission that bad faith is speculative in this matter, and has not been proven by the Plaintiffs on the balance of probabilities. 

[241]   Further on this, the Supplemental Agreement was not imposed though legislation.  Canada ultimately negotiated that agreement with the FNI. In those negotiations, it was the FNI’s responsibility to represent and protect the interests of the Plaintiffs, and all those who had been granted Founding Members’ status before reassessment. As stated, Canada likely pressured the FNI to negotiate a solution to deal with the volume of applications.  However, the FNI is a sophisticated entity and quite capable of handling pressure.  In the end, the FNI must bear full responsibility to the Plaintiffs for its oppressive conduct, and for what was agreed upon in the Supplemental Agreement.

[242]   Finally, as submitted by Canada, Canada was entitled to rely on the indoor management rule, as contained in section 31 of the Corporations Act which states, as follows:

[243]   It was not established that Canada knew that the Special Resolution was ultra vires, and that the Replacement By-Laws were adopted without proper corporate authority.  In turn, it was not established that Canada would have known that this compromised the validity of any ensuing resolutions of the FNI.  Because of the indoor management rule, Canada was entitled to assume that the FNI had the corporate authority to sign off on the Supplemental Agreement.

[244]   Based on the foregoing, I find that the Plaintiffs did not establish entitlement to a remedy against Canada.  The Plaintiffs are entitled to an individual remedy against the FNI, not Canada.

[245]   As to the appropriate remedy, section 371(3) of the Corporations Act lists several orders the court may consider as appropriate for a remedy in oppression. 

[246]   The Plaintiffs seek an order setting aside the Supplemental Agreement.  This order is available for consideration under section 371(3)(h) of the Corporations Act, which permits an order setting aside a contract “to which a corporation is a party and compensating the corporation or another party to the transaction or contract”. 

[247]   In light of the evidence at trial, and the findings, in my view an order of rescission is not an appropriate remedy in the circumstances of this case.  This is primarily due to the fact that performance of the Supplemental Agreement has already taken place.  All applications have been assessed pursuant to the points system under the Supplemental Agreement, including those applications which had already been assessed under the Settlement Agreement.  Specifically, according to the 2018 Canada Gazette, 100,681 applications were considered under the Supplemental Agreement. There was a reassessment of 23,875 applications from the original Founding Members. Upon completion of the assessment and reassessment process, 18,875 were approved for Founding Member status. Rescission of the Supplemental Agreement would negate that entire completed process. In my view, it would neither be just nor equitable to undo the Supplemental Agreement, which has already been performed.

[248]   I add that rescission is not appropriate as judicial forbearance is often required in the context of reconciliation; First Nation of Nacho Nyak Dun v. Yukon, 2017 SCC 58, at paragraph 4.

[249]   As an alternative to rescission, the Plaintiffs submitted that the Court could refer the matter back to the parties to arrive at a separate resolution.  I am not persuaded that is a reasonable alternative.  The parties were unable to resolve the matter before trial, and there was no indication that the Court’s decision on oppression could facilitate an out of court resolution regarding an appropriate remedy.

[250]   In my view, pursuant to section 371(3) of the Corporations Act, an appropriate remedy can be provided to address the FNI’s oppressive conduct of improperly terminating the Plaintiffs’ membership in the FNI.  As stated, the termination of substantially all of the FNI’s membership emanated from the Special Resolution.  I have found that the Special Resolution was ultra vires and invalid.  I have also found that the Replacement By-Laws were adopted without proper corporate authority.  In the meantime, section 371(3)(c) of the Corporation Act permits an order amending the articles and by-laws.

[251]   Consequently, pursuant to section 371(3)(c) of the Corporations Act, I am granting an order to reinstate FNI’s Articles of Continuance and Original By-Laws, in place of the Articles of Amendment and the Replacement By-Laws.  This, in effect, reinstates the FNI memberships of the Plaintiffs; thereby addressing the oppressive conduct relating to the improper termination of the Plaintiffs’ membership in the FNI.  Further, in accordance with section 371(3)(k) of the Corporations Act, I am directing rectification of the FNI’s corporate records to reflect the proper registry of members, so as to include the Plaintiffs as members.  In the final analysis, this does not prevent the FNI from proceeding to re-table the Special Resolution, or any other resolution to amend its articles and by-laws.  However, such must be done in accordance with the procedures as contained within the Original By-Laws.

[252]   It is more challenging to provide an appropriate remedy to address the oppressive conduct arising from the FNI’s entering the Supplemental Agreement.  I have found that by entering the Supplemental Agreement, the FNI failed to protect and preserve the Plaintiffs’ Founding Member status; and the FNI placed the Plaintiffs’ section 6(1)(b) at risk.  Further, the FNI’s decision to enter the Supplemental Agreement was made without proper corporate authority.

[253]   Ideally, this oppressive conduct would be rectified by requiring reassessment of the Plaintiffs’ eligibility for Founding Member status in accordance with the Settlement Agreement, but without utilizing the points system.  This was how the Plaintiffs were originally assessed, and such would therefore likely result in reinstatement of the Plaintiffs’ section 6(1)(b) status.  However, such a remedy would not be appropriate for many reasons.  Particularly because such reassessment would render the Supplemental Agreement invalid vis-à-vis the parties to it, being the FNI and Canada; and the Plaintiffs did not establish a claim against Canada.  Without Canada’s consent, it would not be just and equitable to remedy the FNI’s oppressive conduct in this manner.

[254]   As stated, I have determined that it is not appropriate to rescind the Supplemental Agreement.  At the same time, each of the Plaintiffs have suffered immense loss as a result of their loss of section 6(1)(b) status.  To have their status granted, and then revoked, has hurt the Plaintiffs.  The loss of status represents loss of their identity, their heritage, and their ancestry.  Further, the loss of section 6(1)(b) status detrimentally affected the Plaintiffs’ ability to pass on eligibility for status to their children.  As well, the Plaintiffs trusted the FNI to represent their interests; but the FNI violated the Plaintiffs’ trust by putting the Plaintiffs’ section 6(1)(b) status at risk.  Indeed, I have found the FNI knew that thousands of FNI members would lose their section 6(1)(b) status following reassessment under the Supplemental Agreement. 

[255]   Pursuant to section 371(3)(j) of the Corporations Act an order can be made “compensating an aggrieved person”. While not the order the Plaintiffs were seeking, it is a remedy available to the Court to redress the Plaintiffs’ loss from their claim in oppression.

[256]   That said, before compensation is to be assessed, I find that it would be fair and just to require the FNI to take steps to rectify their oppressive conduct.  Specifically, it is appropriate to require the FNI to take all steps in its power to seek to obtain Canada’s consent to reconsider and reassess the Plaintiffs’ eligibility for Founding Member status, with a view to attaining reinstatement of the Plaintiffs’ section 6(1) status. The FNI shall be ordered to take such steps prior to an assessment for compensation.  If necessary, the parties may obtain further directions from the Court in this regard.

[257]   The Plaintiffs are entitled to costs of this action against the FNI.  Although the Plaintiffs did not establish entitlement to a remedy against Canada, considering the nature of the Plaintiffs’ claim and the circumstances, I find that it is not appropriate for Canada to be awarded any costs of this action.

[258]   In conclusion, based on the foregoing analysis, I have found that the Plaintiffs are entitled to a remedy in oppression against the FNI, but not against Canada.  The FNI’s oppressive conduct included the processes engaged by the FNI to terminate the membership of nearly all of the FNI members; and to then enter the Supplemental Agreement which caused the Plaintiffs to lose their section 6(1)(b) status under the Indian Act.  I have found that the FNI’s oppressive conduct caused the Plaintiffs’ loss.  It is hereby ordered that:

[259]   Order accordingly.